Cable Operators Upbeat About Prospects For Service

Cable operators are cautiously enthusiastic about Xpress Information Services following a workshop the company held for prospective affiliates September 13-14. It appears, meanwhile, that operators will be encouraged to use other data broadcasting media -including phone lines and FM sideband -- to deliver the Xpress quote/news product to customers not passed by cable.

Xpress is a partnership of McGraw-Hill, Inc., Telecrafter Corp., a cable services company, and Tele-Communications, Inc., one of the largest U.S. cable operators. The venture intends to be the low-cost provider of financial quotations and news to home computer users. A broadcast service operating at 9600 bits/second, Xpress includes the Monchik-Weber Ticker III quote feed on a delayed basis, as well as a range of international news services; and sports and weather information.

Cable subscribers can purchase a data receiver and IBM-PC software for about $50, and get the basic Xpress service for $19.95/ month. The software includes Standard and Poor's "Marketline" package for dynamically updated portfolio monitoring.

The addition of non-cable delivery options to the Xpress menu is a response to concerns that the service could only be competitive if it could reach business customers that do not have coaxial cable going by outside. "There's no way to do as much as you want to do unless you get involved with more than one kind of distribution," says John Bunyan, president of McGraw-Hill Cable, Inc. "They're going to have to have a combination system."

Xpress officials are not emphasizing alternative delivery at this early stage or fear of spooking cable operators, but "Xpress in and of itself is going to make a nice broadcast product in other media," says Bunyan. Both FM and phone lines could deliver a "subset" of the Xpress cable feed, and the venture is likely to offer technical and marketing help to operators wishing to move beyond their own plant.

Service is available directly from Equatorial satellite, but this option is thought to be too expensive, especially considering the desire of Xpress to be the low-cost provider of broadcast data.

On the hardware side, meanwhile, M/A-Com has joined Wegener and Scientific-Atlanta as manufacturers Xpress home decoders, and both Apple and Commodore are aiding in software development to move Xpress away from its current IBM-compatible-only configuration.

"I personally would buy a personal computer to have the service," comments the manager of one large, mature cable system in the northeast. The manager, who attended the recent workshop but asked not to be identified because his parent company has not yet committed to Xpress, says he likes the service because it is structured like pay TV: "We run the business. They are the providers. We are the contact with the customers."

"It seems to be rather cleverly constructed," says Kip Wotkyn of the new business staff at American Television & Communications, the nation's largest cable operator. "There is not a lot of downside to it." Wotkyn cites three factors that make it attractive: (1) There is no large capital investment; (2) It doesn't require any video channel capacity; (3) It allows operators to market to a new customer set. But there are still many unknowns involved. "What's not obvious is how it acts as a business in the field," says Wotkyn. Among operator's concerns are these:

(1) How much extra training will be required for customer service representatives? Despite its structural similarities to Pay TV, Xpress is a very different animal. The company plans to install a nationwide subscriber phone number, and to enlist computer

retailers for support, but subscribers may still be inclined to call the cable company when they have trouble.

( 2 ) How will Xpress be billed? Operators worry that if an extra $19.95 appears on the monthy cable bill, subscribers may decide to cancel HBO to bring the total down. On the other hand, few systems are in a position to bill separately for Xpress.

(3) What will be needed to retain subscribers? The acquisition process is almost too easy. The telemarketing staff calls cable households to learn if there is a personal computer present. If so, a door-to-door salesperson drops by for a demonstration. If the subscriber decides to buy, service begins on the spot. Some Xpress officials worry privately that a surge of early subscribers may be followed by a surge of disconnects three months later.

The key to retention is programming. "This is something that makes your PC run like a TV Set," says Bunyan. "The concept of programming is going to have to be more active, vital, and changing than [what] you're used to in those dusty old database services."

In the first 90 days in its first test market, Boulder, CO, Xpress has acquired about 75 subscribers on a cable system that passes 20,000 homes. "A large group is using the stock information," says Bunyan. .