Sunday, May 14, 2006

The Beginnings of Broadband

MediaOne makes 'broadband' pitch.

Date: 5/19/1997; Publication: Multichannel News; Author: Haugsted, Linda

Continental Cablevision Inc., the cable industry's third-largest MSO, officially changed its name to MediaOne last week, as expected. But, in a surprise move, it branded the new company as a "broadband-services company," with the tag line: "This is broadband. This is the way."

Amos B. Hostetter Jr., CEO of MediaOne and co-founder of Continental, said the operator - which has nearly 5 million subscribers in 19 states - would support the relaunch-and-branding effort with a $20 million marketing campaign for the rest of the year.

MediaOne, a division of U S West Media Group, which acquired Continental last year for $10.8 billion, also relaunched its Highway1 high-speed Internet-access service as MediaOne Express and announced its expansion to the metropolitan Chicago market, along with existing service in Boston; Jacksonville, Fla.; and Detroit. Homes in Atlanta; Los Angeles; Richmond, Va.; and southwest Florida are set to be connected to the service by the end of the summer.

Hostetter said the renamed company would "define a whole new industry - broadband," which he described as a "powerful two-way wire" that can deliver computer, television and telephone services to the home.

Many industry observers were puzzled by MediaOne's emphasis on the term "broadband," but Hostetter strongly defended it. He cited a recent survey of 1,000 Americans commissioned by MediaOne from research firm Roper Starch, which, they said, showed widespread public receptiveness to both the term broadband and its perceived benefits, such as speed and delivery of a wide array of services.

Hostetter said the broadband tag tested "surprisingly well," and he expected MediaOne to "follow the computer-penetration curve in the home" with Internet-based services.

Richard Guha, senior vice president of marketing for MediaOne, who joined the company six months ago after a career as a marketing consultant and manager for Procter & Gamble Co. and M&M/Mars, said MediaOne would not only have to market a new name and identity, but a new category - broadband - as well.

While that represented an additional marketing challenge, he argued that the company would benefit by being able to define the category on its own terms.
"People get it," he said of the broadband concept. "What they get is use of lots of stuff."

The marketing campaign, he said, would include ads on broadcast television, radio, newspaper ads, outdoor advertising, Internet ads and direct-mail and direct-response programs.

Branding and competitive-strategy experts were divided on the wisdom of MediaOne's reliance on broadband as a branding strategy, with some consultants arguing that the term was obscure and uninspiring, while others felt that it was a bold stroke that could truly differentiate the company and help it to gain credibility.

Glen Freidman, president of Los Angeles-based Ideas&Solutions! Inc., said that while there are "magic words" that link customers to technology, "broadband is not one of them."

David Aaker, professor of marketing strategy at the University of California at Berkeley's Haas School of Business, called the broadband strategy a risk, but he said it would be a "worse risk if [MediaOne] did not differentiate themselves."
Aaker, author of Building Strong Brands, said research has shown that a successful "branded component" on a brand, such as "Intel Inside," "Sony Trinitron" or Hewlett-Packard Co.'s "Resolution Enhancement," printer, allows companies to charge more for the product.

While Aaker added, "It doesn't really matter if people don't understand what the term means," he warned that MediaOne did run a risk if technology changed quickly, or if the term broadband "starts to mean something else."

COPYRIGHT 1997 Reed Business Information

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