The Regional 'Guinea Pigs’

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Time Warner Cable has always been on the cutting edge of testing and launching new products, and in recent years, the company has picked up the pace. In any given year, Time Warner launches at least two new products. But a few years ago, the company launched a triple whammy — digital service, high-speed data and video on demand, all within a tight window. Fortunately for the MSO’s top brass, plenty of experienced and willing employees were ready to take on the added pressure of serving as a laboratory for innovation.

“There is always pressure to get new things out quickly,” says Mike Hayashi, Time Warner Cable senior vice president of subscriber technologies and advanced engineering. “That is why we have invested in our field personnel, and it is certainly the secret to our success.”

Hayashi and Time Warner Cable chef technology officer Mike LaJoie spend a lot of time picking which particular systems get to test and launch new products and services. It is true that some divisions are chosen to launch new products more often than others. The fact is that several factors are involved that often whittle the options down to the same select group over and over.

“There are some systems that we have that have, over time, built a staff of folk that are better suited to trying new things — that are able to do it without interrupting the success of the blocking and tackling they have to pursue on a day-to-day basis,” LaJoie says. “Those people rise to the top, and you see that that organization is better suited than some others.”

According to Hayashi, where a product gets launched first largely depends on the product itself. “All of our division staff is highly talented and motivated, so technical competence is never a consideration,” he says. “However, the first to go can always count on being the guinea pig, and with the complement of arrows that may be yielded in their direction. Needless to say, the information we gain from that first deployment is the key component for a successful rollout throughout the rest of the company.”

One division historically chosen as a company “petri dish” is Portland, Maine, which has overseen the launches of Road Runner and most recently voice-over-Internet protocol service. Another is Rochester, N.Y., where Time Warner Cable launched circuit-switched telephone service, and it was the first system to be upgraded using fiber optics. The company’s first digital video recorder service was also rolled out to customers there in August 2002.

Not to be outdone, Austin, Texas, is currently testing a local subscription VOD product that the local division has created. And it is in the process of testing an interactive television service. The division is also rolling out the company’s first launch of a video-based instant messaging product for Road Runner customers.

“It seems like systems like Oceanic in Hawaii and Portland tend to get picked quite a bit for new product trials,” says Portland division president Keith Burkley.

“Some say that those systems are chosen because they are off the beaten path,” Burkley says. “There may be some truth in that to a point. Portland may be out of the way geographically. But we’re very high profile. A lot of people have summer homes here, and they visit often. We get a lot of industry and media people here on a regular basis. There may be the perception that we’re out of the limelight, but we’re not as much as people think.”

Each division handles product tests and launches differently, but they all have one thing in common: a desire to be the first to offer a new service.

“Testing and launching new products is seen as an honor,” says Rochester division president Jeffrey Hirsch. Of course, many product launches require the tight-knit cooperation of local management, corporate staffers and vendors, whose products and services are being tested and eventually launched market-wide.

For instance, when the 327,000-subscriber Rochester Division was chosen to test DVRs, corporate employees and a team from Scientific-Atlanta Inc. were ensconced in Rochester for months before the equipment was widely available to customers, Hirsch says.

OUTSIDE ASSISTS

“We worked closely with corporate and with S-A on this project,” he says. “We were all working lock-step even after the launch. Corporate came to us and asked us whether we’d be interested in taking on this project. Then we all sat down and collaborated on rolling the product out.”

The cooperative effort starts before the equipment ever hits the division. “We try to simulate Time Warner’s headends and then go to the designated sites when we launch products in their systems,” says J.T. Taylor, who heads S-A’s marketing and product-testing programs as director of affiliate marketing. “Our teams work with Time Warner’s headend technicians to add the product. In Rochester, we also gave the system 50 DVR boxes to give to employees, and they used the boxes for eight weeks to work out any major bugs.”

For new products like S-A’s DVR boxes, the product manufacturer makes sure it has at least one person at the system every day throughout a trial to make sure all the bugs are worked out before a commercial launch, Taylor says. How much time a vendor spends in the field depends on the technology as well as the staff on hand.

