Cable deal outlook is enriched viewing Merger talks still are going on. But experts see change coming.

The impending merger of the metro area's two largest cable
systems hasn't even been officially announced yet, and already Eric
McIntyre has felt its impact.
McIntyre was planning to replace the old coaxial cable running
through his Merriam home to improve his TV's picture quality, which
is hampered by a nearby pager tower.
But when McIntyre learned his cable operator, TCI of Overland
Park, soon would merge into an entity managed by American Cablevision
of Kansas City, he put his wiring plans on hold.
The reason? American Cablevision is likely to bring its
fiber-optic upgrade to Johnson County, perhaps as soon as 1999. The
upgrade would deliver more channels and a better picture. And it
would require only one cable. TCI's "A/B" system requires two.
"I'd save 50 percent of the wiring cost, but I'll have to put up
with bad reception until the upgrade," said McIntyre.
McIntyre's case is unusual and, like everything connected to the
not-yet-consummated merger, involves some educated guesswork.
Officials at TCI and Time Warner, American Cablevision's parent,
have not commented for the record because merger talks are ongoing.
But the prevailing sentiment among sources at the two companies and
observers in the cable industry was that the merger, although causing
short-term anxieties for some, would make for more satisfied
customers in the long run by offering better service and more
options, including high-speed Internet access.
Questions and answers
So what might it all mean?
Will homes in Johnson County served by TCI get an upgrade similar
to the one American Cablevision customers are getting?
TCI customers probably will not see any change for at least 18
more months - by which time those areas now served by American
Cablevision and Jones (in some Missouri suburbs and Olathe) will be
upgraded. The old coaxial "backbone" that delivers programs to
viewers' neighborhoods is replaced by fiber-optic cable in upgraded
areas. The fiber improves signal quality and reduces cable outages.
TCI had been planning to introduce its new digital service, All
TV, in the Johnson County system by the end of this year. The
optional service offers dozens of new channels and is expected to
give direct-to-home satellite dishes a run for the money.
That plan, however, almost certainly will be abandoned when TCI's
system is folded into American Cablevision's. Johnson County
customers will get a new fiber backbone, but not until American
Cablevision finishes upgrading all the communities it currently
serves, meaning no sooner than the end of 1998. (All TV is still on
schedule for a rollout this week in the Topeka area, where TCI has no
plans for selling its stake.)
The optional All TV service, by some estimates, would have cost
more than many consumers might be willing to pay - as much as $ 65 a
month by some trade accounts. By contrast, an upgrade like American
Cablevision's raises the level of service in all homes throughout the
system. The fee increase is more modest and is based largely on the
costs of carrying extra services.
Not everyone is convinced an upgrade is needed in Johnson County
soon. But upgraded American Cablevision customers seem to be happier,
rating the company higher in every satisfaction category on
questionnaires, according to its vice president, Carol Rothwell.
Will TCI customers lose the Starz movie channel, Fox Rocky
Mountain sports and Channel 11 in Topeka, which American Cablevision
doesn't offer?
For the most part, this matter will not be settled in Kansas
City, but in Connecticut, where Time Warner Cable is located and
where the programming decisions for local systems are made. If
American Cablevision carries a network, it's probably because Time
Warner has signed an agreement with that network to deliver a portion
of its 12.3 million customers nationwide.
And the competition to be carried on those precious few channels
has never been tougher as the number of new basic cable networks
continues to rise. American Cablevision's upgrade has increased the
number of channels it can use, but there are still far more networks
than it can hope to carry.
"We can't control many of the changes that impact the lineups,
especially any new channels that come along," said Robert B. Niles,
American Cablevision's president. "It's subject to change at any
time."
Of course, cable operators remove or relocate services that have
strong viewer loyalty at their peril. TCI learned this last year when
it proposed moving PBS affiliate KCPT, Channel 19, to its lesser-used
"A" band. Hundreds of viewer complaints later, TCI changed its
mind.
One fact is certain: With programming eating up 60 percent of a
cable operator's budget, an increase in the number of channels
offered will result in a rate increase. Both Jones and American
Cablevision subscribers recently incurred such increases.
But as demonstrated by American Cablevision's new AXS tier, a
service with eight extra channels and 31 digital all-music stations,
cable is becoming an a la carte business, with channels grouped into
programming blocks and sold only to customers who want them.
As TCI President Leo J. Hindery Jr. said during a recent visit to
the company's Topeka system, "Everybody in the country who is our
customer should have the right to buy a Chevrolet. If some of them
want to buy a Mercedes, they can."
But American Cablevision's offerings still may not be suitable to
some customers, especially those who can't get enough of sports and
movies. In that case, direct-to-home satellite services, which offer
a large a la carte selection of sports channels and pay-per-view
movies, will be as viable an alternative in 2000 as they are today.
How will a merger affect cable Internet access?
This should be a plus for Johnson Countians, because American
Cablevision's parent has led the industry in getting cable modems -
devices that connect computers to the Internet - to customers.
Time Warner's Roadrunner division has installed cable modems in
cities including San Diego; Binghamton and Elmira, N.Y.; and
Portland, Maine, and will do so soon in Tampa, Fla., giving it most
of the 25,000 cable modems already in use.
Cable modems operate at 10 to 20 times the speed of conventional
telephone-line modems and are a bargain compared to the price of
higher-capacity ISDN phone lines.
The American Cablevision fiber upgrade has made the system ready
for cable modems, and although company officials sound eager to set
up shop as an Internet provider, that won't happen for at least a
year.