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Study Finds Digital Potential on Upswing

3/26/2000 7:00 PM Eastern

The percentage of cable customers interested in digital
cable or direct-broadcast satellite continues to increase, according to the recent
"Digital TV VI" survey of consumers in digital-cable markets from Horowitz
Associates Inc. and S. Liebmann & Associates.

In a survey of analog and digital-cable customers in 49
digital-cable systems, 46 percent were either current digital or DBS subscribers or likely
candidates for a digital service. The study found that digital-cable penetration has
reached 10 percent in systems that offer the digital service, and 21 percent of cable
customers in digital markets plan to upgrade to digital -- given an upgrade price of $10
per month -- within the next six months. The two figures give the digital-cable service a
market potential of 31 percent, according to the group.

In the digital-cable markets surveyed, penetration among
cable customers who also subscribe to a DBS service is 7 percent, with another 8 percent
likely to get a dish, adding another 15 percent to the overall digital-television market
potential. Last year's study rated the market potential for digital-cable and DBS at 36
percent.

The study does not factor in non-cable customers who may
wish to subscribe to DBS or digital cable in the next few months.

Five percent of customers polled in the digital-cable
markets reported that they had already churned away from digital cable. Among current
digital-cable subscribers, 11 percent said the service was worse than they had expected it
would be, while 34 percent said it was better.

S. Liebmann president Steve Liebmann said churn rates for
DBS have been low. The number of people who leave cable for DBS and then go back to cable
is also very low, he added.

While the overall potential for digital-television services
continues to rise, more consumer education is needed, the study suggests. Only 51 percent
of customers polled in digital-cable markets were even aware that their cable company was
offering a digital cable service, the study said.

Horowitz Associates also plans to share data from its new
State of Broadband Urban Markets report this Tuesday (March 28) at The Minority Media
Advocacy conference held in Washington by the Rainbow Push Coalition's Media &
Telecommunications Project.

The Urban Market study, produced by Horowitz division
Surveys Unlimited, projected 46 percent penetration of digital-cable service among current
urban cable subscribers. The number fell to 30 percent overall penetration of digital
cable in urban markets when non-cable households were factored in.

The study found that in urban markets, ethnic households
are more interested in new technologies such as digital audio and interactive programming
guides than their urban white counterparts.

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