WOW Raps Comcast on Pricing

Author:
Updated:
Original:

WideOpenWest LLC wants Southeast Michigan cities to help the overbuilder in its fight against what it calls unfair conduct by its main competitor, Comcast Corp.

In a letter sent to regulators in 42 cities late last month, WOW urged authorities to force Comcast to list all of the pricing plans it has offered within the last 36 months.

The Philadelphia-based MSO will have to submit a "consent to change of control" to local regulators in order to complete its proposed merger with AT&T Broadband. WOW asks that the cities make the price-list request part of that procedure.

The overbuilder also asked for any transfer to be made contingent upon Comcast agreeing to drop discounts that WOW believes are anti-competitive.

WOW CEO Mark Haverkate said Comcast is offering discounts as deep as 50 percent off for 12 months to customers that commit to the MSO.

"If they can set rates customer-to-customer, there's no limit to how low the deal can be," Haverkate said.

After the merger, AT&T Comcast Corp. will be big enough to wait out any overbuilder, he added.

WOW is just the latest competitor to cry foul over "stealth" discounts by incumbent operators, or unpublished rates offered to a customer who calls to cancel in order to change providers.

In some cases, neighborhoods that are about to be overbuilt are telemarketed, and subscribers asked to sign a multiple-month commitment in exchange for a deep discount.

USING 'LOOPHOLE'

MSOs maintain that locally regulated basic rates are uniform throughout a community. Expanded basic, digital cable and other products are unregulated, so a provider may set those rates at will, incumbents have said. Comcast did not comment on the Michigan discounts.

Haverkate sees such reasoning as "exploiting a loophole" in rate regulation and wants cities to examine the practice to see if it violates uniform rate codes or franchise language.

The letter said: "Your community has invested a lot of time and effort to bring cable competition to your residents. We at WOW have too. We remain committed to competing for business in an open marketplace according to established rules, but it is imperative that Comcast — and its successor — do so too. For that we need your help."

When asked if the discounts have hurt WOW's growth in Michigan, Haverkate noted that the company has only operated there for two months.

WOW acquired the local systems when it bought SBC Communications Inc.'s Americast cable properties. If the discounting continues, Haverkate said, "it will definitely impact our ability to grow."

The decline in the financial markets has already prompted WOW to revise its business plans. The competitor stopped its competitive build-out in the Denver area to concentrate on generating revenue in the systems it acquired from SBC.

WOW executives will plead their case in person when the Intergovernmental Cable Communications Authority meets in Michigan on April 17. The group includes regulators from 11 Oakland County, Mich., cities served by the overbuilder.

Cities that received the letter include Auburn Hills, Dearborn and Ferndale.

Related