BusinessReport.com

It was a shot over the bow when Gonzales-based EATEL’s two full-page advertisements appeared in the March 16 issue of Lafayette’s Daily Advertiser, touting Cox Greater Louisiana’s service-rich bundle it had been promoting exclusively in Ascension Parish.

For $75 a month for one year—or half the cost of Cox’s $150 regular price for the same services—qualified customers could receive digital cable with HBO, preferred high-speed Internet and digital telephone service with unlimited long distance.

“Notice: This is a message from EATEL,” read the banner headline in the ad, “Cox has a special pricing plan you may not know about.”

Cox, the nation’s third-largest cable provider, called the whole thing crazy, but honored the offer for qualified callers after some initial customer service issues. EATEL says it made a point, the latest salvo in a heated competition over its more than 14,000 customers in eastern Ascension and southern Livingston parishes.

The ads continue, “The funny thing is that they are required to make this offer available to you, if they’re offering it to residents of Ascension Parish … they just don’t have to tell you about it. So call Cox today and lower you cable, phone and Internet bill. And when you do, ask them, ‘Why didn’t you tell me?’”

Brad Supple, the director of sales and marketing with EATEL, says the ads represent the first time they’ve countered the competition in such an aggressive fashion. Cox says it’s a first for them, too; the companies have battled for customers for nearly three years.

“Our question was if it’s such as a great promotion why wouldn’t they be telling folks in Baton Rouge and Lafayette about it,” Supple says. “They don’t do it there because they don’t have competition there that they have in Ascension Parish.

“We’re not a company the size of Cox that can afford to slash our prices. We have always sold on network quality, quality of our products, customer service and our reputation.”

EATEL, long ago recognizing it couldn’t win on the pricing front, banked on better technology. It beefed up service offerings by investing in a fast, higher capacity fiber-to-home service.

To Cox, it’s business as usual. Sharon Kleinpeter, Cox’s vice president of government and public affairs, questions EATEL’s placement of ads in an area it doesn’t serve. But she says the $75 bundle was aimed at luring first-time telephone customers in Ascension Parish, and there’s nothing new about offering promotions. The bottom line: The battleground for subscribers is price and technology.

EATEL knew the terms of Cox’s promotion because telephone service providers in Louisiana have to file them with the Louisiana Public Service Commission [PSC]. Cox’s Jan. 11 filing states the promotion was scheduled to run from Jan. 14-April 30 and was to be available to “all new or former subscribers of Cox Digital Telephone residential local exchange service residing in Cox serviceable areas in Greater Baton Rouge and Greater Lafayette.” It specifies telephone because the PSC only regulates the telecommunications portion of the bundle.

Even though a provider doesn’t have to advertise a promotion in its entire service area, the filings are mandatory. But if a qualifying caller in the area requests the deal, the company must honor it—which Cox has confirmed it’s doing.

The flare-up points to what many agree is the most aggressive countermove they’ve observed in the increasingly “hyper competitive” Baton Rouge and Lafayette metro markets for subscribers.

While consumers contemplate what is becoming a typical service bundle with cable programming, Internet, telephone and cellular telephone, they also want competitors for better pricing.

“It’s gotten more competitive, and when you have more competition the consumer generally wins,” PSC Commissioner Jimmy Field says. The PSC also required cellular telephone providers to serve remote areas, which he maintains has enhanced overall service and pricing.

Field says it’ll be interesting to see how consumers benefit when the city of Lafayette rolls out its bundled service, including fiber-to-home service, in the next year or two. When that happens, the government will be competing with Cox and AT&T, which already serve the area.

Also, AT&T recently received a franchise with the city of Baton Rouge to provide cable service, which would additionally compete with Cox. “We are delighted the council and the city-parish president believe Baton Rouge consumers deserve a choice in video service providers,” says Karin Beck, director of public affairs with AT&T Louisiana. “AT&T is eager to compete in the video market and to deliver the benefits of real competition to Baton Rouge consumers.”

In response to Cox’s recent $3 monthly rate hike, NAACP President Ernest Johnson is calling for more competition.

“It’s unfortunate that the largest cable company in our state continues to raise its rates, especially at a time when families are struggling to keep more money in their pockets,” Johnson writes. “Unfortunately, without real competition in the marketplace, Louisiana consumers will be forced to endure rising cable rates.”

He also states the NAACP is supporting the Consumer Choice for Television Act, which has been introduced as a bill in the state legislative session. He contends it is aimed at giving consumers more choice in video service providers.

A coalition called TV4US, calling itself a grassroots advocate for more consumer choice in these services, is pushing the act throughout the nation. The local group could not be reached for comment.

However, Ann Schiffman Ruble, Cox’s public affairs manager, and others like Common Cause contend TV4US is actually an “AstroTurf” group heavily backed by AT&T. Ruble says AT&T is shaking up competition to clear the company’s way toward replacing the municipal franchise agreements these companies must have to secure public rights of way with one statewide agreement.

Cheryl McCormick, CEO and executive director of the Louisiana Cable and Telecommunications Association [LCTA], says AT&T has two bills—House Bill 1009 and Senate Bill 422—calling for statewide franchising. But McCormick says LCTA is pushing its own H.B. 869 that includes a tax formula more favorable to consumers.

While AT&T’s earlier efforts to get statewide authority have failed, Kleinpeter says Cox doesn’t oppose it as long as it can also get options that would free the company from 55 20-year and 30-year franchises it has in 13 parishes, which have more stringent provisions. So far, AT&T hasn’t agreed to the move, which she says would otherwise give Cox a competitive advantage. Talks are under way on this issue.

McCormick agrees statewide franchising would make the market more inviting for competitors. “AT&T’s PR machine has cranked up, which is why you’re seeing letters from the NAACP and a push for the Act in the Legislature,” she says.

So what’s fueling more aggressive competition in areas that have long begged for it?

“Think about the growth in Lafayette and Baton Rouge since the storms, with growing populations, strong job market, lots of new investment and housing starts,” Ruble says. “Lafayette and Baton Rouge are two of the best markets in this race for space.”

As with most markets, the two major areas for a return on investment are price and product, she says. In telecommunications, the hook is bundled services and types of service.

“We’re talking about HD, or high definition, being on the rise, and rolling out that product as more households have HD TVs,” Ruble says. “Faster Internet speeds, upgrades and ‘I want my phone with unlimited local calling’ as examples.”

It’s nothing unusual to offer different packaging and “to be a player in this business you’ve got to be able to competitively price,” she says, which is why she questions EATEL’s countermove. “It’s just crazy.”