Small Ops Hold Their Breath for Y2K

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Small, independent cable operators are feeling the same
Y2K-bug sting as their larger MSO counterparts, but with less manpower and fewer dollars
to ward off year-end glitches in their operations and services.

Heavy dependence on outsourced vendor software, hardware
and equipment, mixed with a lack of access to early Y2K information, has contributed to
the creative and self-reliant strategies many smaller operators are deploying in their
dealings with Y2K.

Although most smaller cable operators are confident that
the year-2000 date change will have little effect on their operations, anxieties remain
about the diligence of local power utilities toward Y2K and whether operators' vendor
equipment and software will indeed be compliant as promised.

"We don't have the staff or expertise to deal
with the Y2K issue like the big MSOs do, so we really have to rely more on what our
vendors tell us. But if we hadn't talked with our vendors, we'd be a lot more
nervous. I think our comfort level around Y2K is very high at this point," said
Patrick Knorr, datavision director for Sunflower Cablevision, a 30,000-subscriber system
in Lawrence, Kan.

The core of the Y2K problem rests in older computer
equipment and software that may encounter problems when the date changes to the year 2000,
which they may interpret as the year 1900, causing system crashes or other trouble.

Smaller operators, Knorr said, don't have the
resources to check each piece of hardware and software to ensure that they are
Y2K-compliant, even though vendors might have given assurances to that effect.

"The biggest difference between us and a large MSO is
that they can cross-check vendor equipment," Knorr said. "We don't have
that luxury. But we're confident in the attention vendors have given to Y2K."

Most smaller operators, including Sunflower, said
they've taken the precautions needed to avoid any major Y2K problems or complete
system shutdowns, and vendors have been helpful. Much of their concern, however, rests
with power outages and Mother Nature.

"Ice storms and cars taking out utility poles will be
more likely to cause outages," Knorr said. "So we have power-system backups for
several hours. But whether you're a large MSO or small operator like us, it's
'hold your breath and hope for the best.'"

Earlier in the year, smaller operators were doing both and
getting stressed over their lack of Y2K information from vendors and cable organizations.
In the past several months, though, that has changed, according to Matt Polka, president
of the American Cable Association.

"Getting information from vendors early on was a
significant problem. But over the past several months, vendors have been more forthcoming,
and CableLabs [Cable Television Laboratories Inc.] has been very helpful in getting more
Y2K information to the small-operator community," Polka said.

Recently, the flow of Y2K information has increased via a
special section on CableLabs' Web site, where operators can download specific vendor
information about Y2K.

"For truly small systems, it's never been a
problem because their equipment and hardware isn't Y2K-associated," Polka added.

Overall, Polka is "cautiously optimistic" about
small cable's chances of weathering Y2K. "There will be minor glitches, but not
an apocalypse, and on Jan. 1, 2000, cable will go on, particularly at small, independent
systems," he added.

Getting through the Y2K scenario, however, has forced many
smaller operators either to rely on hardware of questionable compliance or to begin costly
upgrades by purchasing new equipment they may not have planned for, adding pressure to
their bottom lines.

"We have some ad-insertion equipment that definitely
is not Y2K-compliant, so we expect some problems there. The commercials will run, but
we'll have problems verifying data," said Claudia Richards, general manager of
Cable TV of the Kennebunks, a 10,000-subscriber system in Maine.

Buying new equipment prematurely to avoid widespread Y2K
shutdowns has put a strain on many smaller operators' finances, as well.

"Some upgrades we wouldn't have done, but in
other cases, it forces you to do upgrades that you probably should have done anyway, like
replacing dumb computer terminals with PCs. I think this is making us more
efficient," said Chris Dyrek, vice president of CableAmerica Corp., an
80,000-subcsriber MSO based in Phoenix.

Areas such as internal accounting systems at smaller cable
operations are also of concern. "We've converted to a Y2K-compliant system, but
we still have concerns, and we will have more people available like engineers, technicians
and even the owner of the company," Richards said.

At the end of the day, however, Richards is confident in
the Maine system's ability to move through Y2K, mostly because of its recent upgrade.
Yet she has no illusions about Y2K and the potential problems it could bring.

"We were in the process of rebuilding the system, so
it's all fiber, with new electronics in the field, new headend equipment, software
and billing systems," she said. "We've updated file servers and work
stations and gone through all computer problems, and we will have new software, along with
new trafficking and billing equipment, running by year's end. We could have done more
about Y2K if we devoted several people's time, but we just couldn't afford to do
that."

Affording Y2K is another issue for smaller operators, and
the issue of debt differs greatly from their large MSO brothers.

"There are lots of smaller operators with lenders that
want to know that our service and cash will flow through the new year. Some have demanded
copies of our Y2K plans, and they won't take no for an answer. In some cases,
it's gone too far," said Bob Gessner, general manager of Massillon Cable TV in
Massillon, Ohio.

Gessner pointed to three key Y2K issues his system had to
address: first, ensuring that the headend and the entire plant has power; second, that
customer-service, phones, computers and addressable equipment are active; and third, that
employees are available and contingency plans are in place.

Fortunately for Massillon Cable, most of its
mission-critical equipment does not operate with time-based microprocessors. And being
small means that its two systems are much more manageable, Gessner added.

"We don't have to worry about the big integration
issues, like offices talking with each other. And we'll all be here on New
Year's Eve to fix the alarm system in case it fails, or if the furnaces go out. But
customers are what we care about," he said.

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