In a new twist, Comcast has announced rate increases for cable television that are roughly at the rate of inflation (2.3%) — the lowest rate increase for the company since 2001 — but is also hiking rates for Internet service at a substantially higher rate.

The company claims the Internet rate increase is partly due to the increased number of channels on its cable systems in Oregon and southwest Washington, as well as the cost to launch new interactive applications and multi-platform content that customers want and value.

Comcast’s rate increase for video represents the new reality for the cable business — companies continue with 7%+ increases in cable TV rates at the risk of cord cutting, analysts say. With cable television packages increasingly seen as ripe for cutting as they grow more expensive, cable operators are turning to broadband — a service customers can’t live without — to make up the difference.

Comcast had not touched broadband rates in the Pacific Northwest for seven years, until the company began hiking them in 2011. Monthly rates for the popular “Performance” Internet service (15Mbps) are going up again this year, from $48.95 to $51.95, according to The Oregonian. Prices are higher for standalone broadband service. Comcast’s Digital Starter TV package is increasing to $67.49 a month. Rates for customers on promotions will not  increase until those offers expire.

But some customers complain Comcast is now charging nearly $200 a month for its triple-play package.

One customer told the newspaper after his introductory triple play promotion expired, the bill rose to $190 a month for phone, Internet, and cable service with two DVR boxes. The customer does not have any premium movie channels.

The Oregonian has tracked Comcast’s rates in the Pacific Northwest for almost a decade. The staircase of climbing prices for cable television is leveling off as Comcast makes up the difference from its Internet rates.

The newspaper noted Frontier Communications, which provides competition for Comcast in the suburbs of Portland, has given Comcast only a slight headache.

Frontier continues to offer its barely-advertised FiOS television package for around $65 a month, but customer complaints about Frontier’s service in the area have been reflected by Comcast’s growing subscriber numbers.

One Oregonian reader summed up his feelings about Frontier:

Frontier was atrocious. I don’t just mean bad, I mean an embarrassment to humanity […] which chimpanzees and dolphins laugh at us for putting up with. I’ve had Frontier service for a little over a year now only because there is nothing else where I live.

The nightmare started with them coming out hook up DSL at my new house, but instead of hooking me up, [they tore] out the demarc box on the house and left with it,  lost all records of ever having talked to me, much less scheduling an appointment.

After finally getting Internet service a week late, the original [service order] showed up leading them to bill me for multiple accounts, which took five months to  resolve. They never were able to prove to me I actually owed what I ultimately paid (I got them to within one bill’s worth of my calculated value and gave up).

Half of the time I’ve held off paying my bill until a day or two before the due date so it’s too late to mail a check and their online payment system is down, forcing me to call in my payment and pay a $3 service fee.

All of that is on top of the blatant theft of forcing customers who already own modems to pay a “modem rental fee” for a modem they aren’t renting.

Tribune-owned WCCT was seen on certain Cablevision systems in Connecticut.

Tribune Broadcasting Corporation’s WPIX-New York, KWGN-Denver, WPHL-Philadelphia, and WCCT-Waterbury/Hartford, Conn. were all dropped from Cablevision’s lineup late last week in the latest fee dispute between TV station owners and cable systems.

Tribune says the stations were taken off Cablevision as the two sides were in a negotiating session, even after offering the cable company an extension of their current agreement to avoid upsetting viewers.

“Cablevison took this action despite our offer of an unconditional extension of the current carriage agreement with no change in terms while negotiations continued,” Tribune said in a statement. “To be clear, Tribune was willing to provide Cablevision subscribers access to the valuable programming on these stations while working toward a new agreement. Tribune never made any threat to withdraw these stations or any demand that Cablevision remove them.”

Cablevision’s decision to discontinue the New York/Philadelphia stations affects subscribers in suburban Connecticut and New Jersey, Brooklyn, the Bronx, and Long Island. KWGN is a common superstation seen on Cablevision/Optimum West systems in Colorado, Montana, Wyoming and Utah.

Cablevision accused Tribune’s owners of anti-consumer behavior over their demands for higher retransmission fees.

