Ex-Cellular Marketer Watson Starts Over at Comcast Cable

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Ex-Cellular Marketer Watson Starts Over at Comcast Cable

As cable faces more competition than ever, Comcast Cable Communications Inc. has
recruited a veteran of the hotly competitive wireless-phone industry as head of marketing.
It didn't have to look far, tapping the former president of Comcast Corp.'s
Comcast Cellular division, Dave Watson, as executive vice president of sales and marketing
and customer service. He started recently, after Comcast sold its cellular unit to SBC
Communications Inc. Last week,
Multichannel News marketing editor Monica Hogan
asked Watson to address some of the challenges ahead as Comcast rolls out new services and
forges into retail. An edited transcript follows:

MCN: How will your experience in cellular telephony help you with marketing cable
products and services?

Watson: I'm hard-pressed to think of too many more competitive industries than
wireless. My evolution in the wireless world went from a duopoly in the past four years
into a hypercompetitive frenzy.

It really helped me quite a bit with prioritizing what's most important to your
customers, delivering upon your strengths, focusing on your strengths, quickly responding
to customer issues and making sure you're one step ahead of your competition.

MCN: How will your retail experience help?

Watson: Hopefully, quite a bit. In wireless, we had very strong relationships with
consumer-electronics business partners, and we also built a lot of our own retail stores
and kiosks.

New products reinvigorate lots of things, like how you think about distributing your
products and services. Digital TV and high-speed data, in particular, are great to be
showcased in a retail environment. And one of the things that we're looking at right
now are probably a half-dozen retail kiosks that will be up and running by year-end 1999.

We will begin to test our own direct distribution of these services in selected
marketplaces where it makes sense. Retail is a very important long-term strategic area for
the cable industry, and it's something that we're going to continue to look at.

MCN: How closely do you plan to be involved in training the retail sales staff once
your products are sold at retail?

Watson: There are a couple of different models that you could look at following.
One model would be that they're our kiosks within a consumer-electronics company.
They're our folks, and we would pay them. For example, in wireless, we had one-dozen
kiosks at Wal-Mart [stores] with our employees. We essentially paid rent to Wal-Mart.

That's one model, but it's not the only model. If you do work with another
consumer-electronics employee base, it's critical that they understand your product
and that they set the right level of expectations for the customer. You do need to spend a
lot of time with them if that's the model that you choose.

MCN: Do you expect to have to subsidize digital-cable boxes or cable modems in much the
same way that cellular phones were subsidized?

Watson: Finally, wireless has begun to pick up on the fact that customers are
willing to pay for the right value, and now, you'll see that wireless customers are
paying completely for handsets, whereas several years ago, there was a subsidy.

I've often felt that customers will pay based on the value of the service. We have
not finalized any of the [retail hardware] models, but it is our hope that there is not
going to be a lot of that similar activity.

MCN: Isn't that going to be a challenge, given the fact that cable subscribers are
accustomed to leasing their hardware, rather than buying it upfront?

Watson: Well, it can be. It could require a shift in terms of thinking. Again,
it's probably a little early to be thinking about this, especially in the whole area
of digital TV. The industry hasn't really completed our thoughts in terms of how that
would work.

MCN: Have you created any customer-loyalty programs?

Watson: In the systems, we have varying programs that enable the customers to
participate in very local loyalty programs. They can get certain discounts at area vendors
and neighborhood establishments.

But we have not ruled out a nationwide loyalty program. We did that in wireless, and
it's something that we're going to explore for the cable group.

MCN: If you did it on a national level, what would some of the incentives be?

Watson: There's so much that we have right here that you don't have to
look out very far: things like pay-per-view, exciting products like digital. So you
don't have to do very complex things, like mileage programs.

MCN: What do you see as your biggest competition today?

Watson: I'm overly paranoid regarding competition, so it's hard for me to
limit it to just one. Satellite is very real, and they continue to have a strong presence
in the marketplace. And we see in certain areas where there is overbuilding activity --
with Ameritech [New Media] in the Midwest and Knology [Holdings Inc.] in the Southeast --
those are very real competitors, as well.

