Subscribers Get the Bill for Upgrades

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Cable viewers in St. Louis County, Mo., and throughout
Massachusetts will see higher monthly bills early next year, as local MSOs launch a round
of annual rate hikes.

In St. Louis County, Charter Communications will boost its
rates up to 7.3 percent beginning Jan. 1, while AT&T Broadband & Internet Services
will limit its rate increases to just one metro-area system.

In Massachusetts, meanwhile, MediaOne Group Inc. and
Cablevision Systems Corp., which control 80 percent of the market, each plan to raise
rates for expanded-basic service by about 6 percent.

Officials at the MSOs attributed the local price jumps to
"significant" increases in their programming costs.

Cablevision said last Tuesday that it set rate increases
for next year across its 3.45 million-subscriber base, and the overall average hike would
be about 5.3 percent. The hikes will take effect in January and February, and notices are
being mailed.

The Bethpage, N.Y.-based MSO blamed higher programming and
operating costs and system-improvement expenses. Cablevision noted that it is
"aggressively rebuilding all of its systems" to "deliver a full range of
broadband services."

Federal regulation of upper-tier cable rates ended this
past March, but cable trade-association officials have tried to urge operators to practice
restraint in raising rates.

In October, at a regional trade show in Baltimore, new
National Cable Television Association CEO Robert Sachs restated the plea of his
predecessor, Decker Anstrom. "We must manage future price increases very
carefully," Sachs said. "I cannot emphasize this enough. If we act responsibly,
we will not face the specter of rate regulation again."

Charter's expanded-basic programming for some 50,000
subscribers in upgraded areas of St. Louis County will jump to $38.95 per month, an
increase of $2.68. At the same time, Disney Channel will shift from a premium service to
an expanded-basic offering, shaving as much as $8.95 off some monthly bills, Charter
executive vice president of operations David Niswonger said.

Price in nonupgraded areas will increase by $1.95 per
month, ranging from $34.64 to $34.93, depending on the individual systems. This means
another 127,000 Charter subscribers will see rates increase 5.9 percent.

Niswonger said Charter had discussed the upcoming round of
rate hikes with its 50 local franchising authorities in the area, and it would begin
sending out subscriber-notification letters this week.

AT&T Broadband -- which is mired in a battle with the
city of St. Louis over its recent passage of an open-access ordinance that would unbundle
its local network -- plans to raise rates at just one of its seven metro area systems.

An AT&T Broadband spokeswoman declined to reveal the
specific system being hit with the increase until the affected subscribers have been
notified. "People are never happy about rate increases," she said, "but we
think they would rather hear it from us than from somebody else."

In Massachusetts, MediaOne and Cablevision plan rate hikes
Jan. 1.

MediaOne -- which has 1.1 million cable customers, or 61
percent of the market -- will raise its rates 6 percent, or $1.76 per month.

Spokesman Rick Jenkinson answered critics who claimed that
the rate hikes are well above the rate of inflation by noting that "it would be nice
if programmers tracked inflation. About 61 percent of our rate increase is based on
increased programming costs."

Cablevision said its "Optimum" package price will
rise about 6 percent. Overall, across its Bay State subscriber base, the average bill will
rise to $35.97 per month from $34.35, a 4.7 percent increase, the company said.

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