News

MediaOne Rings Up Motor City

4/25/1999 8:00 PM Eastern

The cable industry rang up a new market for competitive
phone service last week when MediaOne Group Inc. began offering its digital-telephone
product in the metropolitan Detroit communities of Plymouth, Northville and Canton, Mich.,
with 55,000 homes passed.

The towns mark the first where MediaOne offers all three of
its advanced broadband services: high-speed Internet access, digital video and, now,
telephony.

MediaOne also faces video competition from local telephone
incumbent Ameritech Corp.'s Ameritech New Media unit.

The regional Bell operating company has yet to launch an
asymmetrical-digital-subscriber-line service in Detroit, but it does offer the high-speed
Internet service in nearby Royal Oak and Ann Arbor, Mich.

In addition to Detroit, MediaOne offers residential
telephone service in Atlanta; Boston; Jacksonville and Pompano, Fla.; Los Angeles; and
Richmond, Va. It had more than 10,000 phone customers at the end of 1998.

With AT&T Corp.'s recent entry into cable, the
industry's attention to telephone services and bundled packages is expected to grow
dramatically over the next several years. Cablevision Systems Corp. had several-thousand
residential phone subscribers on Long Island, N.Y., at the end of 1998. The MSO also
launched phone service in Connecticut in December, and it has signed up 1,000 subscribers
to date.

And Cox Communications Inc. had 28,000 phone customers in
six markets at the end of 1998.

While bundled broadband packages are predicted to appeal
enormously to consumers in the years ahead, they may be of more interest to industry
executives than to cable subscribers today, according to MediaOne's vice president of
marketing for digital-telephone services, Nancy McGee.

"We don't want to get caught up on something that
may be more significant internally than it is to the customer," McGee said. "The
important thing is to talk about the value that we deliver."

MediaOne currently doesn't offer price breaks to cable
customers who also sign up for phone service, although it is running a promotion
discounting high-speed Internet access for customers who buy telephone or video. Free
installation is available to new telephone subscribers in all seven MediaOne telephone
markets.

Since it began offering phone service a little over one
year ago, MediaOne has learned to tweak some of its marketing efforts, McGee said.

For example, the company changed the name of its
full-featured, one-line package to the short and catchy "RightPak," which McGee
believes helps to convey the benefits of the custom-calling features, such as caller ID
and call waiting, which are included in the $34.95-per-month price.

The company also found from earlier market launches that
demand for an alternative to incumbent phone providers was stronger than anticipated.

"It's very easy to overtax the sales
channel," McGee said. "We've learned to pace ourselves and let the systems
and processes stabilize."

Until that happens, MediaOne doesn't plan to market
its telephone service to the masses in Detroit, instead focusing on targeted direct
marketing.

MediaOne is taking on a telephone incumbent with nearly 100
years in the Michigan market.

Sara Snyder, a Detroit-based spokeswoman for Ameritech,
declined to comment on any specific marketing efforts designed to stem competition from
MediaOne, adding, "Customers should stay tuned."

Telephone incumbents may have a leg up on their cable
competition when it comes to signing up subscribers who move to new towns and call their
local telephone companies before they think of contacting their cable companies.

"The trick is to get to them earlier in the moving
process," McGee said.

September