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Cities push for cable TV competitors
Cable costs have grown 86 percent in a decade
By Dennis Camire
Gannett News Service
March 4, 2006
Angela Moody pulled the plug in disgust last year when her family's bill for cable television and high-speed Internet service hit $130 a month.
Moody, who transcribes medical records for the local hospital, said she had seen her bill climb over the past 14 years from about $25 a month as the cable company kept rearranging cable channels and charging her a little more to regain her favorites.
But Moody, of Essex Junction, Vt., said it wasn't long before she plugged back into service from Adelphia Communications because she needed high-speed Internet service for her job and the rooftop antenna captured only a poor TV picture.
After all, Adelphia is the only cable company in town.
"If there was competition, prices would drop," Moody said. "I don't think this kind of stuff would happen if you had more than one company to work with."
Cable rates increased an average of 86 percent during the decade that ended in 2004, but consumers' rates around the country are more than 15 percent cheaper when there is competition between providers, according to the Federal Communications Commission.
In response to rate increases, consumer complaints and requests from would-be cable competitors, local, state and federal governments are exploring ways to bring more competition -- and possibly lower prices -- to the cable TV marketplace nationally.
Doug Fiske of Encinitas, Calif., is ready for it to happen after seeing his cable bill grow from about $26 a month a decade ago to $44.50 a month.
Fiske, 62, has become something of an activist after the 1996 telecommunications law failed to spur competition in the local phone, cable and high-speed data sectors.
"The (law) was supposed to keep the (cable) rates down," said Fiske, who filed complaints with the Federal Communications Commission, his congressman, the city of Encinitas, and other places. "According to what I was being billed, it wasn't happening."
Fiske, who lives in a condominium, said he looked into alternatives but found nothing satisfactory since satellite service is too costly and an outside antenna is prohibited. A self-proclaimed news-hound, Fiske said traditional rabbit ears wouldn't give him enough selection.
"If there were another cable company . . . part of the basis on which they would compete would be price," said Fiske, a course development writer for the Gemological Institute of America. "As it is, I'm stuck with one. It's a monopoly. I don't have a choice."
The largest competitor to traditional cable television so far is satellite TV, which now serves almost 28 percent of the nation's 94 million subscribers to non-broadcast TV.
Joe Laszlo, an analyst with JupiterResearch, said that while satellite is a competitor, the up-front cost of the service's installation and equipment keeps a lot of consumers out of the market, even when the provider subsidizes it.
"The market would be a more competitive one if there were more ground-based, more wire-line-based pay-TV competitors," he said.
That competition is starting to develop with telephone companies now launching live TV service carried by fiber-optic cables and regular telephone lines.
Verizon, for example, is building up its network in some 800 communities in 16 states, passing 3 million homes with their fiber-optic wires by the end of last year. The company expects to double the number by the end of this year.
AT&T is also pushing out a system to reach 18 million homes in the next three years.
To help make that happen, local, state and federal governments are exploring ways to speed up the process to bring more competition -- and possibly lower prices -- to the cable TV marketplace nationally.
Texas adopted regulatory changes last fall so telephone companies and other competitors could set up their TV systems faster to compete against traditional cable companies.
Legislatures in Virginia and Indiana recently adopted similar legislation and sent it to their governors, who are expected to sign it. At least six other states -- including New Jersey and Missouri -- are now considering similar changes.
Laszlo said a recent survey showed more than half of current subscribers would switch providers if they could get a lower price for the same channels. There is "a lot of dissatisfaction and probably a lot of wishing" among consumers for more competition, he said.
The survey also showed that about 66 percent of cable and satellite subscribers are satisfied with their service.
That's because satellite customers are "really, really" satisfied and digital cable subscribers "tend to be fairly happy" with their service, Laszlo said.
"Folks who are still buying analog cable TV services are where you do start to see a fair degree of dissatisfaction," he said.
Subscribers in areas where cable companies face competition from telephone companies might find TV rates even lower than the competitive markets the FCC reported on.
A recent Bank of America report found that in three communities where Verizon started selling its TV service, which is priced nationally at $39.95 a month, local cable operators were willing to quietly drop their rates to match or undercut Verizon's prices.
In Keller, Texas, for example, the cable system lowered its price to $30 a month from $52.44 for customers who called and mentioned the cost of Verizon's service, the report said.
Competition paid off for Michael Marando of Sacramento, Calif., who dropped his bill for television, high-speed Internet and telephone service to $100 a month from $160 a month when he subscribed to a package that SureWest Communications is offering in his area.
SureWest Communications, a telephone company serving about 200,000 customers in the Sacramento region, started its TV service in 2002 and now has about 17,000 subscribers, said Ron Rogers, spokesman for the company.
Marando, an information officer for the California Office of Traffic Safety, said he wasn't satisfied with his local cable company so when SureWest wired his neighborhood, he signed up.
"They really offered a package that I couldn't refuse," he said.
