Knology plays interactive hand

Jun 25, 2001  •  Post A Comment

Knology, a broadband-services network that operates in five Southeastern states, is planning to conduct a market trial of voice-over-Internet, video-on-demand and enhanced cable television services by November, said Knology Director of Product Management Lynn Hall.
At the end of the first quarter (ending March 31), the company had already provided its core digital cable television package fortified by Scientific-Atlanta’s Sara electronic programming guide, telephony (phone service) and high-speed Internet access to more than 192,714 paying customers in Alabama, Florida, Georgia, Tennessee and South Carolina.
Because the network hasn’t deployed the advanced set-tops that house powerful hard drives and cable modems, customers are forced to shuffle three sets of appliances-a television endowed with Scientific-Atlanta’s Explorer 2000 series set-tops for digital cable television, a personal computer with a cable modem for high-speed Internet and a telephone-to take advantage of Knology’s full range of offerings. Such a fragmented digital-home-entertainment experience could become the norm for cable and broadband customers unless leading interactive television hardware manufacturers Motorola and Scientific-Atlanta ship more sophisticated set-tops for widespread use.
Ms. Hall said she envisions that a rapid succession of tests will unfold as precursors to Knology’s video-on-demand launch, and she projected that the broadband provider’s initial interactive enhancements test that will include a VOD market trial will be followed quickly by a technology trial and then by a full-fledged VOD service commencement.
“VOD is definitely one of our enhanced products that we will end up launching for our customers,” she said. “We are also very focused on interactive television. We would like to have [an interactive TV] portal and then launch VOD as one application in that portal environment.”
During the preliminary video-on-demand market test, the network is likely to sample programming provided by several VOD content aggregators, including Diva, iN Demand and TVN, Ms. Hall said. Introducing video on demand is a natural progression for Knology, given the truckloads of Scientific-Atlanta’s Explorer 2000 set-top units it has already paid for. Those boxes’ two-way interactive capacities are currently lying dormant, with the exception of a limited assortment of pay-per-view programs that its customers can order over the network via their remote controls.
In preparation for the home-entertainment tests, the network operator is currently busy studying several issues, including which of the interactive middleware systems (Microsoft TV, Liberate Technologies, OpenTV, PowerTV and Canal Plus Technologies) is best suited for Knology’s architecture. The company is also evaluating whether to supplement the transaction-VOD content offerings from iN Demand, Diva or TVN with HBO, Showtime and Starz! Encore’s subscription-video-on-demand content during the VOD trials.
Conspicuously absent from the test will be personal video recording services. Ms. Hall said, however, that Knology is considering experimenting with server-based PVR in the future and added that she is expecting the nascent industry to blossom soon.
Another priority for the broadband network will be making Scientific-Atlanta’s Explorer 4100 series set-tops with home-networking and cable modem capabilities available to customers once those units are introduced commercially. But not all of Knology’s customers’ existing Explorer 2000 boxes will be replaced by the pricier 4100 models, Ms. Hall said.
Knology, like its larger counterpart RCN, which operates in larger metropolitan markets such as New York City, is known as an overbuilder because it purchases existing cable systems and builds upon them by completing digital upgrades. The company started providing cable television service in 1995, when it first purchased cable systems in Montgomery, Ala., and Columbus, Ga. Since that time, Knology has expanded its subscriber base by acquiring several other cable properties in the Southeast.
In its most recent quarterly filing with the Securities and Exchange Commission, the broadband provider revealed that it has not achieved a profitable quarter since its inception and doesn’t expect to make it into the black in the near term.
“We anticipate incurring net losses during the next several years while continuing to expand … from the construction of our interactive broadband networks,” Knology said in the filing, noting that it had amassed a deficit of $244.8 million at the close of the first quarter.