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Cable Operators

Bright House Braces For Hurricane Verizon

2/17/2006 7:03 PM Eastern

Bright House Networks’ 1 million-subscriber Tampa, Fla., system is about to become ground zero for one of the epic battles of the decade: the three- and four-product showdown between the cable and telephone industries.

Verizon Communications Inc. already has a cable-television franchise for a sizable chunk of the market in which Advance/Newhouse Communications-owned Bright House operates, 700,000-home Hillsborough County. It is also negotiating with the city of Tampa for a cable franchise.

As the telephone companies invade the video business, and cable operators enter the telephone and, eventually, the wireless business over the next several years, Tampa will be one of the key early battlegrounds. Verizon has a history of using its western Florida operations to roll out new services, said St. Petersburg Times technology editor Dave Gussow.

To brace for that competition, Bright House has launched a myriad of initiatives that, in scope and scale, earned it the designation as the Multichannel News System of the Year.

Bright House Tampa
Taking measure of the System of the Year:
*MCN estimate
SOURCE:Multichannel News research
Basic subscriptions: 1 million
Digital subscriptions: 400,000
High-speed data subscriptions: 400,000-450,000*
Phone subscriptions: 100,000

Moving on several fronts, Bright House:

  • Started a 24-hour local sports channel in January, which sits beside two 24-hour local news channels — Bay News 9 and Bay News 9 en Español;

  • Launched digital phone service, generating 100,000 subscribers in one year’s time;

  • Ponied up $1.7 million for the naming rights to Bright House Field, a local minor-league ballpark and the spring training home of the Philadelphia Phillies, and;

  • Opened a 4,500–square-foot demonstration center in a Clearwater mall to showcase Bright House services.

But it’s also the little things that have made a difference, like calling subscribers on their fifth-year anniversary to thank them for their patronage, free service calls and having current employees participate in interviews of prospective hires.

The man in charge — who is now increasingly in the eye of Verizon’s video hurricane — is Kevin Hyman, vice president and general manager of Bright House’s Tampa system.

Hyman knows all about competition, and not just from direct-broadcast satellite. Twenty years ago, Hyman was the competition.

He entered cable in 1985 with an investment-banking company that built a cable system in unserved parts of Colorado Springs, Colo. Those homes went unserved until the incumbent operator, a partnership between American Television & Communications Corp. (now part of Time Warner Cable) and Century Communications Corp., extended its plant in areas where Hyman’s company, Citizens Cable Co., was building.

The overbuild went on for four years, before Citizens Cable Co. sold out to Time Warner. Hyman stayed on with Time Warner and moved to Tampa in 1995.

Hyman is now in another firestorm, this time as incumbent telephone provider Verizon comes to town.

Describing the brave-new world he and his cable brethren are entering, Hyman said: “Your landscape has forever changed. This is where it’s going to be the rest of our working career. Everything is now ingrained in recognizing your entire environment. You have to have competition in your blood. It’s like taking out the blood and putting in new blood.”

Everything Bright House and its staff has done over the past 10 years — including the launch of Bay News 9 (see story, page 28) — has been designed for the day competition arrived, he said.

“We know we have a lot of areas of improvement,” said Hyman, but over the past decade, “we’ve acted in large part as if competition reigned. A good part of this attitude was already in place.”

Bill of Fare
Monthly Bright House pricing:
Source: Bright House Networks
Digital Combo Plus HD: $124.90 (Digital cable, RoadRunner or Earthlink, digital phone, HD/DVR)
Digital Combo Plus: $121.90 (Digital cable, RoadRunner or Earthlink, DVR)
Digital Combo HD: $94.90 (Digital cable, digital phone or RoadRunner/Earthlink, HD/DVR)
Digital Combo: $91.90 (Digital cable, digital phone or RoadRunner/Earthlink, DVR)
Digital Combo (no DVR): $84.95 (Digital cable, RoadRunner or Earthlink)
Digital Cable, DVR: $53.80
Digital Cable: $46.85 (180 channels)
Standard Cable: $31.95 (80 channels)
A la carte:
DVR: $6.95 Sports Pak: $2.99 Nuestros Canales: $2.99 HD/DVR: $9.95 HD Pak: $6.00 HBO, Showtime, Starz: $9.95

So with Verizon coming, there are no quick fixes, nor is there panic. “We’re not doing anything remarkably different,” he said. “We’re investing our dollars in the right areas. We’ll continue to evaluate our community partnerships so that it resonates with customers. And we’ll continue to listen to our customers and front-line employees.”

