ISP Channel Retailing Deal Leads to Self-Provisioning

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ISP Channel's new retailing relationship with nationalchain RadioShack is going beyond cable-modem sales and into tests of self-provisioningsystems aimed at eliminating installation truck rolls.

Along with its recently announced agreement to beginselling high-speed Internet-access service at select RadioShack outlets, ISP Channel willuse Cisco Systems Inc.'s "Subscriber Registration Center" (CSRC)self-provisioning solution in pilots at several of those stores.

Both the retail and provisioning efforts mark an aggressiveeffort to place ISP Channel in front of potential subscribers -- who can view or try outthe service firsthand -- and to cut acquisition costs by promoting self-installation andenlisting retailers to carry the ball of selling modems and service activations.

"Normally, we spend $250 [per subscriber] forsubscriber-acquisition costs," said Ian Aaron, president of ISP Channel'sparent, SoftNet Systems Solutions Inc. "If we can lower that, it's a big win forus. Our cost per subscriber acquisition is lower through our RadioShack channel than it isdoing it ourselves."

The self-provisioning tests bring to fruition plans thatISP Channel -- a provider of cable-modem systems and service to small and midsizedoperators -- outlined at the National Show for accelerating its rollout of standards-basedcable-data services.

RadioShack stores involved in CSRC pilots will havecomputers linked with the end-to-end system, which works with a lightweightdirectory-access-protocol server and specialized registrar modules allowing the user -- asalesperson or shopper -- to configure broadband service, provide customer information tothe operator's billing system and register and activate service.

"We're going to create an HTML [HyperText MarkupLanguage] custom interface so in the store, people will actually be able toprovision," Aaron said.

The setup will work best with systems that ISP Channel hasdeployed based on the cable industry's Data Over Cable Service InterfaceSpecification standards, which are intended to ensure that any brand of certified modemworks with any qualified cable system.

Aaron said about 50 of the 62 systems ISP Channel hasdeployed so far are DOCSIS-based, using Cisco's DOCSIS-qualified headend equipment,along with General Instrument Corp.'s certified "SURFboard 2100" and"2100d" modems.

RadioShack will eventually sell subscribers modems out ofits own inventory -- an arrangement most major MSOs have been eyeing as the goal of DOCSISstandardization.

Earlier this year, RadioShack entered a broad retailrelationship with Thomson Multimedia. Thomson's planned"store-within-a-store" presence will eventually include its standards-certifiedcable modems, but Aaron said the modem brand would largely be irrelevant in DOCSISmarkets.

"If it's a two-way system, we don't care ifit's GI or Thomson -- it's a DOCSIS product," he said. "RadioShackdoesn't care about the modem as long as it precipitates a sale."

Aaron would not detail the financial relationship betweenthe retailer and ISP Channel. However, he described it as similar to those betweencellular-phone dealers and their service providers, with the retailer having a margin onthe hardware and a payment for service activations, and the service provider chipping infor promotional costs.

"They've got a formula that says within atransaction, they need to make a certain amount," Aaron said. "We worked withinthose parameters. Within those parameters, we get an efficiency in subscriber-acquisitioncosts."

The RadioShack relationship may be one of the most advancedcable-modem-retailing pilots in place so far. Overall, the nation's biggestconsumer-electronics-store chain has more than 7,000 outlets, serving about 80 percent ofISP Channel's current markets.

After limited rollouts in a handful of markets such asOxford, Miss., and Lake Havasu City, Ariz., RadioShack will follow shortly with rolloutsin all other ISP Channel markets in the United States and Puerto Rico.

ISP Channel late last month also launched service in 12 newsystems, bringing it to 62 total cable systems passing about 2.4 million homes. Thecompany said it currently has more than 7,000 customers.

Besides a nearly ubiquitous presence in ISP Channel'smarkets, RadioShack also brings to the table video-service expertise that its salespeoplehave gleaned dealing with direct-broadcast satellite service and equipment.

"It's going to give us retail presence with astore that's open 70-plus hours a week," Aaron said. "And because of theirrelationship with DirecTV [Inc.] and PrimeStar, they know this space. They can talk cableand, for the first time in the local market, it gives the cable operator a place tocompete side-by-side with DirecTV."

RadioShack is also expanding its installation role throughparent Tandy Corp.'s AmeriLink Corp. installation-services subsidiary -- another costsavings to the cable operator.

A strong retail presence gives ISP Channel leverage withcable operators as it competes with Excite@Home Corp.'s @Home Solutions. The bigcable Internet-service provider is aiming for the same small to midsized cable operatorsas ISP Channel.

@Home Solutions late last month announced four newcable-affiliate relationships that bring it to more than 1 million cable homes passed, thebulk of those affiliated with its founding MSO partner, Falcon Communications Inc.

@Home also has a national merchandising relationship withCircuit City Stores Inc., although Aaron said ISP Channel's systems tended to not bein Circuit City markets, which are clustered in primary cities.

"The reality is that @Home Solutions is really@Home," Aaron said. "They're under pressure to support the big guys, so thequestion is: How do you support the little ones? The difference is that our business isreally geared to that market."

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