ISP Channel Retailing Deal Leads to Self-Provisioning

ISP Channel's new retailing relationship with national
chain RadioShack is going beyond cable-modem sales and into tests of self-provisioning
systems aimed at eliminating installation truck rolls.

Along with its recently announced agreement to begin
selling high-speed Internet-access service at select RadioShack outlets, ISP Channel will
use Cisco Systems Inc.'s "Subscriber Registration Center" (CSRC)
self-provisioning solution in pilots at several of those stores.

Both the retail and provisioning efforts mark an aggressive
effort to place ISP Channel in front of potential subscribers -- who can view or try out
the service firsthand -- and to cut acquisition costs by promoting self-installation and
enlisting retailers to carry the ball of selling modems and service activations.

"Normally, we spend $250 [per subscriber] for
subscriber-acquisition costs," said Ian Aaron, president of ISP Channel's
parent, SoftNet Systems Solutions Inc. "If we can lower that, it's a big win for
us. Our cost per subscriber acquisition is lower through our RadioShack channel than it is
doing it ourselves."

The self-provisioning tests bring to fruition plans that
ISP Channel -- a provider of cable-modem systems and service to small and midsized
operators -- outlined at the National Show for accelerating its rollout of standards-based
cable-data services.

RadioShack stores involved in CSRC pilots will have
computers linked with the end-to-end system, which works with a lightweight
directory-access-protocol server and specialized registrar modules allowing the user -- a
salesperson or shopper -- to configure broadband service, provide customer information to
the operator's billing system and register and activate service.

"We're going to create an HTML [HyperText Markup
Language] custom interface so in the store, people will actually be able to
provision," Aaron said.

The setup will work best with systems that ISP Channel has
deployed based on the cable industry's Data Over Cable Service Interface
Specification standards, which are intended to ensure that any brand of certified modem
works with any qualified cable system.

Aaron said about 50 of the 62 systems ISP Channel has
deployed so far are DOCSIS-based, using Cisco's DOCSIS-qualified headend equipment,
along with General Instrument Corp.'s certified "SURFboard 2100" and
"2100d" modems.

RadioShack will eventually sell subscribers modems out of
its own inventory -- an arrangement most major MSOs have been eyeing as the goal of DOCSIS

Earlier this year, RadioShack entered a broad retail
relationship with Thomson Multimedia. Thomson's planned
"store-within-a-store" presence will eventually include its standards-certified
cable modems, but Aaron said the modem brand would largely be irrelevant in DOCSIS

"If it's a two-way system, we don't care if
it's GI or Thomson -- it's a DOCSIS product," he said. "RadioShack
doesn't care about the modem as long as it precipitates a sale."

Aaron would not detail the financial relationship between
the retailer and ISP Channel. However, he described it as similar to those between
cellular-phone dealers and their service providers, with the retailer having a margin on
the hardware and a payment for service activations, and the service provider chipping in
for promotional costs.

"They've got a formula that says within a
transaction, they need to make a certain amount," Aaron said. "We worked within
those parameters. Within those parameters, we get an efficiency in subscriber-acquisition

The RadioShack relationship may be one of the most advanced
cable-modem-retailing pilots in place so far. Overall, the nation's biggest
consumer-electronics-store chain has more than 7,000 outlets, serving about 80 percent of
ISP Channel's current markets.

After limited rollouts in a handful of markets such as
Oxford, Miss., and Lake Havasu City, Ariz., RadioShack will follow shortly with rollouts
in all other ISP Channel markets in the United States and Puerto Rico.

ISP Channel late last month also launched service in 12 new
systems, bringing it to 62 total cable systems passing about 2.4 million homes. The
company said it currently has more than 7,000 customers.

Besides a nearly ubiquitous presence in ISP Channel's
markets, RadioShack also brings to the table video-service expertise that its salespeople
have gleaned dealing with direct-broadcast satellite service and equipment.

"It's going to give us retail presence with a
store that's open 70-plus hours a week," Aaron said. "And because of their
relationship with DirecTV [Inc.] and PrimeStar, they know this space. They can talk cable
and, for the first time in the local market, it gives the cable operator a place to
compete side-by-side with DirecTV."

RadioShack is also expanding its installation role through
parent Tandy Corp.'s AmeriLink Corp. installation-services subsidiary -- another cost
savings to the cable operator.

A strong retail presence gives ISP Channel leverage with
cable operators as it competes with Excite@Home Corp.'s @Home Solutions. The big
cable Internet-service provider is aiming for the same small to midsized cable operators
as ISP Channel.

@Home Solutions late last month announced four new
cable-affiliate relationships that bring it to more than 1 million cable homes passed, the
bulk of those affiliated with its founding MSO partner, Falcon Communications Inc.

@Home also has a national merchandising relationship with
Circuit City Stores Inc., although Aaron said ISP Channel's systems tended to not be
in Circuit City markets, which are clustered in primary cities.

"The reality is that @Home Solutions is really
@Home," Aaron said. "They're under pressure to support the big guys, so the
question is: How do you support the little ones? The difference is that our business is
really geared to that market."