Cable customers in certain areas of Florida and California
can now stroll through the aisles of CompUSA and see shelves stocked with cable modems.
So far, there's only one brand they'll see:
NextLevel Systems Inc., which is changing its name back to General Instrument Corp. on
Feb. 2 and is expected to take advantage of its new equity backer, Sony Corp., as the year
'For us, this is a tactical program that has strategic
implications,' said Ed Zylka, senior director of marketing for NextLevel. He added
that the retail launches 'will be a breeding ground for our MCNS (Multimedia Cable
Network System, the cable modem standard) product,' which hits volume distribution
channels in the second quarter of 1998.
Zylka and other NextLevel executives referred to the move
as the first time cable modems have been available to customers at a national retail
chain. Smaller, independent arrangements started cropping up last year, like when
retailers in Fundy Communications' cable footprint in New Brunswick, Canada, started
selling a Scientific-Atlanta Inc. modem.
The GI/CompUSA arrangement kicked off Jan. 10 in
Jacksonville, Fla. -- MediaOne territory -- and plans are under way to see
NextLevel's modems on CompUSA's shelves in Miami and Encinitas, Calif., by
mid-February. Adelphia Communications Corp. and Daniels Cablevision are the operators
participating in the forthcoming CompUSA launches.
In Jacksonville, 400,000 homes passed by MediaOne's
network have been set up to take NextLevel's modems for a year. CompUSA is both
selling the modems and using the MediaOne Express data service in its 'Superstore
Training Center.' MediaOne Express will soon merge with Time Warner's RoadRunner
Mark Kelly, southeast director for MediaOne Express, said
that customers who opt to buy a retail modem save 20 percent on their monthly cable modem
The next moves in retail will come from Adelphia, which is
preparing for a late January retail launch in Miami. Joe Wattick, director of product
development for Adelphia's Power Link service, described the CompUSA/NextLevel
arrangement as a trial in which the company will need at least 90 days to learn how the
He said that Adelphia's existing experience in
different distribution channels -- like long distance telephony, paging and security
service -- shows the MSO's tenacity in finding new ways to market products.
'Retail is clearly one of the more effective
channels,' he said.
Adelphia has been using NextLevel's SURFboard modems
since last February in Miami, where it has 140,000 cable customers. Customers who buy
modems will receive $5 off their monthly Power Link bill, he said.
A similar retail plan is likely to follow in
Adelphia's West Palm Beach, Fla., system, Wattick said, who said both CompUSA and the
operator have much to learn.
CompUSA 'brings to the table a lot of retail
experience, and we'll pull from them as much as we can there -- and we bring the
broadband network plus high-speed data,' Wattick added.
Also in February, CompUSA will stock shelves in Encinitas,
where Daniels Cablevision's network passes 68,000 homes with its 'I-Net
Express' high-speed data service.
Joni Odum, president and general manager of Daniels, said
that the availability of SURFboard modems at CompUSA 'is a great convenience for our
customers and dramatically increases the visibility of I-Net Express with our target
NextLevel's Zylka said that the Encinitas launch is
slightly different than the other two, because Daniels opted to partner with Globalcenter
Inc., an ISP (Internet service provider) that handles back office and provisioning in
return for one channel from Daniels.
'It's a really interesting, low-risk program, in
that we've got a big installed base there now of cable modems, and huge
potential,' said Zylka.
Zylka said that in all three cases, and more to follow, the
retail launch isn't quite as easy as lining shelves with dial-up, analog modems,
because so much cooperation is needed between the retailer, the manufacturer and the
high-speed data service provider.
'There's a lot of layers to work through,'
Broadband network operators will likely watch the retail
moves closely, as they also ready themselves to move modem costs off their balance sheets
and onto retail shelves.
Manufacturers have also said that retailers -- especially
big retailers, like CompUSA -- will need some sort of sign-on program that alerts them to
geographic areas ready for retail. Operators have said they're not sure they like
that idea, since in many cases they like to keep launch locations private for competitive
CompUSA executives were not available to comment on the
launches or other, future retail modem plans.