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Competitive Market Activity. Robert Gessner President, Massillon Cable TV, Inc. System Information. Massillon Cable TV. Two counties in NE Ohio 68,250 Homes Passed 46,900 Homes Served 43,325 Video 20,675 2-way Digital HH 14,500 HD HH 33,325 HSD 15,075 Phone Lines.

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Competitive market activity

Competitive Market Activity

Robert Gessner

President, Massillon Cable TV, Inc.



Massillon cable tv
Massillon Cable TV

  • Two counties in NE Ohio

    • 68,250 Homes Passed

    • 46,900 Homes Served

    • 43,325 Video

      • 20,675 2-way Digital HH

      • 14,500 HD HH

    • 33,325 HSD

    • 15,075 Phone Lines


Massillon cable tv inc
Massillon Cable TV, Inc.

  • Two service areas

    • Consolidated headend

      • Redundant Fiber Interconnect

  • All-Digital/No-Analog

  • Typical HFC Plant

    • 1,500 plant miles

  • 750 MHz

  • Competitors

    • DBS

    • AT&T U-Verse (60%)

    • Embarq (35%)

    • Frontier/Verizon (5%)



Wayne County

Wooster Vicinity

Stark County

Massillon Vicinity

Why?!?!


Service area observations
Service Area Observations

  • Wayne County has lower video penetration

    • The result of more rural demographic and consistently greater activity by satellite providers over the years.

  • Stark County has lower voice penetration

    • AT&T is a stronger competitor than Embarq.

      • AT&T record of consistently better service and lower rates.

      • Active marketing programs

        • Aggressive win-back programs

        • Massive direct mail budget

        • Widely varying offers

        • Low-priced, entry-level service.

    • Embarq has history of lower quality service,

      higher rates and, until recently, a weak

      win-back program.


Status of competitors
Status of Competitors

  • Stark County has more competition is all service types

    • AT&T serves most of the Stark County area

      • Actively building and marketing U-Verse.

      • High recognition due to AT&T overbuild of Time Warner North East Ohio (1.5 million customers in Cleveland, Akron, Youngstown, Mansfield areas).

    • Verizon (now Frontier) serves only small portions of Stark County.

      • Provides data and voice only.

      • Virtually no competitive presence.

  • Wayne County has one competitor

    • Embarq

      • Provides data and voice only.

      • Legacy of United Telephone, high rates and moderate service, coupled with the Sprint/Embarq divestiture allowed us a very open market for quite some time.

      • Recent improvements in Embarq’s efforts.



Past competitive efforts1
Past Competitive Efforts

  • Carefully examined competitive landscape in 2007. Three product lines had different needs:

    • Video – flat to slightly falling penetration to satellite and the prospect of U-Verse required action to maintain our market share.

    • Data –clear market leader. We needed to continue to innovate but could do so from a position of strength.

    • Voice – Growing steadily. Typical bundle marketing was serving us well.


Past competitive efforts video
Past Competitive Efforts - Video

  • Battle for video success framed by HD. Competitors were defining the battleground.

    • Not just DirecTV & Dish. AT&T appearance imminent.

  • We launched our DTV Rollout to minimize the competitive advantage enjoyed by satellite in terms of the “hot item,” HD.

    • Obtained an FCC waiver to use integrated security converters.

    • Developed low-cost DTA (Digital-To-Analog) with no-cost guide.

    • Deployed 100,000 converters in 10 months. Three free per customer.

    • Eliminated all analog video signals.

    • Launched 65+ additional HD signals to reach 95.


Past competitive efforts video1
Past Competitive Efforts - Video

  • Did it work? Don’t know.

    • We lost some video customers due to the requirement of a converter on every set.

    • We don’t know how many customers we did not lose because we launched so much more HD.

    • Finished our project just as the economic recession became big news (Q3 2009).

      • Some level of losses to vacant homes, lost jobs, “right sizing” household budgets, etc.

  • More DTV Rollout Information


Past competitive efforts video2
Past Competitive Efforts - Video

  • Competitive Difference Trade-Off

    • Gave up our competitive difference as “whole house” provider in this effort to equalize our video product with satellite in terms of HD.

    • With analog, consumers have complex decision when considering video providers.

      • They must ask themselves if they want converters on every set. They can choose different providers depending on the answer. That may be an advantage.

      • When all digital, consumers no longer have that factor in the decision. They simply ask whose converters I prefer.

        • Certainly, we can give people converters, but that

          is not the same thing.

    • I will return to this topic later.


