News

Cable One Freezes Rates In '03

4/06/2003 8:00 PM Eastern

Cable customers in Boise, Idaho; Albuquerque, N.M., and Odessa, Texas will share an unusual experience this year: They — and their cohorts in most other Cable One Inc. markets — will not be hit with a basic-cable rate increase for 2003.

Executives at the No. 10 U.S. MSO have decided against rate hikes for this year, citing America's tough economic times and ongoing war. Rates will remain stable for 90 percent of the 700,000 customers the company serves.

Higher prices will be charged in systems in Kansas, which Cable One received in a swap for Time Warner Cable's Akron, Ohio, operation. That's because those hikes were already announced at the time of the swap, Cable One vice president of strategic marketing Jerry McKenna said last week.

Cable companies cite the rising prices for programming — especially sports fare — as justification for annual rate increases.

That situation is no different for Cable One, a wholly owned subsidiary of The Washington Post Co. McKenna said the cable company's programming costs will increase 15 percent this year, amounting to about $17 per subscriber per year.

Cable One intends to absorb $12 million of those programming cost increases this year.

"We sincerely felt it was the right thing to do," McKenna said.

Of course, with direct-broadcast satellite competition everywhere, there could be other benefits to holding rates in check.

"There's a perception that we're priced higher than DBS. This will go a ways toward closing the gap," McKenna said.

The company does not expect the rate decision to curb any of its technological initiatives. Digital-cable boxes have already been deployed, and Cable One has a 30-percent rate of digital penetration. High-speed Internet service is also offered to more than 95 percent of the MSO's homes passed.

Systems are technically prepared to launch HDTV, but small-town broadcasters in the 17 states served by Cable One are not rushing to convert to digital broadcasting. Cable One might test voice-over-Internet protocol (VoIP) telephony, as well.

The rate-freeze story has made the local papers, including the Albuquerque Journal, and has already had an impact, McKenna said. He said the MSO had a good March — presumably in terms of subscriber gains, though he wasn't specific.

The war might have also helped, as TV viewers seek additional sources of news, McKenna speculated.

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