“The bankrupt Tribune Co. and the hedge funds and banks that own it, including Oaktree Capital Management, Angelo Gordon & Co. and others, are trying to solve Tribune’s financial problems on the backs of Cablevision customers,” Cablevision said. “Tribune and their hedge fund owners are demanding tens of millions in new fees for WPIX and other stations they own. They should stop their anti-consumer demands and work productively to reach an agreement.”

WPIX management counters the station is asking for less than a penny extra per day per subscriber.

Both sides are appealing to the public, but city comptroller John C. Liu is fed up.

“These blackouts are happening all too often,” Liu said.  “Cablevision, as a city franchisee and service provider, should do all it can to ensure that this blackout is resolved swiftly because New Yorkers deserve to get what they pay for, not be unfairly punished because of battling corporate interests.  If a swift resolution cannot be achieved, the Department of Information Technology and Telecommunications must step up to hold the provider accountable to the subscribers, who feel the brunt of this irresponsible disagreement.”

Liu adds that New Yorkers are effectively paying Cablevision for channels they no longer receive, and the cable operator is not offering any refunds.

Eventually, both sides will come to an agreement for higher payments, which will be passed along to subscribers with the next rate increase.

[flv width=”640″ height=”380”]http://www.phillipdampier.com/video/Bloomberg Cablevision Blacks Out Tribune Channels in Dispute 8-17-12.flv[/flv]

Bloomberg News talks with Matthew Harrigan from Wunderlich Securities about the impact of the Tribune-Cablevision dispute. Does WPIX and Tribune have enough clout to get Cablevision to cave?  (2 minutes)

Chickamauga Telephone Cooperative office (Courtesy: WRCB-Chattanooga)

AT&T and some of Georgia’s cable operators are under attack by telephone customers outraged to learn of a plan to force two independent phone companies to raise their rates because some think they charge too little.

Residents packed the Chickamauga Civic Center Monday night to loudly protest an effort by AT&T and the Georgia Cable TV Association to force both Chickmauga and Ringgold Telephone to raise their rates, in some cases by 100 percent.

“We’re here today because another company has complained about Chickamauga Telephone rates [claiming] that they are too low,” said Chickamauga city superintendent of schools Melody Day. “Maybe it’s just that their rates are too high.”

Retirees complained the rate increases demanded by AT&T and cable operators were unaffordable, with residential customers facing hikes of 42% for phone service. AT&T claims both phone companies are subsidizing their rates with money from the Universal Service Fund to an artificially low level. AT&T rates are considerably higher, and now AT&T wants the two independents to raise their rates accordingly.

If AT&T has their way with the Georgia Public Service Commission, Chickamauga residential customers currently paying $13.30 per month will be billed $18.83 per month for basic phone service with a limited local calling area. Business customer rates would double from $20.40 to $40.80 per month.

Local businesses and politicians are complaining loudly about the proposal, and want AT&T to mind its own business.

AT&T does not directly compete with landline service in the area, considered a suburb of nearby Chattanooga, Tenn. But cable operators do compete and AT&T sells cell phone service locally.

“It’s important for the Public Service Commission to be able to hear from our constituents around the state,” said PSC Chairman Tim Echols. “And we’re glad people packed the auditorium tonight.”

State regulators told the Times Free Press the Commission was unlikely to approve the kind of rate increase being demanded by AT&T. But they may approve a cut in state subsidies received by Chickamauga and Ringgold telephone companies, which would likely force both to raise rates anyway.

Chickamauga city manager John Culpepper said the city alone is looking at paying $200 more per month — money that will ultimately fall on the taxpayer. Culpepper says independent small businesses are already having a hard time competing with corporate America.

“When you double their rates, it is another financial impact.”

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WRCB Chattanooga Walker County phone customers fighting rate increase 8-13-12.mp4[/flv]

WRCB in Chattanooga reports on the unrest among phone customers in Chickamauga, Ga. over a plan by AT&T and Georgia cable companies to get regulators to force their local telephone cooperative to increase rates by as much as double. (4 minutes)

While Time Warner Cable will pull local channels off its cable lineup when contract negotiations fail, the company was less aggressive fighting demands from Fox News Channel parent company News Corp., and caved in to higher fees for the cable news network.

People familiar with the talks said News Corp. won a major rate increase from the cable operator for its Fox News Channel which could reset the bar when other cable companies negotiate renewal contracts.

