Growth of Cable Competition, Benefits Spotty

In Thousand Oaks, Camarillo and Oxnard, competition is quickly changing the face of the traditionally monopolistic cable television business, leading to more channels and lower prices for many customers.

“It’s great to have a choice,” said Thousand Oaks Mayor Judy Lazar. “We’ve always been hostage to the different cable monopolies, and that’s over now. Choice is a very powerful thing.”

But in Ventura, couch potatoes still have only one way to get their MTV and CNN, other than plunking down hundreds of dollars for a satellite dish.

No additional companies are expected in town any time soon. And the sole cable provider for most of the city, Century Cable, just raised its rates--already the highest in the county.

“I have Century Cable, and I’m not happy about it, so I know what people are complaining about,” said Ventura Mayor Jack Tingstrom. “I think I’m going to change to a dish myself.”

What’s wrong with this picture?

Ventura County, like many areas across the nation, is in a fuzzy state when it comes to cable television.

Last year’s federal Telecommunications Reform Act was supposed to usher in a bold new era of nationwide cable competition, with telephone companies and other media giants plunging into the cable television business.

The water must not have looked inviting. Other than GTE--which is using its service areas in Thousand Oaks, Camarillo, Oxnard and Port Hueneme as a testing ground for a foray into cable--no new competitors have entered the cost-intensive business locally.

In fact, Ventura County is one of the few places in the country experiencing any cable competition at all.

Hoping to create more favorable conditions for its residents, one city--Simi Valley--is actually recruiting cable television firms to come to town and compete with Comcast, the city’s sole cable provider. It has found no takers.

“We’re trying to stimulate competition,

because that’s the best thing for our residents,” said Joe Hreha, the Simi Valley official in charge of monitoring the cable television business. “But so far, it hasn’t worked.”

Ventura is also interested in luring a cable competitor to town, and Tingstrom personally made a pitch to a GTE executive in Texas. Not now, but maybe in a few years, he was told.

In the meantime, many cable monopolies continue to raise fees in Ventura County and throughout the nation, despite a 1992 law meant to keep costs in check.

Fed up with cable rates that were rising much faster than inflation, Congress in 1992 passed the Cable Television Consumer Protection and Competition Act, which gave local government the power to police cable fees using a set of federal rate guidelines.

*

Though the law led to some improvements for the consumer--such as an initial rollback in rates and a loosening of restrictions on the direct-broadcast satellite industry--critics say it has not lived up to its hype.

For one, cities can clamp down on cable providers only if their fees exceed the federal guidelines. And those standards, many city officials complain, are not nearly as strict as consumers were initially led to believe.

“Cities have no real power, but we seem to take a lot of the criticism,” said Mary Walsh, assistant to the Ventura city manager. “People think we do, and we don’t. It’s a frustrating situation for us.”

Furthermore, cable companies can--and usually do--appeal city rulings to the Federal Communications Commission, delaying any changes for years. And with high-priced telecommunications lawyers on their side, the cable companies often win.

“We’re small, and we’ve had the feeling that we were definitely right a few times,” said Ojai City Manager Andrew Belknap. “But they have experts who do nothing but study the FCC regulations, which are just huge. You can spend an entire career doing that.

“Our name is on all the bills, ‘Call Ojai, your franchise regulator,’ ” he added. “But we don’t have the wherewithal to get into disputes with the cable companies.”

In the very near future, even such limited regulatory power could be rendered moot for some Ventura County municipalities.

Under current laws, once a new competitor captures 15% of the cable market, local government loses its ability to police rates. The reasoning is that the area is no longer a cable monopoly, and market forces will keep prices down.

Oxnard, which recently granted a franchise to GTE and is already served by Jones Intercable, may find itself in that position soon. So may Port Hueneme, also served by Jones and GTE.

But Dennis Scala, an Oxnard management analyst who handles cable issues, is optimistic that competition will do more for consumers than government regulation ever could.

“The whole reason the law was passed was to keep rates honest,” Scala said. “We think the marketplace is the best regulator you can have.”

Indeed, in the parts of Ventura County where competition already exists, one thing is becoming clear: Cable providers are hunkering down for a long and fierce battle in which the consumer figures to emerge as the big winner.

