without a change of e-mail address. HSAC bears all capital and marketing costs
of providing the service, and seeks to build economies of scale in our smaller
systems that we cannot efficiently build ourselves by simultaneously contracting
to provide the same services to other small geographically contiguous systems.
As of March 31, 1999, HSAC offers Internet access to approximately 225,000 of
our homes passed and approximately 3,000 customers have signed up for the
service. During 1999, HSAC plans to launch this service in an additional 29
systems, covering approximately 415,000 additional homes passed. HSAC provides
turnkey service which covers all capital, operating and marketing costs. Charter
receives 50% of the monthly $39.95 service fee. Vulcan Ventures, Inc., a company
controlled by Paul G. Allen, has an equity investment in HSAC.
We also have a revenue sharing agreement with @Home, under which @Home
currently provides Internet service to customers in our systems serving Fort
Worth, University Park and Highland Park, Texas. The @Home network provides
high-speed, cable modem-based Internet access using the cable infrastructure. As
of March 31, 1999, we offered @Home Internet service to approximately 140,000 of
our homes passed and have approximately 2,000 customers.
As of March 31, 1999 we provided Internet access to approximately 100
commercial customers. We actively market our cable modem service to businesses
in every one of our systems where we have the capability to offer such service.
Our marketing efforts are often door-to-door, and we have established a separate
division whose function is to make businesses aware that this type of Internet
access is available through us. We also provide several virtual LANs established
for municipal and educational facilities including Cal Tech, the City of
Pasadena and the City of West Covina in our Los Angeles cluster.
- TV-BASED INTERNET ACCESS THROUGH WORLDGATE. We have a non-exclusive
agreement with WorldGate to provide its TV-based e-mail and Internet access to
our cable customers. WorldGate's technology is only available to cable systems
with two-way capability. WorldGate offers easy, low-cost Internet access to
customers at connection speeds ranging up to 128 Kbps. For a monthly fee, we
provide our customers e-mail and Internet access without using a PC, obtaining
an additional telephone line (or tying up an existing line), or purchasing any
additional equipment. Instead, the customer accesses the Internet through the
set-top box which the customer already has on his television set) and a wireless
keyboard (provided with the service) which interfaces with the box. WorldGate
works on both advanced analog and digital platforms and, therefore, can be
installed utilizing the analog converters already deployed. In contrast, other
converter-based, non-PC Internet access products require a digital platform and
a digital converter prior to installation.
Subscribers who opt for television-based Internet access are generally
first-time users who prefer this more user-friendly interface. Of these users,
41% use WorldGate at least once a day, and 76% use it at least once a week.
Although the WorldGate service bears the WorldGate brand name, the Internet
"domain name" of the subscribers who use this service is "Charter.net." This
allows the customer to switch or expand to our other Internet services without a
change of e-mail address.
We first offered WorldGate to subscribers on the upgraded portion of our
systems in St. Louis in April, 1998. We are also currently offering this service
in our systems in Maryville, Illinois and Newtown, Connecticut, and plan to
introduce it in eight additional systems by December 31, 1999. CCI owns a
minority interest in WorldGate, an independent company founded by Hal Krisberg
(former President of General Instrument) with headquarters in Bensalem,
Pennsylvania. See "Certain Relationships and Related