Cable and Competition

April 13, 1993

For proof that competition keeps businesses lean, imaginative and responsive to customers, consider the running skirmish between a pair of cable TV companies in Anne Arundel County.

North Arundel Cable Television and Jones Intercable vie for some 40,000 households in the northern half of the county. If you weren't aware that this is one of the few areas where cable providers square off, you might have guessed from the two companies' relatively low fees.

Subscribers of North Arundel pay a monthly bill of $22.15 for 46 channels on expanded basic service (48 cents per channel), while Jones Intercable subscribers pay $21.20 for 53 channels on expanded basic (40 cents).

In contrast, the highest per-channel costs are paid by customers of Comcast Cablevision outlets in Harford County (70 cents for each expanded basic channel), Baltimore County (67 cents) and Howard County (65 cents).

Each Arundel outlet is even more of a bargain because its basic service includes the Disney Channel and Home Team Sports, premium channels that cost about $30 extra on Comcast systems.

Comcast decided not to offer HTS, the carrier of most Orioles home games, on basic service, saying most homes did not want to pay $1.50 more per month. But the two Arundel companies jumped at the opportunity to make themselves more attractive by adding HTS to their basic offerings.

Consumers aren't the only ones to profit when companies fight over the same turf. The companies benefit as well. North Arundel Cable Television estimates that 80 percent of the households in the "overbuilt" area have chosen to sign up for cable service. The subscription rate in noncompetitive sections of the county is only 61 percent.

These days, the cable industry finds itself on the verge of a revolutionary era, when a TV viewer will be able to choose from among hundreds of channels and participate in two-way communications without leaving the comfort of the recliner. Telephone companies appear likely to get into the cable business and shake things up even further. One significant shift has already occurred with the Federal Communications Commission's recent decision to impose price controls on cable companies.

"Caveat operator" should be the industry's motto. The capacity to change will be paramount, the competition tough. Companies that understand this -- as North Arundel and Jones Intercable seem to do -- will have a head start on their rivals.

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