Charter Turns Around Fort Worth Woes

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Charter Communications is rapidly making believers out of
some skeptics in the Fort Worth, Texas, area.

The St. Louis-based MSO, which is owned by Microsoft Corp.
cofounder Paul Allen, has already begun reversing the service-related headaches that it
inherited with Allen's acquisition of Marcus Cable last year.

"We still get complaints from people who feel that
they're not getting the service that they deserve," Fort Worth assistant city manager
Pat Svacina said. "But that's the exception now, and not the norm."

Attention to details and delaying new offerings in favor of
delivering better cable service have been the keys to the turnaround.

"Instead of selling bells and whistles, they're making
sure that the cable is operating the way that it should," Svacina said. "They're
doing that even though they have to be losing customers."

Charter officials made no bones about what they found when
they took control of the Marcus systems this past October.

"Probably the worst operating systems we've run
across," said Dave Barford, Charter's senior vice president of operations.
"Customer service was poor, they were in the middle of an 860 [megahertz] rebuild,
and there were rate increases and changes in the lineup. Basically, they were
overstimulating the customer base with all of that activity."

Barford responded by bringing in a "SWAT team" of
Charter executives.

"At a normal, well-run system, these people wouldn't
be necessary," he said. "But we were in crisis mode."

The new team launched a series of initiatives designed to
communicate with customers while reducing the flood of complaints pouring into the local
service center.

In addition to informing customers which areas would be
upgraded next, Charter curtailed its overall sales-and-marketing activity in order to
reduce runaway call volumes at the Fort Worth service center. It also implemented new
procedures to prevent double-billing -- another source of irate phone calls.

Closer to home, salaries came under the microscope. After
discovering what its employees were being paid, the company was obliged to budget an
additional $1 million just to attract and retain qualified workers.

"We were competing against local fast-food chains,
because there's virtually no unemployment there," Barford said.

TURNAROUND SPECIALIST

To handle the day-to-day chores, Charter brought in Davis
Wareheim as regional vice president of operations. An 18-year industry veteran, Wareheim
built and managed the cable system in Richardson, Texas, and he was later credited with
turning around several properties owned by Tele-Communications Inc. in Florida and
Georgia.

With Charter's early improvements already in place,
Wareheim said his biggest challenge has been "getting the word out to consumers who'd
been turned off" by Marcus' service, while improving frayed relations with local
governments.

"Customer service is resources and people," he
said. "But it's also focusing on details. It's making sure that customers understand
how the service works. It's a waste if you have to go back because you didn't explain the
service while you were there."

Another detail involved boosting the certification process
for some 112 customer-service representatives, thereby ensuring that customers' questions
will be answered.

The company even went so far as to call the cities every
day to see how its efforts were going over.

"They finally had to tell us to stop calling because
they weren't getting any complaints," Barford said.

With an eye on the future, an image-awareness campaign is
being readied for when the systems officially change their name to Charter, and discounted
cable service will be offered to those who are willing to give the MSO a chance to prove
itself.

"But it's a slow process," Wareheim said.
"It's going to take neighbor telling neighbor."

TRANSFER THREATS

Not surprisingly, Charter's most significant improvements
have come at the Fort Worth system, whose 70,000 subscribers make it the largest of the 44
Marcus franchises inherited by Charter.

It was also the most problematic.

During the first nine months of 1998 alone, the city fined
Marcus $25,000 over service-related problems, citing everything from outages related to a
massive $116 million rebuild, to failing to meet telephone-response standards.

Worse yet, by the time Charter took control of the system
in October, Fort Worth had joined a coalition of 20 area communities that was threatening
to hold up the transfer of 100,000 Marcus customers if the MSO didn't agree to amend its
franchises to include tougher customer-service guidelines.

By the end of the fourth quarter, however, city officials
were ready to concede that Charter was doing more than just talking about improving
customer relations.

According to a quarterly report recently delivered to city
officials, customer calls to the Fort Worth telephone center averaged 4,000 per day in
December -- a decrease of 23 percent in just 60 days.

At the same time, the number of calls answered within 30
seconds had climbed to 99 percent -- up from 85 percent in October, and well above the 90
percent standard required under federal minimum customer-service rules.

The number of service calls required was also down in
December, topping out at 2,430, compared with 4,794 two months earlier. Outages totaled 74
for the month, or a drop of 30 percent.

"There were a lot of problems here in '97 and
'98," Svacina said. "Charter can't turn them all around in just three months.
But they came in and said, 'This is what we're going to do,' and that's what they've
done."

In its most novel service initiative, Charter placed a
representative in City Hall with instructions to take and resolve telephone complaints
that had previously been routed to increasingly angry city officials.

"They removed the city as the middleman," Svacina
said. "They're short-stopping these calls. Their attitude is, 'We should be handling
the problems that we create.'"

Svacina said Charter has further demonstrated its desire to
avoid the problems that occurred on Marcus' watch by negotiating uniform customer-service
standards with the local coalition, which is expected to respond by transferring its
franchises to Charter in the coming weeks.

NOT ALL EFFORTS WERE SUCCESSFUL

The company's efforts haven't all met with success,
however.

In nearby Southlake -- a community of 20,000 residents
located directly west of the Dallas/Fort Worth Airport -- local officials said Charter
failed to adequately communicate to customers that a rebuild initiated by Marcus would
require subscribers to rent new set-top boxes for the first time.

The result was hundreds of complaints from consumers in the
high-end community, many of whom are paying for several converter boxes, as well as the
cost of the upgrade.

"In some cases, the bill has increased by as much as
50 percent," said Kevin Hugman, Southlake's director of community services.
"You've got a lot of angry people coming home and finding that the channel lineup has
changed, and that they're paying for boxes that they never had before. It's hard not to
feel like you're getting ripped off."

Hugman said consumers have also complained about
installations performed by service technicians that were seemingly "in a hurry."
Charter addressed this problem through the use of two-man teams -- one to perform the
work, and the other to educate the subscriber.

"I think that the City Council feels like Charter is
certainly trying," Hugman said. "They honored the council's request to halt the
rebuild until they communicated with the customers. The council felt that this was a step
in the right direction. But it also said it was going to watch to see what happens."

Fair enough, Wareheim said.

"You can talk until you're blue in the face," he
added, "but the big fix is to make sure that you have a quality product."

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