Road Runner Sprints Ahead Toward TV Service

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Road Runner is aiming for mass penetration, with plans to
make standardized cable modems available in all of its markets by mid-2000 and to make
voice communications a component of several content applications before then.

Sources reported that the venture is also exploring new
service to the TV -- something rival Excite@Home Corp. has already put on its agenda.

These developments come amid growing realization among
cable operators that TV-oriented high-speed-data initiatives like America Online Inc.'s
forthcoming "AOL TV" pose new challenges to the traditional PC-only strategy of
cable-data services.

The aggressive expansion agenda at Road Runner suggests
that despite uncertainties surrounding AT&T Corp.'s planned takeover of Road Runner
partner MediaOne Group Inc., people running the service remain focused on doing what must
be done to capture a mass base.

Road Runner executives refused to comment on the failure of
their corporate overseers to find a CEO or the prospects for finding one, but they
insisted that the vacancy at the top is not holding them back.

Over the past several months, the venture has sought to
sustain a strong growth pace through such measures as introducing new broadband content,
expanding its advertising efforts with a New York-based sales force, supporting customer
self-provisioning service and implementing sophisticated network-management and
customer-care systems.

"We've really focused on building an operations
infrastructure that will enable growth to double or more than double every year,"
Road Runner senior vice president of operations Stephen Van Beaver said.

The venture -- with backing from Time Warner Inc.,
Microsoft Corp., Compaq Computer Corp. and the Advance/Newhouse partnership, as well as
MediaOne -- has more than met that goal in 1999. It grew from about 200,000 subscribers to
close to 500,000 today. It now has more than 32 affiliate systems, and it has launched a
business initiative to complement efforts in the consumer market, Van Beaver said.

Two years ago, the leaders of Road Runner and what is now
Excite@Home declared that they intended to create a nationwide integrated backbone for the
cable industry that would meet its high-speed-data and other broadband communications
needs.

But they were never able to come to terms on technical and
management-control issues, leaving open the question of whether cable would ultimately be
able to create the infrastructure it needed to accomplish its goals.

Today, both services working independently have developed
advanced infrastructures that, despite technical differences, have put the industry in a
position to blanket the country with integrated broadband services should the two entities
decide to work together.

Road Runner has built a national infrastructure that links
eight regional fiber networks to a carrier-class network-operations center in Herndon, Va.
There, somewhere between 3,000 and 4,000 routers, servers and other network elements are
monitored and controlled to ensure dependable performance across the affiliate base.

Van Beaver said the infrastructure will advance another
step starting in January, when affiliate systems using proprietary modem systems will
begin adding second channels supporting delivery of services to customers who buy or lease
modems built to the DOCSIS (Data Over Cable Service Interface Specification) standard.

"We expect DOCSIS modems to be available in all of our
affiliate systems by June," Van Beaver said. "The big thing with DOCSIS is
self-provisioning. That's what we're focusing on."

Van Beaver also pointed to enhanced content as a major
factor in the pace of Road Runner expansion. "The level of user experience has
improved significantly," he noted.

The extent to which Road Runner hopes to square that
experience with mass-market tastes is mirrored in the titles of its content executives,
including vice president of programming Karl Rogers.

"Our titles reflect the fact that the broadband medium
is more than just putting up a Web site and offering fast access," Rogers said,
noting that content is organized "in channel-lineup form."

"In the past eight to 10 months, we've transitioned
the customer experience to one that is more of a rich-media, CD-ROM-like experience,"
he added. "We now have relationships with [more than] 90 program suppliers, a lot of
which are cable-TV networks."

For example, Nickelodeon has built a "true CD-ROM
experience for kids" using graphic landscapes to pull the users into story-telling
experiences, director of programming Rebecca Paoletti said.

She pointed to "high, high video" quality in the
service developed for Road Runner by Fox Sports and to full-length music videos, 3-D game
and chat environments and the highly sophisticated use of interactive media by the
networks operated by Rainbow Media Holdings Inc. as other examples of a content
transformation.

The service is also poised to introduce voice chat and
other voice applications in the first quarter of next year, Paoletti said, adding,
"Voice is going to be an important part of the Road Runner experience."

Road Runner, like Excite@Home, is also exploring the
possibilities of delivering its service to the TV as it develops ever more
entertainment-oriented content for the mass market. But unlike Excite@Home, Road Runner
appears to be looking for ways to exploit "Road Runner TV" via the existing base
of digital set-tops in two-way systems, rather than waiting for the DOCSIS-equipped
OpenCable set-tops the "@Home TV" service was designed for.

Bob Benya, vice president of Road Runner's Power Media
Services unit, which spearheads the advertising and electronic-commerce efforts of the
venture, said the new "Power Window" advertising box -- featuring animation and
rich graphic messages, often with one-click connections to video segments -- is
"almost a precursor to Road Runner TV."

Rather than operating in a rectangular window using the
traditional Web-page techniques of HTML (HyperText Markup Language), the Power Window is
square, with advertisements running on a rotating basis.

Some Power Window ads come with built-in browsers that keep
the user at the home site as the window expands to something on the order of half-screen
size to run the user-driven applications, Benya said. He described this as the approach
Road Runner wants its advertisers to use.

A second way the window is used is to link the user to an
advertiser's page that has been co-branded with Road Runner and is hosted on the Road
Runner network. "The Power Window can also link the user to the advertiser's home
site, but that's our least-used and least-recommended application," Benya said.

As for how this facet of the expanding Road Runner
advertising effort dovetails with Road Runner TV, officials refused to discuss their
thinking about TV access. "There's nothing concrete that we can talk about,"
Paoletti said.

Sources indicated that Road Runner officials are exploring
means to expedite TV-based access to the service via new technology that would locate the
end-user computer functions at the headend, rather than at the set-top.

This would allow users to gain access to Road Runner
content without having to own a computer or to use a cable modem, relying instead on the
two-way modems that are built into current-generation digital set-tops.

Several vendors are showing systems designed for this type
of application at this week's Western Show. "There seems to be strong interest in
this technology at Road Runner," said one vendor official, asking not to be named.

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