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Comcast Takes Over Cable Market

Posted on: Thursday, 13 February 2003, 06:00 CST

Source: San Jose Mercury News

After completing its $50 billion acquisition of AT&T Broadband last November, Comcast Cable has at last entered the Bay Area cable market, promising extensive network upgrades, advanced new digital services and improved customer service.

Customers of the Bay Area's dominant cable company will begin to notice the ownership changeover this week. On Friday, Comcast will start replacing the AT&T Broadband logo on trucks, bills, radio and television commercials and newspaper ads.

Taking over a system that remains antiquated in many places, Comcast says its top priority is to replace the one-way, co-axial, video-only networks still in place in many communities with two-way, fiber-optic, digital lines. These upgraded systems will provide more reliable video service to the company's 1.6 million Bay Area subscribers, and will be able to deliver advanced services such as high-definition television, video-on-demand, high-speed Internet access and even phone service.

"It's almost frightening that a high-tech area like this does not have access to many of the same technologies that many other communities have," said Scott Binder, Comcast's new regional senior vice president. "We know this frustrates customers."

The Philadelphia-based company is spending $650 million on network upgrades in California this year and expects the upgrades to be completed across the Bay Area by the end of 2004.

In San Jose -- where much of the cable system was built in the early 1970s and where many subscribers still use an A/B switch to toggle between cable channels -- the company had upgraded 40,000 homes as of late last year and will upgrade 100,000 more by the end of this year. With its network accessible to 260,000 homes in San Jose, Comcast is spending a total of about $200 million to upgrade the city's cable system.

"We think the cable industry has let Silicon Valley down," said Comcast President Stephen Burke. "We are going to focus on fixing things and fixing things quickly."

Around the Bay Area, Comcast's promises are being met with both skepticism and hope. That's because many of the region's cable systems have changed hands twice in recent years, first when AT&T Broadband bought TCI in June 1999 and now as Comcast takes over.

"We keep rolling through new owners and every time they say they will improve customer service and make network upgrades," said Brian Moura, assistant city manager in San Carlos and chairman of the San Mateo County Telecommunications Authority. Still, Moura added, Comcast -- which has 21.5 million subscribers nationwide -- does have a reputation for keeping its promises.

Tom Manheim, San Jose public outreach manager, expects Comcast to proceed with upgrades even though it is still enmeshed in protracted talks with the city to renew its cable franchise. "AT&T had been holding the rebuild over our head to get the cable franchise they wanted," Manheim said. "But Comcast will do it regardless of what happens with the franchise."

Not all the news is encouraging for consumers. Moura noted that Comcast also has a reputation for high rates. As part of its regular annual rate increase, the company lifted rates for standard cable by an average of $2.14, or 6.5 percent, to $38.34 a month across the Bay Area at the start of the year. In San Jose, the rate for standard cable, which includes basic plus expanded basic cable, rose by $2 a month to $41.99.

Carl Pilnick, president of Telecommunications Management Corp., a Los Angeles company that serves as a cable franchise consultant, says Comcast has little incentive to lower rates. Even with the growth of satellite services from EchoStar and DirectTV, Pilnick said, "there is not enough competition." EchoStar and DirectTV together have nearly 20 million subscribers nationwide.

Binder said Comcast is not planning any more rate hikes in the near future. But, he stressed, "programming costs do drive our costs up." He added that Comcast offers the best prices to subscribes who take the most services.

Indeed, Comcast is in the midst of lifting the rates for cable modem subscribers who do not take any video services by $14 to roughly $60 a month.

The company is giving its cable modem subscribers new e-mail accounts -- changing the attbi.com at the end of their addresses to comcast.net. This will be the second e-mail address change in less than a year and a half for subscribers who started out as Excite@Home customers and stuck with the service after Excite@Home folded and AT&T Broadband took over in late 2001.

Recognizing the inconvenience that another e-mail address change will cause for many, Comcast says it will continue forwarding e-mail sent to attbi.com addresses to the new comcast.net accounts through the end of 2004.

According to Burke, Comcast has a very different focus than AT&T Broadband. While AT&T Broadband's roots as part of a massive phone company left it conflicted at times, Comcast is first and foremost a cable company, he said.

So while AT&T Broadband invested several hundred million dollars to deliver telephone service over its cable lines, Comcast does not plan to expand the service aggressively in the near term. The company will, however, continue to offer phone service in the 43 Bay Area communities where it is already available.

Addressing AT&T Broadband's reputation for poor customer service, Comcast is also planning a major overhaul of its customer care operations. While customer inquiries are currently routed to call centers around the country and even in Canada, Comcast is expanding its call center operations here in the Bay Area. The company is adding 100 more people to its 300-person call center in Livermore and building a 400-seat call center in Concord. A third center is also planned for the Bay Area this year and two more will be opened next year.

Binder added that while AT&T Broadband outsourced its customer service operations, Comcast will make its call center workers company employees. Local Comcast representatives, he explained, will understand the geography of the region and will be able to better communicate with technicians in the field.

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To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com.

(c) 2003, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News.

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