Daniels Launches Modems, Digital

1/11/1998 7:00 PM Eastern

There was no slowing down over the holidays in Carlsbad,
Calif., as Daniels Cablevision launched both cable modems and digital TV to its
68,000-customer base.

Executives said they felt confident rolling out two dynamic
products at once because system employees have experience in interactive, transactional
TV. The system, just north of San Diego, has offered GTE mainStreet for several years to
its techno-savvy consumer base.

'Because of the mainStreet experience, we're
familiar with telephone installation. [These rollouts are] just the next step in product
development,' said Joni Odum, Daniels' president and general manager.

The only major operational change was to hire and train 15
extra installers who will handle 'plain vanilla' installs, while veterans will
do digital upgrades and teach subscribers how to use the on-screen navigator, Odum said.

Daniels began offering 12-to-1 ratio digital service,
obtained from Tele-Communications Inc.'s Headend in the Sky digital service, Dec. 18.
Initially, the operator launched 36 new channel slots, including 12 basic channels, 10 DMX
music channels, nine pay-per-view slots and the program guide. This means that Daniels
digital customers will have more than 100 channel choices.

'I would have liked to have gone out with six more
channels of pay-per-view,' Odum said, but she didn't want, short-term, to quash
her strong analog PPV business.

The channel-locked system had to surrender three of its
nine analog PPV slots as compression channels. Odum retained six of the analog channels
for current buyers to use during the rollout of boxes. Daniels executives classified
11,000 of the system's homes as heavy PPV users.

Ultimately, Daniels anticipates offering HITS'

Already, 1,000 consumers have ordered the NextLevel Systems
Inc. digital boxes to get new channels including Sci-Fi Channel, Discovery Kids,
Independent Film Channel, CBS Eye on People, ESPNews and Classic Sports Network. Odum
estimated that installations are rolling out 'about half-steam,' at 40 to 45
boxes a day.

The boxes rent for $2.95 per month -- Daniels'
standard equipment fee. Second outlets cost $4.99, plus the equipment charge. Premium
customers have their pay units multiplexed as a bonus for ordering digital. Daniels is
charging $2.99 for PPV selections via digital -- $1 less than analog offerings.

Susan Otto, Daniels' marketing manager, said consumers
are responding well to the oversized, 'screaming for their attention' direct
mail. The system is also airing a daily infomercial, on channel 4 between 7 p.m. and 8
p.m., explaining both products.

Marketing for cable modems, which launched Dec. 8, has not
really begun.

'We're still accommodating the
truck-chasers,' quipped Otto, referring to consumers who had heard about cable modems
and proactively called the company to request the technology whenever it became available.

Carlsbad residents pay $399 upfront for the installation
and modem purchase, plus $34.95 monthly for service. Nonsubscribers will pay $44.95 per
month. Modem rental is also an option. Those customers will pay $120 for installation,
then add $14.95 per month to the user fee.

Odum feels that commercial use of the modems will be a
strong portion of the business. Businesses can get the modem for $44.95 monthly, including
up to three e-mail addresses, if they are cable customers. Noncable customers will pay

The modem business launched as one-way (downstream via
cable plant, upstream via phone lines), but it will eventually be two-way. Branded
'Cablevision I-Net Express,' the modem service uses NextLevel's SURFboard
modem. GlobalCenter Inc. is Daniels' Internet-service provider.

Otto said the company anticipates a formal launch event at
the end of this month with installer CompUSA.

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