New HITS-to-Dish Service Signs Up R&A, Classic

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R&A Management LP and Classic Cable have signed up as
the first affiliates of HITS2Home, formerly dubbed "Sky Cable," a
direct-to-home satellite-overlay service being offered by Headend in the Sky, officials
said last week.

R&A, formerly Rifkin & Associates Inc., will offer
the service to 80,000 of its subscribers, while Classic will make it available to more
than 70,000 of its homes.

HITS2Home, which was developed by HITS and
General Instrument Corp., allows small cable systems to immediately add 140 channels of
digital programming to their existing analog lineups without rebuilding their plants or
upgrading their headend equipment for digital.

"Small operators have been eyeing digital, but they
could not justify it because of the size of their headends," said Jon Radloff,
director of new product marketing for HITS, which is owned by AT&T Broadband &
Internet Services.

HITS2Home, slated to launch in the third
quarter, is basically targeting systems with 3,000 or fewer subscribers that want to
effectively compete with direct-broadcast satellite.

Essentially, these small systems will be able to offer
subscribers the HITS platform of digital programming without having to install the
necessary headend gear -- which can cost between $60,000 and $100,000 -- to take that
feed.

"We're looking for operators that feel they are
too small to take advantage of the traditional HITS solution," Radloff said.

HITS' digital signal will be delivered to satellite
dishes -- most likely 0.75-meter elliptical dishes -- installed at subscribers' homes
with either pole or wall mounts.

A special new set-top from GI, the "DSR-410-DNA,"
will integrate those digital signals with the system's analog ones, while an
interactive on-screen guide will seamlessly list programming for both the analog and
digital services.

Operators also have the option of branding the service with
their own logos, which can be made to pop up on the navigator's screen.

R&A senior vice president of operations Steve Hattrup
said his MSO has been using the traditional HITS service to the headend in varied markets
since 1998.

"But we've been looking for a digital solution
for our smaller markets for quite some time," Hattrup added. "Our customers in
smaller systems are as interested in this [digital services] as they are in bigger
markets."

R&A plans to offer HITS2Home in systems with
3,000 subscribers or fewer in Pennsylvania, West Virginia, Ohio, Illinois, Indiana,
Missouri and Arkansas, according to Hattrup.

R&A will charge subscribers in those HITS2Home
market the same as it does for HITS in bigger systems -- $11.95 to $13.95 per month for
the digital offerings.

DirecTV Inc. is also offering cable operators a
satellite-overlay service, and Classic has tested that service in some markets. R&A
looked at what DirecTV offered and opted to go with HITS2Home, Hattrup said.

"We can brand this as a cable operator," he
added. "With DirecTV, we're the sales agent for them. I'd rather not turn
my customers over to a competitor."

Classic officials couldn't be reached for comment.

GI will provide authorization services for HITS2Home
through its San Diego operations center, and the vendor will also coordinate an equipment
package that includes the set-top receiver, remote control, satellite dish, dish mount and
all outdoor electronics, according to GI vice president of strategic customer programs
Keith Kelley.

GI is currently working with a number of billing companies
to make sure their systems will be compatible with the interface GI is creating, Kelley
said.

He declined to discuss what GI would charge operators for
the equipment. But one source said the special set-tops are $258, while the dishes will
range from $85 to $95.

HITS is still talking with MSOs about signing up for the
overlay service, Radloff said. Its target is to have 300,000 subscribers for HITS2Home
within the next few years.

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