News

Robbins Hopes for Better from @Home

2/08/1998 7:00 PM Eastern

Washington -- James Robbins, president and CEO of Cox
Communications Inc., last week said he is disappointed with the results of the Cox@Home
service after rollouts in six markets in the last year or so.

Cox initiated the high-speed Internet and data service in
Orange County, Calif., in December 1996, becoming the first market where subscribers have
access to telephony, the Internet and digital TV provided by Cox.

So far, Cox has sold @Home to about 5,000 Orange County
customers, representing 3.1 percent of the 165,000 homes passed by Cox's data-ready
network. But Robbins was also confident that Cox@Home's performance would improve.

Relatedly, Cox has launched digital telephone service over
cable in Omaha, Neb., where it's going head-to-head with U S West Communications.

The Atlanta-based MSO is currently offering Cox Digital
Telephone to 4,000 households in southeast Omaha, with plans to make the service available
to all 240,000 homes in its Omaha/Councils Bluffs service territory by year's end.

Omaha is the second Cox telephone market, joining Orange
County, where the company launched last September, and where it has marketed the new
product to 16,900 of the 19,200 homes capable of receiving the service. The MSO has
regulatory approval to offer phone service in nine other major markets; it plans to launch
in San Diego, Hartford, Conn., and Phoenix later this year.

On the @Home front in Orange County, Robbins said the
high-speed data service has been purchased by 4.2 percent of the homes with personal
computers and by 8.6 percent of PC homes that subscribe to an online service.

'I think 8.6 percent of online users is really just
the tip of the iceberg,' Robbins told reporters last week at a press conference in
Washington, D.C. 'We are getting the real aficionados of this service, the real
techies. I think we can go a lot farther.'

Robbins said he wanted Cox@Home to attain 10 percent to 12
percent of online user homes 'fairly quickly' or he would remain disappointed.

'My guys back in Atlanta are going to kill me for
saying that. But I think we can be doing better,' Robbins said.

Robbins said Cox needed to perform better on the marketing
front, including figuring out how to package effectively Cox@Home with cable and telephony
services.

As new technologies evolve -- such as wireless broadband
and digital subscriber line -- Robbins said modem speed will decline as a competitive edge
for @Home. That's prompted him to push managers to add new features -- such as
multiple PC support and vanity domain names -- and to constantly simplify the product to
appeal to a mass audience.

Cox@Home has about 13,000 subscribers, or 1.4 percent of
data-ready homes and 2.7 percent of PC homes, in San Diego, Orange County and four other
markets, Robbins said. Cox is adding about 1,000 @Home subscribers a week and with less
than 1 percent churn.

Cox is focusing especially hard on customer service in
connection with @Home, which costs $44.95 a month for a cable subscriber that leases a
modem and $29.95 for a subscriber that buys a modem.

Installing @Home costs $399 with the purchase of the modem,
$149.95 if leasing a modem but buying a network interface card (NIC) and $99.95 if leasing
a modem but not buying the NIC.

'We only have one chance to get these customers hooked
on this service. If you screw it up, they won't come back to you again -- or it will
be a long time before they come back to you,' Robbins said.

On the telephony front, Cox will fight for Omaha customers
based on price. It's offering single-line phone service for $15.89 a month compared
with U S West's price of $17.65. A second line will go for $7.89 compared with $17.65
for a second U S West line.

Company officials said these prices will also be available
to area residents who do not subscribe to Cox's cable service.

Consumers switching carriers will be given the option of
keeping their existing telephone number for a one-time charge of $20 and a monthly fee of
$1.50.

In addition to unlimited local calls, the offering is also
being packaged with Cox long-distance service, which goes for 10 cents a minute, any time,
seven days a week.

Meanwhile, Alan Johnson, general manager of U S West's
Local Markets division in Nebraska, said the introduction of facilities-based competition
in Omaha is proof that the regional Bell operating company should be allowed into the
long-distance market as provided for in the 1996 Telecommunications Act.

However, Johnson questioned whether Cox is truly
undercutting U S West on price, since it's raising the cost of its cable service by
$2 a month at the same time.

'At the end of the day, what's their true price
value?' Johnson said. 'They're using their cable subscribers to subsidize
their entry into the telephone business.'

Cox spokesman Mike Kohler said U S West was reponding to
competition in the local telephone market by trying to deflect the question to cable
prices.

'We're talking about our telephone service, which
across the board is priced substantially lower than U S West,' Kohler said. 'I
think it's interesting that they respond by pointing to our cable service.'

Although he would not offer specifics, Johnson said U S
West is preparing a 'campaign' to meet the competition.

Johnson said the telco has been preparing for competition
for the last decade by investing an average of $100 million a year in network and
technical enhancements.

'We're very much positioned to compete in the
marketplace,' he said.

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