MediaOne Sets DOCSIS Retail Strategy

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MediaOne Group Inc. said it is moving closer to national
retail availability of standards-based cable modems with Circuit City Stores Inc.'s
planned Richmond, Va., launch of modem sales.

The two companies already have a nine-month retail pilot in
New England under their belts. So the sale of modems and high-speed-data-service
activations in three Richmond stores represents not another trial, but the next step in
the MSO's strategy to transform the gear from a leased product to a self-provisioned item
handled by stores and consumers.

MediaOne is already in negotiations with other national
retailers, and it hopes to launch more markets before the crucial holiday selling season,
according to Paula Giancola, national sales director for MediaOne-Road Runner.

"The New England pilot showed promise. We're using
that to leverage opportunities in Richmond and where we're going to launch next,"
Giancola said. "Our intention is to be nationwide in our retail coverage."

Successfully moving cable modems from a leased product --
which cable operators must buy and carry on their books -- to mainstream
consumer-electronics store shelves has been a Holy Grail for MSOs since the industry began
creating standards to ensure that modems and headend equipment from different vendors
worked together.

Cable Television Laboratories Inc.'s certifications this
year of the first modems to meet the Data Over Cable Service Interface Specification
interoperability protocols opened the door for widespread retail availability.

"We recognize that we are the leaders in this space
and, as such, we are working very hard together to make it work for us," Giancola
said. "We believe that to continue to build this market and to dig deeper into this
market, you've got to be where the people are -- where they buy computers, where they buy
modems, where they buy TVs."

But most U.S. operators have moved slowly, due partly to
sticky negotiations with store chains over such issues as whether retailers should get
residuals for selling modems and service activations.

AT&T Broadband & Internet Services has been
conducting a retail trial of DOCSIS modems with CompUSA in Spokane, Wash., although it has
not yet expanded that trial.

Circuit City, which refuses interviews with trade
publications, said in a news release that it is the first national retailer to sell DOCSIS
modems.

The chain will offer modems from such vendors as 3Com Corp.
and Arris Interactive LLC (Arris' former LANcity product now carries the
"NetGear" brand); network-interface cards for connecting them to customer
computers; and "activation kits" containing a certificate for installation of
high-speed online service by MediaOne-Road Runner.

An initial promotional package of all three items will sell
for $249 after a rebate by MediaOne-Road Runner.

Cable modems will be displayed on special aisle end-caps
featuring either live hookups of the Road Runner service on personal computers or
demonstrations from CD-ROMs. Those CD-ROMs also include databases enabling salespeople to
look up by street address where and when service will be available.

MediaOne said the service initially passes about 20,000
homes, and it plans about 160,000 homes passed by year's end.

The MSO added that its business relationship with Circuit
City could represent a model for what it will do with other modem retailers.

Giancola said Circuit City purchases its own cable-modem
inventory and keeps all sale profits. It also purchases the activation kits from MediaOne,
although she would not say whether the retailer receives residuals from activations.

Circuit City trains salespeople, although MediaOne-Road
Runner collaborates heavily in the course, working with the retailer to create its modem
sales-training manual, sharing content and performing ongoing follow-up visits with store
managers and sellers.

Last September, MediaOne and Circuit City began selling and
leasing proprietary modems and Road Runner service through 17 stores in Massachusetts and
New Hampshire.

MediaOne will also sell modems directly to Richmond
customers, as it has in New England.

After buying the equipment, customers must call MediaOne to
schedule truck rolls for installation and service activation. But the MSO is working to
address the issues that are keeping it from offering a fully self-installed service.

Those include integrating billing and provisioning systems,
and dealing with installation work that must be done inside or outside of the home by
untrained users, such as adding cable outlets.

"MediaOne has a very active project going on to make
that happen," Giancola said, referring to ongoing trials in several undisclosed
markets. "That is the end-game. That is where we want to be."

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