Meet the System–San Francisco Bay Area: Meet the New Cable Company, (Not the) Same as the Old Cable Company

Imagine the plight of Barbary Coast dance hall girls: Night after night they’d find themselves in the arms of yet another drunken sailor promising eternal love, and morning after morning they’d wake up to the grim realization that all they’d had was yet another one-night stand. Strip away the 19th century tawdriness and the tinkling piano and you’d be able to understand the skepticism of the San Francisco Bay Area’s cable company employees, and the population they serve. Over the past 20 years the Bay Area has seen more cable companies ride in and ride out than, perhaps, any DMA in the country. By my own count 16 different cable operators had put down stakes, claiming a share of one of the most attractive media markets in the world. Each new owner set a new standard for overpromising and under-delivering. Each new sale came with a promise to rebuild, followed by a failure to make the necessary investment. This tradition of disappointment persisted up through AT&T Broadband’s ownership. Two years ago, Comcast stepped in, singing a familiar tune. "Our employees were starving for some attention to capital," says Andrew Johnson, VP of communications for Comcast Bay Area, and himself a veteran of previous owners TCI and AT&T Broadband. "They were living and working in systems that were antiquated." As recently as two years ago, employees in San Jose—the heart and soul of Silicon Valley—were forced to face friends and neighbors knowing that, as the rest of the cable world rapidly was deploying broadband digital technology, their system remained solely analog and still utilized archaic technology such as A/B switches. As evidence of how far below industry standards the Bay Area operation had fallen, shortly after buying it in 2002, Comcast CEO Brian Roberts sat before a packed session at the Western Show and called it "a disgrace" that the system did not offer customers any of cable’s new wave of digital products. The pre-Comcast operation was a highly centralized, two-headed monster. AT&T Broadband concentrated management in one location, from which it ran a network of head-ends that served 6 million subscribers from the wine country of the Napa Valley to the Monterey peninsula, and a second network of systems serving 750,000 customers in the more rural Central Valley, from Fresno to Sacramento. The setup was inefficient, made communication cumbersome and provided few opportunities to interact with community leaders in such important franchise areas as Sacramento and San Jose. Outside of the main office in San Francisco, there was nothing more than a series of installation/service technician centers at strategic locations throughout the system. As Rick Germano, regional SVP for Comcast in California says, "Out of a single office, AT&T Broadband was trying to run a cable system that was so big you couldn’t drive it in a day." Present and Future: Roberts’ Rules of Order Today, according to the system’s management team, Comcast Bay Area is a model of operating efficiency, offering the latest in digital products, including video on demand, HDTV, high-speed Internet access and DVRs. (The difficulties Comcast has encountered filling orders for DVR service—not necessarily a bad sign—has encouraged rivals TiVo and Dish Network to market more aggressively.) In January ’05 the system will begin ramping up for its rollout of VoIP (it has been offering circuit-switched voice service since the days of AT&T Broadband). But the fact that the system’s capacity and technical capabilities can stand beside any in California is not really the story. The real story is how the system got that way—or, more specifically, how quickly it got there. Once the announcement of the AT&T Broadband acquisition was made, one of the first orders of business for the Comcast executive team was to address the employees of their newly acquired Bay Area system. In February 2003, Ralph and Brian Roberts were joined by Steve Burke on board the USS Hornet, an aircraft carrier now serving as a naval museum off Alameda Point in the East Bay, to greet the employees. Brian Roberts seized the moment to drive home his point that, regardless of what the employees’ experience had been, they were now part of a company that was in this for the long haul. When he pointed his finger and promised, "We’re here to stay," 5,000 or so employees—many of them veterans of five, six and seven different owners—broke into spontaneous applause. "When Brian promised that Comcast was going to rebuild virtually all of the system, then looked out over the crowd and said, `We’re going to give you money to get this thing done,’ the employees were jumping out of their seats—literally," Johnson recalls. Roberts wasted no time making good on his pledges. At the time of the purchase, the system was operating on promises made to various municipalities by AT&T Broadband to rebuild in seven years. After that March day on Alameda Point, five years were shaved off the schedule. What followed was a 24-month, $600 million full court press that taxed almost every one of the Comcast’s 6,000 or so employees in the area, but somehow stayed on schedule and within budget. The rebuild interconnected most of the Bay Area head-ends, upgraded channel capacity and introduced the digital age to millions of homes throughout Northern California. Construction and splicing crews were mobilized at numerous locations in the system simultaneously, instead of being focused on one area at a time and conducting a piecemeal rebuild. This