Recent competitive efforts video
Recent Competitive Efforts - Video

  • HD/DVR Survey

    • Recent survey of HD/DVR subs (1,500 responses).

      • Despite almost 100 HD networks, they want more.

        • 42% about right, 57% not nearly enough, 1% too many

      • However, when challenged to name HD nets we don’t carry, they have difficulty doing so.

      • Perhaps reached point of diminishing returns, but can we stop adding and lose ground in advertising battle?


Recent competitive efforts video1
Recent Competitive Efforts - Video

  • Availability of HD is working

    • Door-to-door survey team results show customers are aware of broad HD selection even if they don’t use it.

      • 77% are aware we have 90+ HD networks.


Recent competitive efforts video2
Recent Competitive Efforts - Video

  • Same survey showed very high interest in

    • Increased DVR storage space

      • 34% - Always enough storage

      • 37% - Adequate

      • 29% - Never enough storage space

      • Planning launch of 1000GB SATA drives in July. We will sell (rather than rent) for about $100.

    • MRDVR

      • No specific question, but very frequently noted among respondents.

      • Waiting for guide and converter suppliers to offer MRDVR.


Recent competitive efforts video3
Recent Competitive Efforts - Video

  • First Door-To-Door effort

    • AT&T Inoculation Team

      • Built upon idea from NPG with very similar results.

      • Small team that works just ahead of AT&T to assure satisfaction of current customers.

      • Goal is not sales, but verification that all services are working properly.

      • About 10% of homes surveyed need a service call.

      • About 15% have some type of issue resolved at the door (remote control programming, batteries, Internet questions, etc.).


Recent competitive efforts video4
Recent Competitive Efforts - Video

  • AT&T Inoculation Team (cont)

    • Also using weekly reports to identify area signal issues.

      • Technical SWAT response to resolve very quickly.

    • Collecting information about non-subs

      • Current provider

      • If/why they left us

      • Likelihood of remaining with current provider


Recent competitive efforts hsd
Recent Competitive Efforts - HSD

  • DOCSIS 3.0

    • Transition to all-digital/no-analog created bandwidth to offer DOCSIS 3.0 throughout the system.

    • Four downstream channels operating in all areas.

    • Working to recover DOCSIS 1.0 modems before increasing upstream bandwidth to 6.4MHz (underway).

    • Seen benefits from DOCSIS 3.0 without new, higher bandwidth packages.

      • Auto load balancing

      • Multiple return paths

      • Better performance for all customers.

    • Planning new DOCSIS 3.0 packages

      in near future.


Recent competitive efforts voice
Recent Competitive Efforts - Voice

  • Challenge same as for all

    • Slow sales

    • Cord cutting

  • Began commercial sales in early 2009

    • Reasonably good results to date.

  • Question whether we need a cell phone element to make our phone offering complete.

    • Certainly seems to be the case, but

      no winning combination of providers.


Recent competitive efforts voice1
Recent Competitive Efforts - Voice

  • Stark County

    • Recognize need for low-cost, entry-level phone service to meet AT&T with competitive offers.

    • Creates problem of margin due to Sprint partnership.

    • Testing price points and response rates now.


Competitive efforts other
Competitive Efforts - Other

  • System reliability

    • Allowed to slip during year we worked on DTV Rollout.

    • Currently primary operational focus

      • Deliver higher quality technical signal with greater reliability.

        • Still do as well as others technically and better from customer service, but need to focus on absolute performance.

        • New monitoring tools

        • New workforce distribution

        • New employee dedication


Competitive efforts other1
Competitive Efforts - Other

  • Current enhancement products

    • Carbonite

      • Hosted application for off-site backup.

      • Need to make concerted effort to evaluate

    • IT Guys

      • Great service to customers.

      • Keeps them coming back to our HSD.

  • Planned enhancement product

    • Home Security

      • Broadband based

      • Hope for new entrants due to “widgets”

        and other flexibility.


My competitive crusade

My Competitive Crusade

Digital TV without a Digital Box


Magid study october 2009
Magid Study – October 2009

One-third cite cost and affordability as the primary reasons for not buying HD service.

42% of these sideliners admit that "options are not worth the fees."

34% of HD households do not subscribe to HD programming.


Hdtv sets without hd service
HDTV Sets without HD Service

  • Despite economic recession, consumers replacing analog TV sets at a rapid pace.

  • A large percentage are choosing not to add any HD programming.

  • Our experience as an all-digital/no-analog system provides a unique perspective into consumer use of digital TV sets.

