A survey was prepared to ascertain community needs and interests related to cable television service provided by AT&T Broadband. The written survey was included in a newsletter that was mailed in January, 2002 to residences in Marysville, Washington and nearby surrounding areas (hereinafter collectively "Marysville") using utility billing addresses provided by the City. One thousand one hundred sixteen (1116) surveys were returned. Seven hundred twelve (712) surveys (including those from the City's Website) were coded and analyzed. A sample of 712 provides a margin of error of ±3 points. Figures have been rounded off to the nearest whole number. Therefore, some of the percentages will range between 99-101%.

Based on the responses provided, the following key issues related to cable television emerged.

1. The driving criticism with overall cable service is the "cost" of cable services. Consumers reported cost issues as the key area of dissatisfaction with AT&T Broadband's cable television service. When testing a range of cable service issues, cost consistently appeared as a negative. Customers may have lost some of the desirable channels, such as HGTV, to the digital tier offering. This finding was also reflected in the 66% of respondents who indicated that there were additional channels that they would like to receive which are not currently available on their tier of service. Additionally, when testing a series of service issues, cost, variety of programming and quality of cable programming were the three service areas that received the lowest marks. The cable company may want to consider the negative impact that rising cable rates has on reported overall satisfaction with AT&T Broadband's cable service. This is also an important area for the cable company to consider as competing multichannel services, such as DBS, become more prevalent in the marketplace. In Marysville, 19% of those that had never subscribed to cable television had chosen a satellite dish, and 14% of the respondents who were non-subscribers had left the cable company to choose satellite television. This percentage is congruent with national trends related to satellite television.

2. Compounding the problems regarding rates and programming are that many customers commented on neighboring communities' cable television service, programming options and cost. It does appear that information and experience with neighboring communities' cable television services are impacting satisfaction levels with cable television service in Marysville.

3. When asked about the importance of the local cable television office, 56% described it as very important or important. Services desired at the local cable office include being able to talk face-to-face with a customer service representative, paying cable bills and being able to return and pick-up equipment.

4. Sixty-four percent (64%) of cable consumers indicated that they had called the cable company. When calling, several respondents expressed dissatisfaction with telephone hold times. Twelve percent (12%) of cable subscribers indicated that they were left on hold for up to ten minutes and 33% were left on hold for longer than 5 minutes. A call center review that includes call center staffing, the cable billing cycle and call center response to outages should be raised during franchise discussions. The City may ask the cable company to conduct a regular audit of these consumer service issues and report its findings on a regularly scheduled basis to the City.

5. Viewership of the local government access Channel 29 was strong. Of those watching, 49% of subscribers reported at least occasional viewership of the channel, 4.5% watch monthly, 21% watch weekly and 6% watch daily. More importantly, viewership of government access was significantly related to overall satisfaction with cable television service. In addition, 32% of subscribers described the funding of government and educational channels as "very important" or "important". The categories of local programming in which subscribers indicated high interest included: election results, real time local traffic cameras, parades and festivals and interactive community meetings. As DBS begins to provide local broadcast signals, AT&T Broadband's ability to carry PEG Access programming will be the one category of programming that separates it from its competition. When one understands the value local subscribers place on Access programming, enhancing Access operations in the City seems like a logical competitive step.

6. Personal computer penetration is higher in Marysville (73%) than the United States as a whole (63%). Eighty four percent (84%) of PC owners subscribe to an online service, and subsequently, the rollout of high-speed Internet access is desired immediately among 15% of subscribers and an additional 45% of subscribers indicated a desire to subscribe within 6-12 months or eventually if terms are acceptable. This potential market, left without options, will more than likely seek out high-speed Internet access from DSL or wireless services in the near term if the cable company chooses not to provide that service in Marysville.

7. Six areas of franchise renewal considerations were tested among cable subscribers. Respondents were asked to rank the tested issues as high, medium or of low importance during franchise renewal discussions. The highest-ranking issues were related to signal quality, programming variety and customer service. Just behind these three issues were expanded channel capacity and improved technologies and then community programming. All six areas are of considerable importance when combining high and medium rankings. Respondents appear to consider all six issues to be important areas to discuss with the cable company during renewal proceedings.

