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Cablevision follows Verizon with Optimum Online rate hike

Optimum Online will increase monthly subscription fee by $5 in 2013
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Six months after Verizon (NYSE: VZ) hiked the fees for its FiOS Internet service, rival Cablevision (NYSE: CVC) said Thursday that it will increase the fees for its Optimum Online product by $5 in 2013.

While Verizon timed its rate hike with the introduction of new FiOS Quantum broadband tiers ranging in speed from 50 Mbps to 300 Mbps, Cablevision said its standard Optimum Online tier will continue to offer download speeds of 15 Mbps and upload speeds of 2 Mbps. Cablevision also offers subscribers that pay an additional $14.95 monthly for its Boost Plus tier download speeds of up to 50 Mbps.

Cablevision's investment in building more than 50,000 WiFi hotspots in New York, New Jersey and Connecticut that subscribers can access for free could reduce the impact on subscriber churn from the price increase. Verizon doesn't offer WiFi access to FiOS customers.

In February, Cablevision CEO Jim Dolan announced that the MSO would increase capital spending in 2012 while freezing subscription prices--a move that was questioned by some Wall Street analysts. Investors appear to dig news of the Optimum Online price increase, which was announced late Thursday. Cablevision stock was trading at $14.51 at 10 a.m. ET Friday, up 35 cents, or 2.47 percent.

Cablevision hasn't announced plans to increase the subscription fees for its programming packages. But with the MSO signing contracts in recent months with Walt Disney Co. (NYSE: DIS), NFL Network, CBS Corp. (NYSE: CBS) and Comcast's (Nasdaq: CMCSA) NBCUniversal subsidiary, it will likely look to recoup increased programming costs through additional rate hikes.

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