Competition Fuels Local TV Growth

fpcomcast.jpgDigital convergence – the media trinity of voice, video and broadband – could be coming soon to Claremont, Newport, Springfield and other towns. Two companies, Comcast and FairPoint Communications, recently revealed plans to offer a combination of digital television, telephone and Internet access to their newly acquired customers in New Hampshire, Vermont and Maine.

Comcast is already making their presence felt; FairPoint must wait for shareholder and government approval of their merger with Verizon before going forward. Once that happens, Comcast’s local cable television franchise, a historic monopoly in the years it was run by Time Warner and Adelphia, may face serious competition for the first time. To prepare, the company is readying a system upgrade that’s causing both excitement and consternation.

As the new year approached, cable customers began noticing the effects from Comcast’s takeover of the former Adelphia system in Claremont and Springfield, along with Time Warner’s properties in Newport and Sunapee. The company, the largest cable and broadband provider in the country, announced rate increases averaging three percent for most of their television services. A few new channels appeared, and several disappeared – including the West Coast feeds of premium programming from HBO, Showtime and Starz. Many complained that they were now paying more and receiving less.

A company representative explained that some of the deleted content was redundant, and that customers can expect more new programming in February. Comcast spokesperson Marc Goodman cited an aggressive growth strategy for the coming months. On demand offerings in particular, he said, “represent a dramatic expansion of what’s been available,” including “over 8,000 programs … more than 90 percent of which are free.” High definition content will also increase, including some new channels.

In terms of Internet service, the cutover of Adelphia’s broadband system to Comcast had its share of glitches, including lost emails and other hiccups, but it’s running smoothly now. Comcast’s system improvements include content partnerships with McAfee Internet Security, Snapfish, Rhapsody and others, as well as plans for “PowerBoost,” a flexible, broadband-on-demand service. Pricing, however, did not change.

Rounding out the company’s so-called “Triple Play” is Comcast Digital Voice, a telephone plan that will be available mid-year. It’s a Voice Over Internet (VOIP) service, similar to Vonage and Skype, featuring unlimited long distance calls to the U.S. and Canada. Goodman said the voice/data/TV combination package will cost $99 per month, an introductory rate that will likely rise to $132 after one year.

“We’re delivering convergence today,” says Goodman. “A customer that has digital voice service will have an option in the future to see Caller ID on their TV screen,” as well as Internet-based, unified e-mail and voicemail.

Their advantage may be short-lived once FairPoint Communications completes its merger with Verizon’s Maine, Vermont and New Hampshire wireline business. If the deal is approved, the company will grow from 300,000 current voice and data lines to nearly 2 million.

When the purchase was announced January 17, the company downplayed its convergence plans. FairPoint executive Walt Leach told the Boston Globe, “clearly, video will be a consideration, but we don’t want to get distracted by that.”

Two days later, however, a report in the Manchester Union Leader quoted CEO Gene Johnson promising television via Internet Protocol over DSL (IPTV) as part of their plans. In Washington state, he said, “We are very effectively competing against Comcast in that market.”

“We are offering it today, we have found it has a good acceptance rating,” FairPoint Chief Operating Office Peter Nixon said Friday. “We believe we understand the technology, the programming, and how to integrate it with voice and data.”

Yelm, Washington is currently the only FairPoint franchise offering IPTV service, though another, in Cass County, Missouri, will become operational later this year. The Yelm system features 145 channels and includes on-demand services. It also provides the town with a community access channel for local programming.

Yelm’s FairPoint lineup of local affiliate channels from PBS, ABC, NBC, CBS and Fox is more similar to Comcast than satellite providers DirecTV and Dish Network. In particular, Dish and DirecTV offer no local weather forecasts, few New Hampshire stations and no access for citizen programmers or coverage of municipal meetings.

FairPoint media relations representative Jennifer Sharpe cautioned Friday that customers shouldn’t expect an exact match. “We’re a year away from this deal being closed, and we have a lot of integration to do. We can’t compare with the Northwest. It may be completely different.“

“The general approach is we truly like to become a partner within the community,” said Peter Nixon. “Where we can, we try to include that same approach in these types of offerings,” including community access and as much local programming as possible.

Verizon attempted to offer IPTV to customers in New Hampshire, but was stifled by regulatory requirements mandating that separate agreements be reached with each city or town operating a system. “That is the requirement, and that’s how it has to be done,” Nixon said Friday. “Therefore, it does affect speed and pace of rollout.”

Nixon indicated that FairPoint would like to see that regulatory climate change. Where possible, he said, “we would want work with the town and the state to see if there’s a different way to do that.” However, said Nixon, “the franchise dynamics may be completely different a year from now.”

The company is well positioned to work through whatever difficulties may exist. “We’re already very heavily centered in New England. This is a natural extension of what we’ve been wanting to do,” said Nixon. “It’s an area we’re familiar with. We’ve already committed to making investment in the infrastructure, and we’re already familiar with the regulators and legislators.”

“It’s a perfect fit,” he said.

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4 thoughts on “Competition Fuels Local TV Growth

  1. More political PR while waiting out the Fed House and Senate upcoming investigative meetings concerning the recent FCC ruling allowing a 90 day deadline for coming to an agreement concerning Local control of cable and TV francise agreements!

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