Don’t Call Them Small–Call Them Local

Just shy of both a half-century in business and 30,000 basic cable customers, BendBroadband, smack dab in the heart of central Oregon, operates more like a frisky youngster than a stodgy geezer. How frisky? In the eight months since switching its moniker from BendCable to BendBroadband—and completing a $12 million plant rebuild which began in 1999—the company launched high-definition TV channels, introduced two levels of high-speed Internet access service and deployed digital set-top boxes with personal-video-recorder capability. And there’s no slowdown ahead on the new service road. Video on demand will be introduced at the end of this month, followed by voice over IP service next January and interactive TV later in 2005. The execution of this grand strategy—as grand as any large multisystem owner can devise—along with a passion for quality customer service convinced us that BendBroadband should be the first winner of CableWORLD’s Small Operator of the Year award. This annual honor will recognize MSOs or individual systems with a small customer count that distinguish themselves through rollouts of innovative products, top-flight management practices, outstanding performance and community outreach. On all three counts, Bend hits the mark. Besides the quick product rollouts, the company—which CableWORLD profiled in its "Meet the System" feature in the Dec. 1, 2003, issue—is one of the few in the cable industry to have co-presidents, both of whom report to CEO Amy Tykeson. When it comes to community outreach, event participation and charity support are not the only approaches Bend uses to make a difference with the public. Every week, residents of the three Deschutes County cities served by the operator—Redmond, Sisters and Bend—are invited to drop by the main office in Bend and take a free class in how to use digital cable, HDTV, high-speed and other advanced services. The classes started four months ago and draw 20 to 25 people per session. Such initiatives generate deep loyalty among BendBroadband’s customer base, so much so that DBS penetration in the area stands around 19%, according to Media Business Corp., lower than other places where small or midsize MSOs compete with satellite (about 25%). With the rebuild over, BendBroadband fast is becoming a company "where technology is balanced with excellent customer service and operations," Tykeson says. "It’s a triangle. You must do well at all three points of the triangle to be successful." Tykeson’s got cable in the blood. Her father Donald ran Bend when it was Liberty Communications, and kept the Central Oregon portion together when the rest was sold to Tele-Communications Inc. in 1984. At the time, Amy was a rising star at Home Box Office, becoming VP of area marketing under the tutelage of John Billock and Matt Blank, now spawning their own kingdoms at Time Warner and Showtime, respectively. Tykeson joined Bend as a board member in 1990 when family matters led her to move from New York to Oregon. She became CEO in 1997 and never regrets leaving the cable network scene. "Working for HBO was like climbing Mt. Everest, and it didn’t occur to me to replicate that experience in some way here," she says. "There’s so much happening with the convergence of these technologies. The opportunity to turn them into products consumers want is very satisfying and gratifying." Two Presidents Are Better Than One Part of what has made Bend tick has been the unique co-presidency, shared by Byron Cotton and Ray Spreier. Cotton’s focus is on strategy and where Bend should set its sights, while Spreier handles day-to-day operations and customer service. After Cotton and Tykeson choose the products they will deploy, Spreier takes them to consumers, with assistance from technical operations director Dan Heller and marketing director John Farwell. "We’re comfortable with each other’s skills and work style, and when applied to where this place is headed, the relationship has turned complementary," Spreier says. "And given what’s out there for cable, it’s tough for one big executive to handle it all." "Ray figures out how to offer things like VoIP and maintain growth in our current product portfolio," adds Cotton. "I get to look at the future picture and the faster rate of change affecting this industry. So the balance of responsibility is solid." Beyond the co-president level, Tykeson encourages employees in different departments to share ideas, which accounts for the company’s well-rounded staff and smooth product launches. "Silo-based management style is not effective anymore," she says. "We’re in a matrix situation. When you involve representatives of every department on a new customer initiative, that makes the difference." Homegrown Rollouts That "difference" has sometimes