Time Warner Cable, Verizon
to Duel
By VISHESH KUMAR
July 22, 2008; Page B9
As Verizon
Communications Inc. gears up to offer pay-TV service in New York
City, Time Warner Cable Inc. is making a series of moves to
compete more aggressively with the phone titan for one of its most
prized markets.
Verizon received final
approval from local authorities last week to launch its FiOS TV service
in New York. It has already begun taking video-service orders and plans
to begin installing starting on Aug. 1, says Rich Greenfield, an analyst
at Pali Capital, who downgraded Time Warner Cable's stock to a sell on
Monday because he thought the company was ill prepared for the
heightening competition.
Investors seemed to share
Mr. Greenfield's concerns. Time Warner Cable's stock fell 4.1% Monday.
In 4 p.m. composite trading on the New York Stock Exchange, Time was at
$26.77, off $1.14.
Mr. Greenfield arrived at
his conclusion in part after phoning customer-service representatives at
Time Warner Cable. Some of the reps didn't know what FiOS was, and
others didn't seem to have a plan in place to keep customers who talked
about defecting to FiOS. "I didn't get the sense from talking to them
that they were really prepared for the coming competitive onslaught,"
Mr. Greenfield says. He estimates that Time Warner Cable gets 10% of its
revenue from its New York City market.
But Landel Hobbs, chief
operating officer of Time Warner Cable, says the company has been taking
a host of measures to prepare for Verizon's arrival. The company's
efforts have been most focused on Staten Island, the Manhattan borough
where Verizon is expected to roll out FiOS first.
In an effort to lift
customer service, Time Warner Cable has narrowed the window within which
one of its representatives will visit a customer's house to two hours
from four. The company will similarly narrow the window in other New
York City boroughs in the coming months.
The company will also
start offering discounted prices to customers who commit to longer-term
contracts on video, data or phone services. Previously, "lock in" prices
were available only to customers who bought all three services in a
"bundled" package.
Time Warner Cable has
already moved to a digital platform that allows it to offer more
high-definition channels in Staten Island, and is making that switch in
the rest of New York City as well.
The company is also
sending out a growing number of door-to-door sales representatives to
reach customers before Verizon does.
The tactics have served
Time Warner Cable well in other markets where it has seen increased
competition, says John Hudulik, an analyst at UBS AG. But Verizon has a
local presence, strong brand and a high number of wireless customers in
New York City, giving it an additional edge in that market that it
doesn't have in others.
"It will be a good
head-to-head battle with Verizon," says Mr. Hobbs. "But we have been
planning for this and are ready for the competition."
Write to Vishesh
Kumar at
vishesh.kumar@wsj.com1
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