Ads To Drive Internet

Television Digest with Consumer Electronics, March 13, 2000

Basic cable network viewership climbed to record levels first week in march, according to Cable Ad Bureau. In its latest analysis of Nielsen research data, CAB said advertiser-supported cable's primetime delivery rose to 23.9 million homes for week, up 1 million homes, or 4.2%, from year ago. Similarly, ad-supported cable's prime time rating rose 0.6 points, or 2.6%, to 23.7, and cable's prime time audience share increased 1.6 points, or 4.3%, to 38.7. In contrast, CAB said, 7 broadcast networks saw their collective prime time delivery drop to 34 million households, down 1.1 million (3.2%), from year ago. Likewise, CAB said, collective prime time rating for 7 broadcast networks fell 1.6 points, or 4.5%, to 33.8, and their prime time audience share slipped 1.9 points, or 3.3%, to 54.8.

Excite@Home isn't worried about losing cable affiliations when exclusive deals start ending, CEO George Bell said, because as "practical matter" company's infrastructure is embedded so deeply into 600 cable headends around country. "Who would want to rip that out" to switch cable ISP, he asked: "We're literally married to the headend." Even if company must share platform with other ISPs, Bell said, they won't have same cacheing ability as Excite@Home, which he said by end of year hopes to be able to store 65-70% of accessed content on local servers for faster downloads. He said Excite@Home's future is "platform agnostic," seeking partnerships on DSL as well as cable, although so far it has had "no incentive to go outside cable" since it already struggles to meet rising demand. That will change, he said, especially as company with its new Work.com partnership with Dow Jones increasingly targets commercial customers. Bell said Excite@Home is increasing its backbone capability this summer to 13 Gbps from current 2 Gbps to meet what it expects to be surge of cable modem users. He said current average penetration in ready markets is 5%, but in "mature" markets where service has been available 3 years, it's often 25-30%. This is "not a time to be harvesting profits," he told analysts who wondered when company would show one. "This is 'customer capture' time." We're "sharply undervalued" as result of fears about open access regulation and speculation that MSOs won't renew, Bell said, but "value of our franchise is much larger than the cable partnerships."

In long-awaited decision, FCC created new class of commercial license called "Guard Band Manager license" and voted to prohibit cellular-like services in 6 MHz of guard band spectrum reserved in Ch. 60-69 band. Use of guard bands became contentious issue because private wireless users were urging FCC to give them exclusive use of spectrum, while others were lobbying Commission to put up all spectrum for auction without setting restrictions on types of services that could be offered in band. Comrs. Furchtgott-Roth and Powell partially dissented from decision. FCC said new rules are designed to ensure that public safety licensees, which will use 24 MHz of spectrum in Ch. 60-69 band, will operate "free of interference from any new commercial users in that band." Agency said auctions will be used to assign guard band spectrum to band managers, who will be responsible for leasing spectrum to 3rd parties, which agency said could include "both commercial service providers and private parties." Entities operating in guard bands will be required to comply with specified "out-of-band" emission criteria, and with certain prescribed frequency coordination procedures. Licenses will be auctioned for 2 MHz and 4 MHz guard bands on basis of 52 major economic areas (MEAs), which FCC said will provide opportunity for both "aggregation and partitioning of geographic areas to suit a wide variety of possible business plans."