Backtalk: Retail Rumblings

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There are early seismic rumblings as cable MSOs starttesting the retail waters for selling cable modems — hoping, in part, to shift thecosts of the modems off their own balance sheets and onto those of the Circuit Cities andCompUSAs of this world.

It's going to be more than interesting to see how thesevarious cable high-speed Internet-connection retail models play out — especially forCablevision Systems, because that MSO, unlike all of the others, owns itsconsumer-electronics partner, Nobody Beats the Wiz.

And that ownership relationship may be one important acethat Cablevision has up its sleeve right now.

Prior to its very low-key marketing test for its OptimumOnline service in its own store, the MSO had already signed up about 6,000 customers forthe new high-speed cable-modem service.

And with absolutely no fanfare, or even a press release,two weeks ago, Cablevision, we just learned in passing, conducted a demonstration ofOptimum Online — which will ultimately be renamed @Home — in one of its own Wizstores in Carle Place, N.Y.

Cablevision reports that sales in that particular storeduring the week of the demo were the highest ever. Cablevision sold 50 pre-installationkits for Optimum Online, offering an installation discount and other discounts verysimilar to what @Home Network is doing in 25 CompUSA stores across the country.

*Home is marketing a $39.95 box to consumers, giving them a$90 discount, including one free month of the @Home Internet service, plus discounts onthe cable-modem installation.

And as we reported earlier, MediaOne inaugurated its testfor MediaOne Express in 17 Circuit City stores in the Boston area, pricing theasymmetrical Bay Networks Inc. modems at $250.

So all of those early retail-modem tests are now under way,even though modem vendors still don't know if they passed muster — certification byCableLabs to be DOCSIS-compliant (Data Over Cable Service/Interoperability Specification).

Forget about DOCSIS compliancy for the moment: Let's justsay, in plain old English, that cable modems are hardly at the plug-and play stage, whichis the kind of stuff that these consumer-electronics joints know how to sell.

With cable modems, you still need to call a cable operatorthat is geared up to install them.

So cable, with its retail-marketing tests for cable modems,is taking a potentially treacherous step. Cable is letting consumer-electronics chains— many of which are miserable places to shop, run by far too many incompetent,untrained and underpaid people — possibly ruin the relationships that it has workedso hard to establish with its existing subscribers.

In other words, relationship marketing, or keeping closetabs on your customers, is now up for grabs when you farm out cable modems to aconsumer-electronics chain.

How can @Home, say, possibly correct, or even want tomonitor, the overall business practices of CompUSA? It can't, and it shouldn't.

Case in point: When was the last time you went to aCompUSA? Not that I'm singling them out: All of these giant stores are pretty much thesame in my book.

My last time, and I do mean last, was this past summer, ona quick little trip with my husband, Bob, to pick up a "no-brainer" part for hispersonal computer.

The place was a zoo. The sales force was mostly invisible,and the few who were around were harried beyond description. The part was nowhere insight, so we went to another big consumer-electronics store. The other store had it, atabout double the price that Bob ultimately paid by buying it online.

At least with Cablevision, the MSO owns the Wiz, and it canco-brand and co-market cable modems with some semblance of control. Of course,Cablevision, which bought the Wiz out of bankruptcy, has some retail problems of its ownto straighten out before it starts aggressively marketing cable modems in those stores.

Maybe that's why we never got a press release.

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