Mediacom Eyes Analog Cuts

1/25/2008 7:00 PM Eastern

Mediacom Communications may have to kill analog TV in some smaller systems in order to save them.

The Middletown, N.Y.-based operator filed a request Jan. 18 with the Federal Communications Commission for an “emergency, expedited” waiver to the agency’s integrated set-top ban for systems in small, rural communities that it promises to upgrade to all-digital operation before Feb. 17, 2009.

Mediacom said the systems for which it is seeking a waiver serve less than 9% of its 1.3 million subscribers, or fewer than 117,000.

Under an FCC rule that went into effect July 1, most cable operators are required to deploy only set-top boxes that have removable CableCards for handling security functions.

Out With Analog
Mediacom’s proposal to the FCC:
SOURCE: Mediacom filing
Waiver description: Eliminate analog cable TV service by Feb. 17, 2009, for certain systems but be allowed to deploy integrated digital set-tops
Potential subscribers affected: Fewer than 117,00, or less than 9% of subscriber base
Size of systems affected: Average of 2,600 subscribers; median of 1,637
No. of systems: Not disclosed

Mediacom, the industry’s eighth-largest operator, said it is currently complying with the integrated set-top ban. But without an exemption to the rule for certain areas, the company said, it may be forced to shut down some “isolated” systems.

“The waiver will enable Mediacom to implement an all-digital service in systems that, due to their technical, competitive and regulatory circumstances, could not otherwise be upgraded in a timely, economically feasible fashion and, indeed, might in some instances have to cease operations,” the company wrote in its waiver request.

The FCC has granted waivers to some cable operators and other video providers, including Verizon Communications, that pledged to eliminate analog services by Feb. 17 of next year, the date by which local TV broadcasters are required to cease their own analog transmissions. The rationale is to encourage cable operators to convert to full digital operation, enabling them to deliver new services.

In an e-mail, Mediacom vice president of legal affairs Thomas Larsen said the operator has not made a final determination about “which systems we would take all-digital prior to February 2009.”

He said the systems for which Mediacom is requesting a set-top waiver all have less than 552 Megahertz in spectrum.

Mediacom said it “could not reasonably expect a sufficient return on investment” to upgrade the cable plant in its smaller systems.

“While the cost of building or upgrading a mile of cable plant for these [rural] systems is the same as or more than it is in Mediacom’s larger urban markets, the potential cash flow per mile is much lower because both the number of homes per mile and the percentage of those homes that are Mediacom subscribers are lower,” the company told the FCC.

The most cost-effective approach to freeing up bandwidth in those areas is to eliminate analog TV channels, Mediacom said, but only if it can deploy lower-cost Motorola DCT700 and DCT2000 set-top boxes that have embedded security functions. According to industry estimates, each CableCard-based set-top is anywhere from $50 to $93 more expensive than comparable integrated versions.

Mediacom systems under consideration for conversion to all-digital average about 2,600 subscribers each and have a median size of 1,637. Only two have more than 10,000 subscribers, both of which have fewer than 15,000, according to the operator’s filing.

If the FCC grants the request, Mediacom said it would notify subscribers within 60 days of the transition to an all-digital network.

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