Cox to Raise Cable Rates As Costs Go Up

By Steve Sinovic, Santa Barbara News-Press, Calif.

Feb. 26–Cox Communications is raising its basic cable rate by nearly 10 percent for limited basic service in response to higher operating and programming costs.

The company, which serves customers on the South Coast, will raise its rates across the board beginning March 15, increasing the cost of some cable packages by up to nearly 10 percent.

A basic cable package with 34 channels will increase from $26.64 to $29.14.

Larger entertainment packages, including a $62.64 plan called Digital Basic, will rise by $5.50.

By comparison, basic cable in North County, which is served by Comcast, runs about $24.99 and the company has no plans to increase this rate in 2008, said a company spokesman.

Jennifer Muensch, community relations manager for Cox in Santa Barbara, said the increases are necessary because of the rising costs of producing cable television shows. Cable providers must pay networks for programming expenses, Muensch said.

On the operating side, Muensch said expanding bandwidth to allow for faster Internet speeds and stronger signals also is expensive, but she could not provide a breakdown on what this investment represented for the corporation. Cox employs about 200 people in the area.

Muensch said she didn’t expect many customers to be upset by the rate jumps. “I think customers recognize the increased value we’re bringing to them,” she said. So far, she said the company “hadn’t been inundated” by complaint calls from subscribers receiving their current bills. Still, customer service representatives were being advised to help design a package “that would work better” for more cost-conscious subscribers.

The company will also increase prices on the video side only for customers who subscribe to the company’s bundled service — cable, high-speed Internet and telephone. According to Cox, about 32 percent of its customers nationwide currently subscribe to a bundled package.

A staff member for the City of Santa Barbara who oversees the franchise arrangement with Cox, said she had yet to receive any complaints about the fee increases. “Maybe I’ll get three or four calls a year [regarding rate increases],” said Jill Taura, city budget manager and cable franchise administrator. The city has an agreement with Cox to provide service until 2010.

“Typically, [cable companies] have price increases each year to recoup their investments [due to maintenance and upgrading service].”

According to Taura, the city collected a franchise fee totaling $1.16 million in 2007. Taura, who said the market was a small one compared to the others serviced by Cox nationwide, estimated 30,000 city residents are Cox subscribers; she figured the county had a similar number of customers.

Cox also serves customers in the cities of Goleta and Carpinteria.

Cox, like other cable TV operators, has faced increased competition over the years from satellite TV players DirecTV and Dish Network, which continue to put pressure on the cable companies, along with new competition from phone providers AT&T and Verizon. At the same time, the cost rollout of HDTV programming has also cut into cable company profits.

Cox Communications is the third-largest cable operator in the U.S. behind Comcast and Time Warner. Cox’s largest markets include the Phoenix and Cleveland metro areas and several large markets in California including San Diego, Orange County, Palos Verdes and Santa Barbara.

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