Interactive Channel a Hit on Early Digital Boxes

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Colorado Springs, Colo. -- Century Communications
Corp.'s commercial test of Source Media Inc.'s Interactive Channel is coming to
an end, and executives here said the results are encouraging for both analog and digital
cable environments.

On April 1, the commercial test of Interactive Channel to
about 1,000 subscribers in Century's 105,000-subscriber system here is set to end.

Tom Peters, senior vice president of Interactive Channel,
said during a demonstration that the a la carte service, for which Century subscribers pay
$6.95 per month, is a profitable option for cable systems deploying digital set-tops like
General Instrument Corp.'s DCT-1000 and DCT-1200 units, because it offers advanced
interactive features that won't be available otherwise until GI's DCT-5000 hits
the market next year.

"Conservatively, I think that there's at least a
$1 billion opportunity out there," for interactive services like impulse shopping,
pay-per-view, news, music and other advanced features, he said.

Subscribers to Interactive Channel currently interact using
an analog set-top produced by Source Media, but the company's wares also work on
GI's analog and digital set-tops, as well as on Scientific-Atlanta Inc.'s
Explorer 2000 line, said Hank Cicconi, vice president of engineering for Interactive
Channel.

For their $6.95, subscribers can tune into 10 different
areas, all accessible from an alphanumeric remote control. The services -- culled from
national content developed in Source Media's Dallas headquarters and with local
content partner The Colorado SpringsGazette -- include news, a guide,
lifestyles, games, education, entertainment and yellow pages.

Ginny Greene, interactive-media director for the Gazette,
said cinema information and fresh news are "by far" the most popular areas on
the newspaper's portion of the service.

In a room adjacent to the newsroom, Greene showed how the Gazette's
eight-person Web team augments print information with news and video to produce a
TV-centric information suite.

"I believe in the product -- there's a lot yet to
be learned, and we've skinned our knees along the way, but this was a great
experience for us," Greene said.

Another popular area on the Gazette's area on
Interactive Channel: a "crime-stoppers" listing that shows still photographs of
area criminals.

Peters said the high usage patterns of the Colorado Springs
subscribers reinforces the company's mission: More than 70 percent of the 1,000
Interactive Channel users tuned in weekly, and 20 percent tuned in daily. Of the latter
category, subscribers used the service an average of 2.5 times per day, for 10 to 11
minutes each time.

"In the cable business, those usage numbers are
unbelievable," he said. "The numbers say that there's eyeballs out there --
this drives straight to the heart of the new revenues associated with being
addressable."

Going forward from Colorado Springs, Peters said the
channel's carriage agreements with Century, Cablevision Systems Corp. and Marcus
Cable should land it in other markets this year. The Century trial is winding down because
of the MSO's upcoming switch to a GI-based digital environment, and the service will
likely move to another Century system, he said.

In Colorado Springs, subscribers don't seem eager to
disconnect, said Scott Heller, regional engineer for Interactive Channel. Heller lives
here and oversees day-to-day operations.

"There hasn't exactly been a stampede" to
disconnect, he said, noting that the MSO was required to notify subscribers of
channel-lineup changes 60 days before the change is made.

"We accomplished everything that we wanted to do here
-- we proved in," concluded Peters. "Going interactive is a process that will
take place over time, and not overnight."

Over the next couple of months, Interactive Channel plans
to unveil its new digital suite, which adds Internet and e-mail capabilities as part of an
agreement last year with Spyglass Inc.

On GI's and S-A's digital boxes, the service will
be configured as "a zero-cost download," Peters said, which does not require a
special chip or other hardware modification.

Based on market research conducted by an outside firm
contracted by Source Media, PowerTV Inc., Tele-Communications Inc. and GI, Peters is
convinced that the addition of an interactive suite as part of a digital package is what
consumers want.

That research, which polled 600 randomly selected people in
20 markets, showed that 59 percent of them will buy digital video services if interactive
services are included, he said, with "total price inelasticity" between price
points of $4.99 and $9.99 per month.

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