Small Ops Look for New Revenues

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Anaheim, Calif. -- Faced with increased competition and
consumer expectations, small cable operators across the country are exploring ways to
bring new value to their customers and additional revenues for themselves.

"The good news is, digital is here," said Pat
Thompson, vice president of small-systems brokerage for Daniels & Associates, speaking
at a panel at the Western Show here last week. "And the bad news is, digital is
here."

She explained that many small operators simply don't
have the resources to launch digital-video services.

Michael Pandzik, president and CEO of the National Cable
Television Cooperative, said there are more than 3,900 systems in the United States with
fewer than 250 subscribers apiece. He added that more than one-half of NCTC members own
just one cable system.

Over the long haul, Pandzik predicted, the small operator
isn't likely to survive without some form of digital-video service.

Anderson Eliason Cable Group solved the dilemma by
partnering with direct-broadcast satellite provider DirecTv Inc. to offer a combination of
analog-cable and digital DBS service.

"We're trying to blend these two technologies and
give consumers a better service," said Ken Anderson, CEO of Anderson Eliason.

Anderson admitted that the margins on DirecTv service are
lower than what the operator enjoyed with its analog services, but he expects that by
offering the increased channels, the company can expand its customer base.

In Michigan, Bresnan Communications was able to upgrade
many of its small cable systems to advanced analog by linking a number of systems together
with fiber and serving them with the same headend.

"We're in a period of great change and great
challenge," said Joe Lawson, vice president of marketing for Bresnan, "and the
way to win this thing is to think outside of the box."

Lawson said it's not enough to launch a new digital
service; the service must also be actively sold to consumers.

Instead of pushing multiplex-premium services, Bresnan
decided to promote a "Quantum Basic" digital tier for $8.95 per month. Lawson
said research showed that Bresnan's customers considered "basic" to be a
good value.

Bresnan's digital tier includes Starz! and Encore, but
they're not promoted as premium channels. The tier also includes eight additional
basic channels, plus access to pay-per-view.

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