Itasca, Ill., Mating Dance Lures Strange Bedfellows

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Valentine's Day came early to consumers in Itasca,
Ill., the unlikely objects of intense affection from suitors in the cable-television and
direct-broadcast satellite businesses.

Itasca declared its willingness to be wooed last month,
when the village government announced that it would pay $100 rebates to the first 100
residents who signed up for DBS service.

The village later abandoned that plan, after incumbent
cable operator AT&T Broadband & Internet Services objected that it was "a
misuse of public funds" to promote one multichannel-video supplier over another.

But DirecTV Inc. went ahead and offered the rebate on its
own. And EchoStar Communications Corp. offered Itasca residents free Dish Network hardware
and six months of free programming if they agreed to pay $19.99 per month for 12 months of
its "America's Top 40" package.

EchoStar is an old hand at this game of love and war: It
once offered residents of Boulder, Colo., free satellite dishes after the city chose not
to renew a Tele-Communications Inc. franchise.

Eager to show that it remains lovable despite those
displays of desire, AT&T Broadband claimed last week that more than 1,100 residents of
the Chicago suburb declared their love for cable the most tangible way.

In the two weeks leading up to Sept. 20, residents either
signed up for cable service or bought premium channels, pay-per-view offerings and other
add-on services.

Pat Keenan, a spokeswoman for AT&T Broadband in Itasca,
estimated last Thursday that new subscribers accounted for about 200 of the 1,100, with
still more coming in from recent direct-mail and telemarketing efforts.

Given its 70 percent cable penetration of the 3,200 homes
passed in Itasca, Keenan said, this translated into strong sales from the remaining 30
percent of the market. DBS has more targets of opportunity, she pointed out.

The cable operator's sales included 86 made during a
two-day consumer fair initiated by the Village of Itasca as a way to put cable and
satellite providers on an equal competitive footing. That event turned into "a
showdown of sorts," as DirecTV spokeswoman Barbara Chen put it.

Of those 86 sales, AT&T Broadband regional vice
president Bill Conners said in a prepared statement, 18 households "switched back to
cable" after having been satellite customers.

EchoStar spokesman Marc Lumpkin begged to differ. He
claimed that the MSO's boasts were "not true," crowing, "We were
easily the clear winner."

EchoStar staffers, located in a booth next to the
MSO's, saw no one enter AT&T Broadband's flashy vehicle, leading Lumpkin to
conclude, "AT&T didn't sell one cable subscription on those two days."
EchoStar conceded about 15 sign-ups for DBS rival DirecTV.

Even if AT&T Broadband sold 86 subscriptions, Dish sold
more than twice that number at the two-day event, Lumpkin said. EchoStar had no
significant sales beyond the fair since its Itasca selling effort just began shortly
before that, he added.

EchoStar drew the longest lines at that fair with its
sign-up offer, he claimed.

EchoStar officials said DirecTV made its own Itasca offer
more attractive on the second day, and it sold an estimated 10 subscribers, doubling its
first-day total.

DirecTV refused to be drawn into the quarrel. A spokeswoman
said her company wouldn't detail how warmly their $100 bounty offer had been
received. But she did observe, "EchoStar gave away so much" with its offer.

She also quoted regional sales director Chris Hayes as
being "extremely pleased with the sales activity and interest" in Itasca.

After two weeks of what he described as the satellite
companies' "no-holds-barred effort to market their services," Conners said,
consumers ultimately decided that "early savings quickly get eaten up by higher
month-to-month [DBS] costs later on."

He also claimed Itasca residents were enthused about
AT&T Broadband's high-speed Internet service, "coming soon to our customers,
but not available from satellite companies in the foreseeable future."

The MSO added that prospective customers seemed to like the
availability of local broadcast stations affiliated with the "Big Four"
television networks, as well as PBS, availability of which varies among satellite
providers.

Moreover, AT&T Broadband called consumers'
attention to the fact that its local franchise fees -- about $50,000 per year -- go to
Itasca to support city services, schools and the like.

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