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Cable choice impacts rates

Published Oct. 2, 2005

If you had any doubt about the value of competition, consider the upcoming change in cable TV rates planned for the Tampa Bay area in 1998.

As is customary these days, Time Warner Communications will likely raise prices in January for more than 450,000 subscribers outside Pinellas County _ to pay for everything from increased program costs to system upgrades.

But most customers in St. Petersburg, Clearwater and unincorporated parts of Pinellas County will be spared the rate increases _ which total 11 percent in Tampa, for example.

Why? Because GTE americast is in town.

Faced with competition from the rival cable company in those three sections of the Tampa Bay area, Time Warner _ which estimates about 40 percent of Pinellas County is currently serviced by both companies _ plans to keep rates stable for most customers there.

"Normally, we would schedule a price increase that would reflect our increase in programing costs," admitted Bob Barlow, vice president and general manager of Time Warner in Pinellas County, adding that company policy is not to comment directly on the growing rivalry between the two cable providers.

"We've got no plans to raise rates in St. Petersburg," Barlow said. "You can read between the lines."

Even in the areas of competition, customers who receive only basic cable service _ limited to broadcast stations and access channels such as C-SPAN _ will likely see their bills increase by almost $1.50 a month to about $9.95 (not including franchise fees or taxes), Barlow says.

But Time Warner also plans to discount its standard service (basic plus non-premium cable channels such as MTV and Comedy Central) by whatever amount basic service increases, keeping prices steady for 95 percent of the subscribers in contested areas, who Barlow said get both types of service.

Because discussion of possible changes in 1998 are ongoing in areas other than Hillsborough County, Time Warner executives could not detail how much rates might change outside the competitive areas. Company spokeswoman Linda Chambers said only that increases are "a safe assumption."

"Whatever we do, it won't be a 10 percent (increase)," Barlow said of rates for subscribers in Pinellas County still subject to the cost increases. The law requires Time Warner to notify Pinellas County customers 30 days before any changes take effect.

In St. Pete Beach _ where Time Warner is negotiating to extend a 15-year non-exclusive franchise agreement that expires next year _ officials say they may ask for competitive pricing deals of their own during their next meeting with the cable company.

"Our residents weren't happy with Time Warner anyway, because we don't have access to channels that St. Petersburg does (including the History Channel and ESPN2), but we pay the same rates," says police Chief and acting City Manager Charlie Boice, adding that Time Warner offered to schedule upgrades once a new franchise agreement is in place. "This (rate increase) will probably raise new concerns."

Across the bay in Hillsborough County, where Time Warner is required to give customers 60 days notice, more than 200,000 subscribers have already begun receiving notice of rate increases.

On hearing of the reprieve granted some Pinellas County subscribers, John McGrath, cable coordinator for the city of Tampa, could only hope GTE brings the benefit of competition to Hillsborough County soon.

"We'd love to have (GTE) over here," said McGrath, noting Time Warner will raise monthly cable bills for the city's estimated 70,000 subscribers by $3 in 1998. "Obviously, where Time Warner has competition, GTE is forcing them to offer competitive prices."

Time Warner will soon upgrade service in Tampa to include 17 channels already available on other area systems, such as HGTV and CourtTV, but only $1 of the rate increase will fund those improvements, McGrath says.

"They (Time Warner) are doing what's within the guidelines of federal law," he adds, noting that the Federal Communications Commission provides criteria for cable companies to calculate the maximum amount of rate increases each year. "They're just taking advantage of the maximum rates allowed."

In unincorporated areas of Hillsborough County, officials say Time Warner's rate increases for subscribers in the upgraded Fibertek system have topped 13 percent annually over the past three years (standard service rates will jump $3.80 in 1998).

And those increases came despite the fact that more than 4,000 customers use the competing Adelphia Cable system, says Frank Turano, the county's cable TV administrator.

Officials at GTE say they have no immediate plans to extend their network to Hillsborough County, concentrating first on reaching all of Pinellas. Similarly, the company won't be raising rates for any of its 20,000 or so Pinellas County subscribers for 1998.

"We always said we were coming in with a competitive service at a competitive price," says Rich Engwall, GTE spokesman. "We have been very successful, so we have no plans to change that pricing structure. It's good news (for consumers)."

Time Warner's decision to hold off on price increases comes in addition to other incentives already offered to customers living in areas where GTE service is available.

Using a technique called block-by-block pricing, Time Warner offers special deals only in areas of Pinellas County where GTE has built up enough cable lines to offer service _ unlike the reprieve from 1998 price increases, which extends to every subscriber in St. Petersburg, Clearwater and unincorporated Pinellas County.

Among the incentives Time Warner presents: two free months of service if subscribers stay with the company for 10 months, a free movie channel with purchase of a movie channel package such as HBO and Cinemax, free upgrade to "smart" cable boxes (computerized with extra features) for two additional TVs in the household, and rates guaranteed for a year.

Time Warner's Barlow says the company will also likely rearrange channel assignments so that the subscribers in South Pinellas have the same dial arrangement as North Pinellas customers _ moving Showtime, Cinemax and HBO further up the dial so they appear next to companion channels Showtime2, Cinemax2 and HBO2.

"We haven't finalized anything yet . . . but things are different here (in Pinellas County)," he said. "People think what's happening (in Hillsborough) will affect us, too, but it's a different situation."

Changing cable rates

Time Warner's decision not to raise rates in areas where it competes with GTE has brought further fluctuations to cable rates across the Tampa Bay area. Outside areas where it is competing head-to-head with GTE, Time Warner uses formulas provided by the government to determind the maximum amount it can charge customers each year. Here's a comparison of how things will change in 1998.

Figures are monthly rages



service+ Standard++ Total Change

1997 $9.50 $17.20 $26.70 _

1998 $10.25 $19.45 $29.70 +11%



service+ Standard++ Total Change

1997 $8.50 $19.45 $27.95 _

1998 $9.95 $18.00 $27.95 0%


Local- Premiere-

cast+++ cast++++ Total Change

1997 $10.95 $15.00 $25.95 _

1998 $10.95 $15.00 $25.95 0%

+ Broadcast stations plus access channels

++Non-premium channels such as Comedy Central and MTV

+++Equivalent of basic service

++++Equivalent of standard service

Source: Cable companies