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He's corporate now, but when Carl Rossetti landed on Maine's coast from Hawaii, he not only brought a `warm' outlook, he instilled innovation into the Portland DNA. Here's how Keith Burkley and Co. keep it going.
By Mavis Scanlon
"Now--from your cable company--a full line of Mitsubishi SUVs!"
Sounds absurd? Maybe, but starting up a Mitsubishi car dealership was just one of the imaginative ideas hatched in years past by executives at Time Warner Cable's Maine division as part of their efforts to increase revenue.
Some of the ideas bandied about were way out there, but "part of it was how bizarre we could be," says Keith Burkley, the division president.
One of his predecessors, Carl Rossetti, who came from Hawaii in the 1980s to run the cable system in Portland (then a part of ATC called Public Cable), "set a tone for innovation," Burkley says. "Carl was always focused on what we needed to do to be out ahead of the curve." At the time, Burkley was head of engineering under Rossetti, who is now EVP of new business development for Time Warner Cable and president, Time Warner Cable Voice Services.
It was Burkley who--jokingly--had suggested the Mitsubishi dealership, only because he had a Mitsubishi and there were no dealerships in the area. Rossetti liked the idea, but he didn't really want to sell cars. Rather, he wanted his team to think of ways to insert ads on the cable networks--for a car dealer or any advertiser--at a time when cable TV advertising was in its infancy.
Other ideas--such as selling television sets in the lobby, working with a test marketing group and setting up a fiber network for the nearby University of Southern Maine (yes, fiber, in 1985)--worked out better, and were more lucrative.
"All this had to do with the fact that we were challenged by Carl to come up with ways to generate incremental revenue," Burkley says. The goal was to always find new ways to generate growth, since the system's products had reached high customer penetration. Back then "we always did it without anybody knowing it, and then told [corportate] later," he remembers, but over time the success stories started piling up.
"It's really just become part of the heritage," Burkley says. Both Tom Kinney and Carol Hevey, who managed the division in between Rossetti's departure in 1995 and Burkley's arrival in early 2002, maintained Portland's tradition of innovation.
"For a small division we get a lot of great press, both internally and externally," Burkley says.
Including 17,000 subs in New Hampshire, the Maine division serves 127,000 customers, 81% of them in the greater Portland area. Burkley left Maine in 1989 to run Time Warner Cable's construction group, but before he left he bought a house on the beach, a decision he says was "one of the smartest personal moves I have made in my life." Twelve years in Denver were followed by a stint running Time Warner Cable in Bakersfield, Calif., a system where, he says, beating the competition was ingrained in every employee. He got back to Maine as much as he could, and when he heard about the opening in Portland, he jumped at the chance.
Cable Phone, Take Two
Six years ago, when Time Warner Cable partnered with AT&T to explore launching a residential phone service, Portland was chosen as the test site for the project (dubbed Line Runner). Although it ramped up to 500 customers and chugged along for a few years, Line Runner was eventually put on the back burner.
"But as soon as interest in phone was resurrected two years ago, they came back to Portland," Burkley explains. After six or seven months spent building the architecture and bringing in partners, the Portland system launched a VoIP phone product in February 2003. By the end of September the service had more than 20,000 customers.
The system has strived to make the digital phone service easy to understand and install, an effort that required the cooperation of customer service, engineering and marketing.
Missy Mans, VP, digital phone, says the system conducted a lot of research as it implemented its marketing and install plans. "One of the things that's happened over the last decade is that things have gotten so complicated," says Mans, a 20-year veteran of the telcom industry. What Time Warner Cable found is that customers didn't want comparisons to different plans and confusing price sheets. They don't care that the service is delivered via voice over Internet protocol--they just want to pick up the phone at any time of day or night and make a call.
"We're taking advantage of a newer technology to deliver the service," Mans says, "but from the customer's perspective we're trying to be sensitive to the fact that not everybody is interested in high technology. Our offer has been crafted purposely to be simple, easy to understand and not confusing, without a lot of stars and asterisks and hidden things."
The system didn't reach its current 15% penetration without hitting a few speed bumps, however.
"Voice is a real-time protocol," says Rod Wintle, the system's senior director of network engineering. "There is no time for resending packets. They have to arrive in time-intensive and predictable signals." Engineering had to make sure the plant was extra tight and extra clean. New monitoring tools were installed to ensure problems could be checked before they reached the customer.
Over the last 18 months, the system made a huge investment in its customer care operation, says Gail Huhtamaki, general manager of customer operations, from streamlining processes to further integrating the computer and telephone systems. Still, the introduction of phone impacted the customer care operation. By January of this year Huhtamaki saw increases in call volume--CSRs are expected to field 600,000 calls this year, or between 2,000 and 2,100 a day--as well as handle times for incoming calls. With more training and a beefed-up staff, they have seen improvements and now are handling as many as 110 phone installs a day.