“Competition has broken out hot and heavy in Ventura County, and we’re really going to step up to the plate,” said spokesman Andrew Johnson of Tele-Communications Inc., which provides service in Thousand Oaks, Camarillo, Moorpark, Santa Paula, Fillmore, Ojai and unincorporated parts of the county.

“Frankly, it’s energized us,” he added. “It’s changed the way we do business.”

It better have.

*

In Thousand Oaks, site of the most heated competition, TCI reported 27,812 subscribers in June, down from a previous high of more than 32,000.

Upstart GTE, which has yet to hook up about a third of the city’s households, reported 8,379 subscribers at the end of May for a service that started only this year.

And Falcon Cable, the city’s smallest and most frequently criticized provider, reported it was down to 4,000 subscribers for the same time period, according to Caroline Milton of the city manager’s office. The company’s previous high was about 4,700, she said.

However, several observers believe Falcon’s actual subscriber figure is much lower than it has reported, pointing to GTE’s gains. Falcon representatives did not return phone calls.

“We have been very, very happy with the take so far,” said GTE spokesman Mike Raydo. “One of our main selling points is that we represent a choice, which people have not had, but also that we are offering quality in the form of digital networks and better picture.”

Indeed, GTE boasts that its technological offerings far surpass anything Ventura County has seen.

Its Americast cable system features an on-screen menu that lets viewers pull up a week of television programming guides, cutting down on channel surfing. With the push of a button, the on-screen guide also allows viewers to program their VCRs to record the programs they find.

And its Mainstreet system represents that most ballyhooed of television advances: two-way “interactive” communication. The system, which has only a few hundred customers so far, allows people to trade stocks, conduct banking services, and eventually, to play interactive video games through the television.

By the end of the year, GTE also hopes to offer a high-speed cable modem able to transmit information at speeds up to 350 times faster than current telephone modems.

The company’s goal is to reach 122,000 Ventura County households by the end of 1998, more than half of the 217,000 potential subscribers. If all goes well here, GTE then plans to build regional cable networks in 66 markets, hoping for 7 million subscribers by 2004.

But GTE insists it is approaching cable one step at a time.

“We have quite a bit on our plate in Ventura County as it is,” said Ron Hummel, head of GTE’s video services.

“We just signed a franchise agreement with Port Hueneme. This is where it all begins for us.”

*

To counter GTE’s offensive, TCI earlier this year decided not to apply a nationwide 7% rate increase to the Ventura County areas where the companies are competing.

Their prices are comparable. GTE charges, for example, $26.94 for 64 channels, while TCI charges $26.30 for 54 channels.

Since the competitors offer similar basic cable services at similar prices, both are looking to gain an edge in an area where cable providers have traditionally had a lackluster reputation: customer service.

“We may be the dominant provider in the county right now, but we’re not resting on our laurels,” said Johnson, the TCI spokesman. “We want all the customers, not just half or most.

“We will soon roll out a digital compression system which will allow us to carry as many as 15 channels where only one could be transmitted before,” he added. “But the most important thing we can do in addition to investing in the new technology is customer service.”

In Thousand Oaks, for example, when TCI decided not to carry VH1 earlier this year--a move that was met with a groundswell of criticism from its customers--the company responded.

Not only did TCI quickly bring the channel back, but it also took out an apologetic ad in The Times, announcing its change of plans.

Likewise, when GTE encountered criticism for placing large cable boxes in neighborhoods, it answered the angry homeowners by placing giant artificial rocks over the unsightly equipment.

GTE is also negotiating with Thousand Oaks to restore the look of the scarred streets it left behind after its cable construction, even though the company is not required to fix such aesthetic damage as part of its contract with the city.

“We’re bending over backward,” Raydo said. “I’ve been involved with a few, maybe quite a few, homeowner groups to replace any flowers we have dug up or landscaping we have had to alter. We’re trying to please everyone.”

*

Across the county in Ventura, meanwhile, it’s still business as usual for the cable companies.

Century Cable recently raised its rates from $28.30 to $31.50 for its basic package, angering many consumers already weary from paying the county’s highest rates.

By comparison, the lowest rate in the county, TCI’s basic charge for west Camarillo, is $9.85. And Avenue Cable, the provider in west Ventura, charges $18.75 for its basic package.

But Ventura’s two cable companies cover none of the same territory, so competition is nonexistent.

“We’ve had a fairly contentious relationship with them,” the city’s Walsh said of Century. “People are concerned, the city staff is concerned and the City Council is concerned.”

