Adelphia Plans Big Digital Ramp-Up

Adelphia Communications Corp. plans a major digital cable ramp-up for the second half, more than doubling its installed base to 800,000 customers.

Digital subscribers in the second quarter rose 156 percent to 342,000, the company said last week. Adelphia plans to order 70,000 digital set-tops this month and another 100,000 each in September, October, November and December.

"We're ramping up our sales and marketing efforts and making sure we have the infrastructure available," executive vice president and chief financial officer Tim Rigas said during a conference call. "With this [rollout], we believe we'll have higher customer-satisfaction rates."

The success of the digital product is also rubbing off on Adelphia's cable-modem offering, "Power Link." Rigas said Adelphia is experiencing 4 percent to 5 percent cable-modem buy-rates from new digital customers.

"With the ramp-up in digital, we should see a corresponding increase in the cable-modem product," he added.

Cable-modem subscribers nearly tripled in the second quarter, to about 75,000.

Adelphia is making digital converters available in some retail outlets, and will expand that in coming months.

So far, the MSO has made digital converters available in electronics stores in two markets. Rigas said that in those markets, 60 percent of boxes are self-installed and 40 percent are delivered via a courier service, which also offers some step-by-step instruction to the customer.

Rigas said that retail strategy will expand to other markets, and it will include cable modems, as well.

Adelphia also plans to begin trials of a video-on-demand product in the third and fourth quarters, along with electronic-commerce ventures.

For the quarter, pro forma revenue rose 9.6 percent and pro forma cash flow rose 10.6 percent. Adelphia ended the period with 5.1 million subscribers, up 1.4 percent.

The company is also making headway on telephony through Adelphia Business Solutions Inc.

ABS primarily offers telephony service to business customers, but it does have some residential subscribers in rural areas. In those areas, Adelphia has seen an additional $28 in revenue per subscriber, per month.

Because of its relationship with ABS, Adelphia can extend its high-speed-data service using asymmetrical digital subscriber lines where it doesn't have cable operations.

ABS colocates equipment in telephone-company central offices, so it can offer ADSL service at minimal cost by installing ADSL cards at the switches.

Vice president of finance Jim Brown said Adelphia has already purchased ADSL cards for 10,000 subscribers.

"We believe cable modems are the superior technology," he said, adding, "This allows us to expand our footprint on a lower incremental-cost basis."

Brown did not say when and if Adelphia plans to begin offering ADSL service on a wide-scale basis.