You can see a lot as you drive in and around Suffolk, in the heart of Virginia’s Hampton Roads region, 20 miles west of Norfolk. There are remnants of the city’s industrial roots as a peanut and peanut oil processing center. Freight trains pass through the city’s downtown a few times per day. There’s construction up and down the area’s major highways—spacious housing developments, new schools, hospitals and a new convention center. And there’s a surge in retail and high-tech employment, with QVC, Target and Lockheed Martin opening up distribution and research facilities. You can even find a cable programming source if you hit the right road. The area is home to New Dominion Pictures, which supplies documentaries to The History Channel and Discovery Channel. What you won’t see in Suffolk—at least not in plain sight—is the woodshed where the management of Charter’s local cable system, which serves more than 55,400 households, might have been taken two years ago. At the time, Charter’s relationships with subscribers and city officials were as frayed as some of Suffolk’s downtown housing. Helped along by the beginnings of population and business booms in Suffolk, Charter has managed to change its image with both the public and local leadership. The system has picked up almost 5,000 new basic subs since winter 2002, while DBS penetration in the area, inching near 40% when current management arrived—way above the national average of 23%—is down to around 32-33%. Revenue, helped by deployment of digital and high-speed Internet access, has grown 45% over the last two years and is projected to rise another 20-25% in 2004, according to general manager Matt Favre. These numbers help illustrate the change in the system’s image, a change that has been noted by the local press. When The Virginian-Pilot (owned by Weather Channel parent Landmark Communications), one of the state’s largest daily newspapers, checked in on Charter two months ago, the opening sentence of its story declared that the system "has mended fences with customers and City Hall." What’s more, Charter’s Suffolk system, located in modest quarters a street or two from a peanut processing factory, is becoming a regional hub. The head-end, call center and customer service operations interconnect with other Charter systems east and north of Norfolk, and with the Outer Banks region of North Carolina. All told, more than 130,000 basic customers are handled through Suffolk. Charter’s digital lineup, as well as its high-speed Pipeline brand, is available in all markets covered by the Suffolk hub, and a high-definition TV service tier will premiere later this month. A Sputtering Takeoff Favre arrived in Suffolk in February 2002 after completing assignments with Charter in Georgia and Alabama. He was the fifth person put in charge of the system since the late 1990s, and it didn’t take long to grasp the depth of the quagmire his operation was stuck in. "The system was poorly managed and poorly directed," he recalls. "The staff was under so much pressure to improve service, and there was no cohesiveness to get things done, or to communicate with subscribers on what was being done." When Charter bought the systems from Falcon Communications in 2000, city officials were dubious that the new owners would improve on Falcon’s poor record, which included outages, unanswered phones and repeat service calls gone awry. That record was topic No. 1 at many a city council meeting. Charter initially made a bad situation even worse. Under Suffolk’s cable franchise agreement, Charter and Falcon were supposed to inform city authorities about the possibility of new ownership in order to get approval for a transfer. They didn’t, "and that’s why Charter got in trouble," says Dennis Craff, the city’s communications director. "That continued the negative attitude and bad relationship." Suffolk officials tried to block the sale, then let it go—but not before imposing a series of milestones Charter had to meet once it took control of the system, including a rebuild. Milestones not accomplished on time would result in fines. Charter’s first crack at improving matters, which centered around its rebuild from 450 MHz to 860 MHz capacity, didn’t reduce the amount of complaints voiced at city council meetings. Construction caused outages, repeat service calls continued and subscribers and city officials were left in the dark about how long the situation would continue. And, as current management now acknowledges, the extent of the problems Charter inherited from Falcon was grossly underestimated. "The system deteriorated to a deplorable operating status," says Skip James, Charter’s government relations manager. "We were rebuilding everything with state-of-the-art tech the city never dealt with before. There was no effort to brief city officials on the upgrade. We weren’t even organized at the time to track the number of consumer complaints coming in per month." Winning Over a Cynical City James entered the picture as construction manager four months ahead of Favre in October 2001, after engineering and construction jobs with former midsized MSOs Cable Systems USA and Triax Cablevision. One Suffolk city official advised him early on to keep alternative work handy. "He told me: `I suggest you rent, because I’ve seen all of you come and go,’" James recalls. "The attitude was that they’d heard promises to clean things up before—here’s another savior, and no one’s addressing the problem," Favre says. "To a certain degree, my