Meet the System–Paramus-Hillsdale, N.J.: US Cable Shifts Gears in Jersey’s Mall Mecca

Here’s an odd ’60s flashback: The first week’s episodes of Supermarket Sweep, an ABC daytime game show from 1965, were shot inside a Food Fair store in Paramus. Since that time, Paramus, N.J., has become better known for its shopping malls than just about anything else. At one point, every New York area retailer, from Macy’s to Bamberger’s, touted big Paramus mall stores in their advertising. Even now, from the vantage point of a New Jersey Transit bus as it cruises past Paramus Park Mall, it’s hard to believe that there are more than 8,500 homes in Paramus and nearby Hillsdale. About 4,700 of them subscribe to US Cable Corp.’s Paramus system—one of the few cable systems in New Jersey not run by a top 10 MSO. Despite the small amount of households in its universe, the system is under pressure to deliver the best that cable has to offer, says Joseph Appio, operations VP at US Cable. "The biggest challenge facing us is meeting market appetite," he says. "There’s demand for better high-speed Internet access, a demand for more programming. Our job is to offer satisfaction as we bring in more bandwidth." That extra bandwidth will come sometime in 2006, when US Cable rebuilds its plant. Once rebuilt, the system plans to introduce VOD and VoIP telephone service, which should help prevent customers from rolling into the satellite aisle. DBS penetration in Paramus and Hillsdale stands at 17%, according to Media Business Corp. With the notable exceptions of VOD and VoIP, the system offers services that are available elsewhere in New Jersey, including digital channels, high-speed Internet service, hi-def, DVRs and HD DVRs, which US Cable demonstrates in its headquarters, minutes from Paramus Park Mall. Out-of-Town Shoppers Given the presence of high-profile shopping centers like Paramus Park Mall, you might think that US Cable uses them for promotions. That’s not the case, however. US Cable skips the malls, instead concentrating on promoting services in local dry cleaners, banks, gyms and supermarkets. "We did a home exposition showcase at Bergen Mall for a few years," says Carol McNamara, the system’s general manager. "It wasn’t effective, because the locals don’t visit those malls frequently. We had a lot of interested people from out of the area, and they’re not people I can service. With the local stores, you narrow in on the people you know." McNamara also avoids DBS buyback drives because the majority of Paramus DBS households don’t pay for their satellite equipment. Instead, the system sends its door-to-door squad to DBS homes in the spring and fall. It supplements those efforts with free-standing community paper inserts and cross-channel promotions. The front desk of the Paramus office, at the end of a quiet block of small houses, displays plenty of promotional information. Outside the office, the system works with local stores in promoting Paramus and Hillsdale Little League baseball and youth soccer teams. Some games appear on the system’s local programming channel, along with Paramus and Bergen County government meetings. Cablevision subsidiary Rainbow Ad Sales handles local ad sales for the system. Appio declined to provide details about US Cable’s ad sales revenue for the first few months of 2005, although he says that sales are up in comparison with the first three months of 2004. US Cable partners with Cablevision, Time Warner Cable and Comcast on 1-800-OKCable marketing campaigns, but doesn’t do much with Cablevision or other operators beyond that. "We’re in an environment where we look to differentiate ourselves from them. We want our own identity," McNamara says. The upcoming rebuild should solidify US Cable’s identity in Paramus and Hillsdale. The cost of servers and head-end equipment was too great when the system was upgraded to 550 MHz, which forced US Cable to sidestep VOD. Falling server/head-end prices now have enabled the operator to meet the needs of its affluent customer base. The system eventually will double its channel capacity when it operates at 1 GHz late next year. The use of one or more bandwidth expansion tools may add additional capacity, says technical operations director John Grider. "We’re in contact with some vendors about that," he says. Warp Drive Highs, Hi-Def Lows Cablevision, the area’s previous operator, had delivered its signals to Paramus and Hillsdale from elsewhere in Bergen County, so US Cable spent $1.3 million on a local head-end