Copyright 2005 Newsday, Inc.

Newsday (New York)

February 17, 2005 Thursday


Facing heightened competition on several fronts, Cablevision Systems Corp. is sharply increasing discounts for existing customers who combine digital cable TV, Internet and phone service, the company announced yesterday.

Cablevision said it will give those subscribers a $25 break off monthly bills, including a $5 discount that customers who combine cable TV and Optimum Online service already get.

In June, Cablevision began offering new customers a discounted package rate of $90 for the first year in a promotion called the "triple play," which has helped attract subscribers. But some existing customers complained they weren't getting the same break.

Without the triple play or new Optimum Rewards discounts, Cablevision subscribers pay at least $135 per month for all three services, including $34.95 for Optimum Voice, a phone service that uses Internet technology and that has signed up more than 250,000 customers.

The new discounts will "help attract more three-product customers and promote retention of our most valuable customers," said Patricia Gottesman, executive vice president for marketing at Cablevision, which has nearly 3 million cable customers in the metropolitan area.

In the third quarter of last year, 23 percent of all new cable customers signed up for the triple play. The promotion helped increase sign-ups for Optimum Online, which added 80,000 customers in the quarter.

"It's a very smart strategy - aggressively discounting voice to drive video and data services," said Manhattan-based Fulcrum Global Partners analyst Richard Greenfield.

By the end of this year, Cablevision will automatically apply the new discounts to bills for customers in all its areas. Until then, customers in some areas will have to call to sign up for Optimum Rewards.

The new discounts come at a time when cable companies have been fighting to hang on to subscribers in the face of aggressive promotions, discounts and bundles from satellite TV providers and phone companies that offer Internet service.

In 12 states, including many areas where Cablevision offers service, Verizon Communications is rolling out a new super-fast Internet service and plans to add cable TV service later this year. It also is offering an Internet-based phone service called VoiceWing aimed at fending off competitors such as Cablevision.

In December, Cablevision chief operating officer Tom Rutledge told analysts 85 percent of Optimum Voice customers had disconnected Verizon phone lines.

Rutledge has said that the cost to the company to add an Optimum Voice customer is $133, including installation and equipment, and that at regular rates the company earns back that money in nine months.

To get Optimum Voice, Cablevision requires customers to have Optimum Online. As of Sept. 30, Cablevision had 1.3 million Optimum Online customers.