The following narrative offers a more detailed summary of the results of the data collected.

Narrative Summary of Findings

As part of the cable television franchise renewal proceedings in the City, a needs and interests ascertainment survey related to cable television service was conducted among cable television subscribers and non-subscribers in the area. This narrative summary reports on the findings of that field research.

Findings come from a survey included in a newsletter that was mailed to residences using utility billing addresses. In an attempt to further make available the survey, a printable version of the survey was placed on the City's Website.

Of the surveys included in the newsletter, a total of 1116 were returned. From those returned surveys, randomly selected surveys were coded and entered into a database, as well as surveys from the Website, for a total of 712 surveys. A random selection of 712 surveys provides a margin of error of ±3 points. This margin of error lets the reader know that if this study were replicated in Marysville, the percentages reported in this narrative would fall within 3 points of the new data.

The survey instrument was designed to test community cable television needs and interests and asked the residents to respond to a series of 29 questions related to a variety of cable television service issues. Cable television issues fell into three categories: customer satisfaction with various levels of cable television service, cable television programming and cable television rates. Included in this assessment were also questions related to the City's government access Channel 29. At the close of the survey, respondents were asked in an open-ended question, if there was anything else they would like to add about the cable company, and 49% of respondents added additional thoughts. This high incidence of additional responses suggests a significant level of interest in cable television service in Marysville.
Before launching into a summary of the findings, the reader would benefit from an understanding of who responded to the survey.

Demographics

A little more than half (55%) of the respondents were female and 45% were male.

Ninety-one percent (91%) live in a single-family home and 9% reported living in a multi-family residence.

A majority (68%) reported not having children under 18 living at home. Fourteen percent (14%) reported having one child under the age of 18 in the home. Twelve percent (12%) reported having two children in the home under the age of 18. Additionally, 4% reported having three children under the age of 18 in the home, 2% had four children and 1% had five or more children in the home. In other words, 33% of homes in Marysville have children under the age of 18 in the home.

The most common response related to age was 46-65 years old with 39% of respondents indicating this as their age range. The second most frequent age category was 36-45 years old with 25% of respondents indicating this as their age. Twenty-two percent (22%) reported being over age 66. Twelve percent (12%) reported being between 26 and 35 years old and 2% were between 18 and 25 years old.

Ninety-three percent (93%) of respondents currently subscribe to AT&T Broadband's cable service (N=655) and 7% of respondents described themselves as non-subscribers (N = total number of respondents).

Non-Subscribers of Cable Television Service

For those that have never subscribed to cable (N=52), cost was the main reason offered for not subscribing. In fact, more than half (52%) said it is because of the cost. Nineteen percent (19% of 52) said that they do not subscribe because they have a satellite dish, twelve percent (12%) said it was because they do not watch cable TV and 5% indicated that cable television service was not available in their area.

Of those who once subscribed to cable television service in Marysville, but then stopped subscribing to cable (N=42), half said it was because of the cost (50%), followed by a satellite dish (14%), "don't like the channels" (9.5%) and "service issues" (9.5%).

Cable Television Subscribers

Cable television subscribers (N=655) were asked to describe the level of service they currently receive from AT&T Broadband. A wide majority of subscribers are currently subscribing to the expanded basic cable services with CNN, ESPN, etc. (71%). A little more than 10% subscribe to only basic cable services. Twenty-one percent (21%) receive digital cable services. Thirteen percent (13%) subscribe to premium channels and 10% have used pay-per-view channels.

Sixty-six percent (66%) said they would like to see programs added to their service and almost all of these respondents were either basic only subscribers or expanded basic subscribers. More than 10% said they would like to see additional history channels. Five percent (5%) said they wanted to have HGTV as part of their service. Two percent (2%) would like to have access to Canadian channels. Other areas of interest are comedy (3.5%), science fiction (3%), animals (2%), TV Land (1%) and E! (1%).

In regards to the cost of cable television service, most respondents (73%) think that the services are too expensive. However almost a fifth (19%) said that the fees are the "right amount." Just 1% indicated that cable prices were lower than expected.

