Cable Competition, Prices, and Service Rated 'Very Poor'
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Just 1 of Every 20 Michigan Residents Has Choice in Cable Providers
Today, the law firm of Howard & Howard Attorneys, P.C. issued its inaugural "Cable Competition Index" for the State of Michigan. Howard & Howard's Cable Competition Index considers the status of wireline video competition in the state, the level of customer service provided by cable operators, and the relative pace of cable price increases.
"Our firm has practiced in the area of cable and communications law for nearly three decades," attorney Jon Kreucher said. "We knew this was a good time to take a snapshot of cable competition because it's been a year since our state legislature passed a new cable franchising law." That law, regularly referred to as "Public Act 480," eliminated most regulation of cable systems at the local level of government. When the statute was passed, many state legislators believed that such deregulation would mean a rapid increase in cable competition, better customer service and lower cable prices for Michigan's residents.
However, Howard & Howard's 200+ hour analysis reveals that the anticipated benefits of the new law haven't yet materialized. "By our estimate, wireline cable competition exists in fewer than 110 of Michigan's 2,000 communities." When considering Michigan's households, the numbers get no better: Just a little more than one out of every twenty Michigan homes appears to have a choice in wireline cable providers. "AT&T has received video franchises in some of the larger communities in our state," Kreucher commented, "but in many of those communities, the pace of AT&T's buildout appears to be moving rather slowly. That means that the vast majority of our state's residents will probably be waiting for cable competition for a very long time."
2007 also proved to be one of the worst customer service years for cable in recent memory. According to the American Customer Satisfaction Index, the cable industry scored the lowest level of customer service out of the forty- three industries tracked. Comcast and Charter, Michigan's two dominant cable providers, were the lowest-scoring companies in the lowest-scoring industry, as measured by the ACSI.
"Unfortunately, cable companies scored the triple-play last year: Very poor levels of new competition, exceptionally bad levels of customer service, and prices that often increased ten times faster than the national consumer price index for other forms of recreation," Kreucher said. In many parts of southeast Michigan, Comcast's prices for the lowest level of cable service rose between 25% -- 50%, while the CPI for recreation logged an increased of just .8% during the same period.
"Given the very low levels of wireline competition in the state, the decline in customer service, and rapidly increasing cable prices, we have to rate the current situation in cable service as 'very poor,'" Kreucher concluded.