In the beginning the phone service was marketed only to the system's broadband customers--the most likely early adopters. Early attempts at a broader marketing campaign, such as one print ad that featured a phone with wings, had to be refined, says Gary Stack, VP sales and marketing. That ad in particular came across to consumers as somewhat confusing, he says. Customers thought they might need a portable or a wireless phone to get the service; those ads were soon ditched.
Mans is looking ahead to expanding the phone product to include wireless, "because, again, that's what our customers want," she says. "If we have the ability to provide that to them, particularly if it's another service that we can add to the bill, then, yes, that's a nice bundle for them and it's better for everybody around."
Selling to the Choir
The launch of digital phone service last year was reminiscent of the system's rollout of Road Runner in 1997, which similarly received a lot of support from corporate.
"You couldn't go anywhere without seeing Road Runner," Stack remembers. The system sponsored events and a Little League team, and literally plastered the market--only 20% of which had computers at the time--with ads for Road Runner.
To further entice people to get online with the broadband service at a time when personal computers were considered more of a luxury than a necessity, the division started an employee PC purchase program. Nearly 100% of employees ended up buying computers from the company and signing up for Road Runner, Stack says.
The high-speed strategy worked: Penetration runs about 50% these days, one of the highest penetration rates in the country--not too shabby for a 110,000-subscriber system. Likewise, digital phone, a crucial new offering for the industry, is receiving as much corporate backup, and is this year's priority.
With 80% video penetration of homes passed, also far higher than the industry average, growth will come from the introduction of new products, and, as Stack says, "digging down."
"We need to start looking at who's left," Stack says. The system is creating a new position for a database manager who will examine subscribers' choices and what happens when customers take new products.
A big focus for 2005 is "gaining a better understanding of what we did do," Burkley says. If someone is moved into a bundle, "where did we move these people and what did they do when we moved them into phone? Is the average subscriber's life longer? Are they buying more product from us? Did they save money? Are they buying more VOD? Did they upgrade from standard to digital?"
Marketing's biggest challenge is finding new customers. Satellite penetration in the Portland DMA averages around 5%, according to data from Media Business Corp., and Stack and his team want to keep to keep it that way. Again, he enrolled employees to help, encouraging them to report satellite sightings at the IfoundADish.com website.
High-speed data is selling itself--as Stack says, the system is having a very good year. DVRs are a tougher sell in that more education is needed, but he has found that cross-channel spots have proven to be effective in promoting that service, while marketing the system's interactive services via e-mail has worked well. "Those are the customers who understand it," Stack says.
Time Warner's Portland Studio
Bill McEnaney, general manager of television advertising, has extended the tradition of looking for--and finding--incremental revenue from the ad sales side of the business. In addition to its ad sales functions, McEnaney's department houses a post-production facility that services ad sales clients primarily but also produces Time Warner Cable's in-house promotions, PSAs and long-form info pieces.
"Our biggest client is becoming, with all the new products, Time Warner itself," McEnaney says. Promos that have been produced in Portland have run around the country.
On the ad sales side, producing spots adds an ancillary revenue stream, "one that can't be ignored as it helps the department make its goals," McEnaney says.
That's a good thing, as the Maine economy is treading water. Overall the ad market is flat year to date through August, McEnaney says, citing Competitive Media Reporting (CMR) data. His department is outperforming the average; he expects to end 2004 with double-digit increases.
McEnaney's hope is that Time Warner will win in its bid to acquire at least some of the
Adelphia systems up for sale. If it does, the cable division in Portland will be able to form an interconnect with adjacent systems; issues over control of an interconnect so far have prevented its establishment. There also is hope that Maine's languishing economy will be rejuvenated by an influx of Bostonians, McEnaney says, who are now able to commute via a train line that Amtrak recently completed.
"We have a relatively flat market, [so] we're hoping to see growth down the road in terms of what's happening in southern Maine and the expanding economy," McEnaney says. "And then the interconnect is really the Holy Grail for the market. That's the big thing--unify the market, get to the regional and national dollars. That's where the big upside is for us. [In addition,] the market has got to start to grow economically for us to get the kinds of growth locally that we've seen in the past. We're getting a larger share, but the pie is not necessarily growing. So the pie has got to grow."
Looking Ahead
With so many products already deployed, Burkley is looking to place more emphasis on interactivity. Although Portland has been out front in the industry when it comes to interactivity--the system was first to make deals with Buzz-time and GoTuit--more interactivity is on the horizon, this time with a mandate from corporate.
"Interactivity is definitely evolving now," he says. "It's real." One of the first new interactive services that may come from Time Warner Cable is a set-top enabled with cell phone ring tones--a lucrative service for the wireless companies.
The challenge the system as a whole faces mirrors that of McEnaney's staff: driving growth. To do so, Burkley will continue to sell new products such as digital phone to existing customers.
"That's our challenge for next year--moving our subscriber base into more packages."
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