Digital TV wars........................................
multichannel.com
GTE, Cable Fight Over Ventura Superhighway
By LINDA HAUGSTED
As of this week Ventura County, Calif., may be one of the most competitive areas in the country.
GTE Video Services is upping the ante in this Los Angeles suburb jumping from 79 channels to 160 as it converts to digital.
But cable subscribers here have far more than video on their menu: The various multichannel providers offer interactivity, cable modem service (only from GTE), multiple money-back guarantees and price wars.
GTE is franchised to serve pockets of unincorporated Ventura County and the cities of Oxnard, Thousand Oaks, Newbury Park and Camarillo. It currently passes 54,000 homes and has claimed 22,000 subscribers from competitors including Tele-Communications Inc., Falcon Cable TV Corp. and Jones Intercable Inc.
"We think that's pretty good for a competitor in this kind of markets," said Richard Jones, GTE Video Services manager of programmer marketing.
GTE's main competitor is TCI of Ventura County, which is in the midst of a "whisper launch" of its own -- more modest -- digital product.
Of the market contenders, TCI comes closest to going toe-to-toe with the telco.
GTE has interactivity (GTE MainStreet); TCI has interactivity (ACTV). Both have similar lineups -- and both have now gone digital.
But GTE has beaten all the operators to the market with cable modems. GTE has launched WorldWind on its synchronous (same speed upstream and down) local-area network using a LANcity modem and is utilizing a unique marketing scheme: Consumers can choose two different network speeds, according to how much they wish to pay.
The service is a bit pricier than cable services such as @Home Networks or RoadRunner. Fees for installation, service activation, modem rental and the fastest service run the first month's bill up to $141.80. After that the monthly bill is $64.90 for the faster service and $48.90 for the slower one.
Dan Deutsch, TCI's Ventura general manager, said the system has no plans to launch @Home yet because the company is concentrating on its core business in order to remain competitive. TCI hasn't tried any retrieval campaign to recapture those who go to GTE because it's focused on its current digital launch, he said. But a few customers have already come back, he said, after finding GTE's equipment "unfriendly."
GTE requires a digital set-top while many cable subscribers on the trapped systems don't need one for most services. Therefore, customers of the incumbent operators don't have equipment incompatability problems that go along with set-tops.
But GTE has an impressive array of services. In addition to 14 new multiplex premium services, it offers 12 pay-per-view channels, 40 channels of Music Choice digital audio and about a dozen satellite services.
And the telco's introductory offer is a tough one to match. Customers who sign up before Nov. 30 for the GTE digital package will get it for $37.90 for the first two months. That includes all the multiplexed premium services. GTE customers now pay $26.95 for expanded basic service.
The catch? GTE's offer will expire in two months and the upstart isn't saying what it will charge thereafter.
TCI isn't sitting idly by. While it charges $26.30 for expanded basic, the incumbent markets its new digital platform for $25.99 for expanded basic plus the digital package of 11 basic services and digital audio. The entire plan of all basic and pay services costs $49.99.
The area's other incumbent operators have tried various competitive strategies, with some success. The tiny (4,709 homes passed) Falcon Cable system last December announced it would drop its Sat Pak basic tier to 45 cents, a 93 percent cut. That put the cost of basic-expanded basic at 15 percent below that offered by GTE, although Falcon then offered 53 basic channels compared to 64 by GTE. Executives hoped the cost cut would foster consumer loyalty and perhaps dissuade GTE from overbuilding Falcon's area.
(Falcon was recently deregulated by the Federal Communications Commission under terms of the effective competition rules. TCI filed for deregulation in this market Sept. 17.)
It doesn't appear to have worked. While customers appreciated the lower prices, Falcon suffered a customer service meltdown, which was not entirely the operator's fault, said noted Caroline Milton, a staff member in the city of Thousand Oaks' media services division.
Falcon was victimized, first by the arson fire that blackened Malibu last winter and then by rebuild problems this year that clogged phone lines. At the peak, Thousand Oaks was receiving up to 50 complaint calls a day, Milton said. The city fined Falcon $12,300 for violating service provisions of its franchise.
Now the rebuild is complete, a new customer service center has opened and service has vastly improved. Milton believes the speedy turnaround and incremental improvements would not have been done without GTE looming on the horizon.
"GTE hurt us initially, but we're starting to get a few back," said Dan DeLaney, Falcon western division vice president, who said the system is now operating with better-than-required response times.
Executives said many defectors bolted GTE because of its set-top requirement.
Still, Falcon executives said there are a few more operational issues to address before the operator actively solicits GTE customers to return.
Competition has been a two-edged sword in Oxnard. Jones has stepped into the battle with new, attractively priced packages and consumer service guarantees. But the company also socked the city with a lawsuit challenging the terms of GTE's franchise, said Dennis Scala, the city's management analyst.
The action, filed in Los Angeles Superior Court, is nearly identical to the suit Jones filed against the Ameritech New Media franchise in Naperville, Ill.
The Oxnard suit focuses on local programming requirements. For instance, GTE is not required to build a studio but will pay Jones to use its facilities.
Scala said Jones stopped paying franchise fees, pending outcome of the case, and is threatening to drop PEG (public, educational and government channels). The parties are talking over possible franchise changes, but Scala indicated Jones is hurting its case by withholding the fees.
Jones officials are tight-lipped about activities, but confirmed that the system has added six channels to be more competitive: Home & Garden Television, the Sci-Fi Channel, Cartoon Network, the History Channel, ESPN2 and Fox Sports West 2.
Jones also pumped up its service guarantees instituting a two-hour service window, 24-hour repairs, quick billing resolutions and a general guarantee of satisfaction. If the system fails to meet these guarantees, it will give consumers a $20 credit.
Officials declined to discuss new pricing and packaging, but sources in the area said the new packs are labled "Impact TV." Expanded basic is a very competitive $24.57 for all 60 basic channels, but the top package pitched to callers is dubbed "Maximum Impact" and includes all basic and premium channels for $51.29.
Sources also said sales associates have unprecedented authority to make deals with customers to get them to stay with Jones.
Erica Stull, Jones' corporate spokeswoman, said the packages appear to be working. She wouldn't offer specific figures but said churn is down by 50 percent.
"The race is on and we already have a strong local presence," she said.
GTE hopes to pass 110,000 homes by the end of next year.
GTE's new cable networks include: BET on Jazz, CNN/SI, Outdoor Life, Speedvision, EWTN, Independent Film Channel, Ovation, Country Music Television, The Travel Channel, Game Show Network, Nostalgia's Good TV, Knowledge TV and the International Channel. |