“Historically, Time Warner has led the charge with new services that haven’t launched anywhere else before, so we work closely with them on those projects,” Taylor says. “We’ll take direction from the operator, but it helps to have our perspective on a test or launch as well. And we never just cut the cord once a product is launched. We have a service support group for an entire launch process and co-op marketing program. After launch, we’ll slowly retreat our people as the systems get more comfortable with where things are in the launch process.”

Operators agree. Often times, the added manpower from the vendors and Time Warner are necessary to make a new product launch go smoothly. When the Portland division was chosen to test and launch VoIP, representatives from corporate and from various vendors involved in the project “parked themselves in Portland,” Burkley says.

“I’d say that people from corporate were here at least 75% of their time for months. We had some people doing double-duty here with the Line Runner project [the predecessor to the company’s current VoIP service]. We didn’t hire incremental support staff to handle the business until February 2003.” That’s when the service officially launched — several months after the trial began.

During the VoIP trial and launch, vendor Cisco spent more time in Syracuse, N.Y., than in Portland because Time Warner chose to put a soft switch there that would eventually handle VoIP traffic for several divisions in the region, Burkley says. Nonetheless, vendor participation was imperative for a smooth launch of the service, he says.

The amount of time a vendor spends at a system during a product test and launch depends significantly on the technology and equipment being tested, the operators and vendors say.

AUSTIN’S ITV TEST

Time Warner’s Austin division, which counts some 303,000 customers, is currently in the process of testing a new ITV application designed by Plano, Texas-based software development firm BIAP Systems. Customers will eventually be able to access an ITV menu that will enable them to navigate through a series of games as well as several news and information channels. For instance, Time Warner digital customers will be able to get personalized weather forecasts according to ZIP codes. The system has also created an application whereby customers can access their children’s soccer team Web sites, Kinney says.

The Austin division has been working on this application for almost a year, although the project kicked into high gear about six months ago. “This product didn’t come in a box so it’s taking longer to get off the ground. BIAP had a concept to provide these services, and we’ve worked with them to turn it into a product that actually works,” Kinney says. “Other products we test are already pre-packaged and ready to go. We just to have to implement them. Those projects don’t take as long to get off the ground.”

The complexity of a product has a lot of to with how long it takes to debut it, Hayashi says. “Launching VoIP across the company is different from adding a new guide portal,” Hayashi says. “As an architect of technology, we try to anticipate our future needs and try to design and deploy a platform to which various applications or services can be deployed very quickly.”

“However,” he adds, “there are no textbooks that can instruct you on how to adequately invest in an infrastructure for a yet-to-be-defined future. I think we have been fortunate with a leadership that allows us to innovate as well as encourage taking risks.”

Hayashi says Time Warner has deployed major products including digital video, high speed data and voice services within a 12-month window. Incremental applications, particularly soft-based applications, should be as easy to launch as a new programming network, he says.

“Are we there today?” he asks rhetorically. “Probably not. But with programs such as OCAP [OpenCable Applications Platform] and DSG [digital signaling gateway] we are certainly headed in the right direction.”

True to its decentralized nature, each Time Warner Cable division handles new product launches differently. The Austin division, for example, has a special operations team dedicated to overseeing the testing and launch of new products within the framework of the existing management makeup. The Portland and Rochester divisions generally give existing staffers direct and additional responsibilities when testing and launching new products.

“New product launches just get added on top of what our employees do every day,” Hirsch says of the Portland operations. “We know we have to keep adding and rolling out products, and our people know they have to handle the load. But our folks have a history of having a 'Let’s go’ attitude. And it’s not like we don’t work closely with corporate or our vendors. We have plenty of resources to help with tests and product launches.”

Austin’s special operations team gathers regularly to oversee the implementation of new products into existing divisional operations, Kinney says. The special team develops procedures and processes that must be put into place in order for a new product or service to be launched and offered to customers successfully. They work closely with different department heads to make sure every facet of the operation is on the same page when it comes to testing and launching new products.

For instance, line personnel must be trained to install and sell new products; engineers must know what technical ramifications a new product might have on the plant or headend; and the marketing department needs to know how to sell the service or product. The special operations team not only coordinates the operational aspects of the launch, it also serves as the liaison between vendors and corporate, Kinney notes.

