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Arizona daily star
Tucson, Arizona | Published: 12.28.2006
Local cable providers Cox Communications and Comcast have announced price increases for 2007, citing rising costs.
Cox is boosting its rate for its Expanded Basic lineup by $3, or about 7.5 percent. Comcast is raising its Preferred Basic package by about $3, or about 6 percent, and bumping its Limited Basic service by $1, along with increases to digital plans.
The cable companies said the increases are needed to offset programming costs that have increased up to 10 percent annually in recent years.
Recent cable-TV rate increases have been moderate compared to previous years because of increased competition in telecommunications, with telephone companies pushing into the TV business, said Jeff Kagan, a telecommunications industry analyst in Atlanta.
And that trend should gain new traction from a ruling earlier this month by the Federal Communications Commission, which approved rules making it easier for phone companies to compete with cable companies to offer pay TV subscriptions, Kagan said.
"Competitors won't have to deal with different rules and requirements from every market they want to enter," Kagan wrote in an e-mail. "It sets out a set of national rules that will clear the way and should speed up the Baby Bell entry into television from coast to coast."
The new rules, which passed 3-2 with the three Republican appointees prevailing over the two Democrats, are aimed at encouraging competition in an industry that has seen rates nearly double from 1995 to 2005.
But critics of the rule change fear it will remove local power to force video providers to offer public, educational and government-access channels.
Those critics include both local cable operators and Al Sterman, vice president of the Arizona Consumers Council, a nonprofit advocacy group.
"What the state has already done to local areas, the feds have now done to the states, and all it does is take power away from local communities," Sterman said. "The newer companies that may come in don't have to serve the community. They can pick and choose who they're going to serve and what they're going to be serving."
At least in the short term, the FCC ruling will have little effect in the Tucson area. That's because the competitors that stand to gain most — large telephone companies such as Verizon Communications, AT&T Inc. and Qwest Communications — aren't set up to compete locally with Cox and Comcast for wired TV service.
"We don't operate the infrastructure in Arizona except for a very small portion, and we're only going to be building out our fiber-optics service where we have local franchise areas," said Kevin Laverty, a Washington D.C. spokesman for Verizon. "It's Qwest that operates as a local land line in Arizona."
While Qwest has the infrastructure, the company opted to provide television service not through its land lines but rather through a partnership with wireless provider DirecTV.
Nonetheless, Qwest's senior vice president of federal relation applauded the FCC order on video franchising.
"The federal government's own studies show that cable rates are reduced by as much as 40 percent when a second, wire-line competitor enters a market," Gary Lytle wrote in an e-mail statement.
Officials from Cox and Comcast disagreed, asserting that the FCC's data was outdated and fails to account for the benefits of bundled pricing and its favorable impact on cable prices.
"We don't agree with the FCC's contention that speeding the (telephone companies) entry into video will reduce cable prices," said Anne Doris vice president and system manager of Cox Communications Southern Arizona. "Arizona has one of the lowest basic cable prices in the cable industry, and the report's data is almost two years old. This outdated information doesn't reflect today's competitive environment."
Cox, the cable provider for the city of Tucson and Green Valley, serves more than 350,000 "product subscribers," a measure that counts customers who subscribe to each service such as Internet, TV or telephone. The company doesn't divulge how many households it serves.
Comcast serves more than 80,000 customers in unincorporated Pima County, Marana and Oro Valley.
● Contact reporter Thomas Stauffer at 573-4197 or tstauffer@azstarnet.com.
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