Meet the System: Comcast Pittsburgh

Since completing its merger with AT&T Broadband, Comcast has been busy revamping many of its systems. Take the Pittsburgh region. It’s been split into three systems — Pittsburgh, Tri-State and Cleveland — and some old hands have been brought in to restore what was once a top performer for pre-AT&T owner TCI. “AT&T Broadband’s Pittsburgh market included Cleveland, the Pittsburgh DMA, parts of Ohio and West Virginia and also Richmond, Va.,” says former TCI-er Joseph Gamble, now VP/GM of Pittsburgh. “Our focus coming in was to get a more decentralized approach and more of the decision-making pushed down…into the local market.” With about 521,000 homes passed and more than 5,000 miles in the greater Pittsburgh region, this is the largest system in Comcast’s Atlantic division. Besides being charged with revitalizing the market, Gamble — who assumed the reins after the merger closed — also must resolve a situation left behind by AT&T. “There are about 56,000 employees in Comcast, and about 2,000 are represented by a union,” he says. “We have 1,000 of those employees.” Although voted in two years ago, there is no formal contract in place with the Communications Workers of America, as AT&T was in negotiations with the CWA right up until the merger. “Since then we have had quite a few negotiations with the CWA,” says Brian Jeter, the system’s director of corporate affairs. Gamble notes that “after 120 days we have five bargaining units, and we now have decertifications pending in four of those.” He adds that the Pittsburgh regional call center has also filed for decertification. The union is lobbying Comcast for a contract through local ads and a letter-writing campaign. “We obviously will continue to negotiate in good faith with the CWA,” Jeter says. (A local CWA spokesperson could not be reached; a national spokesman declined to comment.) In dealing with all employees, union or not, Gamble’s team has been busy “talking about what we want to do,” he says. “We’re now doing a lot of the things we used to do outside of the scope of normal day-to-day activities: events, Christmas parties, outings with employees. They haven’t done those things probably in about four years.” Gamble has nothing but praise for what he calls “the highest-tenured cable workforce, bar none, in the entire country among former AT&T Broadband markets. The average tenure is almost 13 or 14 years, so there are a lot of well-seasoned employees here, and a very strong work ethic.” Returning to the city where he learned the ropes has helped allay apprehensions, Gamble believes. “Coming in there was a lot of nervousness about the deal,” he says. “I started my career here about 16 years ago in Pittsburgh and I spent my first seven and a half years here. So there was a little bit of ease in knowing that a familiar face was going to be running the system.” With the upgrade to 750 MHz almost complete (the city of Pittsburgh should go digital by fall), “a lot of what we’re doing now is employee focused,” Gamble explains. “In the first three months we had over 6,000 hours total training, so we’re pushing a lot of advanced product training, particularly around high-speed data.” The first item on his list was to establish clear financial and customer objectives, particularly because the system lost just over 10,500 basic customers last year. “The big point for us is to get back to basic…and deploy the synergies of the merger,” he says. “This market has always been one of the highest penetrated systems for either TCI or AT&T Broadband. It’s always been either the No. 1 or No. 2 system for both those companies, both on operating and financial performance.” Now at 68% penetration, one of Gamble’s biggest challenges is to “grow revenue-generating units for advanced products,” he says. “Digital is about 43% penetrated, which is one of the highest, I believe, in the country. Broadband telephony has been a success in this market — this system was No. 1 for customer service of all the former AT&T Broadband telephony [markets] at the time of the merger. This market had reached in its market-ready homes passed as high as 32.5% penetration, which was the best within AT&T Broadband. We’ve slowed that down a bit, similar to our sister cable systems, and we’re still sitting at almost 29% penetration.” The only laggard is cable modem service. “The highest we’d reached until last year was 10.4% penetration in high-speed data. Part of that is because the city was the last to be rebuilt, which basically had to do