At age 47, Adelphia Communications Corp. already has one of
the oldest brands in the cable business.
And if Tom Cady, the MSO's vice president of marketing and
sales for the past six months, has anything to say about it, the Adelphia brand will now
extend further than ever.
Adelphia is fueling its growth through virtually every
means available: acquiring other MSOs, moving into new regions, deploying new products,
targeting business customers, building a national fiber backbone and exploring multiple
technologies for last-mile delivery to the home or office.
Thanks to the name change of its Adelphia Business
Solutions Inc. subsidiary (formerly Hyperion Telecommunications Inc.), Adelphia's brand
extension will move beyond areas where the MSO has cable franchises. The company's board
officially approved the name change last Monday, but the brand transition has been under
way since this past spring.
Some consider it risky to tag a business division with a
cable brand. "We believe Adelphia has a pretty good track record," Cady said.
"As we develop our brand over time, it will definitely be something we want to carry
over across both markets."
With the help of its national fiber backbone, which should
be completed by the end of next year, Adelphia plans a national expansion on the
commercial side. "We'll be serving most markets in the continental United States,
with a few exceptions," Cady said.
Adelphia will use a mix of fiber, digital subscriber line
and wireless local multipoint distribution service to establish last-mile connectivity,
When asked whether using technologies typically associated
with phone companies might raise eyebrows in the cable community, Cady answered,
"We're a service provider. We're not depending on any one technology."
For its national expansion outside of its cable-franchise
territories, Adelphia will focus on the business market first. But eventually, Cady said,
the company might take DSL into new residential markets where it's established a business
presence, or even overbuild a cable network outside of its current cable properties.
Cady led Hyperion's marketing team prior to his promotion.
His biggest challenge in his new role is pulling the marketing teams from both the
residential and business sides and "finding where we could leverage our strengths
across both sides of the business."
Adelphia plans to offer all four of its core product
categories -- video, voice, data and messaging -- to homes and businesses, although some
applications differ between the two markets. Businesses may want videoconferencing or data
applications such as frame relay that residential customers don't need.
After a recent marketing reorganization, Adelphia now has
one executive overseeing each of the four product categories, responsible for both the
business and residential markets. In each product category, there's also a specialist for
each market, business and residential.
Cady acknowledged that it was still relatively unusual for
an MSO to have a dedicated team for the business market.
SG Cowen Securities Corp. analyst Gary Farber said the
business telephone market represents "big dollars," adding that having a
business strategy will prove attractive for any cable operator that chooses to do so.
To reach business customers, Adelphia primarily uses a
direct-sales force, which Cady predicted would more than double in size, exceeding 1,000,
by the end of next year.
Adelphia also allows outside sales agents to sell its
services, but only under the Adelphia brand. "We don't wholesale our services,"
Cady said. "We want a direct relationship with our customer."
The MSO's residential-sales strategy includes field sales,
call centers and retail.
The company will keep the "Power Link" brand for
its cable-modem service, rather than signing up with Excite@Home Corp. or Road Runner,
Ultimately, Cady wants to use retail to sell all Adelphia
consumer services, such as digital cable, cable modems and paging.
Cable & Telecommunications Association for Marketing
president Char Beales said one of Adelphia's top priorities today is integrating its new
properties. Early last month, the MSO closed on deals to acquire Century Communications
Corp., FrontierVision Partners L.P. and Harron Communications Corp.
Rebranding the new systems presents a great marketing
opportunity, if it's done right, Beales said, adding, "'New and improved' has always
been the most powerful marketing message."
Adelphia has just begun the rebranding efforts for its new
systems. The process is expected to take about 90 days. "At some point, you have to
stop, because otherwise, people will say, 'I've got it! Why do you keep telling me
this?'" Cady said.
With the new acquisitions, Adelphia plans to revamp its
advertising and promotional efforts. "We're not using the Century or Harron approach,
or even the Adelphia approach," Cady said. "It's all new."
Adelphia will test a customer-loyalty program in its
Buffalo, N.Y., system, where it has a longtime presence on both the residential and
business sides, and where it owns the Buffalo Sabres National Hockey League team.
While growth is a clearly a priority for Adelphia,
"Customer retention is a key goal for next year," Cady said, because "the
value of the customer has gone up dramatically."
Adelphia's stock price doesn't yet reflect the value of the
customer, which has led Wall Street analysts to strongly recommend the stock in recent
"Given what we view as outstanding fundamentals and by
far the least expensive statistical valuation in the [cable] group, we regard the stock as
truly compelling at the current price," Goldman, Sachs & Co. analysts Barry
Kaplan and Lou Kerner wrote in a report two weeks ago.
Residential Adelphia customers are worth $200 to $300 per
month when factoring in cable, telephone, paging, high-speed Internet and home security in
some markets, Cady estimated.
"The loss [of a subscriber] in the future will hurt a
whole lot more than a loss in the past," he added.
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