from: Oregon Live [1]
Cable TV gets choice-tastic
Competition might mean lower prices -- and more confusion
Friday, April 20, 2007
MIKE ROGOWAY
The Oregonian
Within a year, many metro-area households likely will have a choice -- for the first time -- about who provides their cable television service.
Verizon Communications Inc. won regulatory approval Tuesday to start offering cable TV service by early 2008 in Washington County, competing with Comcast Corp. Qwest Communications International Inc., meanwhile, plans to meet with city officials today about doing the same in Portland.
The prospect of competition brings with it hopes for better service and, possibly, lower prices.
As cell phone subscribers and long-distance callers have long known, however, more choice also makes life more complicated. To get the best deal, consumers will have to be smart shoppers and aggressively play one company off another.
"It's always going to take more time to compare prices," said John Breyault of the Telecommunications Research and Action Center, which publishes a weekly newsletter on consumers' telecom choices. "But at the end of the day, if people can save money, then it's worth the headache."
Competition for cable viewers has been a long-standing goal of local regulators, but the high cost of installing a new cable network deterred rivals from entering the market. Now, the prospect of bundling high-speed Internet access and phone service over the same fiber-optic lines has convinced Verizon and Qwest that competitive cable makes sense.
Verizon is already stringing fiber-optic cables directly to customers homes, creating advanced telecommunications networks running through neighborhoods. Qwest hopes to achieve the same result less expensively, running fiber to regional hubs and then sending TV the rest of the way to customers' homes over copper phone lines.
Verizon hopes to begin serving customers in its traditional service territory, Washington County, late this year or in early 2008. Qwest, which serves Portland, probably is at least a year behind.
The companies probably will take longer to offer cable outside the metro area, but small phone companies in places such as Canby already have started competing with local cable operators.
Neither Verizon nor Qwest has announced rates for their Oregon TV service, but those favoring competition hope that having a choice for cable service will put the brakes on soaring rate increases.
Cable rates have climbed by an average of 6.4 percent annually during the past decade in the Portland area. That includes a 7.9 percent increase that took effect March 1, bringing monthly rates for Comcast's 70-channel package to $50.89.
Verizon charges less than that -- about $43 a month -- for a comparable package in other markets. But whatever price Verizon offers initially, consumer watchdogs say prices tend to creep up over time and both Comcast and Verizon could offer increasingly complex plans with hidden rate increases that could make some packages unappealing.
"There's a lot of caveats consumers need to be aware of, and they need to scrutinize their contracts carefully," said Jeannine Kenney, senior policy analyst for Consumers Union, which publishes the Consumer Reports magazine.
In particular, consumer advocates say viewers will need to keep the following in mind as they consider their cable choices:
Introductory rates: Some plans offer good rates for a year or less, anticipating that consumers won't go through the hassle of switching after higher prices kick in.
Lock-in: Some plans require subscribers to commit to a year or more of service to get the best deal.
Bundles: Verizon is likely to join Comcast in offering discounts to people who subscribe to multiple services -- home phone, cell phone, Internet and cable TV. Consumer groups, though, say those packages might be a good deal only to those who use such services quite a bit.
The good news, Kenney said, is that even seemingly rigid corporations often leave some room for negotiation if consumers threaten to quit.
"You may be able to haggle with your existing provider over prices," she said.
There are no guarantees that competition will improve cable prices or boost service, said Fred Christ of the Metropolitan Area Communications Commission, which regulates cable TV in much of Washington County. But Christ said consumers might take some pleasure in being able to move their business elsewhere if one company proves unsatisfactory.
"At least you feel like you had a choice," Christ said.
And as much as the Internet and other new technologies have changed the entertainment and information business in the past five years, Christ said cable TV is poised to undergo more dramatic changes.
Many cable and broadcast networks already offer subscriptions to individual programs via the Internet. With that, Christ said, come more choices and even more decisions about what to watch and how much viewers are willing to pay.
"Things are going to be very interesting in five years," he said.
Mike Rogoway: 503-294-7699; mikerogoway@news.oregonian.com; siliconforest.blogs.oregonlive.com