  • We really did not know how they were using HDTV sets until we removed all analog signals.


Hdtv sets without hd service1
HDTV Sets without HD Service

  • What are they watching?

    • Our experience from our DTV Rollout says ANALOG.

      • Only know this if you have eliminated analog signals.

      • Poor quality compared to digital signals (satellite or telco)

  • Why are they watching poor quality analog?

    • You aren’t making it possible for them to watch digital.

    • They don’t know how to use their digital TV set and you aren’t teaching them.

  • What will they do when they notice?

    • Maybe they will subscribe to your HD service.

    • Maybe they will switch to another provider

      because they assume analog quality is the

      best you can deliver.


Hdtv sets without hd service2
HDTV Sets without HD Service

  • Not just replacing the “BIG” TV anymore.

    • Since Digital TV Transition, all TV sets are digital.

    • Stand at Wal-Mart, Best Buy or HHGregg and watch the number of small digital TV sets streaming out the door. Many homes have replaced all analog TV sets with digital.

    • They may equip the “BIG” TV with a converter, but the others are simply connected to the coax system.


Hdtv sets without hd service3
HDTV Sets without HD Service

  • Why don’t they have converters.

    • Magid Study says cost, affordability, options not worth the cost.

    • Perhaps more factors, especially for AOs.

      • Cost

      • Complexity

      • Comfort

      • Aesthetics

      • Convenience

      • Stubbornness


Hdtv sets without hd service4
HDTV Sets without HD Service

  • Wouldn’t it be better if we could deliver digital quality signals to digital TV sets without a converter?

    • WE CAN!

    • PSIP – Add small amount of data to SD signals so digital TV sets can easily tune to them.

    • ClearQAM – Maintain a robust lineup of unencrypted SD signals (including PSIP).



Consumer continuum of choice1
Consumer Continuum of Choice

  • Why is this important?

    • It is what customers want.

      • Choice

      • Value

      • Friendly

        • Our HDTV registry already tracks more than 5% of our HHs who use at least one digital TV set without a converter.

        • Grows every day.

    • We are the only platform that can deliver it.

      • Competitive difference

      • Delivers digital quality at analog price

      • Affords easy migration path to other services.


Consumer continuum of choice2
Consumer Continuum of Choice

  • My proposal

    • Primarily status quo

    • Lifeline & Basic SD signals should be encrypted at the operator’s election.

      • SD no different than analog in terms of signal quality and need to secure from copying and illegal distribution.

    • All HD and premium SD signals should be encrypted at the programmer’s election.

      • Recognizes need to secure HD content from copying and illegal distribution.

      • Allows programmer flexibility (QVC, HSN)


Consumer continuum of choice3
Consumer Continuum of Choice

  • Needs both PSIP and ClearQAM

    • PSIP-Program and System Information Protocol

      • ATSC protocol for metadata in an MPEG stream.

      • Available and, within limits, works well.

        • Requires new discipline regarding spectrum utilization

      • TV compatibility issues

        • Being resolved with practice.

    • ClearQAM

      • Required to maintain robust offering directly to digital TV sets.


Consumer continuum of choice4
Consumer Continuum of Choice

  • Threats

    • Industry support

      • Comcast has no interest.

        • Want to encrypt everything to reduce truck rolls and theft.

        • Not sure of other MSOs

      • NCTA unwilling to consider in light of Comcast desire.

    • Not all systems in same situation as Comcast.

      • Fully support Comcast’s right to encrypt based on their specific needs.

      • Problem - Comcast (due to their dominant position) precludes my right to choose not to fully encrypt.


Consumer continuum of choice5
Consumer Continuum of Choice

  • Threats (continued)

    • Program Networks

      • No clear reason why they want us to encrypt SD.

        • Possible negotiating tactic – trade for something else.

    • Should not put program networks in position to determine our capital expenditures

      • They don’t care what it costs us to secure their signals.

      • Consider that you must eventually replace every DTA and non-HD STB with a new one. The cost is staggering.

        • Probably 3x the number of STBs today.


Consumer continuum of choice6
Consumer Continuum of Choice

  • My crusade may be more like Quixote’s than Lancelot’s, but still worth the attempt.

    • Creates a competitive difference.

    • Presents friendly, consumer-oriented options.

    • Appeals to an activist FCC that will offer many opportunities to raise the issue.


Questions
QUESTIONS?

Robert Gessner

Massillon Cable TV, Inc.

Email: rbgessner@massilloncabletv.com

Voice: 330-833-5509

Fax: 330-833-7522


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