facility after acquiring the system. The company also budgeted for an upgrade from 450 MHz to a 550 MHz two-way plant, incorporating a 30-mile fiber-optic backbone. The upgrade allowed US Cable to launch digital channels, as well as Warp Drive Online, an in-house Internet access service. Warp Drive, priced at $39.95 a month at full blast or $24.95 in a slower option, has been the most successful advanced service in Paramus, topping digital by almost 200 homes. "We get our biggest bang for the buck there," Appio says. By contrast, HDTV has not taken off the way US Cable had hoped when it was introduced last year; a rollout of Motorola HD DVRs soon followed. Despite 14 HD channels on the system’s lineup, fewer than 200 subs have signed on for HD. Appio attributes the disappointing numbers to marketplace confusion about HD sets and services. "There’s a lot of indecision out there, and we’ve got a lot of customer education to do," he admits. "HD’s day is coming, but right now, we’re not getting a lift." Among the tactics McNamara and her management team are using to boost numbers for HD, digital and other advanced services is the deployment of a third-party sales squad on door-to-door jaunts during spring and fall. The salespeople demonstrate services and perform instant installs. "Spring and fall are when you have longer days, and when people are more apt to be outside and easily approached," McNamara notes. "In the winter, people are less likely to open their doors." Besides backing up local customer service reps at night and on weekends, CSRs at US Cable’s call center in Hannibal, Mo., cold calls Paramus and Hillsdale subscribers for various promotions. The Hannibal CSRs also take service orders when Paramus staffers are off duty and process the orders through a billing databank that’s patched into a similar data repository in Paramus. Azar Computer Software provides the billing system in both locations. Upscale Customers State officials seem happy with US Cable, saying that it is a solid player that satisfies both its customers and city leaders. From March 2004 to March 2005, fewer than a dozen service complaints about the system reached the New Jersey Board of Public Utilities, which runs the state’s office of cable TV. "Those complaints are largely run of the mill, such as not showing up for an install on time," says Eric Hartsfield, the board’s spokesperson. "The reputation they have with the mayors in [Paramus and Hillsdale] is good. There appear to be no problems." US Cable, whose corporate headquarters is in Montvale, 15 minutes up the Garden State Parkway from Paramus, became the area’s cable operator in 1998. Cablevision had been asked by federal authorities to divest some of its Bergen County cable franchises in exchange for acquiring other county systems from AT&T Broadband; the MSO chose to sell the Paramus-Hillsdale system. Appio, who previously worked for UA-Columbia systems northwest of Paramus in the 1980s, saw the chance for a deal. "I convinced the corporate office in Montvale to pick the area up," he says. "The Paramus system was on the market for a while, and since we were only seven exits away, it was a franchise we could easily oversee." The system’s upscale consumer base was an obvious enticement. The median household income in the area went from $76,918 in 2000 to $99,900 in 2002, according to the city’s chamber of commerce. Appio estimates median household income is now over $115,000; the median home value is over $300,000. "It’s a good mix of high-end, high-income middle-class and seniors," McNamara says. "There’s also a growing Asian population, covering 15% of our area." For Asians and other ethnic groups, US Cable introduced AZN TV and Mandarin-language CCTV-4 on digital in March, along with 11 premium channels, six in Asian or South Asian languages. US Cable Paramus-Hillsdale, N.J. By the Numbers Employees: 7
Miles of plant: 148
Homes passed: n/a
Bandwidth: 550/750 MHz
Percent upgraded: 100%
Basic subs: 4,739
Basic penetration: n/a
Basic rate: $14.25/mo.
Expanded basic rate: $33.39/mo.
Digital subs: 1,177
Digital penetration: 25%
Digital tier rate: $4.95/mo.
HSD subs: 1,366
HSD penetration: 29%
HSD rate: $24.95-$39.95/mo.
HDTV: 14 channels—local CBS, NBC, Fox, ABC stations, Discovery HD Theater, Cinemax, ESPN, HBO, HDNet, HDNet Movies, Showtime, Starz, Universal HD, WealthTV
HDTV subs: 177
HDTV rate: $4/mo.
HDTV tier rate: $11.95/mo.
DVR: Launched 12/04
DVR subs: 35
Ad insertion: 34 channels n/a: not available Source: US Cable