Century Cable did not respond to numerous requests for an explanation of its rates.

At Avenue Cable, the last of the small, locally owned and operated providers in Ventura County, the formula is simple: Proceed with caution when upgrading to new technology and keep rates as low as possible.

Many other small cable companies were gobbled up by nationwide providers in the last decade, but family-run Avenue believes it can survive by carefully funneling profits back into the business.

“We don’t have a lot of cash flow,” said Pamela Drake, Avenue Cable’s director of marketing, explaining the company’s no-frills philosophy.

*

That is not to say Avenue Cable is behind the times, Drake insists.

The company was the first in Ventura County to offer a high-speed cable modem, and is now expanding with new equipment such as digital cable boxes that will allow customers to keep their existing television sets once high-definition television is introduced, she said.

Avenue Cable has its share of critics, as Drake is quick to concede, and not everyone is happy with the company’s service. But if it has proven anything, Drake said, it is that small companies can swim with the cable giants, and remain independent, as long as they stick to the core business.

That is because as “the local company”, they have certain advantages.

“My father [founder Johnny George] has lived in Ventura since he was 2, and we understand this place,” Drake said. “Larger corporations have all these layers of management, and that sometimes leads to higher fees.

Like Thousand Oaks, Oxnard and Port Hueneme will soon become cable battlegrounds as GTE begins competing with the area’s sole existing cable provider, Jones Intercable.

Or will it be Century Cable?

Steve Naber, the general manager for Jones Intercable, confirmed that the company, which has about 40,000 subscribers in the two cities, is negotiating a sale of the local franchise to Century.

It could be announced as early as next month, he said.

“It isn’t gossip, it’s a fact,” Naber said. “That is something that still might happen. Century is a major player in Los Angeles, not just Ventura.”

*

Jones Intercable recently sued Oxnard and GTE in U.S. District Court in Los Angeles, alleging that the franchise agreement between the two gives GTE an unfair competitive advantage.

But that action should not be interpreted as a sign of concern over the impending cable war, or a stall tactic, Naber said. Like consumers everywhere, he said, Jones Intercable is eager for the competition to begin.

“It’s not just going to be channels and prices--there’s much more to it,” Naber said. “Ultimately, the product is going to be the same, because there are only so many channels out there.

“The key is having a good local presence--making sure people can get someone on the phone, airing the high school games,” he added. “We’ve been here 15 years, and we feel we have done that. It’s going to be interesting.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Cable Television Rates

*--*

Basic monthly Expanded City Provider price/channels price/channels CAMARILLO GTE $10.95/27 $26.94/64 East city TCI $12.30/21 West city TCI $9.85/26 FILLMORE TCI $13.30/21 $24.66/48 MOORPARK TCI $13.75/21 $26.45/61 OJAI TCI $10.81/19 $26.20/46 OXNARD GTE $10.95/27 $26.94/64 Jones $13.64/24 $28.27/47 PORT HUENEME GTE $10.95/27 $26.94/64 Jones *$13.64/24 *$28.27/47 SANTA PAULA TCI $13.30/21 $24.66/48 SIMI VALLEY Comcast $27.08/42 None THOUSAND OAKS Falcon $22.45/38 $22.90/50 GTE $10.95/27 $26.94/64 TCI $10.51/22 $26.30/54 VENTURA Avenue $18.75/28 $28.25/57 Century $31.50/39 $35.19/52 UNINCORPORATED AREAS Rincon Avenue $20.25/28 $29.75/57 Near Camarillo TCI $9.85/26 $24.10/58 Santa Rosa Valley TCI $13.30/21 $24.66/61 Near Fillmore TCI $13.30/21 $24.66/48 Oak Park TCI $11.30/22 $27.75/54 Near Ojai TCI $10.81/19 $26.20/46 Near Santa Paula TCI $13.30/21 $24.66/48 Near Thousand Oaks TCI $10.51/22 $26.30/54

City CAMARILLO GTE $22.90/61 $24.10/58 FILLMORE MOORPARK OJAI OXNARD PORT HUENEME SANTA PAULA SIMI VALLEY THOUSAND OAKS VENTURA UNINCORPORATED AREAS Rincon Near Camarillo Santa Rosa Valley Near Fillmore Oak Park Near Ojai Near Santa Paula Near Thousand Oaks

*--*

Source: Cable companies