Another Hawaiian Edge: Cables Great

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Life is good on the Hawaiian Islands. And if recent developments from cable and satellite providers are any indication, it can only get better for video fans.

Honolulu-based Oceanic Cable, a division of Time Warner Cable that serves about 260,000 cable customers on the island of Oahu, was the first cable system in the country to introduce video-on-demand to consumers this past January.

And direct-broadcast satellite providers have introduced special programming packages for Hawaii in the past year that now allow residents to use smaller dishes than had been deployed in the past.

And at least on Oahu, consumers have another pay- television choice: wireless-cable provider Verizon Americast, although the telephone company's video business is up for sale.

Oceanic's iControl VOD service is available to the operator's 48,000 digital-cable customers, according to director of public affairs Kit Beuret. Oceanic has about 260,000 cable customers and also sells Road Runner high-speed-data service.

At its VOD launch in January, Oceanic offered the same eight or 10 titles that also played on near-VOD.

"It became the mission in marketing to be able to offer more movies than were available in the pay-per-view window," Beuret said.

Oceanic negotiated directly with the Hollywood studios and was able to add library movie titles at lower prices. During Halloween, for example, the cable company touted
Dracula

and other horror flicks, and hopes to promote Christmas favorites later in December.

Adult films sell well on VOD, Beuret said. On Oceanic, the adult genre is assigned its own VOD channel, and the titles don't appear unless a subscriber calls to authorize it.

"Sometimes the titles themselves can be pretty offensive," Beuret said, adding that people who like adult movies tend to find them.

Oceanic's iControl feature offers more than just movies. This past spring, Oceanic added pizza-on-demand-or POD-to its interactive guide on Channel 999. Through an arrangement with Pizza Hut, subscribers can choose from the restaurant's entire menu, ordering pizza toppings for the whole pie or just a half, for example.

"People really love that," Beuret said. "They can order the pizza and within 25 minutes there's a knock on the door. They can watch a VOD movie, hit the pause button, order a pizza and hit pause again when the pizza arrives."

PILE ON THE BREAD

Pizza parlors seem to love the arrangement, too, because customers are more inclined to order side items such as salad, breadsticks and soft drinks over a video menu than via the telephone, Beuret said. Oceanic gets a commission from sales made over the television.

In addition to VOD and POD, Oceanic plans to add KOD-karaoke-on-demand. The company is already running karaoke trials, testing song sales individually and in packages.

"Karaoke is very, very popular in Hawaii," Beuret said.

Digital cable has been available on Oahu for about one and a half years, and Oceanic is installing close to 1,000 digital-cable boxes each week.

New digital customers can find information on VOD and other features via the operator's information network, aptly assigned to channel 411.

Digital customers need to be informed about the benefits of VOD, which include pause and rewind features. Otherwise, some customers continue to order NVOD, even though the pricing is the same, Beuret said. Oceanic might offer discounts to encourage customers to try VOD, he added.

One recent VOD feature Oceanic introduced allows pay-per-view event customers to time-shift a live boxing event, for example.

Oceanic tested Concurrent Computer Corp.'s personal-video channel technology during two championship boxing fights earlier this fall, the Oct. 20 Mike Tyson-Andrew Golota bout and the Nov. 11 match between Lennox Lewis and David Tua. The technology lets viewers rewind the video at any time during the event, then fast forward to catch up with the live action.

At the time, the feature was not heavily promoted so Oceanic could test the technology. "We don't launch these things-we just let them escape," Beuret said.

He said about 100 people tried the pause and rewind features, many may have been Oceanic employees.

Storing PPV events in the VOD server at the headend also allows viewers to watch them whenever they want.

"Because we are in a different time zone in Hawaii, our customers weren't going to have the opportunity to watch either fight at a convenient time, and naturally, we would have lost PPV revenue as well," Oceanic vice president of operations Norman Santos said in a press release.

