March 16, 2003
The Muskegon Chronicle

By David Alexander

The local cable television system has been sold three times since it was Muskegon Cablevision in 1989 and each time the new owner has been the largest cable system in the United States.

With Comcast Corp.'s recent purchase of the local system, cable customers have realized that bigger has not always meant better.

The local system was purchased in the early 1990s by TCI Inc., the largest cable company in the United States at the time. By the late 1990s, TCI had upgraded the local system with a fiber optic network.

When AT&T Broadband bought TCI in 2000, it became the largest cable operator in the nation. AT&T -- old Ma Bell itself -- provided the opportunity to "bundle" products such as cable television, Internet access and even local telephone service over one wire, with one company sending out one bill.

But AT&T Broadband never realized its potential as a cutting-edge telecommunications company; the traditional telephone company never understood the cable television business, industry observers say. At its sale, AT&T Broadband was one of the least financially successful cable operators in an industry that has taken its lumps in the past three years.

Well, Muskegon, it has happened again.

AT&T has been bought out by Comcast and you guessed it ... the deal has created the largest cable operation in the nation. Comcast could have revenues of $24 billion this year, more than the combined revenues of Time Warner Cable and Charter Communications -- the second and third largest cable companies.

While customer service might improve, basic services will remain the same for 2003, Comcast officials say. The new owners are quick to point out that they are no AT&T.

Comcast officials say they are approaching the cable business in Muskegon and all of West Michigan differently than the former AT&T Broadband. Comcast is a company that began as a cable operator in 1963 in Tupelo, Miss., with a three-station system. It has evolved into a company that offers 250-channel digital systems and high-speed Internet connections, with 21 million customers.

Whereas AT&T centralized all operations -- including the removal of a general manager in the Muskegon operation -- Comcast officials say their operations will be decentralized and tailored to the individual communities.

The West Michigan operating region for Comcast will be headquartered in Grand Rapids, serving 312,000 customers from Jackson to Muskegon. Muskegon has an estimated 40,000 customers on its system that includes Ferrysburg and Fremont.

"We are trying to bring a local feel back to our communities," said Richard Ruggiero, vice president of corporate affairs for Comcast's Midwest central region based in Detroit. "(As AT&T,) what ever happened in Grand Rapids we did in St. Paul, Minn. That doesn't always work."

The West Michigan region is being headed by Area Vice President Steve Makowski, who is headquartered in Grand Rapids. Makowski previously was the chief financial officer for AT&T Broadband's Midwest markets.

"In the AT&T world, we were reactive to things" Makowski said. "Under Comcast, we will be more proactive. We want to get things that are needed to be done, done. But it will take some time to make it happen."

First on Makowski's mind is customer service. The AT&T call center operations are now being handled by Comcast in Minnesota. The new operation is a "split call center" so a team of customer service representatives exclusively work with the West Michigan cable customers, he said.

Although customers will never see the issues, Comcast is working on making all of the divergent cable systems compatible. Muskegon and Grand Rapids was upgraded by TCI, while Jackson was upgraded by AT&T and Lansing by MediaOne -- another system purchased by Comcast.

"We have various technical differences in the networks," Makowski said. "We have to work to make sure the customer does not see the difference."

Comcast -- which completed the $54 billion AT&T Broadband deal at the end of 2002 -- immediately began the concept of bundling -- the selling and billing of separate services in combination packages.

Comcast did what AT&T never attempted -- the combining of bills for cable television and broadband Internet service. Pricing also was changed for customers of broadband Internet service only. Cable customers having just broadband Internet service now will pay $60.95 a month vs. the $45.95 a month for those also having cable television service. Comcast's Ruggiero said $60 a month is a competitive price for high-speed Internet service and the $45.95 rate is a true value.

Internet users will have their e-mail addresses changed from @attbi.com to @comcast.net within the next two months. Customers will be notified in advance. The change should allow users to keep their account names but fewer than 10 percent might be forced to find a new account name as well. E-mail sent to @attbi.com addresses automatically will be forwarded to the new Comcast addresses through 2004, Ruggiero said.

As Comcast competes for customers with traditional telephone companies such as Verizon Communications and satellite video providers such as DirecTV and Dish Network, new services will be important.

Comcast will look to expand its "video on demand" services for digital cable customers and high-definition television programming. Comcast's Makowski said those new products are able to be put on the current Muskegon network but won't be added in 2003.

Video on demand offers customers the ability to watch programing such as network prime time shows, sports events and movies at any time -- at the viewer's convenience. A central server stores a program, which customers can access at anytime. Some programs would be part of the basic digital package and others would be available on a pay-per-view basis.

"Video on demand is a key product for us," Ruggiero said.

HDTV is the new video standard the U.S. television industry is moving toward. All over-the-air broadcasters must convert to HDTV by the end of 2006, according to current Federal Communication Commission rules. HBO and Showtime already have HDTV channels and Discovery and ESPN will in the near future.

HDTV provides crisp pictures with higher resolution and in a rectangular "letterbox" format rather than the traditional nearly-square picture shape. HDTV is said to be as huge of an advancement for the industry as when color television became the standard. Cable eventually will need to convert all programing to the new HDTV standards.

Finally, AT&T was aggressive in pushing local telephone service over its cable systems. Comcast will operate the cable telephone systems but is more interested in developing its video services first, Ruggiero said. Cable telephone service is further down the road for Muskegon-area customers, he said.

FAXBOX:

What cable customers need to know about Comcast:

1. The company will "bundle" cable television service and broadband Internet service into one bill.

2. Cable television customers can purchase broadband Internet service cheaper than customers having the Internet service on its own. Cable television customers pay $45.95 a month for broadband Internet service and all others are charged $60.

3. Email address will change from AT&T to Comcast. The user's name should have to change in less than 10 percent of the accounts. Instead of being @attbi.com the new addresses will be @comcast.net.

4. Customer service will move to a Comcast regional call center in Minnesota from an AT&T center in Denver. Twenty-four/seven service for cable television customers is at 1-800-824-2000 and Internet customers at 1-888-623-6300.

5. New services such as "video on demand," HDTV cable programing and telephone services will not be offered locally in 2003 but will come in future years. Video and HDTV services will be offered by before cable-based local telephone services.

6. While still operating as AT&T Broadband, the local cable system raised rates approximately 6 percent at the beginning of the year. Basic cable is $12.59 a month, expanded basic $40.89 a month, standard digital $54.99 a month and broadband Internet $45.95 for cable television customers.

FAXBOX:

The new AT&T Comcast

* Business: The largest cable company in America

* Other businesses: Owns 57 percent of QVC, major stakes in E! Entertainment, Golf Channel, Outdoor Life Network and regional sports channels in Philadelphia and Baltimore/Washington markets; majority ownership of NBA's Philadelphia 76ers and NHL's Philadelphia Flyers.

* Headquarters: Philadelphia

* Revenues: $24 billion annually (2003 estimate)

* Customers: 21 million cable and Internet customers in 17 of the top 20 markets in the United States.

In West Michigan: 98 communities and 312,000 customers from Jackson to Muskegon, including Grand Rapids with 500 employees.

* In Muskegon: An estimated 40,000 customers in metro Muskegon, Ferrysburg and Fremont with 60 employees.