01-12-2004 Council Packet - Laserfiche WebLink

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Heavy capital lavcstmcat and programmiag increases kave been noted in previous rate adjostment nodflcationt. Despite cnstomer sensitivities to further rate increases^ progranuniug companies continue to increase their pricing to Mediacom at many times the rate of inflation. It must be noted that although wages and benefits normally comprise the greatest expense for most businesses, programming expenses make up the single greatest operating expense for Mediacom. The signiflcance of these types of increases is put into proper perspective when one considers that thb one expense has been increasing at rates in excess of 18 percent per year. Mediacom has strenuously objected to the continued rate of escalation by programming companies and will continue fighting to reduce cost acceleration. Most importantly, the City should know that the total increase in costs that Mediacom Incurs from programming, wages and benefits, marketing, training and other items exceed the amount of increased revenue received from increased pricing. The percent of operating margin, or rate of return for core video services has been decreasing year over year. The decline in margin for the company is the equivalent of an employee earning less real dollars as happens when their salary increases by less than the rate of inflation. There are great opportunities for Mediacom in your community despite the challenges we currently face. Mediacom cable systems are superiorly positioned to deliver exciting new products aud services such as high definition television, video on demand and telephone service. The growth of high*specd Internet service and other products continue to fuel future investments in your community. Please contact me directly at (507) 835-2356 if you would like to discuu the rate adjustments or If I may be of any assistance in responding to customer iuquires. Sincerely,