Cablevision to offer faster Internet speeds to low-income homes than other cable MSOs

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While more cable operators plan to offer low-income homes high-speed Internet access at a discounted rate of $9.95 monthly, some providers are offering faster speeds than others.

Cablevision (NYSE: CVC), one of several cable MSOs that plan to offer $9.95 monthly cable modem service as part of the FCC's Connect-to-Compete initiative, says it will offer low-income homes its core Optimum Online service, which delivers speeds of up to 15 Mbps downstream and 2 Mbps upstream. That's 10 times faster than the 1.5 Mbps downstream and 368 Kbps upstream speeds that Comcast (Nasdaq: CMCSA) is offering low-income homes through its Internet Essentials program.

"Cablevision has long recognized the importance of broadband adoption, particularly for students. We were the first cable provider to join this important effort, which builds upon our more than decade-long commitment to providing free broadband to schools and libraries across our service area--the same core product we sell to residential and business customers--through our Power to Learn education initiative," said Cablevision spokesman Jim Maiella.

Several other cable MSOs have committed to offering discounted Internet access to low income homes, including Time Warner Cable (NYSE: TWC), BendBroadband, Bright House Networks, Charter Communications (Nasdaq: CHTR), Cox Communications, Suddenlink Communications, Eagle Communications, Insight Communications, Mediacom Communications, Midcontinent, Sjoberg's Cable and Alaska's GCI (Nasdaq: GNCMA).

National Cable & Telecommunications Association (NCTA) spokesman Brian Dietz said cable MSOs participating in Connect-to-Compete will offer speeds of at least 1 Mbps. "We expect that some operators will offer faster speeds," Dietz said. Pilot programs from NCTA members offering discounted Internet access will kick off in the spring, followed by a full-scale launch timed for back-to-school season in 2012, he added.

Time Warner Cable said it won't detail what type of speeds it will offer low income homes until closer to its launch next year, but that it will offer speeds of at least 1 Mbps.

Comcast was the first cable MSO to offer discounted Internet access through its Internet Essentials program. Comcast offers subscribers several different pricing options for cable modem service, depending on the speed of service and the number of products such as digital cable and phone service that are bundled with its service.

In Washington, D.C., Comcast's "Performance" Internet service offers speeds of up to 20 Mbps downstream and 4 Mbps upstream for $59.95 monthly. It also offers a an Economy service of 1.5 Mbps downstream and 384 Kbps upstream for $40.95 monthly. That's the same speed offered to low-income homes that qualify for its $9.95 monthly Internet Essentials service.

Comcast spokesman Charlie Douglas noted that the 1.5 Mbps speed the MSO offers Internet Essentials customers is the same speed it offers subscribers through its economy package, which costs $41 to $44 monthly as a standalone service. He also said subscribers can choose packages ranging from 1.5 Mbps to 105 Mbps. 

"There are more than 4,000 school districts in our service areas. We feel our effort could potentially reach more families than any other MSO," Douglas added.

Selling high-speed data is one of the biggest growth areas for Comcast, which picked up 261,000 cable modem customers during the third quarter. Offering speeds faster than 1.5 Mbps to low-income homes in major Comcast markets such as Atlanta, Chicago and Washington, D.C., could thwart its ability sell faster and higher priced Internet tiers to subscribers.

It's also worth noting that Cablevision operates systems in some of the wealthiest areas of the country, including Westchester County, N.Y., Bergen County, N.J., and Nassau County on Long Island. Cablevision's systems pass fewer low income homes than Comcast, and therefore, it will see less demand for its discounted Internet service.

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