Billions of dollars in savings — $11.2 billion between the start of 2007 and the end of 2011. That’s what a National Cable & Telecommunications Association-commissioned study predicted U.S. consumers will save by using cable providers’ phone service as a result of competition with incumbent phone providers.
The study, by Microeconomic Consulting & Research Associates, assumes a certain amount of growth in cable phone customers, and a savings of $11.19 per month in phone bills, the difference between traditional phone carriers’ bills and what cable customers pay. The $11.19 figure comes from J.D. Power.
MiCRA also said the $11.2 billion estimated price savings is “dwarfed by the indirect benefits from the competitive pressure placed on [incumbent phone carriers] by competitors.” Indirect benefits include matching what cable voice-over-Internet protocol services offer in terms of all-distance calling and advanced features.
Recently, wireline competitors in Ascension Parish outside Baton Rouge, La., discussed with Multichannel News the effect of cable vs. incumbent phone company competition there.
On one side is EATEL (for East Ascension Telephone), the 75-year-old independent local phone provider that’s recently been offering fiber-to-the-home services on a new network it’s still building out within a 34,000-home territory. Competing with EATEL for video, phone and high-speed Internet customers is Cox Communications Inc. of Greater Louisiana.
Asked if Cox had reacted to competitive moves by his company — such as a three-service bundle for “a little over $100” or a 10-Megabit high-speed Internet service for $56.50 per month — EATEL president Robert Burgess said: “They change, but we’ve maintained an edge mainly because we have more bandwidth. So we try to hit them where they’re not hitting us.”
EATEL actually introduced on-demand video in the market ahead of Cox. It also introduced digital-subscriber-line service in the parish ahead of Cox’s cable modems, according to the company. Cox is rolling out on-demand service now, its officials said, and its cable-modem service does offer up to 9 Megabits of download speed.
As for price competition, EATEL’s Burgess said there’s not so much.
“In some cases, we’re higher, in some cases we’re a little bit lower,” Burgess said. “For most customers, it’s not a pricing decision. It’s more of, do you get customer service quality, do the phones get answered, does somebody show up when something’s broken? We’ve got 75 years of trust built up in our customer base, so that helps us significantly.”
On at least one point — that there’s relatively little price competition — local Cox officials agreed.
“Their pricing follows our pricing,” was how Ron Rouillier, marketing manager in the region for Cox Greater Louisiana, put it.
When Cox in August raised its prices for high-speed Internet services, EATEL raised its prices by the same $2, according to Rouillier, who used to work for EATEL.
Rouillier differed with EATEL on that company’s popularity, saying it took a hit when EATEL stopped reselling BellSouth phone services, a decision that reduced EATEL’s local workforce.
Burgess said EATEL exited the resale business after federal rules changes in 2004 made the business less profitable, instead plowing $40 million plus into the fiber network.
EATEL used to sell Sprint wireless service locally, a business it also sold — so it won’t have a wireless offering when Cox introduces service from its venture with Sprint Nextel. Cox hasn’t said when that service rollout might happen locally.
Cox said it did bring about a significant savings for Ascension Parish consumers when its VoIP phone pricing (introduced in 2004) excluded a charge EATEL had placed on calls made to or from Baton Rouge.
Rusty Jabour, local director of governmental and public affairs, said that when he lived in Gonzales, La., before he worked at Cox and when he was an EATEL customer, the surcharge to call the capital city “only one interstate exit away” was about $15 a month. The Gonzales area has grown fast as people from Baton Rouge are drawn to the parish’s well-regarded schools. “If a family wants to move down there, they want the ability to call back and forth,” Jabour said.
EATEL’s bundled pricing eliminated the surcharge in response to Cox, Rouillier said.
Competition has brought advanced phone, video and networks to Louisiana’s bayou country.
That’s a good thing — something else that the wireline rivals in Ascension Parish might agree on.
Kent has been a journalist, writer and editor at Multichannel News since 1994 and with Broadcasting+Cable since 2010. He is a good point of contact for anything editorial at the publications and for Nexttv.com. Before joining Multichannel News he had been a newspaper reporter with publications including The Washington Times, The Poughkeepsie (N.Y.) Journal and North County News.
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