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It’s Rate-Hike Season

11/24/2004 8:16 AM Eastern

Rate-increase notifications are as predictable as holiday cards in the mail in November and December, and cable’s competitors are already poised to take advantage of any consumer discontent.

Operators said they are feeling the full impact of programming-price and fuel increases. Representatives also said they invested in upgrades and beefed up their customer service and channel lineups -- all factors that justify coming rate hikes.

An online check of local news coverage shows that notices so far warn of basic-cable-rate increases ranging from 9.5% in locations such as Lansing, Mich. (Comcast Corp.), and Pine Level, N.C. (Time Warner Cable), to 2.9 % in Holland, Mich. (Comcast).

A Time Warner spokesman said rate hikes are set division by division. Hikes are announced and rolled out according to the local billing cycles.

Time Warner divisions in North Carolina and Ohio have already begun sending notices, according to press coverage. There cable rates will escalate by 5.5%. By comparison, the cost of living increased about 2.5% in 2004.

Companies are contextualizing the rate increases. Comcast plans no hikes for its 6.5 million high-speed-data customers or its 1.2 million telephony customers, spokeswoman Jenny Moyer said. The company’s planned 2005 increase will be about 3% averaged across all products, she added.

The rate hike will help to pay for the hundreds of hours of new linear and video-on-demand programming the company has added and will launch, such as a planned children’s channel set for next year.

Comcast has also taken significant steps across the country to expand service hours, to put more technicians in the field and to offer consumers shorter service windows. The company continues to upgrade its plant to voice-over-Internet-protocol readiness, she added, and 95% of the MSO’s plant will be able to provide telephony in 2005.

Cablevision Systems Corp. has announced that it will increase rates an average of 2.8% in its systems. The company noted that charges for phone and Internet service would remain unchanged for the second year in a row.

One company that is not currently in rate-hike mode is Adelphia Communications Corp. Spokeswoman Erica Stull said the company is changing its strategy of spreading hikes throughout the year around the country to a uniform increase date. That date has yet to be set, however.

Several companies declined to state the amount of their planned rate increases.

Direct-broadcast satellite competitors are already touting coming cable-rate hikes in an effort to capture consumers who are angry over another cost increase.

DirecTV Inc. is running commercials attributing nothing but continually higher costs and bad service to digital cable.

And EchoStar Communications Corp. is being even more aggressive. It has invited local reporters across the country to call the company as soon as writers receive notice of a cable-rate hike.

EchoStar vowed to provide interviews with angry local cable customers who have switched to its Dish Network. The company will also put writers in touch with local retailers, provide Federal Communications Commission reports dunning rate hikes and provide anti-cable analysts’ reports.

September