Sources told the Los Angeles Times Fox News Channel will now cost each cable subscriber more than $1 a month, up from 89 cents. Time Warner Cable will likely bundle that increase into the next round of customer rate hikes. Fox News Channel’s new price puts them among top tier cable networks like TNT and USA.

Last year,  News Corp. President Chase Carey told Wall Street contract renewals for the channel “will take subscription fees to a whole new level.”

The only concession Time Warner Cable seemed to win was a more limited renewal agreement that only covered the Fox News Channel, Fox Movie Channel, and the barely-watched Fox Business Network. Time Warner Cable officials refused to renegotiate earlier, yet to expire deals with less popular Fox-owned cable networks.

The Times noted Fox News Channel did not want to lose more than 10 million cable subscribers at the height of election season, and the cable company did not want to deal with loyal Fox News viewers likely to complain or leave over the loss of the network.

With the renewal, every Time Warner Cable subscriber will pay even more for the channels whether they watch them or not.

Normally, telephone companies looking for a rate increase file a request themselves with state regulators to charge customers more for service. But in Georgia, AT&T, Comcast, and the state cable lobbying group are asking the Georgia Public Service Commission (GPSC) to order two rural phone companies to raise rates because they are not “charging enough” for phone service, when compared with cable telephone services and AT&T.

The Ringgold Telephone Company (RTC) and Chickamauga Telephone Company both argue the action is anti-competitive.

“By forcing [both companies] to increase rates, these competitors are seeking to make wireless and cable companies more attractive to consumers,” says the Don’t Raise My Rate website.

The independent phone companies are vehemently against raising their rates, and executives at both companies are outraged AT&T and the state’s cable companies are literally trying to force the GPSC to order rate increases on residential and business customers.

“It’s totally unprecedented,” Phil Erli, executive vice president at RTC told the Times Free Press.  “It is ludicrous and illogical.”

The Georgia Public Service Commission will decide on Oct. 16 whether the rate increases are justified, following local public hearings Aug. 13.

AT&T, which is driving the campaign to force customers to pay higher rates, says they are pressing the case because both companies unfairly charge substantially lower rates than AT&T does in Georgia.

Peter F. Martin, vice president for legislative and regulatory affairs in Georgia openly admits he wants both companies to charge essentially the same prices AT&T bills its customers in other areas of the state.

“The premise of my recommendation is that [the two phone companies] raise rates to roughly the same levels that are being charged by other local exchange carriers in surrounding areas,” Martin testified before the GPSC. “In other words, my recommendation is that [the two phone companies] increase their own end-user rates to market-based levels comparable to what other carriers are charging their subscribers.”

For customers of Chickamauga Telephone, that would amount to a 42% rate increase on residential customers, 100% on business customers. Customers of RTC would pay 20 percent more for residential service, 37% more for business service.

AT&T claims both companies, in deeply rural Georgia, are tapping into the state’s rural service fund and are receiving some of the largest state-mandated telecom subsidies, which are funded by all of Georgia’s phone companies and ratepayers. But both companies claim they have spent a large portion of those funds repairing damages to their rural networks incurred from a series of tornadoes which hit the area two years in a row.

The state cable lobbying group, the Cable Television Association of Georgia (CTAG) also has a dog in this fight. Comcast Cable, the dominant provider in Georgia, directly competes with both phone companies. They support AT&T’s demands that both phone companies hike their rates. It is not difficult to understand why:

Residential Service With Calling Features:

Business Service With Calling Features:

(EPB, a publicly-owned provider from nearby Chattanooga, Tenn., also offers service in some areas.)

Chickamauga Telephone executives argue Georgia’s telephone deregulation policies are heavily weighted in favor of huge phone and cable companies and leave independent, rural phone companies with no new revenue opportunities. Chickamauga argues AT&T and the cable industry are using legislatively imposed “unfunded mandates” to win favor and additional profits for themselves and their shareholders, with no resulting savings for Georgia ratepayers, especially in rural areas.

If AT&T and cable operators have their way, both independent phone companies “would be priced out of the competitive market,” and “would soon find [themselves] out of business.”

“If you lived down here and you had a phone with us and your rates went up, how would you respond?” asked Ted Austin, a spokesman for Chickamauga Telephone. “Nobody wants their bills to go up, especially when it’s not something that Chickamauga Telephone is asking for.”