Comcast asserts right to set rates

Says Boston’s bid for control ignores competition

By John M. Guilfoil
Globe Staff / May 25, 2011

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Comcast Corp. officials stepped up their campaign yesterday opposing the City of Boston’s petition to the Federal Communications Commission for control over the price of basic cable service.

Mayor Thomas M. Menino wants the federal agency to reverse a 2002 decision that stripped the city’s authority to regulate cable television rates, saying Comcast does not face effective competition and has raised its rates several times since deregulation began. The city’s May 9 petition states that “the failed promise of effective competition has left the majority of subscribers in the city unprotected from Comcast’s market power.’’

Comcast, in response, argued that its rates are fair and that its rate for basic cable service in Boston is “highly competitive’’ with packages offered by satellite services, the free over-the-air broadcast TV channels, and the city’s fledgling second cable provider, RCN Telecom Services LLC.

Dot Joyce, a spokeswoman for Menino, said that the mayor’s office had not reviewed Comcast’s document yesterday.

In Boston, Comcast offers a basic cable package of 35 channels for $15.80 per month. It offers the same service to seniors for $5 per month. The cheapest available service from satellite TV provider Dish Network is $34.99 a month, with a $10 discount during the first year. Satellite provider DirecTV charges $29.99 a month for the first year, with the price rising to $60 per month thereafter. RCN offers basic service for $17.50 a month.

While Comcast offers the cheapest basic cable in the city, it charges much less for that service in Massachusetts towns that still regulate basic cable television prices. A study produced for the city by Front Range Consulting Inc. of Castle Rock, Colo., found that residents of cities such as Cambridge, Malden, and Chelsea paid substantially less for basic service than Bostonians.

Doreen Vigue, a Comcast spokeswoman, declined to comment beyond the opposition document dated yesterday.

In the 21-page document, Comcast officials argued that the FCC determined that RCN Telecom Services LLC was “effective competition’’ nearly a decade ago, when cable service was deregulated. Comcast argued that RCN “has a well-established presence in Boston’’ and remains a competitor.

However, RCN’s promises of a citywide cable television network never materialized. RCN has 15,000 Boston customers, compared with Comcast’s 170,000.

Comcast argued that RCN does not have to build a network to serve the entire city in order to be a competitor. “The city’s petition places undue reliance on the fact that RCN has not yet built-out cable facilities to the entire city, claiming that RCN has only built-out a fraction of the city,’’ the document said. Comcast says that guidelines do not require a cable company to “build-out its network to any specific coverage area or serve a particular percentage of households.’’

Comcast also argues that satellite television companies provide “programming that is comparable to Comcast’s.’’

Finally, the telecommunications giant asserts that Boston more than meets a 15 percent competition threshold set by the FCC, saying that 18.7 percent of households use either RCN or satellite television service.

Verizon Communications Inc.’s FiOS service is available in 111 Massachusetts communities, but there are no plans to bring it to Boston.

Boston once had high hopes for stiff television service competition driving local cable prices down, but RCN’s failure to establish a citywide network, Verizon’s unwillingness to expand to Boston, and the price of satellite programming doomed those hopes.

John M. Guilfoil can be reached at