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92 Rate Hikes
<br />Coming in High
<br />By JOHN M. HIGGINS
<br />p ew cable operetors seem pre-
<br />V paicd to live by industry dec*
<br />I laralions that they can live
<br />with 3 percent rate increases, and
<br />a check of seasonal hikes finds that
<br />double-digit boosts in subscriber
<br />rates aren't uncommon.
<br />Calls to more than a dozen sys
<br />tems around the country last week
<br />found typical rate increases were
<br />above the magic S percent goal,
<br />but still within the high single^iigii
<br />percentage range. In one extreme
<br />case,'low-tiered subscribers will
<br />see increases of up to 43 percent.
<br />But some systems are trying to
<br />completely hold the line against
<br />hikes. "We have no increase com
<br />ing, not in the inunediate future if
<br />you’re talking fim half 1992,” said
<br />Wayne Watson, general manager
<br />of Tele-Communications Inc.’s
<br />Boise, Idaho System. “We’ve been
<br />able to contain expenses, so that
<br />we don’t have to have a normal re
<br />alignment.”
<br />But that ’s the exception rather
<br />than the rule. In addition, while
<br />system managers contacted said
<br />they plan to boost some cable net-
<br />worla from part-time carriage to
<br />rull-time. hardly any said they
<br />planned to add new basic services
<br />ilong with the hikes.
<br />Rate hikes have become the
<br />biggest lighting rod for the cable
<br />industry in recent years, provoking
<br />industry. Cable price increases
<br />have far outpaced the general in
<br />flation rate. According to the U.S.
<br />Department of Labor's monthly
<br />price statistics released last Fnday,
<br />cable prices in 1991 jumped 9.7
<br />percent through November, while
<br />prices for alt consumer goods ruse
<br />just 3 percent.
<br />In the politically sensitive par
<br />lance of the cable industry, there
<br />are no rate hikes but rate “enhatKe-
<br />menls," joked one system execu
<br />tive who is hitting customers with
<br />a double-digit hike soon.
<br />At Warner Cable's Cincinnati
<br />system, most subscribers will see
<br />6-1 percent increases in their cable
<br />bills. But abob. percent of the
<br />system's customers, who take the
<br />riKst basic tier, will see their bills
<br />soar more than 40 percent.
<br />System president Virgil Reed
<br />said the big increase will hit sub
<br />scribers to the system's 24-channel
<br />basic service, which includes off-
<br />air signals from Cincinnati and
<br />Dayton, Ohio, Black Entertain
<br />ment Television, several supersta
<br />tions and public access channels.
<br />Not including franchise and
<br />public access fees, that rate had
<br />been $6.93, but it was raised Dec.
<br />12 to $9.95, a 43 percent increase.
<br />When the other fees are included,
<br />the increase in a subscriber's total
<br />bill will jump 31-45 percent, de
<br />pending on which town he lives in.
<br />rrr- •nt DAne JK
<br />92 Rate Hikes C m
<br />CONTINUED FROM PAGE J
<br />The total bill for subscribers to
<br />the system's 40-channel expanded
<br />service rose 6 percent in the city of
<br />Cincini^ to $26.44, while the tab
<br />for the 60-channel “standard ”
<br />package went up 7 percent to
<br />$26.96.
<br />Reed said the basic-tier hike was
<br />imposed after several years of ex
<br />perimenting with the price, includ
<br />ing two years in which the rate
<br />went down. The tier’s 12 percent
<br />penetration never changed mu^h,
<br />indicating little price sensitivity.
<br />Reed said the new $9.95 rate
<br />was imposed only after research
<br />showed that contrary to conven
<br />tional wisdom, few basic tier cus
<br />tomers were low-income house
<br />holds. but rather suburban homes
<br />surrounded by hills.
<br />Multipay subscribers, he added,
<br />will see no increase at all from
<br />tl.eir$3 .95 rate for full basic plus
<br />two premium services.
<br />“Frankly, the reaction has been
<br />very minimal,” Reed said. “About
<br />25 percent of our customers see no
<br />increase, 60 percent are in the 6-7
<br />percent range. Basic level cus
<br />tomers see a big percentage in
<br />crease, but a small amount of mon-
<br />ey"
<br />Customers of Prime Cable ’i
<br />194.000-subscribcr Atlanta system
<br />will get two hikes at once in Jari-
<br />uary. Fust, the rate for the system’s
<br />52-channel expanded basic climbs
<br />7 percent to $23.45 per month.
<br />Second, the system will begin
<br />breaking out the franchise fee of
<br />between 3 and 5 percent, tacking
<br />that onto the basic charge.
<br />Prime Atlanu s marketing com
<br />munications coordinator, Erin
<br />Levins, said the breakout of the
<br />franchise fee was inevitable. “Early
<br />in the year, we had an increase in
<br />the franchise fee for one of our
<br />franchises from 3 percent to 5 per
<br />cent, and we just saw we were go
<br />ing to have to do it eventually,” he
<br />said. It's not a “disguised” rate hike
<br />because “this is a receipt that we
<br />never see."
<br />Levins said he's heard just three
<br />complaints from subscribers about
<br />the hike.
<br />Cablevision of Baton Rouge,
<br />La., took a full-disclosure tack to
<br />ward its January increase. The sys
<br />tem released :o local media wd
<br />complaining subscribers detailed
<br />jiformation on the system’s costs,
<br />particularly soaring program
<br />license fees.
<br />The system’s rates are increasing
<br />6 percent to $18.45 for a 3<l-chan-
<br />nel basic package and 6 percent to
<br />$18.95 for a 36<hanncl package.
<br />"Let’s not just try to gloss over
<br />High]
<br />t: let's show how \this rate increase^
<br />we operate as a company, said
<br />Cablevision of Baton Rouge
<br />spokeswoman Barbara Weber.
<br />“Let’s try to plant a more realistic
<br />idea of how this company operates
<br />and show them where their dollars
<br />go.”
<br />Charles King, general manager
<br />of Storer Cable's Louisville, Ky.
<br />system, said he’s hoping to avoid a
<br />rate hike scheduled for next August
<br />because of a tax problem that
<br />two increases during 1991.
<br />Expanded basic customers saw an
<br />11 percent increase to $2030 per
<br />month last winter.
<br />Then the sute ordered a re
<br />assessment of all cable systems in
<br />the state in October, slapping a
<br />property tax increase on Storer
<br />retroactive to January 1990. That
<br />triggered a $1.34 pass-through, in
<br />creasing customers’ bills by anoth
<br />er 6 percent
<br />“We did some commercials that
<br />showed our customers that we
<br />didn’t receive one penny of the in-
<br />cicase,” King said. “We began to
<br />itemize on our customer s bills
<br />where their payments go in taxes
<br />and fees." The result was that the
<br />system didn’t get as mwy com
<br />plaints as expected, but King is still
<br />forced to hold rates down next
<br />year. ■
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