Austin: Time Warners First Digital Foray

Early last month, Austin, Texas, became Time Warner Cable's
first market to formally launch digital cable.

Three days before its official May 6 launch date, the
system began advertising the service over radio and television, according to Judy Walsh,
vice president of marketing for Time Warner Cable of Austin. Direct-mail pieces followed
shortly thereafter.

Rather than relying on pent-up demand for the new
technology, "We went ahead and launched the product just as you would any new
product," Walsh said. "The assumption was that we'd have to tell consumers about
digital, to educate them. But they're catching on."

Time Warner had conducted a slow and very controlled
rollout of its digital-cable service in Austin since the beginning of the year to make
sure that the plant performed technically and that the system was up to the task

But since the service launched last month, "We've
really integrated digital into our day-to-day marketing," Walsh said.

Instead of selling digital as an add-on or a set of tiers,
Time Warner offers for $40.95 per month its "Digital Value Package," which
groups together all of the system's standard basic and advanced-analog channels and adds
new digital-basic channels.

The package also gives customers access to 37 pay-per-view
channels, additional premium-movie feeds -- presuming they already subscribe to analog
premium channels -- plus 40 channels of digital audio and the on-screen interactive
programming guide native to the digital boxes from Scientific-Atlanta Inc.

Premium-movie services cost $10.95 per multiplex, with
incremental discounts for each additional premium network taken.

Time Warner promotes "more channels" as one of
its primary sales messages for digital cable. But Walsh said the system doesn't shy away
from talking about the technology as it relates to consumer benefits, such as better
picture and sound quality, as well as the seven-day-in-advance search capabilities of the
on-screen guide.

In tracking sell-ins to new subscribers, digital accounts
for 30 percent of customer acquisitions, Walsh said.

"We're very pleased," she added. "Digital is
the best thing that's happened to cable in a long time."