Cable TV Price War Has Begun
By RICHARD MULLINS The Tampa Tribune
Published: Mar 13, 2007
TAMPA - The cable TV price war has started in the Tampa Bay area.
Verizon Communications plans to announce a $100 package deal today for cable TV, telephone and high-speed Internet service - cutting prices by roughly one-third. Verizon also will allow part-time residents of Florida to "pause" service.
Verizon's new pac
kage mostly matches a $100 per month deal that rival Bright House Networks quietly launched about a month ago and helped tempt nearly 24,000 telephone customers away from Verizon.
That pricing attack and counterattack between rivals represents the first full-scale price fight over cable TV, phone and Internet service in the area.
And it's likely to become fiercer.
"This is going to be the year when the price wars hit," said Jeffrey Kagan, an independent telecommunications analyst in Atlanta. "Right now, Tampa is in the center of it. Customers will have to buy bigger bundles to save money, but when they do, they'll get lower prices and more innovation because both companies want that same customer."
Verizon and Bright House largely have avoided slashing prices to retain customers or tempt customers to switch.
Since Verizon first entered parts of the market with cable TV in December 2005, both Verizon and Bright House have said they hope to compete on service and quality. Except for rare instances, neither company promotes cash rebates or months of free service for switching.
That caution largely ends today.
Verizon's deal carefully is targeted to bring customers back from Bright House or to entice customers to upgrade to the company's new fiber optic network called FiOS. For example, Verizon is cutting some long-distance calling prices by half, just for new customers or those people who return from Bright House.
"This option, like the others, shows we are serious about keeping customers, winning customers back," Verizon Southeast region President Alan Ciampocero said in a statement Monday.
And for people who live in Florida only part of the year, Verizon for the first time is offering a way to pause service for up to six months at no cost. Before, customers had to keep paying their monthly bill even if they lived elsewhere part of the year.
Bright House and Verizon both consider those traveling customers prime targets for switching because traveling customers had to cancel and restart service and were likely to shop around for a better deal each year.
As with many telecommunications deals, there are caveats. Verizon's offer only is available to customers in neighborhoods where Verizon has finished construction of its fiber optic network. The price change should not affect prices of premium TV channels such as HBO or Showtime. And Verizon said the $100 price is set for 12 months. After that, current pricing would go into effect.
Overall, Kagan said, $100 packages like these in competitive markets can save customers 30 percent to 50 percent compared with buying those services separately in a market with no competition.
Meanwhile, Bright House has won some initial battles in this new phase of competition. Spokesman Joe Durkin said Bright House recruited just fewer than 24,000 telephone customers from Verizon in February by signing them up for package deals. That signup pace remained steady during the first two weeks of March, Durkin said.
Florida is among the most closely watched markets because Verizon made this market one of the first to begin construction of a fiber network that could carry telephone, cable TV and high-speed Internet service directly into homes. This year, Verizon could complete the vast majority of its new network in the area.
Verizon specifically is under pressure to build its fiber optic network quickly because the company is spending billions of dollars on the fiber construction project nationwide and investors are focusing on signs of a payoff from that investment.
Reporter Richard Mullins can be reached at
rmullins@tampatrib.com or (813) 259-7919.
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