Some of it depends on the region, but practically everywhere, DBS [direct-broadcast
satellite] is a viable competitive threat.

MCN: Is there anything that you're doing specifically to combat that competition?

Watson: The focus again is: What do our customers want? What are their expectations
from us as a service provider, and in meeting their needs?

The best thing that we can be doing is a fairly aggressive rollout of these new
products and services. Pushing hard on digital is important to us, and then, over the next
couple of years, the slightly more aggressive rollout of the high-speed-data service will
be important, as well.

MCN: Are you going to be bundling various products?

Watson: If the customers want that. We don't think that in and of itself is a
silver bullet.

Clearly, if customers want the simplicity, and it gets to the other point that I
mentioned -- ease of access and easy to do business with -- then you should be prepared to
deliver that kind of bundle.

MCN: How long before you start offering bundled billing?

Watson: We're going to be testing that probably this third quarter. I believe
we're going to start in Michigan.

MCN: Do you envision discounts with the bundles?

Watson: The early research that we have is that customers aren't necessarily
looking for that: They're looking for simplicity. With the value of the products --
at least from what we're hearing early on -- each product sort of stands on its own.

MCN: What are your priorities when you launch new services?

Watson: The analogy that we like to use is that with digital TV, we're
probably well ahead of the speed limit. If the foot on the pedal is not at the floor,
it's getting pretty close.

With @Home [Network], we're pretty much doing the speed limit, maybe even slightly
less. In regard to digital TV, we're more aggressive. We're pushing harder and,
with @Home, we're rolling it out fairly consistently, but we're not moving as
aggressively.

MCN: Were there bundling opportunities in the cellular-phone business?

Watson: There are some -- for example, with paging, long distance and things like
that. But it really was based on what the customers wanted: Sometimes they did, and
sometimes they didn't.

As I've learned, many customers just do not want it. They're real happy with
the ongoing service they have right now, so you have to match your investment based on
what the reality of the marketplace is.

MCN: How do you determine that?

Watson: You have to keep constantly asking the question. You keep coming back to
it, and you keep testing it. The great thing about a decentralized model is that we can go
out and work with systems and ask customers and test different concepts.

MCN: Will your bundling offer vary from market to market?

Watson: It could. It clearly gives us the opportunity to at least test different
ideas and get meaningful data back, versus doing it throughout the country. We can go to a
market and get good insight on a bundled concept without having to do it nationwide.

MCN: Do you use database marketing to tailor promotional messages to your customers?

Watson: We use billing-legacy information based on who some of the customers are.

However, if you look at the cable industry, there hasn't been the historic need to
do too much of it. If you look at the levels of what customers are spending, between the
lowest amount the customers pay and the highest amount, there's not a ton of
difference.

In the new world, with new products, everything changes. Customers all of a sudden are
going to be spending considerably more with you, and you need to understand that. You need
to understand their needs in regards to multiple digital outlets, multiple PCs [personal
computers], potentially multiple telephones.

A customer that you once thought was a fairly predictable kind of customer is going to
change quite a bit.

MCN: Some customers have already seen cable companies come and go. How do you position
your message to cable customers who may have become cynical with recent ownership changes?

Watson: You deliver. And once you get a new product in their hands and demonstrate
that it's real, that the value proposition is real, that it's simple and that
we're easy to do business with, then you break through it.

But you've got to back it up. A nice advertising campaign is not going to work.
Our best solution is delivering these products.

MCN: Do you have any advice for someone from outside of the industry considering making
a move to cable?

Watson: To me, it's a very personal question, because obviously, I just did
it. The SBC folks had asked me to stay.

What it came down to was that this is just an extraordinary time in which this industry
will reinvent itself in the customers' eyes and in our own employees' eyes and
through this steady wave of new products and services. We're going to get good at
being able to communicate and roll out these products.

To me, as a marketer, it's an incredible time to think about a very mature
business that is prepared to reinvent itself. It's a great time.

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