[Editor’s Note: When the original article below was published, one of our Buffalo readers notified us the clip didn’t match the location, and we accidentally discovered a bug which apparently resulted in a few TV stations using the same video delivery platform getting clips mixed up between them.  My thanks to our reader who wishes to remain anonymous who alerted us to this problem, and allowed us to correct it.  Most of the original article still applies, but I’ve modified the details to match the reality!]

Although Buffalo was spared from any experiments with tiered pricing, they weren’t spared the annual rate hike.  One of the interesting differences between Buffalo and Rochester, which are adjacent to one another, is the competitive situation on the ground.

Buffalo has competition across the telephone, broadband, and television business from Time Warner and Verizon, which has wired a significant portion of Erie county with Verizon’s FiOS fiber to the home service.  The two compete effectively with similar product lines.

Rochester has competition across the telephone and broadband business from Time Warner and Frontier Communications, but the latter is stuck reselling DISH satellite service to provide a competing video package, and also has somewhat slower broadband service.  The two are not equal competitors across the board.

Buffalo, like many Time Warner divisions, offers “price protection agreements” in their territory.  Rochester does not — there are no contracts that commit Time Warner customers to any term of service.  In the Rochester market, the competitive threat from Frontier Communications has been judged so weak, there has never been a reason for Time Warner to bother with them in the Flower City.

Competition explains why one market has them and another does not.  In highly competitive markets, customers are tempted to hop from one provider to the other, and back again, to take advantage of substantial new customer discounts or other incentives.  Marketing costs to provide these discounts and incentives can be substantial, and customers can and do exploit them to save money.

The “price protection agreement,” which is another way of saying a “term commitment contract,” anchors customers with one provider for an extended period (typically one to three years), with a substantial penalty for early cancellation.

In less competitive markets, the dominant provider can avoid using contracts because most customers are reluctant to switch to an inferior product.  It also gives that provider the opportunity to bash the lesser competitors, which often do have contracts, with comparison advertising.  Time Warner Rochester has, attacking Frontier’s bundles for lengthy contract terms and $200-300 penalties if customers try and cancel early.  Clearwire is such a minor player, they exist below the radar.  But they have contracts as well, if you want the lowest price service.

In Buffalo, when Time Warner increased rates, Robin Wolfgang, Public Affairs VP for Buffalo, appeared on WGRZ to explain why rates had increased and also suggested customers hop on a price protection agreement to protect them from price changes during the contract.  During the recent Road Runner tiered pricing controversy, many customers outside of Rochester quickly signed up for these agreements for similar reasons – to avoid tiered Road Runner pricing for a few years longer.

This report from WGRZ has a reporter who sounds very familiar to Rochester residents.  Yes, that’s Dave McKinley who spent 18 years in Rochester broadcasting.  His report covers all of the bases, takes a mildly contrary position about where prices are heading, and lets Time Warner have their say.  I would have liked to see a customer complaining about the rate increases though.