Meet the System–Rock Hill, S.C.: Rockin’ With a Five-Pack

When the local police headquarters looks like a block-wide dormitory with crew-cut lawns and walking paths, there’s not a shadow of doubt you’ve landed in one of those special corners of the nation known as college towns. A few hours walking and riding around Rock Hill, S.C., leaves you with the clear impression that the city can hold its own with more noted centers of higher learning. Rock Hill, 20 miles southeast of Charlotte, N.C., and a few miles below the border separating one Carolina from the other, is as collegiate as it gets. The streets are clean and downtown shops are plentiful. Some 6,500 students began a new semester at Winthrop University last month, including a class of more than 1,000 freshmen. Hopes are high that the Winthrop University Eagles men’s basketball team, contending in the Big South conference, will get back to the NCAA championship tournament next spring and get past the first round, where Duke and other perennial basketball powers shellacked them in their 1999-2002 run of tournament participation. For Comporium Communications, the cable operator serving Rock Hill as well as three other markets south of the Carolina border, hopes for better operating performance this fall and beyond rest upon building momentum for several initiatives launched over late spring and summer. At the head of this initiative is what may be the most unique advanced service bundle any system is offering anywhere. Most MSOs are counterattacking DBS with a bundle of three products: digital channels, high-speed Internet and telephony. It’s a five-way proposition at Comporium. Besides digital, Web access and phone service, Comporium deploys wireless service (as a Cingular affiliate) and home security (First Alert products/services). About 28,000 Rock Hill households take cable service from Comporium; that accounts for 54% of the operator’s total cable customer universe. Parent Comporium Group, whose headquarters are located off the town square downtown, also operates local and long-distance phone companies serving the upper half of South Carolina. Diversified Town, Company In one respect, the unusual scope of Comporium’s bundle reflects the nature of Rock Hill today, says Bryant Barnes, president and CEO of both the cable operator and the parent firm. Textile mills were a local bedrock four decades ago, with the mill worker and college student populations almost equal. "My dad used to work at the chamber of commerce to find ways to diversify the area and get away from textiles," he recalls. "Since then, a mix of manufacturing and service industry business has shaped activity, including paper, electronics and trucking. We’re like a bedroom community to Charlotte." Few cities the size of Rock Hill (population 50,000, according to U.S. Census 2000), however, are home to a cable company that offers the ability to connect bedroom TVs or PCs to such a variety of services. Besides the bundle, Comporium deploys digital video recorder functionality and seven high-definition TV and 45 digital audio services (mostly from Music Choice). Three months ago, more than 15,000 digital cable subscribers in Rock Hill and other Comporium markets became the first nationwide with the capability to request caller ID information on their TV sets (see "Alphabet Soup," July 19 issue). "The big challenge now is to promote the bundle deeper into our marketplace," says John Barnes, Comporium’s SVP of marketing (and Bryant’s cousin). "The challenge to come is positioning ourselves for what we can do in an all-digital, Internet protocol operation." More than 1,100 customers have become bundle holders since Comporium launched the option in late June. To qualify for bundle pricing, subscribers must take four of the five services, with circuit-switched local and/or long-distance telephony being one of the four. For every service taken, the subscriber gets a $5 per month discount. That adds up to $240 in annual savings for people taking a four-service bundle, and $300 per year for each full bundle user. Exploding wireless use among college students drove the inclusion of wireless in the bundle. Home security was a natural attraction because of how it complements telephony, Bryant Barnes says. "In order to have home security, you need a phone number to call back into when reporting a problem," he says. "We see one element driving another element, and all the elements work together to better bond with our customers." Bundle Shopping at the Mall Comporium has been promoting its bundle in the nine retail stores it operates in the Rock Hill vicinity, four of them in shopping malls. There’s ample demonstration space at each location for all five bundle elements, including digital channel monitors and an HDTV viewing lounge. The first store opened in nearby Manchester two years ago, and two additional stores will open by the end of 2004. Local DBS dealers’ joint retail efforts with Radio Shack and other electronics outlets prompted Comporium to open its own retail stores, says development/ brand manager Pamela Trimnal. "We had to put ourselves in the same arena as DBS, and control the environment [compared with taking shelf space from another retailer]. You’re out to be the one-stop emporium, so the stores offer consumers a comfortable way to see the bundle or other services for themselves." Several customer service/walk-in payment centers—including one I toured the day