HSA Deploys without Contracts - fast cable Internet service provider High Speed Access Corp - Company Business and Marketing

Cable operators all over the country are scrambling to cash in on the high-speed data business. In fact, demand for high-speed Internet is so high

some companies don't even have time to sign the contracts that enable the deployment of the service.

At least that's where High Speed Access Corp. says it's finding itself. The provider of turnkey super-fast cable Internet said last week it's a sign of the competitive environment that makes up the data industry.

"All our cable affiliates are interested in moving forward very quickly," said HSA's newly promoted president/CEO Dan O'Brien during a conference call last week to discuss the company's fourth quarter earnings.

"We have gone forward on a number of occasions with a number of companies and actually deployed systems without legal, formal, binding contracts," O'Brien said.

And while many other businesses would never think of doing business this way, HSA said that because of its relationship with Paul Allen's Charter Communications Inc., it's using the situation to its advantage.

"We actually see that as a positive," O'Brien said. "We've been able to deploy about 600,000 additional homes and about 400,000 of those homes are affiliated with Charter."

As of last December, the company's high-speed service was deployed in 1.9 million homes, of which more than 1.1 million were owned by Charter Communications.

The company is also breaking down its turnkey solution business model and is in the process of polishing a strategy called the "network service model," which offers operators the ability to cherry pick HSA services.

"It becomes clear that the full turnkey agreement may make sense for some of (Charter's) smaller markets, but ... they'd like to see a much more flexible model that allows them to choose from a list of our core competencies and have a process that also gives them greater flexibility on content," O'Brien said.

The company hopes the extension of its original model will create the opportunity to work with other large MSOs and position the company to take advantage of the potential open access environment fairly quickly.

The concept seems to be attractive to other major operators, as well, according to O'Brien. Early this month, the company entered into an agreement with Insight Communications Co. Inc. to support its deployment of Road Runner high-speed Internet service in the Columbus, Ohio area.

As an example of the new model, which O'Brien said he hopes to announce more formally next month, HSA is using Insight's billing system in the Columbus area.

"We are essentially looking just like their tier 1 customer care support people," he said. "We answer the phone as Insight cable."

The company had fourth quarter net revenues of $1.4 million compared to $145,000 on a year-over-year basis, representing an increase of 890%. The Denver-based company also posted a net loss before certain non-cash charges of $22.5 million, or 41 cents per share on a pro forma basis, compared to a net loss of $4.5 million before non-cash charges, or 22 cents per share on a pro forma basis, in the year-earlier period. Residential cable modem subscribers increased 73% from 9,307 at Sept. 30, 1999 to 16,099 at the end of the fourth quarter.

RELATED ARTICLE: HSA's Key Operating Stats

                         As of Sept. 30, 1999   As of Dec. 31, 1999

Homes under contact or
letter of intent                    1,900,000          2,000,000(*)
Homes deployed                      1,500,000          1,900,000

                                 Subscribers:

Residential                             9,307                16,099
Commercial                                528                   685
Dial-Up                                 5,813                 6,648

(*) Excludes approx. 600,000 homes deployed under interim agreements.

SOURCE: High Speed Access Corp.

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