Road Runner Shows Fight In Cincy Broadband Battle

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Most MSOs launched cable-modem service with little digital-subscriber-line competition in their market. Time Warner Cable in Cincinnati didn't have that luxury.

Three years ago, when it launched Road Runner, it faced competition from Zoomtown, a DSL offering that had already been launched by popular telco Broadwing Inc.

But Road Runner has battled its way into a leadership position in the market by pushing a combination of higher speeds and lower prices. The addition of service from ISPs EarthLink Inc. and America Online's AOL Broadband last October goosed the market even more.

It's been the addition of testimonial ads from former Zoomtown subscribers that have helped to solidify the cable offering's position, though, said Time Warner of Cincinnati vice president of sales and marketing Dennis Holzmeier.

"We saw a considerable increase when we made some clarity between the two services," he said. Those ads carried the message that Road Runner offered three times the speed at the same price.

Three years ago, Time Warner launched Road Runner to its base of 340,000 subscribers — 18 months after Cincinnati Bell had launched both DSL and dial-up service. Road Runner's $39.95 per month price quickly forced Zoomtown to lower the $50 per month it charged at launch.

Both companies offered free installation, and thanks to intense early marketing efforts, within one year high-speed penetration hit the mark that most cable markets reach after two years.

"The total broadband curve is growing much faster here than anywhere else," Holzmeier said.

Though Holzmeier won't release exact subscriber figures, he said Road Runner has surpassed Zoomtown "by a considerable margin."

Zoomtown counts about 55,000 DSL subscribers.

2 OUT OF 3 CONNECTS

Road Runner, AOL and EarthLink combine for 65 percent of high-speed-data connections, Holzmeier estimated, while 35 percent of subscribers choose DSL.

Overall, high-speed penetration in the market is believed to be greater than 20 percent.

Both EarthLink and AOL launched aggressive broadband marketing plans in January of 2002. Both companies use combinations of direct mail and pop-up ads to entice their existing dial-up subscribers to broadband.

Road Runner had high-speed-data displays in about 10 shopping-mall locations. That number has soared to more than 20. EarthLink and AOL also use local Circuit City Inc. and Best Buy Stores Inc. outlets to market high-speed data.

"There's a lot more awareness in the marketplace," Holzmeier said. "There has been an acceleration" in penetration, "but I can't go into how much."

Throughout Time Warner, the numbers seem to be working. The MSO added 248,000 modem subscribers in fourth-quarter 2001, 278,000 in first-quarter 2002 and 271,000 in the second quarter of this year.

There haven't been huge shifts in share between Zoomtown and Road Runner because various marketing offers are matched by the other side.

"We are getting more coming our way with our superior product," he said.

SUBS IN ADS

In Road Runner's latest testimonial campaign, subscribers talk about how their cable-modem service is much more reliable than DSL. The data-over-cable service also boasts more substantial local content, the system said.

Holzmeier plans to add two more ISPs later this year. That adds to CSRs' training load. But CSRs also become more sophisticated and benefit from the training conducted by outside ISPs.

And outside marketing efforts from EarthLink and AOL also educate consumers, making it easier for CSRs to help them with whichever service option they desire.

In Columbus, Time Warner has introduced Road Runner and four additional ISPs in newly acquired and newly-rebuilt areas over the past year.

The combination of multiple ISPs, word-of-mouth and the fact that consumers in these outlying areas of Columbus are familiar with high-speed data has helped penetration jump past 14 percent in those communities, executives said.

And "we're still seeing growth" five years after launch, said Dave Tabata, manager of marketing for Road Runner in Columbus.

The MSO recently completed an instant-installation campaign for high-speed data.

"It was definitely successful," Tabata said. Installation numbers were up 70 percent over an average week, the MSO said.

Even in mature markets, cable systems can generate growth, Tabata said.

"We developed benefit statements to match the needs and wants of subscribers," he said. Those benefits center on speed and efficiency.

"We're seeing more and more families" subscribe to the service, Tabata added.

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