Eighty-one percent (81%) of subscribers agreed that special cable television discounts should be made available to senior citizens and 11.5% disagreed. Eight percent (8%) chose not to respond to that question.

A series of 14 inquiries were posed related to customer service in regards to, for example, telephone service, outages, service personnel, communication with the cable company, promptness of service personnel, cost of cable, signal quality and programming. Respondents were asked to indicate their level of satisfaction on a 4-point scale from very satisfied to very dissatisfied. The respondent was also provided with the option of responding don't know or that the question was not applicable. Special attention was paid to service issues that received a greater than 10% response in the "very dissatisfied" column and tested issues that received a greater than 20% "very dissatisfied" and "dissatisfied" combined score.

When it comes to customer service, respondents were mostly positive. Respondents were significantly satisfied with the quality of the picture and sound. Eighty-two percent (82%) said they were "very satisfied" or "satisfied" with the picture quality and eighty-seven percent (87%) said they were "very satisfied" or "satisfied" with the sound quality.

Most (84%) were "very satisfied" or "satisfied" with how AT&T Broadband makes the monthly cable bill understandable. Sixty-one percent (61%) of respondents said that they were "very satisfied" or "satisfied" with the friendliness and courtesy of the personnel who handle the questions and service requests (only 11% were "dissatisfied" or "very dissatisfied" in this regard).

More than half (57%) were "very satisfied" or "satisfied" with AT&T Broadband's ability to restore service when outages occur and 13% were "dissatisfied" or "very dissatisfied" in this category.

Results were more mixed for the quality and variety of programs. About half said that they were "very satisfied" or "satisfied" with the quality (58%) and variety (50%) of the programming. However, 36% said that they were "dissatisfied" or "very dissatisfied" with the quality of the programming and 46% said that they were "dissatisfied" or "very dissatisfied" with the variety of programming.

Respondents were less satisfied with their ability to reach the cable company by phone and with the information provided about changes in service. Seventeen percent (17%) said that they were "dissatisfied" or "very dissatisfied" with the ability to contact AT&T Broadband by phone.

A fourth (25%) said that they were "dissatisfied" or "very dissatisfied" with the information provided about changes in service.

Respondents were most unhappy with the cost of AT&T Broadband's services. A majority (70.5%) indicated that they were "dissatisfied" or "very dissatisfied" with the cost of their cable services.

The following table provides the results from respondents on the customer service questions:

More than half (56%) of respondents thought it was "very important" or "important" that AT&T Broadband operate a full service local office in the City. Thirty percent (30%) of respondents described that service as "not that important." Eight percent (8%) described that service as "not at all important."

When considering the services that should be offered in a local office, 92% of respondents thought that in that office a customer should be able to talk face-to-face with a cable customer service representative. Respondents also indicated it would be important for local subscribers to be able to return equipment (74%), pay bills (92%) and have access to technical assistance (57%).

Sixty-four percent (64%) of those surveyed have called AT&T Broadband in the last two years (an average of one call each).

Forty-two percent (42%) waited less than two minutes when they called. However, 19% waited up to five minutes, 12% waited up to 10 minutes and 11% said that they waited more than 10 minutes. In other words, 23% of subscribers had hold times of five minutes or more. These reported hold times are significantly higher than the 30 second hold time stipulated in cable service guidelines offered by the Federal Communications Commission.

In an effort to determine what was considered a reasonable hold time from a local perspective, eighty-five percent (85%) said that it was reasonable to wait up to two minutes and 9% said that it was reasonable to wait up to five minutes.

Computer Use and Online Access

Almost three fourths (73.5%) of respondents (subscribers and non-subscribers) said that they have a personal computer in their home and 84% of PC owners said that they subscribe to an Internet service. Respondents spend a significant amount of time on the Internet each week. Twenty-one percent (21%) said that they spend more than 12 hours on-line a week. Another 42% spend between 5 and 12 hours and approximately 37% spend fewer than four hours on-line each week.

Fifteen percent (15%) of respondents plan to subscribe right away when high-speed Internet service is introduced in Marysville. Five percent (5%) plan to subscribe within the first year and forty and a half percent (40.5%) will eventually subscribe if the terms are acceptable. Nineteen percent (19%) said that they do not plan to subscribe and another twenty percent (20%) are undecided.

