Cable TV costs scheduled to rise in Vermillion by David Lias John Varvel, the government relations manager for Mediacom, was at Vermillion City Hall Monday night to oversee some needed improvements on the equipment used to broadcast Vermillion City Council meetings on cable channel 3.
While technicians fine tuned the video and audio in the meeting chamber, Varvel received some static from another source � city aldermen.
His grilling by members of the city council Monday comes on the heels of a significant rate hike enacted by the cable television company in Vermillion.
Mediacom included a bit of good news and bad news in billing invoices sent to Vermillion customers beginning Dec. 17.
The good news � Mediacom is adding three new channels on or about Feb. 1 � WE: Women's Entertainment (channel 69), RFD-TV (channel 73) and Inspirational Network (channel 77).
The bad news � starting in February, monthly rates will be going up.
The cost of the basic family cable service � which includes five local broadcast stations and 58 cable channels, will go up from $31 to $36.
That's an increase of 16 percent. And it's a rate much higher than Mediacom is charging in Yankton.
Mediacom faces competition in that city from PrairieWave Communications. PrairieWave was formerly known as Dakota Telecommunications Group (DTG) and most recently was a part of McLeodUSA Telecommunications.
Vermillion's former cable television holder, Zylstra Communications, also operated in Yankton and several other communities before being purchased by Mediacom a few years ago.
"Since the changeover in cable TV companies, there has always been a highly significant differential � I think right around 30 percent difference in rates � and I'm not sure if that is still at that magnitude today, but I know there is quite a significance difference," Mayor Roger Kozak said to Varvel Monday. "Can you explain how it comes about that there is such a differential between the two communities?"
"The price structure in Yankton is not in the real world," Varvel said. "I don't know what the competition is doing, but Mediacom is losing money in that market. We're doing everything we can to maintain or expand our market share."
Varvel said he believes that in about two or three years, neither Mediacom nor PrairieWave will be able to offer services in Yankton at lower rates.
"I submit to you that both companies will not continue losing money in that market for an indefinite period of time, and prices will come up to normal in that market," he said.
"Are you suggesting that if we can find a competitor, your prices will go down?" asked Alderman Jack Powell.
"I'm suggesting that we do what we have to in each community to maintain market share for a reasonable amount of time," Varvel said, "but I will also go on and suggest that it is a temporary period of time and I don't believe anyone can stay in business by losing money in a market.
"Eventually, you either make money in the market or you abandon that market," he said.
Varvel said Mediacom is not losing money in its Vermillion market. The price increases that become effective next month, he said, are a product of the cost of doing business.
"A significant portion of that cost to do business is the cost of the programs that we provide on the television," Varvel said. "The programmers traditionally raise their prices to us in double-digit percentages, some as high as 25 and 30 percent per year.
"We obviously can't pass all of that price increase on, but we have to find some ways of containing costs," he said. "That's why some times very popular programming is dropped from the schedule."
Varvel assured the city council that Mediacom will do all that it can to maintain its recent major upgrade to cable services introduced to Vermillion in recent years, and will work to assure that customers that are experiencing problems with picture, audio or high speed Internet are satisfied.