Jerry Kent

It's not easy to run a forward-looking cable TV company with a computer icon looking over your shoulder. Of course, it's also not easy to develop a forward-looking technological attack in an increasingly competitive industry without money.

Of the two choices, Jerry Kent, president and CEO of the nation's fourth-largest multiple systems operator, St. Louis-based Charter Communications, prefers the former. Charter is backed financially by principal owner Paul Allen, who might be slightly better known as the co-founder of Microsoft.

“He's constantly challenging us to make sure that we don't miss any opportunities — that we continue to meet with different vendors, people with different ideas,” Kent says. “With his background in technology, he opens a lot of doors to us that heretofore had been closed.”

And with his seemingly endless supply of funds, Allen has helped Charter grow from a mid-sized Midwest MSO to what some call the most technologically advanced service provider in the U.S.

“With Paul Allen's backing and with the vast resources available to him, we have really tried to gear our culture toward becoming a more technologically advanced company,” Kent says.

What makes Charter's success so astonishing is how quickly it happened. What makes it remarkable is that it's continuing in the face of an economic slump that is battering the industry, and ironically, many companies with forward-looking goals that compete with Charter.

“The deep pockets are a minor part of that,” Kent says. “We haven't altered our business spending plan. We recognize we're in a competitive environment, and the worst thing you can do is to overreact to a downturn in the economy and cut back on capital spending.”

Charter invests heavily in technology. The MSO has upgraded most of its systems for two-way interactivity, building 500-home nodes that can, in short order, be sliced and diced to juice up delivery speeds and features. From the marketing side, Charter is one of the few MSOs that have offered tiered high-speed data services. Everything, Kent emphasizes, is to get and keep subscribers.

Notably missing, for now, is the third leg of the stool: voice.

“We're not a big proponent of circuit-switched telephony,” he admits. “I firmly believe IP telephony is going to be a much more efficient way to compete in the voice market.”

But IP, following the mandates of CableLabs' DOCSIS and Packet-Cable efforts, won't be a reality until at least late 2002. Some companies, such as Cox Communications and AT&T Broadband, don't want to give competing RBOCs that much time to spruce up their technologies and services.

“We don't see the telephone companies becoming any more entrenched with their customers in the next two years,” Kent says.

Charter can afford to slow its pace. Until last year, that pace was so hectic Kent was concerned he was overloading his executives' mental circuits.

“We did 13 major acquisitions in a year and a half,” he recalls. “We grew about sixfold in two-and-a-half years. Our management team was stretched.”

So he did what any CEO would do: He took a year off and didn't make any acquisitions in 2000. “Frankly, another major acquisition could have broken the backs of the management team,” he says.

Now, with more than 5 million subscribers in strategically clustered batches served by about 100 headends, having completed the third largest IPO in U.S. history in November 1999 and with cash in his pockets, Kent is ready to make Charter a household name.

“We continue to have a technology advantage in the marketplace,” says Kent. “There's no competing last-mile solution that can effectively provide the speed, capacity and interactive capability that our broadband pipe supplies to the home.”

Kent, to a point, subscribes to the theory that cable is a “recession-proof” business.

“What's different today is we have digital video, interactive TV services and high-speed data,” he says. “We've never been through a downturn in the economy with those services.”

With thunderclouds on the horizon, therefore, Charter was very cautious making 2001 business predictions. At least through the first quarter, the company has been able to throw that caution to the wind.

“So far the economy has had very little impact upon our deployment of advanced services. We're hooking up more than 20,000 new digital customers a week and we're adding 7000 new high-speed data customers a week,” he says.

A slower economy even offers an advantage, Kent says. “It has allowed us to attract more qualified people,” he says.

The biggest problem Charter has is maintaining its entrepreneurial edge. That means that to some extent, Kent must loosen the reins and let others make some everyday decisions.

“I have to rely on my people and put good people in place, but the same management structure still applies. It's that decentralized operating environment where we allow our managers to respond to local market conditions,” he explains.

Just as in the old days, each Charter employee receives equity in the company “and we mesh that with a very centralized financial internal control system that allows us to keep our fingers on the pulse and monitor all our operations in the field,” he says.

If, by chance, things seem a little too rosy, though, Kent can still reflect on his one regret.

“I didn't buy enough cable properties,” he says with a chuckle. “I should have bought everything that was available.”