Comcast Tries To Blur Picture With Senior Pricing Gimmick

THE OBSERVER

March 29, 1992|By Mark Guidera

The most amazing thing about the recent cable television rate hike from Comcast Cablevision of Harford County is that it's only senior citizens who have raised a fuss about it.

And they aren't even raising cane about the $2 monthly hike for what's called "preferred basic service." They're upset about having to provide detailed financial information to Comcast to get a discount to offset the monthly increase.

The $2 monthly rate increase and the restrictions for the discount are both troubling.

First, let's look at the discount.

Comcast is marketing the $2 monthly discount for senior citizens as a goodwill gesture to those over 65. The problem with the discount isn't that Comcast requests seniors to provide enough information to rival an IRS inquisition, but that it amounts to age discrimination.

To qualify for the discount, you have to prove that you are over 65 and have less than $17,000 annual income. Most of the information required involves disclosures about finances, from stock dividends to capital gains.

So the discount is clearly more income-based than age-based.

Here's the rub: If you are a young, single parent struggling to raise kids on $16,000 a year, you can't qualify for the measly $2 monthly discount. But if you are 66, your kids are on their own and you are collecting $16,000 a year in Social Security and pension payments,you qualify.

In the world of marketing these days, it rings of community goodwill to forever be offering seniors discounts and freebies for everything from public transportation to coffee.

It makes for slick marketing gimmicks, too, like Comcast's trying to deflect thereal issue here: another rate hike.

If you are a Comcast customer, you received with the March bill a notice from the company that thefee for preferred basic service is going up. Again.

There will beno public hearing to determine if the rate hike, bringing the basic monthly service charge to $23.50, is warranted or an act of monopoly price-gouging.

The company, like 90 percent of all cable TV outfits in the nation, operates without regulation. If Comcast wished, it could hike rates again next month and the next and the next.

In April 1990, the basic service rate for Harford Comcast customers was $17.95. So in two years, the fee has increased by $5.50.

That's abouta 30 percent increase over two years. I don't know of many businesses, other than cable TV firms and diaper companies, that can keep customers with such a stiff price increase in so short a period.

For most Harford customers, the $2 monthly increase didn't shake them up much. They turned on the tube after snickering when they got the bill this month and fell into that tube-head lethargy induced by socially important programming like MTV and the Weather Channel.

But let's wake up a minute and look at some math. With between 35,000 and 40,000 customers in Harford County, that $2 hike on your monthly bill means between $840,000 and $960,000 in new annual revenue to the company.(Windfall might be a better term.)

(If you want to do some additional math to determine approximately what Comcast's gross revenues are, play with these figures: The company pays Harford governments a franchise fee of 3 percent of its basic and pay revenues. In 1991, it paid about $389,000.)

As usual, the company says the rate increase is needed -- to quote Kurt Pendelton, Comcast's general manager -- because of "the higher cost of doing business."

And exactly what is that higher cost of doing business? Comcast says it has added 100 miles of additional cable, hired more customer service representatives and is adding seven new channels.

The cost of adding new cable lineis expensive. Comcast says it costs about $16,000 to add a mile of aerial cable and about $24,000 a mile for ground cable. The added lines were a mix of ground and aerial. Comcast would not disclose how much the entire project cost.

But let's be frank. While the new linesare a cost of doing business, they are, more importantly, a way to bring in new customers and more money. It's the same reason fast-food restaurants expand with new establishments. The added cost of the newchannels isn't clear. Comcast negotiates separate deals from corporate headquarters for each new channel it adds to local franchise areas. Pat Donovan, spokeswoman for the Harford Comcast operation, says cost figures therefore aren't available.

But let's take a close lookat the channels being added. We find three are pay-per-view channelsand two (C-Span II and the Country Music Television) are standard fare in most cable franchises in the Baltimore-Washington area.

So, for your 24 extra bucks a year, you'll get Black Entertainment Television and The Nostalgia Channel. Such a deal.

Thankfully, our tube-head lethargy has not blasted all the brain cells. We can still put the proverbial two and two together.

Comcast's rate hike comes a month after the U.S. Senate, by a resounding 73-18 vote, passed a bill requiring the Federal Communications Commission to begin full-scale regulation of cable television, including rate control.

The Senate did this after hordes of cable customers and consumer protection groups complained about rate gouging by cable companies.

The measure is now in the House, and experts on the issue believe it has a pretty solid chance of passage there, considering the House passed similar legislation last year which the Senate never acted on.

It would seem Comcast has decided to raid the henhouse before the FCC moves in.

And you thought the corporate ethics of the '80's were out of style.

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