To Survive, Shen-Heights Cable Thinks Big

Residents of 6,500 homes in rural Schuylkill County, Pa., can settle in each night and enjoy the benefits of high technology: 130 analog and digital cable channels, as well as high-speed access to the Internet. The technology comes from a 50-year-old, family-owned cable operator that thinks big — Shen-Heights Cable TV Associates Inc. Frank Brophy and Albert Kersewicz founded the business, and Brophy's sons now run it. One of them, Martin Brophy, is the CEO.
Multichannel News West Coast senior editor Linda Haugsted recently spoke with him about the state of rural cable. An edited transcript follows:

MCN: Why did your dad pick cable as a business? What do you think attracted him to the industry?

Martin Brophy:
Well, the fact is that one of the things him and Albert connected on is [that] they're both sports fans and they couldn't get the New York Yankees baseball games in Shenandoah, because it sits in a valley. There were other people who tried [to launch cable], but they picked the wrong mountain. My father and Albert got together and they decided they would pick West Mahanoy Township as the antenna site.

My father was on the school board at West Mahanoy Township at the time, so he had the political connections to do the township. Albert had the political connections to the town, and thus the name: Shen-Heights TV. But they were both sports fans, they both loved baseball and they needed to watch the World Series. That's what predicated it.

MCN: How hard were their early days? Were there enough sports fans like your father and his partner to move this along?

There were a lot of sports fans, but you have to realize — a lot of us forget now — but back in 1950, there weren't a lot of television signals available. When they started there were only three signals available: 3, 6 and 10 out of Philadelphia. They couldn't get New York. They tried for the longest time to get signals without microwave and it was very difficult. It wasn't until the mid-1960s until they reached a microwave agreement to bring in New York channels.

MCN: What kept the system alive until that time?

The channels 3, 6 and 10; and the advent of the Wilkes-Barre/Scranton UHF channels; and the growth of the system. As they started in 1950, they only had so many homes, and they built a section as money came available to expand. To wire the whole town at that time was a monetary challenge. As you go forward, you have to raise money. At that time, hook-up fees were $139, $140 a house.

MCN: How hard a sell was that to the bankers in those days?

You didn't go to the bankers! They did this all through family financing. My aunt and backers from Albert's side, family members, helped them get started. They basically did it from pure determination and borrowed dollars from family members.

MCN: Given the expense of a digital upgrade and high-speed-data implementation, I'd imagine you're not financing things the same way. Even the big guys are complaining about the lack of capital. How does a 4,000-subscriber system find the capital and the customers to do the kind of technological improvements that are on a
par with the AT&T Broadbands of the world?

It's very, very difficult. We recognized that to stay afloat, we'd have to advance to digital and to Internet. As I always say, it always works out for you.

The best thing that happened to us was [that] we launched Internet before we launched digital cable. Internet allowed us to find the problems in our plant and allowed us to correct the plant.

As far as financing is concerned, I was able to sell our local financial institutions on advancing our system to be technologically sound and thereby attracting new customers, and especially since we got a new area for the service, which is approximately 6,000 homes. If we didn't upgrade technologically, we couldn't get those new customers.

MCN: So you sold your local bank on the upgrade based on the financial health of the region?

The financial health of the new region we were about to serve, plus the advancements that digital cable and Internet bring. Everybody wants new services, and when you add new services, you increase your revenues by increasing your income. We had a good relationship with our local bank because we went to them to finance the buyout of our former partner [George Uritis].

MCN: Would you recommend that other small operators launch high-speed data before digital cable?

It all depends on the condition of one's plant. If one's plant is fairly old, I would suggest the Internet is easier to do, because it shows you where your problems are more so then digital will. But everybody is different and they have to judge by their own plant.

MCN: Given the size of your operation and the size of the community, is Shen-Heights the kind of operation where you go to the supermarket and people know you run the local cable company, and they tell you what they think, good or bad?

Without a doubt! You can't walk out of this door without somebody stopping you.

MCN: What's the strangest customer interaction you've ever had?

The strangest one is when you go out in the evening for dinner. You go to a local restaurant, and someone goes up to you and lodges a complaint about television reception, or the Internet, or the digital isn't working, or, 'I don't understand that button on the remote control you gave me for my digital box.' It's kind of like being a celebrity.

Equate it to a celebrity who tries to go out to dinner and somebody's out after an autograph — it's the same thing. My father always used to say he had to go out of town for a good meal or a drink, because he couldn't go anywhere in town without getting a complaint.

MCN: These days are subscribers complaining about performance — the fact that technology's moving more quickly than people can figure out — or, like everybody else, is it that programming prices are too high?

The programming prices are definitely leading the way. One of the nice things I can say today is that the actual compliments outweigh the complaints, which I didn't think I'd ever see in my lifetime. We get more compliments for the accomplishments we have made and are making than we do actual complaints.

If there's a service problem or interruption, we fix it almost immediately and that has led to our ability to be recognized as consumer-oriented. Our customers recognize that and they've been more complimentary than they have been negative.

MCN: Do your customers recognize how technologically advanced your system is, compared to other rural systems or operations of your size?

Yes, they do. Our customers are very technologically savvy. We get a lot of compliments on having two-way capability on the Internet cable modems and digital. We've had a lot of requests to expand our facilities [into other areas], but we can't do that. We just tell them [other franchised operators] are working on their facility upgrades, and they'll be adapting shortly.

MCN: Are you holding your own against the small dish? If so, how do you prevent erosion to direct-broadcast satellite?

One of our best strategies against DBS is that we wanted to implement our digital platform as soon as possible to stem migration of people out toward dishes. One of our biggest challenges right now is the proliferation of illegal smart cards to dish owners.

I talked to the Pennsylvania Cable Telecommunications Association about this, and there's no way that I know [of] that I can stem this. These dish people have to do it. If they don't really care who's stealing their signal, although I do, there's nothing that I know [of] that I can do about it.

We have a lot of people in the borough of Shenandoah who have turned back their digital boxes. One person told me bluntly at the counter: I said, 'Why are you giving your box back?' and he said, 'Oh, I got a smart card. I'm getting a dish.' And that was it. So that has to be stopped.