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Cablevision bumps up Internet service fee

Tue, 07/01/2003 - 8:00pm
Staff

Copyright 2003 Newsday, Inc.

Newsday (New York)

July 2, 2003 Wednesday NASSAU AND SUFFOLK EDITION

Cablevision Systems Corp. yesterday raised its monthly fee for high-speed Internet service to $44.95 for most customers, 50 percent higher than it was less than two years ago.

Even though Verizon Communications, the main competitor in the New York metro area, slashed its high-speed Internet service rates two months ago, Cablevision Systems Corp. raised its monthly fee by $5 for Optimum Online customers who get at least a standard package of cable TV service.

Optimum Online was charging most customers as little as $29.95 a month in late 2001 before it imposed its first price increase.

On Jan. 1 this year the company started charging new Optimum Online customers the $44.95 rate. The latest action extends that rate to cable TV customers who signed up before Jan. 1. Customers who don't get a standard or higher level of cable TV pay $49.95 per month.

Merrill Lynch analyst Jessica Reif Cohen said the new rate increase shows that Cablevision is counting on features other than price to compete and is not retreating on its strategy. Verizon cut prices for its digital-subscriber-line service to $34.95 per month, or $29.95 for customers who also get an unlimited telephone calling plan.

"Consumer preference, at the moment, appears to favor cable modem ahead of DSL service," Reif Cohen said in a research report.

Optimum Online has signed up 22 percent of homes in the areas in which it is available, including 37 percent of homes on Long Island. The broadband service had more than 852,000 customers as of March 31 and expects to top 1 million by year's end.

Since May, calls to Verizon inquiring about getting DSL service have jumped 25 percent, said Briana Gowing, a Verizon spokeswoman. "There's a lot more interest," she said. In its 24-state area, which includes 30 million phone customers, Verizon had 1.83 million DSL customers as of March 31, up 36 percent in the past year.

Cablevision tries to depict the Optimum Online service as distinctly different. "High-speed Internet users in the New York metropolitan area have demonstrated that speed and quality matter," said Gemma Toner, senior vice president of Optimum Online.

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