Copyright 2004 Times Publishing Co.

St. Petersburg Times (Florida)

July 29, 2004 Thursday

The first challenge to Verizon is available in Dunedin and should go countywide within a year.

Knology Inc. began selling phone service in Dunedin on Wednesday, the first step in its plans to compete for phone customers in its entire Pinellas County service territory.

The West Point, Ga., company expects to launch phone service in Clearwater by the end of September, with service expected to be rolled out to the rest of Pinellas within 12 months.

Knology's entry into the Pinellas phone market marks the first time that Verizon Communications will face competition for residential customers in the county, other than from Internet phone companies. It also marks the latest escalation in the local battle between Verizon and cable companies to offer customers one-stop shopping for phone services, cable TV and high-speed Internet access.

While Knology will sell stand-alone phone service, the cable company is most interested in signing up customers for three-way packages that bundle phone, TV and broadband services.

That has been the company's marketing strategy in its other service territories, which include Panama City, Fla., and scattered towns throughout the Southeast, according to Knology senior marketing director Taylor Nipper.

About 80 percent of Knology's customers in other areas sign up for at least two of the company's services, Nipper said. As an enticement, Knology offers modest discounts on three-way bundled packages. For example, Knology will charge $110 for a package that includes unlimited local and long-distance phone calls, standard "expanded basic" cable TV and high-speed Internet access.

In addition, the company is offering a $100 rebate to customers who sign up for a new three-way bundled package by the end of the year. (The rebate will be paid four months after service begins.)

"The value proposition is really in all three," Nipper said.

The ability to sell packages of phone, cable TV and Internet services has become all the rage as cable companies and traditional phone carriers such as Verizon increasingly encroach on each other's turf for customers. Verizon has a marketing partnership with satellite carrier DirecTV and is exploring the possibility of offering pay-TV service in Tampa.

Verizon representatives met Wednesday with Tampa city officials to discuss a draft cable-TV franchise agreement that the company submitted last month. Verizon is installing new fiber optic lines to offer enhanced services including ultrafast Internet access, as well as the ability to provide cable TV channels.

Meanwhile, Bright House Networks, the Tampa Bay area's dominant cable TV provider, kicked off a limited test launch of Internet phone service in Pinellas County this month. Bright House Tampa Bay president Kevin Hyman said the company may have more information in late August about the company's plans for a formal launch of phone service in Pinellas and elsewhere in the Tampa Bay area.

Competition from Knology compels Bright House to price its cable TV packages at lower rates in Pinellas County than elsewhere in the area. Verizon, which brought its new competitor into Pinellas when it sold its Americast cable TV operations to Knology in December, is unlikely to respond in the same way, at least initially, according to Verizon spokesman Bob Elek. "We would rest on our quality because we offer the best value out there," Elek said.