Frontline Solutions Unveils Proven Software Solution for Battling $6 Billion Cable Theft Problem

Business Wire, May 4, 1998

REDWOOD CITY, Calif.--(BUSINESS WIRE)--May 4,1998--

Cable Veteran Ken Higgins Formally Debuts Company That Has Delivered 300% to 500% ROI for Four MSO Divisions in Major U.S. Cities

Cable-industry veteran Ken Higgins today announced the formal debut of Frontline Solutions Inc., formerly known as The Backdoor Group, a company with a proven solution for helping MSOs dramatically reduce cable theft, a problem that costs the cable industry an estimated $6 billion per year in lost revenue (Source: National Cable Television Association).

Frontline Solutions' official unveiling at the 1998 NCTA trade show in Atlanta, Georgia follows implementation of the company's tap-auditing software in a total of 14 MSO divisions nationwide, including Time-Warner, TCI and Intermedia systems in major U.S. cities. Four of these divisions have been utilizing Frontline's solution for more than a year, with all four divisions documenting dramatic drops in signal theft and an ROI between 300 to 500 percent in just 12 months. Higgins, a pioneer in launching HBO and other cable programming in the 1970s, notes that an additional 10 MSO divisions -- customers acquired by Frontline Solutions in the past six months -- are all positioned to achieve equally substantial results.

"This announcement comes at a time when the cable industry is in need of a real solution to a very real problem," said Ken Higgins, CEO, Frontline Solutions, Inc. "At present, there are roughly 17 million households in the U.S. with unauthorized cable connections. For cable operators who are serious about addressing this issue, we have developed a software solution that is market-tested and proven to deliver bottom-line results."

The Monitor Solution: How It Works

Frontline Solutions' software product, called The Monitor 2.2, provides cable operators with a simple yet effective method for auditing taps, the devices located on telephone poles that feed a cable signal into a household. Each tap installed in the field services approximately six households. In the past, operators had neither an effective nor an efficient means to track the cable connections flowing through their taps, making it easy for unauthorized viewers to steal cable.

By automating the tap-audit process, Frontline Solutions has provided its current customers with a total of $13.2 million in recurring annual revenues generated from new subscribers. The Monitor Solution enables cable operators to create new sources of revenue by identifying unauthorized viewers and converting them into paying subscribers. The Monitor also enables MSOs to protect existing revenue by continuously monitoring customer activity, ensuring a high rate of customer retention.

Paper vs. An Automated Solution

Traditionally, MSO divisions conduct tap audits once every two to three years, using a labor-intensive, paper-based process. The result is static information captured on paper and stored in filing cabinets, where it is rarely accessed. By contrast, The Monitor Solution automates and streamlines tap auditing, making it an integral part of a cable field team's daily workflow. Information captured in the field is downloaded daily, making access to the information rapid and easy for use by various departments within the MSO division, including top management, sales, marketing, and field maintenance. The Monitor software is easy-to-use and comes fully loaded onto Pentium-based PCs (used by tap audit managers) and hand-held devices (used by field technicians).

Continuous Monitoring

According to the NCTA, traditional paper-based audits reduce the rate of cable theft for an average of three months but fail to reduce theft for the long term. NCTA studies show that unauthorized viewers, even after being identified via a paper audit, tend to steal again. Unless operators continually repeat the costly and labor-intensive paper audit process, they have had no means to break this cycle of cable piracy. The Monitor solves this problem by equipping field personnel with easy-to-use hand-held devices that provide a vital link between dynamic field information and centralized databases. This link enables MSO divisions to continuously monitor customer activity out in the field, freeing management to concentrate on providing better service to paid subscribers and allowing field personnel to focus on capturing new business.

"Paper audits enable the cable operator to catch an unauthorized viewer once, but after that there's no way to stop them from stealing again -- until you conduct another paper audit two to three years later," says Higgins. "What this industry has lacked is an effective means to continuously monitor what's happening out in the field. The Monitor provides this capability."

The Monitor Delivers Results in Philadelphia

Philadelphia-based Wade Cable, a division of Time Warner, was one of the first cable operators to implement The Monitor system, which replaced traditional paper-based audit system that was labor-intensive and error prone.

"If cable operators really want to be aggressive about closing the backdoor on cable theft, they need to start using this automated auditing system," said Mike Ryder, Business Manager, Wade Cable. "The Monitor system is so effective that, for the first time in this company's history, we actually posted gains in subscribers during the summer months of June, July, and August -- months when we traditionally lose subscribers in the cable industry."