Falcon Cablevision to Cut Rates for Several Premium Channels

Facing competition from telecommunications giant GTE, Falcon Cablevision, a cable company that some Thousand Oaks customers have accused of charging too much and offering too little, said it would slash its rates for several premium channels next month in an effort to hold on to customers.

In a letter to the city, Falcon officials said rates for its SatPac service, a six-channel package whose price has already been hiked twice this year, would drop from the current $6.36 to 45 cents. At the same time, Falcon’s satellite package will grow from six channels to 12 to include American Movie Classics, The Learning Channel and MSNBC, the new 24-hour news and information network from Microsoft and NBC.

Falcon, which serves about 4,000 households in the city, also said it would cut the rates it charges for premium channels such as HBO, Showtime and The Movie Channel from $9.95 to $5 each.

The rate reduction is one of the first indications that the competition ushered in by the Telecommunications Act of 1996, enacted by Congress in February, is beginning to pay off. The legislation, which overhauled the nation’s telecommunications laws, allowed telephone and cable companies to enter each other’s markets.

When GTE launched its cable service in Thousand Oaks just two months ago, the city became one of the nation’s first battlegrounds in the war between cable and telephone companies for cable subscribers.

“Isn’t competition wonderful?” said Ed Shafer of CTIC Associates, a cable consulting company hired by the city. “The market is the best regulator and this is evidence of that.”

Falcon officials said the company is trying not only to hold on to customers but also to sign up new ones.

“Obviously [the rate reduction] has to do, to a certain extent, with competition,” said Howard Gan, a Falcon vice president. Being a relatively small operator in Thousand Oaks, Falcon is facing competition not just from GTE but from the fast-growing market for satellite television services like those offered by Direct TV, Gan said.

“More importantly [the rate reduction] is a tactic that we are taking to drive additional [market] penetration,” he added.

The rate reduction will become effective in mid-December, Gan said.

City officials welcomed the rate reductions for the premium services, the portion of Falcon’s service that it does not regulate.

But the city continues to be entangled in a complicated and ongoing regulatory dispute with Falcon--a Los Angeles-based company with nearly 800,000 subscribers nationwide--over the basic services it offers.

Falcon’s $22.45 basic service includes 38 channels. By comparison, TCI of Ventura County, which with more than 32,000 customers is the city’s largest cable provider, has a basic rate of $10.51 for 21 channels. Newcomer GTE, which began offering cable service in parts of the city just two months ago, is charging $10.95 for 28 channels.

On three occasions over the past year, the city has ordered Falcon to reduce the price for its basic lineup of channels, known as a tier. Each time, Falcon appealed those decisions to the FCC.

In a September ruling, the FCC sided mostly with the city on the first two appeals.

Following that ruling, the City Council ordered Falcon to lower the basic tier to $19.59 and refund the difference to customers. The council also instructed city staff members to find ways to better enforce its cable franchise agreement with the company and to examine a clause in that document that mandates Falcon to provide service and programming comparable with that provided by TCI.

But Falcon officials continue to argue that the company’s rates are justified and have filed new documents with the city and the FCC to argue their case.

And in a letter to the city Thursday, Falcon also said it believed it is in full compliance with the comparable service clause in its franchise agreement.

Toula Colovos, a Falcon customer who has been vocal in her criticism of the cable company, expressed frustration over the continuing dispute between the city and Falcon. And the price reduction in the premium service is too little, too late.

“[The rate reduction] may satisfy the affluent customers,” Colovos said. “But how about the people who cannot afford the basic tier? The fact of the matter is we have to get Falcon to refund the money they have collected.”

No matter what happens with Falcon’s latest appeal, the city’s regulation--even of its basic tier--will soon end. The Telecommunications Act deregulates rates in cases where a cable company competes against a telephone company for cable customers.

“Now that GTE is offering service in Thousand Oaks, the city will no longer be in the rate-regulation business,” Gan said.

Shafer said the added competition would probably mean further price reductions for customers.

“It’s going to be an interesting few years ahead with all the new services that are going to be available,” Shafer said. “I don’t think anyone really knows how it’s going to play out. But I think the consumer is going to benefit. The competition will ultimately determine the price for all the tiers of service.”

Colovos said she is not going to wait for competition to bring down Falcon’s basic tier rate. She plans to switch to GTE’s cable system when the telephone company begins to serve her neighborhood near Los Robles Regional Medical Center on Dec. 2.