Copyright 2006 Denver Publishing Company
Rocky Mountain News (Denver, CO)
January 25, 2006 Wednesday
Final Edition
By Joyzelle Davis, Rocky Mountain News
From LexisNexis

Comcast Corp. will raise rates for its 700,000 customers in Colorado by an average of 4.4 percent, in line with the company's previously announced nationwide increase.

Comcast is raising rates by an average of 0.4 percent for its 20-channel basic cable package, 6.9 percent for its standard cable package and 6.5 percent for digital cable subscribers.

For the second year, the company is holding the line on prices for its high-speed Internet and phone service.

Comcast announced its Colorado rates Tuesday, the same day DirecTV, the nation's largest satellite- TV service, said it's raising prices nationwide by an average of 4 percent this year. That matches rival EchoStar Communications' previously announced rate increase and is on pace with last year's boost at both companies.

Comcast and both satellite companies are employing a strategy of imposing the greatest increases, on a percentage basis, on their entry-level packages, Craig Moffett, an analyst with Sanford C. Bernstein, noted in a research report.

DirecTV is raising the price of its Total Choice 155-channel package by 7.1 percent to $44.99, while Douglas County-based EchoStar's Dish Network is boosting its America's Top 60 package by 9.4 percent to $34.99.

By comparison, DirecTV is nudging its 250-channel Total Choice Premier package by only 3.2 percent to $96.99 for existing customers, and Dish's Top 180 package customers will see a 3.7 percent increase to $54.99.

The strategy of higher rate increases at the bottom of programming tiers is an effort to flatten the "demand curve" by making it relatively more attractive for customers to upgrade, Moffett said.

Comcast spokeswoman Cindy Parsons said the price increase reflects investments such as improving customer service, network maintenance and adding channels such as OLN to standard cable.

"During the last year, Comcast has improved customer service by offering more morning and late evening appointments and shorter appointment windows and is giving customers more viewing choices," she said.

The price for the 20-channel basic cable package is going up 5 cents, to $13.43. The company declined to say how much, in terms of dollars, standard and digital cable packages would increase because prices vary depending on where customers live.

The increase comes as little surprise. Comcast has increased rates every year in Colorado since it bought AT&T Broadband in 2002. Last year, it raised rates an average of 6 percent in the region.

The increases by all of the pay-TV providers are ahead of the rate of inflation, which rose 2.2 percent last year, excluding food and energy costs.

California-based DirecTV, which is controlled by Rupert Murdoch's News Corp., is rewarding existing customers with lower price increases than it will charge new subscribers. Current DirecTV customers will see prices rise $3 a month across all packages, while new Total Choice Plus customers will see a $4 hike and Total Choice Premier customers are in for a $6 increase.

That tactic, a reversal of the typical discounts to lure new subscribers, indicates that DirecTV is trying to give subscribers an incentive to stay with the service, Moffett said.