“There’s always a goal that corporate has in mind when they come to us with a product test,” Hirsch in Rochester says. “They rely on our market knowledge and expertise to reach that goal. We tell them how we think we can do it, and we execute it for them. But it’s a free-flow of ideas on how to get there. Even after a product launches, we work closely with our vendors and with corporate to make sure everything goes smoothly.”

MARKET DYNAMICS

Management makeup is just one component in how Time Warner Cable’s corporate staff picks specific product launch sites. Geography and market demographics also play a big role, LaJoie says.

For example, the Portland division, which serves 110,000 customers, is broken up into 182 separate communities with a mix of urban, suburban and rural demographics. “It’s a mini replica of the country,” Burkley says. “Those demographics just make it easier to test products and eventually plug them into other parts of the country.”

Portland is an interesting division, LaJoie says. “It’s a relatively small division, but they’re very deeply penetrated. Over time, they’ve built up a great relationship with their customer base, and they have a very astute staff. They’ve been together for a long time, and they have an appetite for new things.”

Austin is also a good market to do product trials, maintains Kinney, who is used to being involved in new product launches having been Time Warner Cable’s division president in Portland before moving to Austin in 2001.

“It’s a good market because customers are tech savvy, and it’s one of the top five connected communities in the nation,” he says. “There are many customers who are enthusiastic about testing new products, and that is helpful when it comes to launching new services.”

He also notes that the Austin team has the same interests as their customers — “and they have a strong desire to be the first division to test and launch new services.”

Kinney almost laughs when he says, “We’re always testing something. They haven’t all been home runs. Some would even be considered bunts. We’ve done a lot of 'under-the-radar screen’ stuff. Corporate management knows what we can do safely without making much noise. But we have launched several products that have eventually been rolled out throughout the company.”

ROCHESTER ROLLOUTS

Other divisions share similar experiences. For example, Rochester has long been a test bed for Time Warner. The system was the first to employ fiber optic technology and began offering circuit-switched phone service almost a decade ago. The product hasn’t been rolled out throughout the company’s other divisions, but it has been relatively successful in Rochester.

Portland has also had its share of washouts. When the division tested the Line Runner phone service four years ago, it was designed to be a second-line service for customers already subscribing to Time Warner Cable’s Road Runner broadband Internet access product. (Second line refers to phone service that doesn’t have universal services such as 911 emergency calling options.)

Time Warner chose Portland to test the product partly because it was one of the first divisions to launch Road Runner and had a healthy subscriber base with which to work as it tested a VoIP product, Burkley says.

Yet the initial Line Runner product was short-lived. Time Warner Cable shelved the project until two years ago, when it decided to readdress IP technology. A small team of corporate engineers and marketers evaluated VoIP for six months to determine whether the product had any kind of future at Time Warner. Because the original VoIP project had its genesis in Portland, coupled with the division’s history as a launch pad for new services, it made sense to continue the testing there, Burkley says.

VoIP service officially launched in Portland in February 2003, but it was really June of that year before all the bugs were worked out, he says. VoIP service is now being launched in several Time Warner Cable markets. And Time Warner chairman Richard Parsons told investors earlier this year that the service will be a major focus for the company moving forward.

TOP DOWN, BOTTOM UP

Time Warner Cable’s product launches, according to division presidents, come in two directions: top down and bottom up. The VoIP product launch was a top-down project. But plenty of product launches start at the local level and are eventually expanded to other divisions.

“One of the most dramatic and successful things that have been done in Portland have been done completely on our own,” Burkley says. “For instance, the team here developed a commercial high-speed data product. The division was, without a doubt, the innovation center for business-centric HSD. There was no corporate support for this. When Ken Fitzpatrick [corporate senior vice president of commercial development] came on board, he used Portland’s product as a model for the rest of the company.”

A similar development is occurring in Austin, which is creating a local SVOD product as an adjunct to its existing VOD offerings. LaJoie likes the entrepreneurial spirit at the division level.

“Sometimes we have guys that just go do stuff. That’s actually good,” he says. “Good ideas come from all directions. We’re interested in people’s ideas out in the field. They are closest to the customers, and they are also closest to the realities of operating a cable system. A lot of good ideas come from there.”

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