Educational/Governmental/Community Matters

When asked how important it is for the City to have access to fiber optic cables, 60% said that they thought it was "very important" or "important." Twenty-two percent (22%) said that it was "not that important" or "not at all important." The following chart represents combined figures for educational and governmental uses.

A significant number of respondents (48%) reported watching the City's local government access television Channel 29. Of those who watch the channel, 6% watch the channel on a daily basis and 21% watch it at least once a week. Another 4.5% said that they watch monthly. Forty-nine percent (49%) reported watching occasionally. Twelve percent (12%) never watch and another 8% said that they do not receive this channel.

These numbers create a significant level of viewership for a cable channel. By comparison, the Nickelodeon cable network is continually ranked as the top overall network with a rating of 1.4. In other words, at any given moment 1.4% of the 67 million households that watch cable television are tuned into the Nickelodeon network. The City's government access channel attracts a 6% viewership on any given day.

Customers were asked to rate the importance of certain types of programming. News and events updates received the highest interest ratings. More than half (57.5%) marked a "high" interest in news and events updates and only 10% expressed a "low" interest. Educational programs received high ratings with almost half (46%) indicating a high interest and 38% a medium interest. A majority (77%) said that they had a "high" or "medium" interest in community events and announcements. Respondents did not have as high an interest in area school sporting events and performing arts events. The following table shows the specific percentages for each category:

Respondents were also asked about how important it was for certain types of local community coverage to be live. They were most interested in receiving live coverage of elections and traffic reports. Almost half (42%) say that live election coverage is of "high" importance. A little more than a third (37%) said that real time local traffic cameras are of "high" importance.

The following table shows the specific percentages for each category:

When asked how important it was that a portion of their cable bill go to support capital costs for governmental and educational access programming, 8% indicated that it is "very important" to them that a portion of the cable bill is used to support governmental and educational access. Twenty-four percent (24%) said that it is "important." Twenty-seven percent (27%) said that it is "not too important," which indicated some importance, followed by 28% who said it is "not at all important."

While community programming was the lowest ranked in the high category, it was the highest ranked in the medium category. This finding suggests that residents do value community programming; however, of larger concern is that the cable company provide a good quality signal, a variety of programming and good customer service. In practice, all of the listed franchise renewal issues are areas that can and should be addressed by the cable company.

Overall Satisfaction with Cable Service

When asked to rate AT&T Broadband's overall performance, more than half (57%) said that it was "excellent" or "good." However, 40% rated the overall performance as "fair" or "poor." In the following chart, "DK" represents those who responded as "don't know."

In an effort to better understand the key issues driving down overall satisfaction with cable television service in Marysville, the question regarding reported overall satisfaction was compared to all other tested issues looking for significant relationships.

Significant relationships were found between overall satisfaction and each of the service issues tested in the question 8 series, a desire for more programming, concerns about the cost of cable television, a desire for senior citizens to receive a discount, establishing a local office, calling the cable office and being placed on hold, personal computer ownership and viewership of the government access channel. Each of these tested areas is directionally related to overall satisfaction. For example, respondents that indicated they watched the government access channel were significantly more likely to report overall satisfaction with cable television service. Perhaps, this group of respondents recognizes that Access television is a special feature of cable television that cannot be provided by over-the-air television or competing satellite services. An example of a relationship in the opposite direction would be interest in a local office. Respondents that indicated they would like a local cable office were significantly more likely to report lower levels of overall satisfaction with cable television service.

The discovery of these areas as being significantly related to overall satisfaction with cable television service in Marysville is important in that one can conclude that if these key areas are addressed, in turn, overall satisfaction with cable television would rise.

Additional Comments

When asked to provide any final comments about AT&T Broadband's cable service in Marysville, of those providing additional comments, almost a third (31%) said that the services were too expensive. Another 29% said that they had an interest in more programming variety. High-speed Internet service and poor customer service were each mentioned by 6% of respondents.

