Charter busy paving a new digital path

Jul 16, 2001  •  Post A Comment

Charter Communications is quietly involved in a test that would enable customers to order advanced digital cable services through their set-top boxes.
The software tool, which was developed by British technology company Jacobs Rimell, would also let cable subscribers view their cable bills on their television screens and interact with digital “agents” endowed with the artificial intelligence necessary to answer customers’ billing and service questions.
At deadline last week, Charter officials had not confirmed that the new project was under way.
Some Charter officials believed that Jacobs Rimell’s technology was actually being tested by Charter’s software partner, Liberate Technologies, rather than by Charter, at a technical headend facility near Charter’s headquarters in St. Louis.
Jacobs Rimell, which raised $11 million in venture capital since opening its doors in 1997, has already established a presence in the Western European cable community-signing deals with Dutch multiple system operator UPC and British operator NTL. But the technology vendor has only started to market its software aggressively in the United States in the past several months.
Kristi Spears, senior director of solution sales for Jacobs Rimell, said the company is facing an uphill battle in convincing American cable operators of the product’s utility.
“The main question of most of the MSOs is how can I make money on this [advanced digital] service, and when I make money, then I’ll figure out how to operate it,” Ms. Spears said. “Our argument is that we have the infrastructure that will allow us to implement a lot of services today.”
At present, the greatest challenge the developer faces in selling cable operators on its technology is that MSOs have yet to widely deploy many of the advanced digital services (video on demand, personal video recording, telephony, etc.) that Jacobs Rimell’s software helps customers order. But Ms. Spears said she is emphasizing one of the application’s other selling points-how much money it can save cable operators by avoiding unnecessary customer service calls.
Estimating that each customer service call costs operators $2 to $3, she projected that if her company’s technology could eliminate two or three superfluous calls for 50,000 cable customers per year, a cable operator would reap several hundred thousand dollars in annual savings.
And since Jacobs Rimell typically charges MSOs a one-time software licensing fee of only $5 per subscriber, a cable operator’s return-on-investment several years after purchasing the application could be significant, Ms. Spears said.
In addition, operators can capitalize on Jacobs Rimell’s innovation by channeling the feedback they get from the software’s online customer relationship management tool into a marketing database where it can then be used to determine what subscribers in various demographic groups want from their digital cable service.
The upshot is that the technology could prove to be economical even if sluggish advanced services deployments continue to plague the cable industry, she said.
Jacob Rimell’s software has already won one follower, Yankee Group Senior Analyst Mike Goodman. “I think this really creates impulse shopping for cable services,” Mr. Goodman said. “Right now you have to call up a cable operator and say, `This is what I want.’ It’s really an interesting concept if you can do it online. With a simple click of a button, I’ve just ordered HBO. It removes a barrier and has the potential to increase buy rates.”
Regardless of the application’s potential, it won’t become a reality until Charter signs a final contract to implement the technology in its cable systems. Charter is said to have completed a two-week initial test of the software.
However, the trial is said to be diferent than a conventional lab test in the respect that Jacobs-Rimell’s solution was presented to the cable operator as a stand-alone “proof of concept” demonstration that could be viewed outside of the laboratory in Charter’s St. Louis headquarters.
Now, the MSO is expected to send Jacobs Rimell a set of instructions explaining how to make its technology compatible with Charter’s system architecture-one of the final hurdles for Jacobs Rimell to clear before its application can undergo a broader market trial.
Although Ms. Spears conceded that Charter is the only American cable operator to express interest in the software, Jacobs Rimell President for the Americas Ian Parrott said the company’s alliance with digital cable middleware developer Liberate Technologies should advance his company’s prominence in the cable industry. Jacobs Rimell announced last month that Liberate’s middleware can run Jacobs Rimell’s application on set-tops along with a suite of other digital cable offerings.
“It’s certainly the MSO’s choice whether they want to choose us [and] choose Liberate, but we’re making it much easier for them [to choose both of us,]” Mr. Parrott said.