been made manifest with BendBroadband’s homegrown products. Such was the case with its high-speed Internet access product; BendBroadband introduced its own InstaNet product in 2000, replacing Road Runner. More than 12,000 residential and 1,400 business customers take InstaNet currently. When customers called for a choice in speed rates, Bend responded with a slower-speed, lower-priced InstaNet Lite version at 1.5 megabits and a higher-priced InstaNet Deluxe model running content at 3 megabits. In less than three months since their launch, Lite has picked up about 300 users and Deluxe 150. Promotions for Deluxe target video-game buffs and telecommuters—both groups are heavy PC users. Bend will launch VoIP service next January under its own brand, Cotton promises. Vonage, Net2Phone and other third-party infrastructure resources "are not part of the equation. The future is about people associating the services with the operator. We must clearly link the two," he says. Just as important is making VoIP available to local business when the public can get it, not later and not as a revenue afterthought. "We need to get into the doctors’ offices and the real estate brokers’ offices, so that they see this works just as well for them at home," Cotton adds. Local businesses are contributing to other BendBroadband service deployments, notably HDTV. With no national consumer electronic chains like Radio Shack, Best Buy or CompUSA in the area to work with, BendBroadband set up promotions earlier this year with three local retailers: Martin’s, Standard TV & Appliance and Johnson Brothers. Each business has point-of-purchase displays showing off Discovery HD Theater, HDNet and other HD channels the operator carries, as well as in-store messages on monitors covering HD installs. The exposure seems to be working; BendBroadband counted 510 HD subs as of early July. "There are some challenges associated with retail promotion, because there’s a number of products at the retailer’s end vying for attention at any time, so you have to push for your product," Farwell says. "The HD effort has worked fairly well." So have local ad sales, applicable to 24 insertable basic nets and BendBroadband’s local programming lineup, which includes high school and minor league baseball games, the Good Morning Central Orange hour each weekday and event specials. Halfway through 2004, local ad sales revenue is up 13% over mid-2003, and Spreier predicts revenue for all of 2004 will increase 15-18% from last year. VOD, ITV and All-Digital Ahead On-demand programming is next on BendBroadband’s procession of new service rollouts; Heller anticipates the service will be available the last week of August, following a short technical trial period. "We have all the content integration work completed. At this point, we’re waiting for a billing interface to be installed," he says. The operator will use an nCube server, Motorola digital set-top terminals, billing software from CSG Systems and Gemstar-TV Guide’s interactive program guide. For now, content details are being kept secret. Cross-channel messages and direct mail touting VOD will break around Aug. 20, Farwell says. Ahead of that, BendBroadband is running 30-second spots advertising its ability to deliver digital channels in several ways, including HD and DVRs. Local radio messages and ads in The Bulletin, the area’s only daily newspaper, support the campaign. Once VOD settles in and VoIP is launched, the ITV effort will begin. BendBroadband will switch to higher-end digital boxes, probably from Motorola, before going ahead with interactive applications. Look for an assortment of national and local offerings, from games to e-commerce, Heller hints. "We’ll probably move in with local business relationships, such as the pizza vendor or car dealer, and develop great applications for our customers." BendBroadband also is looking ahead to a transition to an all-digital platform, with or without all-IP capability, by the start of 2007—another example of the company’s commitment to evolve as fast as, or faster than, larger operators. Cotton has been monitoring the Next Generation Network Architecture allegiance of Comcast, Time Warner Cable and Cox, as well as developments from CableLabs. "We have to get to the point of offering content where and when people want it," he says. "All-digital is a better platform for consumers to save a lot more money and save us a lot of truck rolls per year." BendBroadband’s modest size to some degree plays into which advancements see the light sooner than later, Tykeson admits. "You have a limited amount of people and resources to figure the picture out, and it can be frustrating. You balance when to make a move with keeping an eye on what’s coming down the pike," she says. "And you cannot rest on your laurels."