Ops Must Speed Rebuilds for Retention

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Chicago -- While affinity programs can help to increase
customer loyalty, cable operators need to address fundamental business issues -- including
channel lineups, pricing and customer service -- if they want to keep their subscribers
from leaving for direct-broadcast satellite and overbuilder competition.

The primary reasons why DBS subscribers buy dishes is to
get access to more channels, especially sports and movies, SkyREPORT editor Evie
Haskell said. That's true even though studies show that the average viewer might watch
only 11 channels.

"Different people have different favorite channels
that appeal to them," Haskell said. "The more channels you can offer, the more
likely you are to hit everyone's hot buttons."

At Mediacom LLC in Gulf Breeze, Fla., the operator decided
to step up its plant upgrades from a five-year schedule to two-and-a-half years so that it
could introduce digital-programming tiers more quickly to address competition from DBS.

"You have to have the programming to compete,"
Mediacom senior vice president of operations James Carey said.

AT&T Broadband & Internet Services' TCI Great Lakes
Inc., based in Deerfield, Ill., faces competition from not only DBS, but also Ameritech
New Media and several municipal overbuilders across its Midwest region.

Preparing for competition before an overbuilder gets to
market goes a long way toward controlling churn, TCI Great Lakes president Steve Bryan
said, adding that the vast majority of subscriber losses to overbuilders occur within the
first three to six months of their entry into the market.

"Any time you have a disadvantage in programming,
you're going to lose a lot of subscribers," Bryan said. The time to complete a
rebuild and enhance customer service is before competition comes in, he added.

Each Mediacom system employs a customer-retention
specialist with the power to do whatever it takes to win back a customer who wants to
disconnect for DBS, Carey said, even if that means buying back the DBS hardware.

Bryan said win-back programs are less successful than
retention efforts. With win-back programs, "you're too late in many cases," he