The time differences between Hawaii and the continental U.S. also cause some operational problems for satellite feeds targeted to the mainland's East and West coasts. Oceanic has had a tough time finding enough high-definition television programming to give to customers who want it.

DBS KEPT AT BAY

Because the Showtime Networks Inc. high-definition feed does not offer full-time high-definition content, the so-called primetime programming it runs in the format is beamed to Hawaii in the afternoon, Beuret noted.

DBS is less of a threat to Oceanic than to cable operators on the mainland, and not just because of the operator's aggressive move into new services. Until recently, most satellite signals could not reach Hawaii without the use of a very large dish. Even now, DirecTV Inc. and EchoStar Communications Corp.'s Dish Network do not offer all of their programming to small-dish owners in Hawaii.

According to SkyTrends, a division of Media Business Corp. that tracks cable and direct-to-home satellite penetration among U.S. television households, Hawaii ranks first among the 50 states in cable penetration and last in direct-to-home penetration. Satellite household penetration is not just in the single digits; it's about a single percentage point at 1.21 percent. The DTH count, current as of Oct. 1, was published in the November 2000 issue of
Sky
Research
.

Those statistics have not kept satellite retailers away from the islands. On the big island of Hawaii, for example, Dish Hawaii owner Bill Barker has been selling satellite dishes since 1986, starting with large C-band satellite systems. The dealer now sells small-dish systems from both DirecTV and EchoStar, although the dishes required are somewhat larger than the ones used on the mainland.

In September, DirecTV launched four programming packages geared to the Hawaiian islands, including two bilingual Spanish and English packages, starting at $19.99 a month.

"We wanted to be able to offer service in Hawaii as soon as we possibly could," said DirecTV senior vice president of programming Stephanie Campbell. "We have some physical constraints about which satellites can actually see Hawaii."

All of DirecTV's satellites at the 119 degrees west longitude orbital spectrum can see Hawaii, but most of the DBS company's core programming is broadcast from 101 degrees west.

'COMPLEMENTING' CABLE

All of the company's Hispanic offerings from the DirecTV Para Todos service are available in Hawaii. Campbell estimated that 10 percent of the Hawaiian population is Hispanic.

Many of the 44 English-language channels in the $21.99-per-month Hawaii Choice Plus package are networks found on digital-tier upgrades, such as SoapNet, Toon Disney, Do-It-Yourself Network, Boomerang and Biography Channel.

"We're trying to provide something complementary to cable," DirecTV senior vice president of marketing Susan Collins said, who admitted that Hawaii has a "pretty good cable system."

DirecTV ran ads of its own in Hawaii at the time of the service launch, but relies on its retailers to do most of the local promotion in the Aloha State. National offers such as the current free installation promotion are available on Hawaii, as well.

DirecTV customers on Hawaii need an oval-shaped dish about 39 by 29 inches.

"It was always our intention to serve the islands," Collins said. "It just took a while to get all the pieces in place."

Campbell added that DirecTV plans to expand service to Hawaii over time.

EchoStar has also said it plans to use its recently launched, high-power EchoStar 6 satellite to deliver more programming to Hawaii. No date has been announced for the expanded packages.

Dish Network already offers a 70-channel package in Hawaii for $29.99 a month.

In Hawaii, DBS providers don't offer the Hawaii Network or any of the local broadcast affiliates. On the other hand, Barker said, satellite offers more channels overall than the local cable system on the big island of Hawaii.

Dish Hawaii sells more systems for EchoStar than DirecTV, Barker said. Hawaiian subscribers to Dish need two dishes, 24 inches and 30 inches in diameter, Barker said. Although he participates in national promotions that offer hardware and installation discounts, Barker adds $60 to most Dish system sales because of the cost of shipping the equipment to Hawaii.

Local consumers who see DBS ads in national publications or on network television often don't understand the price differences between the island and the mainland.

Despite its challenges in competing in Hawaii, DBS is making inroads. For Hawaii residents, that just means another option in paradise.

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