TCI Kick-Starts Two-Way Plans

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Denver -- Tele-Communications Inc. willshift into high gear with its two-way plant activation this year, but it will focus heavymarketing for high-speed-data service @Home Network on its existingmarkets.

At its annual meeting with financial analysts here lastweek, TCI president and chief operating officer Leo J. Hindery Jr. said the MSO plans toactivate the return path in 26 percent of its cable-serving area by year-end. Whencompleted, that translates to 3 million to 3.5 million homes that will be ready foradvanced services.

Firing up the upstream, or "return path," ofcable systems is critical to the operation of advanced services like high-speed data,because without it, signals can only be delivered in one direction: from the cable headendto the home.

Hindery said TCI's goal is to light up the reverse path in59 percent of its plant by the end of 1999. By the end of 2000, about 90 percent of TCI'snetworks will be capable of carrying bidirectional signals, he asserted.

But until TCI systems on the two-way activation list mapmore logically with demographic information about homes with personal computers and onlineservices, the MSO is likely to focus its @Home efforts on the San Francisco Bay area andSeattle, executives said.

"We were trying to get to 1 percent [penetration] in10 markets, but we concluded that we'd like to do 10 percent in one or two markets,"Hindery said of a goal to serve between 85,000 and 100,000 @Home customers by the end ofthis year.

"We're becoming more fixated on subscribers [to@Home]," he continued, noting that two-way activation plans will add 26 potential@Home-ready systems to the list this year.

Marvin Jones, chief operating officer of TCI unit TCICommunications Inc., said about 490,000 subscribers are connected to two-way networks thatare equipped to receive the @Home service right now.

Jones said TCI will decide over the next few weeks whetherto actively market @Home in two-way-ready markets, or to simply make the service availableto any would-be "early adopters," while sharply increasing the marketing heft insystem areas where the service is already offered.

Jones also said that in Fremont, Calif. -- the first TCIsystem to receive the @Home service -- penetration rates are nearing 8 percent.

"This is a very popular [service]," Hindery said."We get demands for it all of the time, but unfortunately, we can't do everythingimmediately."

Still, many observers wondered if cable operators like TCIwill be able to sell high-speed modems beyond the equivalent of the so-called truckchasers of cable's early days.

John Malone, chairman and CEO of TCI, said the slow pace inrolling out @Home last year was partly rooted in the lack of standards-compliant modems inthe marketplace.

"The good news is that we should have [standardized]modems by this fall, in deployable volumes," he said.

TCI.NET, the TCI division handling the @Home rollout,issued a request for cable-modem proposals late last year, and so far, he has narrowed thelist to about one-dozen contenders, said Tony Werner, executive vice president ofengineering for TCI.

Specific vendor selections are likely to be announced atthe National Show in May.

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