after it opened for business—also serve as a promotional tool for bundle sales. Across from a tennis/soccer stadium complex under construction, the new center has a waiting area where visitors can relax and watch HDTV before speaking with a representative. About 45% of Comporium customers pay their monthly bills through center visits. The newest service center also has caller ID displayed on an HDTV flat-screen monitor in a separate room. Designed by Integra5, the interactive feature can be requested three ways with the touch of a remote: full-screen, together with the channel being viewed or as part of an interactive program guide with the ID info located in the lower half of the screen. The service is free and available to all digital customers. PBT, a telco Comporium acquired last April, deployed caller ID ITV through a digital switching process among rural households near Columbia, S.C. "People were loving it there," says Bryant Barnes, "and after some marketing study, we thought it could play well over cable." Even though Comporium has promoted the caller ID feature only through its stores and service centers, 560 digital cable customers have used it, while 497 people welcomed digital cable into their homes because of the feature. Trimnal anticipates both figures climbing much higher this fall, driven by a mass media push for both the bundle and caller ID. Cross-channel messages and displays on service vans are scheduled to begin this month, followed by direct mail, radio, newspaper and broadcast TV ads. Friendly Mailers for DBS Customers New offerings like the five-product bundle and caller ID ITV are helping Comporium blunt DBS encroachment of its territory. About 15% of Rock Hill households subscribe to satellite, according to Media Business Corp. estimates. Comporium backs up its product offensive with direct mail aimed directly at DBS users; using a database of satellite consumers, every other month the company issues marketing materials touting a cable attribute or two. "The message: We’re here when you’re ready to take us," says John Barnes. More than 200 people converted from DBS to Comporium when the first collateral campaign was conducted in January 2004, he adds. Local programming also helps in the fight against DBS. CN2, the system’s news channel, covers the area with an original 30-minute newscast each evening. The program is replayed around the clock, with updates when necessary. Tri-County 14, Comporium’s long-running analog channel, offers a blend of in-house public affairs programming and leased access shows. The draw of new services and familiar local content has helped Comporium increase its basic cable universe 3% over the last 18 months. And other business drivers are perking up. Over the first seven months of 2004, local ad sales are 19% ahead of internal forecasts, compared with a 5% decline the first seven months of 2003. (Political buys from the Democratic primary contenders and a hot U.S. Senate race have helped push up sales.) The introduction of avails on 20 of Comporium’s 35 diginets in a few weeks should cement a double-digit annual sales increase, John Barnes says. The networks involved include Lifetime Movie Network, Speed Channel and DIY. Conversion from circuit-switched to voice over IP phone service is the next big item on the company’s rollout agenda. Bill Beaty, Comporium’s cable operations VP, and Dan Smith, VP for planning and engineering, predict that VoIP will be introduced first to business customers, then to the general public. The age of VoIP in Rock Hill likely will begin in early 2005, with Comporium in full control of infrastructure and service content. Sounds like no need for Vonage, Net2Phone or any middleman vendor here. All-IP or Bust Comporium is serious about migrating from its current plant makeup to an all-digital/Internet protocol infrastructure. The questions are when and how. "It’s going to be interactive TV that will fuel our future, and we’re going to have to migrate to that environment," Bryant Barnes says. "We don’t want to rebuild." Capacity under current operation is at 550 MHz, but there’s at least 300 MHz of capacity currently idle, and perhaps more with bandwidth expansion technology available now or in the works. BigBand Networks has been retained to develop some options. "Another thing we have to consider is when digital set-tops will be cost-effective to work under an all-digital system," Smith says. "I wish we could get our hands around it, but we’re depending on what the industry decides." With the arrival of MPEG-4 signal processing and the release of low-cost digital terminals with advanced processing power, Bryant Barnes believes Comporium can become all-digital/IP as soon as late 2005. Beaty could play a huge role in encouraging the MSO to earmark 2004-05 budget dollars for a conversion. Elected to the National Cable Television Cooperative’s board of directors last month, Beaty will work with the group’s new engineering director, Alan Tschirner, a former Time Warner Cable executive; Tschirner’s focus at NCTC is an all-digital strategy for small and midsize operators. "The co-op hired him with that in mind," Beaty says. John Barnes can use a few hands to count the ways all-digital can be put to work in Rock Hill. "You can give a consumer the ability to access information from all over the place, or check up on their appliances on their TV or PC," he says. "This will make us broadband providers the good guys."