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Cable Agency, Press Release: 02/15/00
Newcomers likely to chip away at
cable television's dominance
By Courtenay Edelhart
THE INDIANAPOLIS STAR
INDIANAPOLIS (Feb. 15, 2000) -- A
challenge to cable television's dominance
in Indianapolis has been a long time in
coming despite landmark legislation
deregulating the industry four years ago.
But a few flickers of competition are on the
screen:
- Philadelphia-based Digital Access Inc.
says it will spend $1.3 billion to build
a fiber-optic broadband network in
Indianapolis and three other cities during
the next three years. It will offer local and
long-distance telephone, digital television
and high-speed Internet access.
- Satellite television providers -- Hughes
Electronics Corp.'s DirecTV and EchoStar
Communications Corp.'s DISH Network --
plan to carry Indianapolis TV stations as
early as this year -- erasing cable's key
advantage over satellite.
- Other telecommunications companies are
racing to get into one another's businesses
so they can offer customers one-stop
shopping -- everything from local
telephone service to Internet access to
cable service on one monthly bill. For
example, long distance provider AT&T
Corp. recently acquired cable giant
Tele-Communications Inc.
"I'm cautiously optimistic about more
competition coming in not only nationally,
but in Indianapolis," said Rick Maultra,
director of the city's Cable
Communications Agency, which monitors
compliance with cable franchises. "Digital
Access will probably force the others to get
into each other's business to produce
bundled services, because that's where
everything's going, even though it's
happening slowly."
Maultra's agency has long been a lightning
rod for complaints from cable customers.
For many of these customers, competition
can't come soon enough.
Oddly, four years after Congress passed
landmark legislation, the
Telecommunications Act of 1996, many
believe competition has decreased.
For instance, Comcast Cablevision of
Indianapolis is pursuing a service area
swap with Time Warner Cable that would
make Comcast the lone cable provider in
Marion County.
Local phone service provider Ameritech
Corp. is backing away from entering cable
markets since being acquired by SBC
Communications Inc. of San Antonio,
Texas.
And DirecTV bought rival satellite
television provider Primestar Inc. last year,
reducing the number of providers in that
segment of the Indianapolis market to two
from three.
"Congress obviously had hoped we'd see
competition a lot faster, but you don't see a
whole lot of people taking cable on," said
Mike McGregor, associate professor of
telecommunications at Indiana University.
"The long distance providers seemed like
obvious contenders, but they've lost
interest."
Part of the problem is logistics. New cable
providers either would have to build new
cable lines from scratch -- formidably
expensive -- or pay to lease a competitor's
lines.
And cable companies are not required to
offer their lines to others, unlike local
phone companies that are required by law
to make their lines available to telephone
newcomers.
The result is that few cable companies have
chosen to invade a rival's territory.
The cable industry says competition is
tighter than ever before and will become
ferocious as satellite television companies
carry local broadcast stations.
That was made possible last year after
Congress passed the Satellite Television
Home Viewers Act.
Neither DirecTV nor DISH Network could
say specifically when they will begin
carrying Indianapolis TV stations. Angst
among cable TV customers could send the
satellite market skyward.
A recent Federal Communications
Commission report found that the price of
cable television rose 3.8 percent through
the 12 months ending in June 1999,
compared with 7.3 percent in the previous
period.
The FCC attributed the change to a
challenge from satellite television but
noted that the increase was still nearly
twice the rate of inflation during that
period.
It was competitive pressures that moved
Comcast to upgrade its infrastructure a few
years early to accommodate digital
television and high-speed Internet access,
both of which were launched last year, said
David Wilson, area vice president for
Comcast Cablevision of Indianapolis.
Parent company Comcast Corp. also is
testing technology that would allow it to
carry voice over the Internet, a capability
that would bite into local- and
long-distance telephone markets.
But all of this takes time, Wilson said.
"The technologies are sophisticated and
complicated," he said. "You don't rework an
entire infrastructure overnight."
The new kids on the block may
nevertheless quicken the pace.
Digital Access Inc. is building its network
in Indianapolis, along with Kansas City,
Milwaukee and Nashville. And America
Online's announcement last month that it
wants to buy Time Warner is another sign
of oncoming competition.
© 2000 Indiana Newspapers Inc. AP materials © 2000 Associated Press. All rights reserved.
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