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Consumers win as more companies bundle cable, high-speed Internet and telephone services

[April 14, 2008]

Consumers win as more companies bundle cable, high-speed Internet and telephone services

(Sacramento Bee, The (CA) (KRT) Via Thomson Dialog NewsEdge) Apr. 14--In the eyes of telecommunications industry analysts, Sacramento now ranks as one of the most competitive cities on the West Coast for the "triple play" services of television, high-speed Internet and telephone.

Many people live in areas with two or even three choices of triple play providers. The competition should make it easier for them to strike deals once their introductory period (usually one year) runs out.

The presence of regional companies SureWest and Frontier (Elk Grove), in addition to national firms Comcast and AT&T, is key to Sacramento's emergence into the top tier of cities for consumer choice.

"Sacramento is a great testing place because you've had an overbuilder (SureWest) there for a long time," said Jimmy Schaeffler of the Carmel Group, which analyzes the telecommunications industry. "You now have AT&T eager to do well there. They're a pretty sophisticated marketing organization, so I think some of their thinking goes that if they can do well in the capital ... of the most important state they're in, they're going to be able to do well elsewhere."

Known as "overbuilders," SureWest and other such companies go into an area already served by at least one provider and build their own system to compete. SureWest has laid fiber-optic lines that can serve more than 100,000 homes around town.

Jeff Kagan, a telecom analyst based in Atlanta, cited the obvious benefits from such competition.

"What we're seeing right now is very good for the customer," Kagan said. "You have lower pricing and that's because they're trying to drive the customer to buy a bundle."

Kagan saw another consumer benefit -- innovation.

"When was the last time you saw innovation on cable TV?" he said. "When was the last time you saw a price drop in cable television? This competition is very healthy for the marketplace."

The floodgates opened with the Telecommunications Act of 1996, the biggest rewrite of such laws in more than 60 years. It paved the way for phone companies to get into the TV market and cable companies to offer phone service, kicking off a scramble that is now coming to fruition for consumers.

"We are seeing the two major competitors -- the cable company vs. the local telephone company in each area gearing up for the biggest competitive battle that we've seen," Kagan said.

Cable companies got out of the gate much faster and now boast more than 15 million telephone subscribers nationwide, said Joy Sims, a spokeswoman for the National Cable and Telecommunications Association, a cable industry group. Comcast alone had 4.6 million telephone subscribers at the end of 2007.

The big phone companies only now are quickly rolling out TV services on their own. Technically, they have 5.2 million TV subscribers, said Portia Krebs, a spokeswoman for USTelecom, an industry association. But three-quarters of them are through marketing alliances with satellite companies Dish Network and DirecTV. Among the phone companies, Verizon leads in land-line TV with 1 million customers of its FiOS (fiber-optic to the home) television service in 13 states.

AT&T had 231,000 U-verse TV subscribers at year-end, up from 126,000 at the end of September, and is adding 12,000 a week. Brooke Burgess, a company spokeswoman in Sacramento, said AT&T is ramping up to add 40,000 U-verse TV subscribers per week by year's end.

Locally, Comcast has offered TV, Internet and telephone over its cable lines for a year and has by far the biggest subscriber base in the region for television. It has cable to about 750,000 homes roughly from Chico to Fresno, including near-blanket coverage of Sacramento County.

SureWest Communications, which offers lightning-speed Internet service that rivals anyone in the nation, now has fiber-optic wiring availability to 114,000 homes. Its wire goes to areas of Sacramento, Elk Grove, Lincoln, Roseville, Citrus Heights, Rancho Cordova and unincorporated areas of Arden Park, Carmichael, Fair Oaks, Antelope and McClellan Park in North Highlands.

AT&T's new U-verse TV service was greatly expanded to areas covering more than 160,000 homes in the region last month, including much of the suburban area -- Fair Oaks, Carmichael, Folsom, Rancho Cordova, Lincoln, Rocklin, Loomis, El Dorado Hills and Gold River.

Another player, Frontier Communications, offers service to about 75,000 homes in the south Sacramento County area, mainly Elk Grove, which is now rich in choices. Frontier is the only company lacking VoIP phone service, which offers interactive features with the Internet and TV. Its TV package comes via satellite company Dish Network. AT&T also offers Dish TV in areas without U-verse service.

Each company touts its own advantages in trying to win over new customers and keep old ones.

Comcast cites local programming and its huge library of video-on-demand offerings. Spokesman Bryan Byrd cited the number of high-definition programs that could be viewed at any given time, rather than the number of HD channels that Comcast offers (32).

"People watch TV differently today -- they want to watch the best HD programming on their schedules," he said. "The HD experience is all about what you have available to watch when you sit down to watch television."

AT&T cites its technological innovations and flexibility. Its digital video recorder, for instance, can record four programs at once, and U-verse TV allows users to create a U-bar they can customize with local weather, traffic, sports scores and stock prices.

Burgess also noted that AT&T charges a flat $10 a month for HD service, with no extra charges for second and third TV sets. She also said the company allows customers to add cell phone service to make it a "quad play," and that prices are not introductory and therefore won't jump at the end of a term period.

For SureWest, it's all about speed. Its premium triple play package includes broadband speed of 20 megabits per second (mbps), double that of any of its competitors. SureWest also is the only company to offer "symmetrical" Internet, which means equal upload and download speeds. That makes moving your photos or videos to an Internet site (uploading) much faster than any other Internet service.

Spokesman Ron Rogers also says that SureWest's fiber-optic lines consistently deliver the clearest HD picture, as tested in the company's lab.

Frontier offers a service none of the others does -- an automatic backup system for your computer hard drive. The system backs up all your files on a regular basis, so if your computer crashes, your photos, music and other files are safely stored on Frontier's server.

Kristine Fairfield-Capps, a teacher who lives in Sacramento's Tahoe Park neighborhood, has been a SureWest triple play subscriber for 2 1/2 years and, while now satisfied, is itching to look around in the new competitive landscape.

"I wonder if I'm paying too much," she said. "I see deals advertised, and it seems like they are less than what we pay."

Triple play packages can range from as low as a $67 introductory bundle from SureWest to $194 for AT&T's U400 package.

Those prices reflect the range of offerings, with key differences in numbers of TV channels, Internet speeds and telephone calling plans and features. They do not include the cost of any HD programming.

To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/.
Copyright (c) 2008, The Sacramento Bee, Calif.
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