Another overbuilder has cried foul to the Federal Communications Commission over Time Warner Cable's hardball discounting practices.
Everest Connections Corp. — a provider of bundled telecom services to multiple-dwelling units owned by UtiliCorp United Inc. — believes Time Warner has jumped the gun in Kansas City by dropping its rates as if it has already been deregulated, said Everest president Kevin Anderson.
"This is a recurring pattern by Time Warner," Anderson said. "They don't abide by specific FCC rules."
Overbuilder Grande Communications Inc. and Austin, Texas, city officials have lodged similar complaints. Regulators in the Texas capital had complained that Time Warner's discounts were not offered uniformly throughout the city.
Everest has operated in the Kansas City, Mo., metropolitan area for 18 months. It started by wiring nearby cities — including Lenexa, Kan. — and has reached penetration rates of 60 percent in some areas, said Anderson.
Everest had passed 12,000 homes by January, reaching 4,000 suburban subscribers.
Everest pitches a bundle of services. They include digital cable; high-speed Internet access with downstream speeds as fast as 3 mbps; and phone service with advanced features, such as voice mail.
A package that includes 70 video channels, basic local telephone service and access to one's choice of long-distance provider costs $49.95. For $129.95 per month, Everest customers receive all programming, the fastest available cable-modem service and local telephone service with such bonus features as voice mail, call waiting and call forwarding.
Due in part to Everest's launch, Time Warner won an effective-competition ruling in the FCC that covers the suburbs served by the overbuilder. Time Warner now offers deeply discounted rates — sometimes cut as much as 45 percent — to keep or regain customers.
"We've heard of up-front cash offers to buy loyalty," Anderson said.
Everest recently expanded its operation into Kansas City proper. It now passes 2,000 residences there, Anderson said.
Even though Time Warner does not have an effective competition ruling that covers Kansas City, the offers have followed Everest across the city line.
"We're all for competition," Anderson said. But Time Warner hikes rates in the rest of its franchise territory to offset discounts in areas served by Everest, he claimed.
Consumers are beginning to catch on, too. They've complained to the local press that they can't get the same discounts their friends enjoy in Everest areas.
Time Warner spokesman Mike Luftman said Everest's complaints had no merit. There is nothing in federal regulations that prevent special promotional pricing, he said.
Federal uniform rate guidelines apply only to basic cable, and basic rates in Kansas City have not been discounted, Luftman contended.