View Full Version : The New Cable Guy



cablewithaview
07-31-2006, 11:55 PM
Jul. 31--Don't expect immediate changes when Comcast Corp. acquires cable-television systems in the Colorado Springs area from bankrupt Adelphia Communications Corp.

Major changes in rates and channels aren't expected because Adelphia's standard rate for cable television in the Springs is already identical to Comcast's standard rate in Denver and the channel lineups offered by the companies in the two cities are similar.

But change is likely in the months and years after the Philadelphia-based cable giant takes control of a system that serves more than 100,000 television and Internet-access customers throughout El Paso County and employs nearly 800 people locally.

Comcast won't keep all of those employees -- 600 in a call center here go to Time Warner Inc. as part of a nationwide deal between the three companies scheduled to be completed today. The remaining 200 employees and 100 contractors will go to Comcast to continue operating the local system.

Officials from Comcast said last week they don't want to talk about the company's plans for Colorado Springs until the deal is completed.

Comcast didn't become the nation's and Colorado's largest cable provider by standing still -- the company was built through a series of acquisitions and has expanded in recent years into offering Internet access, digital telephone service and new video services.

Faced with competitive threats from satellite broad- casters, telecommunications giants and companies offering entertainment on devices over the Internet, Comcast often has responded by offering consumers more bells and whistles in its services.

"You will probably get a better-run operation with better service, more channels and additional products, but you probably won't get lower prices," said Avi Kishore, media and entertainment team director for Yankee Group, a Boston-based market-research firm.

Comcast rarely competes by cutting prices, opting instead to add more extras to its products to win and keep customers, Kishore said.

Those extras could include faster Internet service, additional channels and unlimited long-distance calling, he said.

Comcast will face competition in the Springs, as it has in most of its other markets; customers already can choose from both major satellite providers and soon may get the chance to buy television services from their phone company, Qwest Communications International Corp.

Kishore expects Comcast to invest heavily to expand the capacity of the cable systems it is acquiring from Adelphia to offer more high-definition channels and individual broadcasts customers can order. He also expects them to begin offering digital phone service soon.

That's what the company has done elsewhere in Colorado, where it has spent $600 million on upgrades since acquiring cable systems across the state in 2002.

Cindy Parsons, a Comcast spokeswoman in Denver, said the upgrades allow it to offer high-definition channels, faster Internet speeds, "video on demand" and digital phone service to its 700,000 customers in the state.

Comcast plans to "continue to add content, features, speed, interactivity, voice services," Parson said, as part of its strategy to offer customers "more choice, more value and the ability to fully integrate their entertainment and communication experience."

Upgrades in the Springs would allow Comcast to market its cable, Internet and digital phone service in a single "tripleplay" package it began offering last month in Denver for $99 a month. The offer is good for a year and available only to new customers.

"They're aggressive with promotional rates in markets where they have a lot of competition," Kishore said.

"They are hoping that once they hook you with the price, they can keep you when the price goes up because you won't want to change providers for all three."

Chuck Ward, president of Qwest's operations in Colorado, said Comcast has been an aggressive competitor in the Denver area, but noted that the company has offered even better deals to new customers in other cities such as Seattle and Philadelphia.

"I would expect them to be every bit as aggressive in competing in Colorado Springs as they have in Denver," Ward said.

"The fact customers now have a choice for the packages of services has brought down prices and given them more features for what you pay."

Comcast also has been aggressive in most cities in moving customers to its digital cable service, which allows the company to then sell its high-definition channels and video-on-demand service that allows customers to order programs on their own schedules.

"Comcast competes using premium products" as its primary weapon, said Todd Mitchell, an industry analyst for Kaufman Bros. LP, a New York-based investment-banking firm. "They want you to write them a bigger check and always are trying to sell you something else."

Consumers haven't benefited from Comcast's growing clout to negotiate lower fees from the channels it carries -- cable rates still have risen three times faster than inflation during the past 10 years, said Mark Cooper, research director for the Consumer Federation of America.

One area where Comcast is not as fast is offering the latest products and services to its customers, said Ronald Rizzuto, a University of Denver finance professor who focuses on the cable-television industry and has been a consultant to many cable firms.

"They are a year behind Time Warner and Cablevision in rolling out digital phone service, but they are very good at execution" once a new product is introduced, Rizzuto said.

"They have the financial wherewithal to do it quickly."

Comcast has followed much the same cautious path with its video-on-demand service.

The company wasn't the first to offer such a service, but it now offers more ondemand programming than any cable provider, including movies, sporting events and reruns.

Comcast has plans for more new products and services -- the company joined three competitors late last year in forming a partnership with Sprint Nextel Corp. that will allow Comcast to offer cellphone service in its packages and offer its services on cell phones.

One area where Comcast is behind its competitors is customer service.

A customer satisfaction survey released last August by J.D. Power and Associates rated Comcast ahead of Adelphia but below the industry average and behind both satellite-television providers.

Another J.D. Power study rating telephone customer satisfaction that was released earlier this month put Comcast ahead of Sprint but below the industry average and Qwest in a region that included Colorado and 15 other Midwestern and Western states.

Comcast got its start in the cable business more than 40 years ago, when Philadelphia entrepreneur Ralph Roberts used profits he had made from selling a company that made men's belts to buy a Tupelo, Miss., cable system with two other Philadelphia businessmen.

"I realized the cable business was the best of all the ones I had invested in and decided to go forward full-boat," Roberts said in a 2001 interview for the Cable Center's living history project in Denver.

"It was exciting once we realized you got to develop programming and could do other things that would make people want to buy."

Comcast grew by financing each new system individually because Roberts didn't want to gamble the entire company on a single new deal.

He took Comcast public in 1972 and completed his first major acquisition in 1986 by buying Group W Cable with two larger competitors.

The company bought competitors in 1988 and 1994 that vaulted it to the nation's third-largest cable provider, but it really didn't hit the big leagues until 2002, when it acquired AT&T's cable operations and became the nation's largest cable-television firm.

Comcast wasn't only buying cable systems. In recent years, the company has bought or started the Golf Channel, the Outdoor Life Network, E! Entertainment Television, the Style Network, four regional sports networks and a children's television channel.

Not every acquisition was a home run for Comcast -- the company made a bid two years ago for Disney Co. that the entertainment giant's board ignored.

The bid was widely thought to be part of Comcast's bid to expand the base of programming it controls.

DETAILS

Headquarters:

Philadelphia

Chief executive:

Brian Roberts

Started:

1963 by Ralph Roberts, father of Brian Roberts

Customers:

21.7 million for cable television, 9 million for highspeed Internet access, 1.5 million for digital phone service; 700,000 customers in Colorado

Employees:

80,000 nationwide; 4,000 in Colorado

Revenue:

$22.3 billion in 2005

Earnings:

$928 million in 2005

Stock:

Traded on Nasdaq Stock Market under symbol CMCSA

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Reigster at SatelliteGuys