situation fell on deaf ears, because they wanted to see the progress." After a top-to-bottom staff review, during which several people were dismissed, Favre designed what he calls his blocking-and-tackling strategy. While the rebuild accelerated, Charter went on a neighborhood-by-neighborhood patrol to weed out recurring service problems. The system’s technical staff was retrained to handle the majority of consumer complaints on the first call, using new equipment and procedures. "We developed teamwork here, to the point where I went out in the field with the service employees plenty of times," says system technology director Clarence Rainey. "Whatever it would take to satisfy a customer, that’s what we did." Charter launched an outreach blitz on the entire Suffolk area, with local media carryng ads announcing customer service improvements under the new regime. Charter stepped up its participation in charities and city events. It set up a combo digital/high-speed kiosk near the front door of system headquarters for walk-in customers. It also used a trailer to showcase digital and high-speed services to prospective subs. When the sky-blue trailer doesn’t operate at a local landmark, it’s parked outside the front office. "There were times Skip and I and other senior people pulled the trailer out and sold Charter Pipeline door-to-door," Favre notes. "We had everyone jump into different duties when we needed to get the work done. You had to roll up your sleeves and understand how all the cogs work in a business and have everyone function as one engine. Consumers had to see a face in us." By early 2003, the Suffolk system had made some progress in reducing outages and follow-up service calls, but not enough to meet the milestones city officials set in place with the ownership transfer. As a result, Charter paid about $340,000 in fines. Still, new basic customers were coming in, and with fully rebuilt areas enjoying improved service, the public complaints finally started to subside. Despite the local devastation caused last September by Hurricane Isabel, repeat service calls are down to 5-10% of the system’s call volume per month, among the lowest rates in any of Charter systems operating in the Northeast and mid-Atlantic states, Rainey says. "I’ve been here six months, and I’ve only received two calls complaining about service," says Suffolk communications director Craff. "One of those calls was about high-speed Internet service the caller didn’t consider so high speed. The relationship has turned pretty good." Hurricane Isabel didn’t hurt the system’s improved rep with city leaders. "They had some problems, but that month, so did we all," Craff says. And Now…Time for the Marketing Push Digital penetration in some corners of Suffolk is around 50%, and nearing 25% in others, Favre says. Pipeline penetration is reaching 25% in some locations, "and other neighborhoods just launching it are off to the races," he says. The ongoing promotional campaigns have helped these numbers. "Because we’ve overcome the service problems, we’re now in position to go to our customers and educate them about advanced services," says Brooke McDaniel, a Cox, Comcast and Cablevision veteran who joined Charter last November. "A lot of our customers are tech savvy—well versed in what’s available." Charter’s customers in Suffolk are diverse as well; the area has fast-growing Latino and African-American populations. In recent months, McDaniel has advertised with Spanish-language radio stations and publications in the area to tout digital and high-speed. That tack will continue with the HDTV rollout. Cross-channel promos for the HDTV tier will appear soon, as will bill stuffers and radio and print ads. Charter’s trailer will add an HDTV demo in upcoming community appearances. "Customers are coming to us and asking for [HDTV]," says McDaniel, seated in her office in front of an impressive sand painting of a Native American warrior. "They know it’s on the horizon because they hear from people in surrounding communities who have it, and they see the retailers pushing it." Several advanced services are under consideration for deployment later this year or in 2005, including video on demand, PVRs, telephony and interactive option Digeo. Before that, Suffolk area subs will see a digital sports tier, largely devoted to single-sport or extreme sports channels. That digital assortment, and maybe one for Latinos, will show up late summer or fall, Favre says. Most of Charter’s local and national spot ad sales in the Suffolk area are managed by Prime Media, an independent firm. Sales for the Outer Banks markets are handled in-house. Rob Faus, a regional Charter advertising VP, believes local sales revenue will grow 10-12%, in line with Cabletelevision Advertising Bureau’s suggested average result for the industry. Political advertising is a question mark. "We’re waiting to see when it breaks, and when it does, how much in dollars will go to local markets against national buys," Faus says. As for Favre, even though the local political winds are breaking in his favor at last, he won’t rest on his laurels and take the operator’s new image for granted. "We must have a sense of urgency here," he says. "The technology changes and the consumer’s mind-set can change on the drop of a dime if you don’t pay attention. You have to make sure to launch new things, but not before investing more in the infrastructure to support them."

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