Ho, Ho, Ho: Cablevision Pops 7% Hike

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With the winter holidays here again, many cable customers can expect something in the mail from their cable operators, but it won't necessarily be a greeting card. Several systems are in the midst of alerting their subscribers about pending rate increases.

Cablevision Systems Corp. said last Tuesday it would raise rates for the cable customers in its New York metropolitan system in January and February. Hikes for the MSO's 2.9 million New York area customers will average 7 percent.

Cablevision cited increased programming and operating costs, as well as investments in network upgrades and customer service. The cable operator plans to use the upgrades to help launch digital cable. Its first rollout is set for Long Island, N.Y., later this year.

For the third year in a row, Time Warner Cable plans to keep its rate adjustment for its combined basic and expanded packages to about 5 percent in most of its systems, spokesman Mike Luftman said.

"Our costs are going up more than that, but we're not passing them all on to our customers," Luftman added. He noted that increasing competition and customer price sensitivity guided its rate-adjustment strategy.

While the 5-percent increase is an average, Luftman noted that it's not one-size-fits-all for all the Time Warner systems. The Houston division, for example, plans a rollout of additional digital-cable channels in December, but according to division spokeswoman Kimberly Maki, has no plans to raise rates this year.

Cable operators are not the only video providers faced with tough decisions when it comes to pricing. Both direct-broadcast satellite providers, DirecTV Inc. and EchoStar Communications Corp., raised rates on at least some of their programming packages in the past year.

DirecTV acknowledged earlier this fall that its recent rate increases led to a short-term spike in customer churn during the third quarter.

Cable rate increases for Cox Communications Inc. should average about 5 percent, spokeswoman Amy Cohn said, although each system has the flexibility to adjust its rates locally based on channel lineups. Because the MSO is so decentralized, she added, there is no set time frame for the increases.

A spokesman for Adelphia Communications Corp. said it was premature to speculate about the MSO's rate increases for 2001. Senior management had been meeting to consider all the factors that play into a possible rate adjustment, including license fee negotiations with programmers, he added.

"In many cases we haven't touched our rates since 1999," the Adelphia spokesman said.

Like other MSOs, Adelphia must examine subscriber pricing structures across both long-held systems and those added recently through swaps or acquisitions. Some operators have typically announced rate hikes at year-end, while others do so in the middle of the year.

Additionally, many MSOs that have pieced together systems within a given market are trying to make their packages and pricing more uniform.