Cable: Fees hit you where you live

April 07, 1993|By Frank D. Roylance | Frank D. Roylance,Staff Writer

An Orioles fanatic in Halethorpe has to pay $41.35 a month to get Home Team Sports and basic cable TV service from Comcast Cablevision in Baltimore County.

But if he sells his house and moves across the Patapsco River to North Linthicum in Anne Arundel County, he can get HTS free with his basic cable service. And North Arundel Cable Television will charge him just $22.15 a month.

He'll also get the Disney Channel on basic in the bargain.

What's wrong with this picture?

Nothing. North Arundel Cable TV competes with Jones Intercable in much of its franchise area, and consumer bargains are just what the Federal Communications Commission hopes to see where two cable operators are fighting for customers.

Last week, the FCC gave local and federal regulators the green light to roll back prices in noncompetitive markets by up to 10 percent. That's how much cheaper cable TV rates are where rival cable operators compete, according to an FCC survey.

And, once real competition arrives in a market -- from a growing rival cable company, less expensive satellite systems or video systems delivered by telephone wires -- the cable companies can ask the FCC to exempt them from further government regulation.

North Arundel Cable and Jones Intercable believe they will be judged competitive enough under complex FCC rules to be exempt from the new price controls.

"I believe we will probably be one of very few cable systems in the country that will qualify [for exemption]," said Gary Massaglia, general manager at Jones.

North Arundel Cable and Jones Intercable compete head-to-head for 38,000 to 42,000 households that have access to both systems in a so-called "overbuilt" zone stretching from Arnold to Linthicum.

North Arundel says it has signed up about 22,000 customers in the "overbuilt" zone, a little more than half of its 43,000 customers.

Jones doubts North Arundel's numbers, and claims about 16,000 households there as its own. That's about 35 percent of Jones' 44,600 subscribers.

Officials at both companies say their rivalry has affected programming and rate-setting decisions, and the quality of customer service.

Richard Oldenburg, regional manager of North Arundel Cable TV, said Home Team Sports was moved from premium to basic in 1989 at the urging of HTS. The channel wanted to smooth out the revenue decline it suffers every fall when thousands of Orioles fans drop their premium HTS service after the baseball season ends, he said.

HTS spokesman Scott J. Broyles said HTS began in 1984 as a pay service and has "made a conscious effort to shift the burden from subscribers to advertisers" by moving to basic. Of 250 cable systems in six mid-Atlantic states, only 10 still carry HTS as a premium channel, he said.

Among the holdouts are Comcast in Baltimore and Harford counties, Comcast-owned Howard Cable TV in Howard County and United Artists Cable in Baltimore City -- all of which are without major competitors. Prestige Cable TV in Carroll County offers HTS free when subscribers buy another premium channel, Mr. Broyles said.

Comcast Vice President Stephen Burch said a survey last year showed 75 percent of those polled are unwilling to pay $1 to $1.50 more for basic with HTS. "We're not going to force it on customers who don't care about the Orioles," he said.

But the question was answered differently in Arundel's competitive environment.

"We thought [HTS on basic] would be an excellent competitive advantage," Mr. Oldenburg said. So, with heavy Opening Day promotion in 1989, North Arundel put HTS on basic.

A year later, Jones Intercable followed suit, although Jones General Manager Gary Massaglia said he had been planning the change all along.

"We just felt . . . that adding a service like HTS to basic greatly enhances the viability of your basic service," he said. "In a market where you have off-air reception, you certainly don't need cable TV. You have to find ways to make cable programming as attractive as you can."

But Jones upped the ante, adding the Disney Channel to basic along with HTS as part of a Disney test in seven markets nationwide. The move did not go unnoticed by rival North Arundel's subscribers.

"We had a lot of people . . . say they were considering going to Jones" if North Arundel didn't change Disney from a premium service to basic, Mr. Oldenburg said. "We didn't want to take the chance that a percentage of our 5,000 Disney subscribers would leave us, so we put it on basic."

It was a boon to many cable viewers, whether they actually lived in the overbuilt zone or not. A family that had subscribed to North Arundel's basic service that year, and paid premium rates for HTS and Disney, saw its cable bill drop by half in a year's time, from about $32.50 to just $15 a month.

"Consumers in Anne Arundel County have seen a benefit in price and marketing offers," Mr. Massaglia said.

The rivalry kept North Arundel's rates for basic services below $10 a month through the late 1980s. When HTS was added to basic, the company ventured a $2 increase.

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