IN WITH THE NEW

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Los Angeles -- Cable's new landscape was plastered all over
the Los Angeles Convention Center at last week's Western Show, from the explosion of new
interactive services to the effects of industry consolidation.

After selling his cable systems to AT&T Corp., Liberty
Media Group chairman John Malone found himself the star of a panel session featuring
widget-heads from Cisco Systems Inc., Replay Networks Inc. and Yahoo! Inc.

Charter Communications Inc. CEO Jerald Kent, the only MSO
executive featured in the opening session, had to explain his relationship with RCN Corp.,
a cable overbuilder and traditional nemesis.

Just two months after quitting his post as president of
AT&T Broadband & Internet Services, Leo J. Hindery Jr. was also featured in the
opening session, joining Time Warner Inc. vice chairman Ted Turner and USA Networks Inc.
chairman Barry Diller, two trade-show regulars. But this time, Hindery represented
Internet company GlobalCenter Inc., where he is CEO.

Less than two years after quitting MediaOne Group Inc.
after the MSO's headquarters moved from Boston to Denver, Robert Sachs made his first
Western Show appearance as president of the National Cable Television Association.
"I've experienced the effects of consolidation," he reminded listeners.

Sachs opened up last Wednesday's general session with a
call to cable operators to fight open access. He reminded them that although cable is
moving ahead of the game with deployment of digital services -- he estimated that there
will be 5 million digital set-top boxes in homes by the end of the year -- the industry
has to fight harder than ever to stave off the competitive threat.

Sachs also warned cable operators to resist the lure of
hefty rate increases to help offset the cost of deploying new services.

"We must be disciplined about rate increases, even
when there's ample cost justification," Sachs said. "We must moderate rate
increases to ensure that the progress we've made in price deregulation is never
reversed."

The open-access debate spilled over into the panel session,
which included Bloomberg L.P. president Michael Bloomberg, Diller, Hindery and Turner.

Turner agreed that open access and competition from
direct-broadcast satellite and telephone companies are threats to cable, but he said the
game is still cable's to lose.

"Cable is holding the distribution high ground,"
he said. "The game is ours to lose. We have to fight open access, competition with
satellite operators and competition with the telephone companies. If somebody wants AOL
[America Online Inc.], we're not shutting anybody out. It's our wire, and we'll do what we
want with it."

Turner stressed that despite the additional competition,
cable is in the best position at the moment. "There is no question that overall, this
business is getting more competitive," he said. "It's going to be tough from
here on out. Those operators that do the best job servicing their customers, they're going
to have to do a really good job of promoting and service. I think cable has the best shot
at winning."

As the open-access debate heats up, so, too, will the
consolidation trend in the industry, Diller said, adding that as more and more companies
merge, the competitive environment will dissipate.

"To the extent you don't have people able to freely
compete against one another, the blade gets duller," he added.

Hindery disagreed that further consolidation would stifle
competition, but he added that more threatening are the disparate agendas that many new
industry participants are bringing to the table.

"Disparate agendas are going to change this
industry," Hindery said. "We have, in consolidating the industry on the
distribution side, opened up the opportunities for disparate agendas to rise to the
surface. I think it is going to be hard for the industry. There are others in the industry
who have suggested that to meet their national telecom agenda, they will select noncable
strategies in selective markets, while pursuing cable strategies in others. That has to be
understood and reconciled. It's going to be hard on the emotions of the industry and the
camaraderie of the industry. "The 'Summer of Love' is over. It's clearly over. And
that's too bad, perhaps."

One example of those disparate agendas is Charter chairman
Allen's investment in cable overbuilder RCN through his Vulcan Ventures Inc. investment
vehicle. Kent spent part of the panel session defending the investment, which he
characterized as unconnected to Charter.

"The industry is more fragmented," Kent said.
"AT&T has their own interests, we have our own interests at stake. RCN, from my
perspective, is as much a premiere competitor in residential telephony that also happens
to provide video. When you look at our plans on telephony and our plans in terms of
deploying a broadband portal, when you overlay RCN and Charter, you have the makings of
creating a national footprint."

Hindery also warned about video-streaming services, which
could wind up taking away the very customers that cable has spent so much time, effort and
money to keep. "If the Pandora's box opens, the demons are multiple," he said.
"Streaming video is in that box."

Streaming video was also a hot topic on the show floor. USA
Network plans to take its programming library and sell it through the Internet using
streaming video, said Kevin Unangst, lead product manager for Microsoft Corp.'s
streaming-media division.

"I fully predict that within a couple of years, I'm
going to be able to get streaming video on my cell phone," Unangst said. "The
technology is moving that fast. Instead of getting a little text message for the CNBC
update, I'm going to be able to watch a video that comes down."

Programmers may be able to use streaming video to deliver
dedicated cable networks directly to television households, possibly eliminating capacity
constraints, Unangst said. But it's still not clear if the video will be stored on a
set-top or on servers at a system headend, he added.

Some exhibitors said traffic appeared slower than in years
past, but the California Cable Television Association said it expected attendance to
exceed last year's 30,200 mark despite the fact that the convention was held the week
before Christmas.

"The dates will never be this late again," CCTA
vice president of industry affairs C.J. Hirschfield said.

The number of exhibitors jumped slightly, from 455 to 460,
and total exhibit space jumped from 251,700 square feet in 1998 to 288,194 this year. But
some attendees said cable operators -- the people they're trying to reach at the trade
show -- were harder to find.

"That's the consolidation going on in the
industry," Liberate Technologies president and CEO Mitchell Kertzman said. "But
there's more of us selling to them."

The CCTA declined to break out the number of cable
operators that attended the show, but Hirschfield noted that more than 1,000 members of
the media attended this year's confab.

"It's true that we don't see as many general managers
possibly as we used to. But every MSO is very well represented at the corporate level.
These are the people who are making a lot of the decisions now, so it's not as if the
operators aren't in attendance at the show," Hirschfield said, noting that Comcast
Corp. president Brian Roberts was the only major MSO head to pass on the event this year.

She also emphasized that exhibitors are no longer trying to
solely reach cable operators at the trade show. Exhibitors are also trying to tout their
brands to Wall Street analysts, educators and government officials, she said.

"I think that programmers are not just looking at, 'Is
the head of programming for AT&T coming to my booth?'" Hirschfield said.
"Rather, there are other things that are happening at a show like this that I hope
are of great value to them."

Still, AT&T Broadband executive vice president of
programming Madison Bond remained one hot commodity at the Western Show. Asked if he gets
"mugged" while walking the floor, he said, "Yeah."

Bond, who has the power to make or break networks with the
reach of AT&T Broadband's systems, said he scheduled "less than 10" meetings
with programmers last week.

"Certainly, with consolidation, there are fewer
players. Whether that affects how the show is conducted will remain to be seen," Bond
said, adding that the trade show still "serves as a vital platform" for
deploying new programming and technology.

The show proved thin on any big news from programmers.
Oxygen Media did announce that it was getting $122 million from investors LVMH Möet
Hennessy Louis Vuitton and Europ@web, but it didn't have any new carriage deals to talk
about.

And neither SoapNet, part of The Walt Disney Co., nor
SoapCity, owned by Sony Corp., had any news about who will be carrying them when they
debut next year.

The only affiliation deals unveiled at the show were FX's
agreement with Time Warner Cable and National Geographic Channel landing hunting licenses
from AT&T Broadband and DirecTV Inc. for its launch in the second quarter.

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