The first shot in Bright House’s war with Verizon was fired in the Tampa suburb of Temple Terrace, Fla., where Verizon began offering 180 channels for $39.95 a month, plus a per-set-top-box charge of $3.95 per month. Bright House charges $46.85 a month for its 184-channel digital-cable package, but no extra fees for set-tops.

Verizon charges $34.95 a month for high-speed data services at speeds of 5 Megabits per second upstream and 2 Mbps downstream, if a consumer makes a one-year commitment and also takes phone or video service. Phone service is $34.95 a month for bundled subscribers.

A video/phone or video/data bundle from Verizon is $69.90 a month. A video, voice and data bundle is $104.85 a month.

Bright House charges $84.95 per month for a digital-cable/high-speed data combo (5 Mbps downstream), and $121.90 per month for video, voice and data that includes a digital video recorder, again with no additional fees for extra outlets.

“The competition is intense,” said Gussow, who covers the cable and phone industries. “Bright House is taking Verizon very seriously, and Verizon is taking Bright House very seriously.”

Gussow said Bright House did not raise cable rates in Temple Terrace this year, or in Hillsborough County, where Verizon is about to launch.

According to a Bank of America study, Bright House is matching Verizon’s rates in Temple Terrace if subscribers call in to disconnect service.

A Bright House spokesman did not confirm or deny the price-matching tactic, but said the company planned to do whatever it takes to be competitive.

And Bright House’s rates in Pinellas County, where it faces cable-system overbuilder Knology Holdings Inc., are $10 below the rates it charges in Hillsborough, Gussow said.

But “you don’t get a lot of negative comments about Bright House,” he added. “They are very much focused on customer service.”

Bob Elek, manager of media relations for Verizon’s Southeast division, said the telco will be competitive in the market. “The best strength we have is the network,” he said. “It will provide customers with content, speed and reliability. And Verizon doesn’t fear Bright House’s place in the market.” The telco’s biggest hurdle, Elek said, “is our ability to get out there as quickly as possible.”

Bright House vice president of marketing Steve Colafrancesco likened the battle to heavyweight boxers trading punches.

“We got into their business and our pricing is quite competitive,” he said. “Their TV service is quite competitive with ours. That’s the way the game is being played. When push comes to shove, our triple play is within earshot of theirs.”

Colafrancesco’s plan, for now, is to bundle rather than cut prices. “Over the course of time, the more you buy, the more you would save,” he said.

Customer service is another differentiation point, he said. “We’re local. We think we can be a simpler, easier experience for customers.”

Listening to customers is important, Hyman said. For instance, Bright House has made changes in how it markets digital video recorders after listening to customer focus groups.

“We will have a more retail look and feel with our stores and billing centers,” Hyman said. “We’ve learned from customers that they have a thirst to get their hands around technology before they make a purchase,” he said.

Digital phone has been a pleasant surprise (see story above). “They wanted a better price and wanted a service provider that was going to be responsive to their needs,” Hyman said of Bright House’s success, which came largely at Verizon’s expense.

“We think our customer-service levels over the past decade are measurably high,” he continued. “Customers feel comfortable working with us.”

Customers who already take video and/or data service can buy Bright House’s digital phone offering for $39.95 per month.

Hyman hinted at offering a lower-price phone service. “As with any new service, we will have to have different iterations and product definitions. We’ll look at new iterative-type phone service to capture maximum share, a limited-application service.”

So if Verizon isn’t enough, does Hyman fear the potential Internet-based or mobile video end runs around cable?

Not really, he said — mostly because he’s focused on the consumer trends he sees.

“It’s how to get someone installed or serviced on the same day. … We’re catching the time spent with HDTV [and it’s] at a rate no one expected. That tells me people are preparing to consume entertainment in their own household. I’m seeing additive occurrences, rather than any kind of cannibalization.”

September