TCI, At Home Battle PR Troubles

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Tele-Communications Inc. and At Home Corp. last week found
themselves confronting another groundswell of bad publicity surrounding their handling of
issues related to high-speed data services.

The high-speed data service continues to be plauged with
what appears to be an isolated but persistent series of technical glitches in Connecticut.
Beyond that, TCI missteps in revising its subscriber data service agreement, poor handling
of customer service complaints and rumors of deteriorating relations between At Home and
its affiliates have began generating largely negative press from several high-profile
media outlets.

The Los Angeles Times, San Jose Mercury News and cable
network ZDTV and online news service C/Net have all profiled @Home's problems recently.

The parties were acting on all fronts at press time to
control the damage, especially with regard to the new subscriber agreement, which was
generating cries of outrage from subscribers who viewed it as a threat to their online
privacy.

"We're working on either amending or deleting the
language that has been so troublesome," said TCI spokeswoman LaRae Marsik.

The troubling language pertained to TCI's statement of its
legal right to collect data on subscriber usage patterns. Many customers read the note as
saying the company would monitor their online activities and use the information as it saw
fit, including selling it to other parties.

When questioned about the meaning of the new agreement on
ZDTV, TCI spokeswoman Katina Vlahadamis said the intention was to use information in the
aggregate rather than on an individual basis, but that the company reserved "the
right to do that," according to an online account of the interview run by ZDNet. Both
ZDNet and ZDTV are units of Ziff Davis.

ZDNet reported that more than 200 users had posted
statements saying they would disconnect from the service within hours of the ZDTV report.

Marsik stressed it was all a misunderstanding, with no
intention on TCI's part to change its policy.

"We're not in the habit of selling mailing
lists," she said.

While the company's legal interests require that it convey
what its rights are, the new version of the agreement undergoing preparation at press time
would take "the most conservative track we can while assuring our customers that we
will uphold the privacy with which they've entrusted us," Marsik said.

In Connecticut, customers who are dissatisified with the
spotty quality of their @Home Network/TCI.Net service were planning a "low-key"
demonstration this past Saturday at a TCI marketing event in Bristol.

"We were told the problems were being worked on and
that they'd keep us informed, but we haven't seen any improvements and they haven't been
returning my calls," said Scott Greczkowski, the leader of an online forum of
Connecticut @Home customers.

TCI.Net vice president Susan Marshall lauded Greczkowski as
a reliable conveyor of subscriber concerns and experiences. She said the company had every
intention of updating the user group on actions taken by a team of At Home technical
experts who were dispatched to research the problems two weeks ago.

At press time, Greczkowski reported he had received a
message from TCI telling him a senior executive would be in touch before the weekend.

Nonetheless, Greczkowski's and other Connecticut users'
complaints about responsiveness mirrored issues raised by customers elsewhere, including
those in Fremont, Calif., who sparked negative press coverage last December over their
inability to get help when serious service problems developed.

Last week, the San Jose Mercury News reported continuing
dissatisfaction among TCI.Net customers who said they were routinely spending 40 minutes
to an hour on hold waiting for responses from the national help desk in Denver.

"I see us making a lot of improvements, but we still
have work to do," Marshall said.

She noted her unit and @Home were working out new
approaches to handling trouble tickets to ensure more timely analysis by technicians and
better communication between the two groups.

As for performance problems, Marshall acknowledged the
company had "got a little behind the eight-ball" in addressing ongoing expansion
needs as a result of the distractions surrounding the soon-to-close acquisition of TCI by
AT&T Corp.

In Connecticut, the companies thought they had fixed the
problem of slow data rates with installation of DS3 (45 megabit per second) links between
the At Home regional data center in Hartford and regional headends in late January.

But users reported their modems were still operating at
subpar speeds a good share of the time, prompting the subsequent visit by the At Home
"Tiger Team."

The technicians made some adjustments in router load
management, which Marshall said had not been previously optimized for the Connecticut
market. And At Home is negotiating peering agreements with "off-net" entities
that are generating a lot of traffic from At Home users in hopes of alleviating key choke
points, she said.

Users last week were still reporting data rates that fell
to dialup rates or even lower on occasion and were also experiencing a new phenomenon --
loss of "sync" with the network which was causing their computers to freeze up.

Officials at At Home Corp. said they were mystified over
what might be causing this new problem but that they would look into it.

Marsik acknowledged that some of the problems with
customers have to do with expectations created by marketing pronouncements that promise
data speeds "up to 100 times faster" than dialup. No matter how well TCI's and
@Home's networks perform, there's nothing they can do about the slowdowns common to
traffic traveling over the Internet and other "off-net" routes, she noted.

"The marketing challenge is how to sell to customers
what is a very powerful and desireable product while pointing out its limitations,"
she said.

Complicating matters is that cable providers are trying to
accommodate the demanding expectations of early adopters and power users while bringing
online a much broader base of casual users whose performance requirements are far less
demanding.

Despite these tensions, TCI and @Home executives refused to
legitimize talk -- amid the flurry of bad publicity -- that relations among the partners
were beginning to fray. They asserted a Los Angeles Times account on this point was deeply
flawed and took issue with rumors of serious divisions that were circulating within cable
industry circles.

In particular, a reported blowup of affiliate executives at
a recent meeting with @Home executives over reputed plans to exploit @Home's acquisition
of the Internet portal Excite by giving the portal a high-profile position on @Home's home
page simply didn't happen, said Matt Wolfrom, a spokesman for @Home.

"There was an open discussion about options on how to
integrate Excite, which is what the acquisition is all about, but no one was presenting a
final decision on the matter," he said, adding, "I question the agenda of any
person leaking information to the L.A. Times."

Clearly, though, a sense of missed communications and
resentment at perceived high-handedness on the part of @Home has fueled the negative
publicity.

In one case in point, @Home CEO Tom Jermuluk told reporters
following news of the Excite acquisition that @Home would use any means, including telco
high-speed access lines and wireless broadband, to reach markets where it doesn't have
cable connections. That statement that stirred concerns among industry executives and that
was disowned publicly by TCI president and chief operating officer Leo J. Hindery Jr.

There are also instances of missed communications within
MSOs between the teams driving data services and other departments. That happened recently
when TCI chief technical officer Tony Werner learned he hadn't been informed of the
problems in Connecticut after having taken the TCI.Net unit to task over the handling of
the Fremont problems.

"We fell down there," Marshall said.

But, whatever communications issues remain to be worked
out, it is clear that the problems @Home and TCI have encountered are largely functions of
growing pains, with the technical performance side contributing remarkably little to the
overall state of affairs. Despite the publicity surrounding the problems in Fremont and
Connecticut and the readiness of online users to share their griefs,

relatively few of the 330,000-plus subscribers have voiced
grievances, attesting to a relatively smooth-running operation in the ramp-up stage.

"I have to say, we're not seeing any pattern of
problems in our territories," said Richard Rasmus, director of network systems for
Comcast Corp.'s online operation.

The comment was echoed by officials at other affiliates,
making clear that human rather than technical performance remains the key challenge on the
way to winning public confidence in services delivered by @Home and its affiliates.

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