Cable One Sees Heady Rollouts

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Cable One Inc. is about to embark on an ambitious
new-service program that includes the launch of its own high-speed-data Internet service
and the use of next-generation headend gear to support digital TV across its 16-state
region.

Rather than taking pre-packaged amalgams of digital
programming from satellite services, the MSO has cut individual deals with a wide range of
programmers to create its own customized mix of video and audio services, said Cable One
vice president of engineering Tommy Hill.

Because the new video-multiplexing system to be used in
customizing the digital-service mix comes from Cisco Systems Inc. -- which is also
supplying the data services headend gear -- Cable One has positioned itself to efficiently
add additional advanced services as time goes by, he added.

"An integrated system for data, voice and video means
that we can eventually scale our service offering to include cost-effective data, voice
and video services such as voice-over-IP [Internet Protocol] and video-on-demand over a
single, streamlined broadband network," Hill said.

Cisco's RateMux multiplexer lets a cable operator multiplex
individual digital feeds at the headend in any combination it chooses. It also lets
operators insert local advertising into the digital stream and increase their bandwidth
efficiency, compared with taking a straight digital feed from a satellite and putting it
on the cable plant without remixing, Hill noted.

"We're going to 256 QAM [quadrature-amplitude
modulation] with eight RF channels for the digital tier," he said. All of Cable One's
systems are operating at 550 MHz with coaxial serving areas of approximately 1,100 homes
passed, he noted.

The new digital-service package, with about 100 video
channels and 40 audio channels, will launch next month in four markets that range from
about 10,000 households to 35,000 households with a mix of demographic and geographic
profiles, according to Jerry McKenna, vice president of marketing for Cable One.

Once the company has gauged the marketing parameters, it
will launch in some 40 more markets next fall, representing about 640,000 households of
the total of 1 million the company's networks pass in the West, Midwest and Southeast.

"We're targeting our premium-service customers,
offering them a lot more choice for low additional cost," McKenna said.
"Competition [from DBS] is a factor in our decision, of course, but, primarily this
is a demand-driven opportunity based on our determination that our customers want more
choice."

Expanded-basic customers will be offered the digital tier
for about $8 per month. And someone subscribing to the current five-channel, $16.95 analog
package of Home Box Office and Cinemax services will, for the same price, get 20 channels
from those providers via the digital tier.

Cable One next month will also launch two tiers of
high-speed data services in four markets other than the ones where digital TV will start,
McKenna said.

Using DOCSIS modems in combination with Cisco's headend
cable-modem termination system (CMTS), the company can "throttle" data rates to
suit two pricing schemes: one at $34.95 to "10 times" the dialup Internet access
rate and one at $49.95 for service that's twice that fast, he said.

"We've been operating our own ISP for the past 18 to
24 months and now have dialup in front of 70 percent of our customers," McKenna said.
"So we're comfortable with going on our own into high-speed service."

Cable One is the first announced customer for the Cisco
multiplexer, which Cisco brought to market following its acquisition of V-Bits Inc. last
year.

Together with other Cisco products, the MPEG-2 management
system puts the vendor on track to create more integrated next-generation headend and
distributed networking products, said Larry Grunewald, director of marketing for RateMux
and related products.

"Over time this [V-Bits] technology will permeate
through Cisco products," Grunewald said. "There will be other shoes to drop,
though Cisco won't move out of its areas of core competence."

Cisco is working closely with unnamed strategic partners to
foster the development of more tightly integrated headends. They will allow for operator
management of multiple service streams, dynamic allocation of bandwidth to those service
streams at specific points in the distribution architecture and the mixing of various
service components, such as local ads and Web-based media.

An obvious step in that direction will be closer
integration of control over video streams within the company's routers, Grunewald noted.
"The idea is to create plug-ins for line cards with different functionalities that
allow you to share the transport and trafficking capabilities of the routers," he
said.

This would include the headend-based routing system, in
which the modulation function residing in the router could be used for all services,
allowing one piece of equipment to distribute individualized service streams to the
various hubs in the network.

It could also involve the routers at those hubs as tools
for shifting bandwidth allocations to dedicated services such as video-on-demand and IP
telephony as demand varies from node to node.

Cable One, by moving to a uniform platform geared to this
evolutionary path, will avoid the problem of trying to accommodate the often-incompatible
platforms used for data and digital-video services confronted by many other MSOs moving
toward more integrated means of delivering these and more advanced services in the future.

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