with the franchise agreement which AT&T Broadband…renewed about two years ago. The suburbs began to be upgraded around 1993 to 1994; they were one of the first to be upgraded.” The team is now concentrating on getting broadband deployed in time for back-to-school this fall. “We have eight universities within our system, four of them being major [University of Pittsburgh, Duquesne University, Robert Morris College, Carnegie Mellon University],” says Gamble. Student subscribers, he adds, are “really going to drive HSD.” Director of marketing Beth Patterson is ready with a high-speed data offer of $19.95 for the first three months, discounted from $45.95. “As with all our launch areas, we’ll be sending direct mail, we have an internal group for outbound marketing and we use direct sales as a last follow-up for the territory,” she says. Internal research shows that PC penetration in Pittsburgh has been low, meaning there’s been little need for cable modems. “A lot of the PC penetration rates are now starting to hit,” Patterson says. “A couple of years ago it was less than half; now, we’re at a little over 50%.” Around 8,200 HSD subscribers have signed up since December thanks to Comcast’s offer of free installation (a $50 value for a premium install) and a free month of service. “We also had heavy marketing versus what we did under AT&T Broadband, which made a big difference,” Patterson adds. “Our [HSD] penetration level is right around 11% and we’ve put on 55,000 [digital] homes since the beginning of the year,” Gamble says. “A lot of folks were saying you can’t grow PC or HSD in this market, but Beth and her team are proving that wrong.” The team has also sped up the pace of upgrades, from 40 to 50 miles per month under AT&T to around 200. “I inherited a mandate to have Pittsburgh’s upgrade done by the end of September in the franchise agreement that was under AT&T Broadband, so…I’m facing penalties if we don’t get it done,” says Gamble. “We literally doubled the mileage, and we’ll probably be finished by midsummer.” The city’s upgrade will usher in new services such as video-on-demand as soon as August and HDTV in early fall. “The VOD product will be cookie-cutter to Phillyvision and [New Jersey’s] Big Apple Vision, we just don’t know what we’re going to call our ‘Vision’ yet — maybe ‘Steel City Vision,’” Gamble says. “Because of the success with telephony, we are hoping to be one of the first [Comcast] markets to launch IP telephony, hopefully next year.” Before then, he’s planning to relaunch the phone product in Pittsburgh. “As we finish the upgrade in the city we are looking to launch digital phone by early to late fall [with] switched circuit telephony.” Director of technical operations Danny Maxwell has been transitioning from a national to a digital addressable system, or localized controller, to get ready for VOD. “We have what used to be called the Pittsburgh super head-end: of the 670,000 subs in this region, it feeds a little over half a million,” says Gamble. “So we’ve been doing a lot on the tech side to get that ready.” A more serious challenge: sending out cable techs to conduct a “full tap audit,” or climbing a pole to sort through cable wires and disconnect illegal connections. “We’re 43% through and we’ve only had about a 3% theft rate, so the plant is tight,” Gamble says. DBS penetration is also low. “According to SkyTrends, we’re right at 6%, which is one of the lowest in the entire country,” says Gamble. “Some of that has to do with topography — we do have a lot of hills — but I think that’s also due to having a great penetration of the product at almost 70%.” Not to mention a dish buyback plan offering a $25 credit on new digital cable bills for 16 months, a $400 value compared to AT&T’s $200 offer. “We’re also looking to roll out a dish detector program where we will pay employees to go out and find addresses with a satellite dish on it,” says Patterson. The system is also trying to get older folks into the technological future. “Allegheny County is the second-oldest county in the entire country next to St. Petersburg, Fla.,” says Gamble, who is weighing adding Turner Classic Movies next year to appeal to older customers. “More seniors are starting to not be afraid of the Internet. We’re looking at going to some of the senior centers and setting up demos so they can come in and see how easy it all is. “This isn’t your grandmother’s Pittsburgh anymore,” he adds. “This isn’t the steel mill, smoky, dreary Pittsburgh you might think. It’s really transformed itself