Somers to Ops: Attack DBS with Interactivity

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Boston-Sensing that direct-broadcast satellite providers are starting to feel the effects of digital cable, AT & T Broadband CEO Dan Somers urged cable operators to keep up the pressure with the launch of interactive-television services.

"I think we, as an industry, lost to DBS on innovation," Somers said during last Tuesday's general session at the Cable & Telecommunications Association for Marketing's CTAM Summit here, referring to how DBS companies soared while many cable operators continued to offer 40-channel packages. "We can't afford to lose this next round."

Somers noted with some glee that DirecTV Inc. reported this week that its subscriber- acquisition costs increased during the second quarter. He also said cable dish-buyback programs, like one AT & T Broadband recently launched, are effective. "You can, I think, smoke [DBS] out," he added.

Somers said AT & T Broadband has five priorities in today's market: being responsive to customers; offering consistency in packaging; innovation (through launching interactive-TV services such as video-on-demand); partnerships; and motivating employees.

On consistency, Somers said, AT & T Broadband will begin to implement genre-based programming tiers nationwide this fall, as reported in Multichannel News May 29. He added that genre tiers would simplify the ordering process.

Somers also called on other cable operators to open up their pipes to competing Internet-service providers. "We must make this happen for our consumers and constituencies," he said.

This summer, AT & T Corp. will change the name of recently acquired MediaOne Group Inc. systems to AT & T Broadband, Somers said. "It's an expensive but mission-critical proposition," he added.

AT & T Broadband will be the third name current MediaOne subscribers will see in three years. The company's cable systems were branded Continental Cablevision Inc. before merging with U S West Media Group in 1997.

Somers also stressed the importance of keeping employees happy, noting that in June, the MSO offered stock options to all employees, including customer-service representatives.

"The only way we can win this war is on the front line," he said, referring to surveys that found that "customers who believe our employees are enthused see better service."

On cable telephony, Somers said AT & T Broadband expects to meet projections of signing up 400,000 to 500,000 subscribers by the end of the year. In its 66,000-household Aurora, Colo., system, the MSO penetrated 22 percent of the market within six months of launch, he added.

On content investment, Somers said AT & T wants to invest in Internet-content companies and "next-tier digital" companies. "Our desire is not to invest in very traditional content such as networks," he told moderator Charles Ellis, executive vice president at Time Warner Cable.

Afterward, Somers told reporters the MSO will begin to deploy advanced Motorola Broadband Communications Sector "DCT-5000" digital set-tops this fall, adding that the company may begin distributing the set-tops through retail outlets next year.

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