Conclusions

Subscribers to AT&T Broadband's cable service report mostly positive levels of consumer satisfaction. Fifty-seven percent (57%) described overall cable service as "excellent" or "good". Thirty percent (30%) did give the cable company a "fair" rating. Additionally, 9.5% gave the cable company a poor rating. The 39.5% of subscribers who were less than positive about overall cable service did offer information as to how to improve cable television service.

The following are areas that emerged during the cable television needs and interests ascertainment survey where the cable company may want to enhance its presence in the community and resolve the problems that presented themselves in this study.

1. The driving criticism with overall cable service is the "cost" of cable services. Consumers reported cost issues as the key area of dissatisfaction with AT&T Broadband's cable television service. When testing a range of cable service issues, cost consistently appeared as a negative. Customers appear to have lost some of the desirable channels, such as HGTV, to the digital tier offering. This finding was also reflected in the 66% of respondents who indicated that there were additional channels that they would like to receive which are not currently available on their tier of service. Additionally, when testing a series of service issues, cost, variety of programming and quality of cable programming were the three service areas that received the lowest marks. The cable company may want to consider the negative impact that rising cable rates have on reported overall satisfaction with AT&T Broadband's cable service. This is also an important area for the cable company to consider as competing multichannel services, such as DBS, become more prevalent in the marketplace. In Marysville, 19% of those that had never subscribed to cable television had opted for a satellite dish and 14% of the respondents who were non-subscribers had left the cable company for satellite television. This percentage is congruent with national trends related to satellite television.

2. Compounding the problems regarding rates and programming are that many customers commented on neighboring communities' cable television service, programming options and cost. It does appear that information and experience with neighboring communities' cable television services are impacting satisfaction levels with cable television service in Marysville.

3. When asked about the importance of the local cable television office, 56% described it as "very important" or "important." Services desired at the local cable office include being able to talk face-to-face with a customer service representative, paying cable bills and being able to return and pick-up equipment.

4. Sixty-four percent (64%) of cable consumers indicated that they had called the cable company. When calling, several respondents expressed dissatisfaction with telephone hold times. Twelve percent (12%) of cable subscribers indicated that they were left on hold for up to ten minutes. A call center review that includes call center staffing, the cable billing cycle and call center response to outages should be raised during franchise discussions. The City may ask the cable company to conduct a regular audit of these consumer service issues and report its findings on a regularly scheduled basis to the City.

5. Viewership of the local government access Channel 29 was strong with 48% of subscribers reporting viewership of the channel. Of this, 4.5% watch monthly, 21% watch weekly and 6% watch daily. More importantly, viewership of government access was significantly related to overall satisfaction with cable television service. In addition, 32% of subscribers described the funding of government and educational channels as "very important" or "important". The categories of live local programming which subscribers indicated were of high interest included election results and real time local traffic cameras. As DBS begins to provide local broadcast signals, AT&T Broadband's ability to carry PEG Access programming will be the one category of programming that separates it from its competition. When one understands the value local subscribers place on Access programming, enhancing access operations in the City seems like a logical competitive step.

6. Personal computer penetration is higher in Marysville (73.5%) than the United States as a whole (63%). Eighty four percent (84%) of PC owners subscribe to an online service, and subsequently, the rollout of high-speed Internet access is desired immediately among 15% of subscribers and an additional 45% of subscribers indicated a desire to subscribe in 6-12 months or eventually if terms are acceptable. This potential market, left without options, will more than likely seek out high-speed Internet access from DSL or wireless services in the near term if the cable company chooses not to provide that service in Marysville.

7. Six areas of franchise renewal considerations were tested among cable subscribers. Respondents were asked to rank the tested issues as of high, medium or low importance during franchise renewal discussions. The highest-ranking issues were related to signal quality, programming variety and customer service. Just behind these three issues were expanded channel capacity and improved technologies. All areas are of considerable importance when combining high and medium rankings. Respondents appear to consider these issues and community programming to be important areas to discuss with the cable company during renewal proceedings.

The above concluding remarks are not meant to be a comprehensive reflection of all of the needs assessment findings, but rather as part of the analysis for the City. Other data presented in sections of this narrative may also be of value to interested parties as they move forward with the franchising process.