into a high-tech center. Pittsburgh is getting younger.” Instead of outsourcing, the system has been handling about 95% of tier one HSD service calls since April. “We’ve seen reductions in service calls and trouble calls already,” Gamble says. “We’re also looking at getting IVR [interactive voice-response menu] rates up, satisfaction, the normal kinds of things that matter.” Ad sales VP/GM Jim Mason aims to keep satisfying his customers. Mason oversees a team of 40 local account executives plus five on the regional interconnect. With 37 networks offering local avails, they can offer clients 45 zones in the entire interconnect or 25 zones in the Pittsburgh DMA. With 834,000 subscribers under its umbrella, the interconnect is about 40% Comcast homes. With his staff under one roof, Mason has been pleased to see key categories such as automotive take off. “When we go to a car dealer the common objection is: ‘I already own my backyard, I know you guys do a good job with the zoned selling, but I want to draw from a wider pool,’” he says. In the fourth quarter, “we began to show them the area they define as their backyard, typically five to ten miles from their store. We take the cable system zones that surround that dealership, we marry them with our data showing not only which cars were sold but who sold them. We might go in and show a Chevy dealer that 83% [of vehicles are] being sold by his competition in his backyard.” The result? “Our automotive business in the first quarter was up 41% over last year.” Agrees John Macuga, operations manager for Falconi Motors in Pittsburgh: “Not only have we been very successful with local cable — we’ve been bombarded with customers after some of our ads have run on cable.” That’s music to Gamble’s ears. He feels his system “could be the best in Comcast. All the signs are there. It’s just getting us to that point.” EMPLOYEES: 625 MILES OF PLANT: 5,050 HOMES PASSED: 520,805 BANDWIDTH CAPACITY: 750 MHz PERCENT UPGRADED: 85% completed BASIC CUSTOMERS: 351,239 BASIC PENETRATION: 68% LIMITED BASIC RATE: $12.57 for 24 channels (city of Pittsburgh) EXPANDED BASIC RATE: $38.98 for 67 channels (city of Pittsburgh) DIGITAL CUSTOMERS: 151,355 DIGITAL PENETRATION: 43% HSD CUSTOMERS: 48,083 HSD PENETRATION: 11% HSD RATE: $42.95 (w/cable) or $57.95 (w/o cable) TELEPHONY CUSTOMERS: 75,615 TELEPHONY PENETRATION: 29% AD INSERTIONS: 37 channels SOURCE: COMCAST With 16 years in cable, Gamble has worked with operations in Pittsburgh, Denver, San Francisco and Miami. His most recent assignment was with AT&T’s East division, where he was VP of operations and then of finance. He then helped turn around the customer care operations for AT&T’s Florida market. Gamble graduated from Ohio University with a B.S. in communications. Maxwell joined the team from Comcast’s Baltimore system. An 18-year cable veteran, he has held positions at Warner Amex Cable in Dallas, Time Warner Cable in Cincinnati and also at Montgomery Cable in Maryland, where he was director of operations. He is president of the Chesapeake Chapter of the Society of Cable Telecommunications Engineers (SCTE). Ng has been in the cable industry for seven years working in finance for TCI and then AT&T Broadband in San Francisco. He started his career as a financial analyst and was promoted to finance manager before his most recent position. Ng earned his B.S. in geophysics from the University of Calgary and an M.B.A. in international management from Golden Gate University. Patterson has spent the last five years in Pittsburgh. Previously she was regional marketing manager for the Three Rivers region. She began as a sales manager for the McKeesport system, and then became area manager for TCI’s Pennsylvania/Ohio arm. She has a B.S. in business administration from West Liberty College. Previously, Jeter worked as area manager of government affairs for Comcast’s Southern New Jersey region, where he was responsible for 350,000 customers and over 100 municipalities. He started his cable career as manager of government affairs for Comcast’s corporate office in Philadelphia. He received a B.A. in liberal arts from DeSales University. Mason joined the cable industry in 1984 to produce public affairs programs for Michigan’s cable association. He’s held local programming and sales positions for United Cable and United Artists before joining TCI Pittsburgh in 1995. He has a B.A. in telecommunications from Michigan State University. Comparison of consumers in Comcast’s Pittsburgh service area to the top 75 market average.