helped get the project completed sooner, and also concentrated the disruptions of service and demands on the call centers into definable, manageable blasts of activity. Comcast decentralized its Bay Area operation, breaking AT&T Broadband’s one central cable operating center into five largely autonomous system offices, each with an area VP and directors of marketing, finance and human relations. While there is still a regional office, Germano says Comcast’s five area offices are "five locally managed, quarter of a billion dollar businesses." Channel lineups are consistent and programming is shared throughout the contiguous sections of the system, but each of the five areas has its own local origination channel and a production head who reports directly to that area’s VP. To facilitate the growth of its business-to-business services, Comcast created two divisions: Comcast Business Systems, which targets corporations for point-to-point network solutions, and a group which is targeting small businesses with a myriad of products. The latter has shown such great growth potential, Germano says, that Comcast has added support staff to keep pace with orders. Over the past 24 months the company opened and staffed three state-of-the-art call centers in Northern California (Concord, Morgan Hill, Sacramento) and upgraded a fourth (Livermore), adding a total of 1,100 full-time employees in the process. Halfway through the rebuild process Comcast brought in Germano from its Seattle operation to oversee the conclusion of the project. Germano, who has been relocated 13 times in 16 years, finished the process of hiring the five area management teams and took a read of the already stretched-to-the-limit workforce. "In any undertaking like our rebuild, the key thing is getting the employees to help you and getting them to work an incredible amount of time," he says. "I’d be lying if I were to tell you that there weren’t times when we’d say [to corporate], `We just can’t hit that timeline. And if we do, one of two things will happen; we’ll either kill our people or the thing won’t work right.’" To help employees deal with the staggering cost of housing in the Bay Area, Comcast initiated two programs (CAE for its call centers; CommTech for its technical operations) that enables them to earn additional pay by developing themselves professionally and/or by meeting other performance-based goals. As if Germano didn’t have enough on his plate, earlier this year Comcast announced plans for a regional sport network. With Fox’s Bay Area RSN having tied up the San Jose Sharks, Oakland A’s, San Francisco Giants and Golden State Warriors for the foreseeable future, Comcast enters launch mode with only the NBA’s Sacramento Kings as a foundation. The balance of the net’s regional programming will have to come from local high schools and colleges such as Stanford and the University of California at Berkeley. Marketing and PR Challenges The San Francisco Bay Area is one of the most ethnically diverse markets in the country, and Comcast knew it needed a top-notch marketer. To that end, Germano recruited Rick Lang, also from Comcast’s Seattle system, to be VP, sales and marketing. Lang assembled a sales and marketing team, based in the regional office, that is as culturally diverse as the market itself. "Not only are there tremendous minority populations in this market, but each consumes media a little differently than the next," Lang says. For example, San Jose’s large Vietnamese community likes to do business at a local store, at which they will buy anything from meat to phone service. Lang discovered that campaign tag lines—and English-language idioms in general—don’t always translate well to other languages. As a result he’s given his agencies and marketing teams leeway when delivering broad message points or image advertising. "It’s more important to get the message right than it is to deliver a word-for-word translation." Given the area’s history with cable operators, community leaders have adopted a wait-and-see attitude. Tom Manheim, public outreach manager for the city of San Jose, is heading up the renewal of the city’s now-expired franchise agreement and finds himself torn between what was and what might be. After finally hammering out a renewal with AT&T Broadband, Manheim was frustrated to learn that Comcast wanted to fundamentally change the agreement when it acquired the system. He says the new company’s subsequent negotiations have been "characterized by delays and lawsuits." Still, he says what few complaints he does hear now are generally standard rebuild complaints, relating to such things as construction crews walking though peoples’ yards or unfamiliarity with new products and equipment. He complimented Comcast for being "very aggressive" with its rebuild. "They are concerned about customer service in a way that AT&T Broadband appeared not to be," he says. Germano hasn’t quite gotten over the chilly reception from the local press. Germano says he recalls seeing headlines that would say, for instance, "Cable Company Does This" or "Cable Company Announces That." "They wouldn’t even use our name," he says. "That’s how accustomed they were to the parade of companies and how skeptical they had grown to anyone’s chances of being here for any length of time." Things are much different now. Johnson says, "I tell reporters all the time, `I challenge you to find another Bay Area company that has invested $600 million dollars in capital infrastructure, while at the same time hiring between 1,100 and 1,500 people in 24 months.’ Try as they might, they can’t name one."