EPB, AT&T and Comcast compete for Chattanooga customers

Chattanooga seems an unlikely battleground for the future of the American living room, yet it's one of the few American cities with three choices for the triple-play combo of TV, Internet and phone service.

Since launching their products in the last two years, EPB and AT&T have slugged it out with Comcast, trying to gain the upper hand in a market that has exploded with choices in recent years.

And the challengers are slowly gaining ground.

Comcast revenues in the city of Chattanooga fell by 8.4 percent from January to June this year as EPB signed up new customers for its fiber-optic telecom services and AT&T expanded its U-Verse Internet Protocol TV, according to franchise fees paid by local cable providers.

But while some of Comcast's customers are defecting, the nation's biggest cable company remains the dominant TV provider in Chattanooga with taxable revenues this spring four times greater than EPB and nearly 50 times bigger than AT&T's U-Verse, city records indicate.

Comcast doesn't release subscriber data at the local level. But according to city franchise fees paid by cable TV providers, Comcast still has more than 100,000 customers in the Chattanooga area.

EPB is quickly gaining ground, however. Since launching its fiber-to-home service in the summer of 2010, EPB Fiber has attracted more than 33,000 residential customers to its high-speed Internet, TV or phone service, generating more than $3.8 million a month in revenue from just its residential division. EPB has already built a $45 million-a-year residential telecom business in less than two years and EPB President Harold DePriest said he expects to attract even more subscribers.

"We're seeing our growth continue -- every week I've got more customers than I had the week before," DePriest said about the telecom division that is already profitable for the city-owned utility. "We must be doing something right."

AT&T had only 821 TV customers in Chattanooga through its U-verse system this spring, although that number is projected to grow as the service is made more widely available.

Nationwide, AT&T added about 400,000 subscribers nationwide with its Internet Protocol-based TV, roughly the same number of consumers that analysts estimate quit local cable companies.

"We're in a very competitive market," said Joe Johnson, head of local marketing firm Johnson Group, which is working for Comcast. "Right now, you see the most competitive activity, the most switching back and forth and the most new customers coming into the market."


It's a battle in which each competitor is going to "go with their strength," whether it be raw speed, content or connectivity, Johnson said.

EPB, for its part, holds the distinction of launching the nation's fastest Internet service last year when it rolled out 1-gigabit broadband to more than 170,000 Chattanooga-area customers. The utility even bested the mighty Google, the search engine giant that has yet to switch on its own gigabit network in Kansas City.

Comcast, too, places a great deal of importance on the Chattanooga market, emphasizing content and connectivity.

The Scenic City is a test market for the media conglomerate, which means Chattanooga residents get first crack at new technologies -- home security systems, mobile apps and a new OnDemand interface -- that other cities have to wait months to try.

Comcast also offers faster speeds in Chattanooga and bundles HBO for free in some local packages.

AT&T, a smaller but still aggressive presence in the city, has been stepping up the pressure with affordable plans that play to today's connected lifestyles while working to maintain relationships with business users.

By doubling down in its DSL technology and moving to a model that's completely based in the cloud, AT&T -- like EPB and in many ways, Comcast -- can make upgrades on the fly without ever entering a customer's house.

"For us in Chattanooga, that leaves the consumer with a good set of choices," Johnson said.


Kristen Squires switched from cable to AT&T's U-Verse last month at her Cleveland, Tenn., residence, because of what she cited as unreliable cable service and illogical TV controls.

"I've got four kids and it takes an act of Congress to block your inappropriate channels, then you have to go through another setup to block the titles you don't want people reading," she said.

To keep the Internet running with her Charter Cable in Cleveland, "I'd have to go crawling under my kitchen cabinet, unhook it, let it sit, and hook it up in the correct order to reset the stupid thing," Squires said. "AT&T has their modem and router in one box, so we haven't had any issues," other than a hungry raccoon that chewed through her telephone wires initially.

Aside from the raccoon, her story is typical of many cable customers who seek relief from perceived problems by embracing a competitor, even though a new service provider can come with a new set of problems.

"I don't think AT&T is as fast as Charter," Squires added.

An informal Times Free Press Facebook poll showed that many users were switching from cable to an alternative, whether it was EPB, AT&T or another regional option.

But a truly fair comparison of all the TV, Internet and phone choices is difficult, with the true cost of connectivity often obscured by Christmas specials, gift card deals and front-end discounts.


All of the local providers brag about their reliability and service quality.

AT&T won the "highest in residential television service satisfaction in the South Region" recognition from J.D. Power & Associates for 2011.

EPB claims a service advantage with call center employees physically located in Chattanooga.

Comcast insists it also is working hard on its customer service, said Jim Weigert, vice president and general manager of the Chattanooga market.

The company has reduced its service window to two hours with the help of a new automated system that routes technicians to their next job using GPS tracking, and Weigert himself monitors interactions with customers to make sure that subscribers are treated fairly, he said.

"I keep hearing this [EPB] commercial that we'll come with booties on," Weigert said. "But we were wearing booties before booties were cool."


On cost, Comcast and AT&T offer steep discounts on prices for up to a year with a contract, masking the future cost of their bundles, while EPB charges more in the short term but doesn't increase prices later on.

Speeds vary widely, from Comcast's 1.5 megabit-per-second economy package to EPB's top tier of 1,000 megabits per second, known colloquially as a "gig."

In general, a Times Free Press comparison showed that EPB offers faster Internet speeds for the money, and shows equal pep in both uploading and downloading content, with Comcast and AT&T trailing on quickness.

But EPB's TV offerings are more limited, bested by higher channel counts at Comcast and AT&T, which have a national presence and increased buying leverage with content providers.

Comcast also crushes the competition with a wealth of content that can be played any time from its on-demand library, which AT&T and EPB have yet to successfully emulate.

AT&T, on the other hand, claims more HD content than either Comcast or EPB, and is the only provider to offer "quad-play" -- a bundle that includes wireless phone access, spokeswoman Cathy Lewandowski said.

Taking things a step farther, Comcast is testing home security and home automation in Chattanooga, making all a house's functions easily controlled by a smart phone from anywhere in the world.


But despite the old-line cable providers' best efforts, a growing group of consumers is still cutting the cord and exploring other options in record numbers, according to The Associated Press.

In a tally by the AP, eight of the nine largest subscription-TV providers in the U.S. lost 195,700 subscribers in the April-to-June quarter.

That's the first quarterly loss for the group, which serves about 70 percent of households. The loss amounts to only 0.2 percent of their 83.2 million video subscribers, the AP reported.

Analysts chalk up the losses to the poor economy, which has put pressure on consumers' ability to pay for premium services such as cable TV.

But people are also canceling cable in favor of cheap Internet video, and some are turning to traditional antenna TV.

Rossville resident Kelly Gillenwater once paid $130 for Comcast's double-play combo, but couldn't afford the bill without a steady source of employment, she said.

So she returned her cable box to Comcast and set up the rabbit ears.

"We pick up all the channels we need on the antenna, and get our Internet through Cricket," she said, referring to the pay-as-you-go wireless Internet provider.

"If we want to watch something that we possibly might see on TV, we go to our Internet and boot it up," Gillenwater said.


Customers like Gillenwater, who embrace wireless Internet or only pay for pure Internet access, can be a threat to service providers, but there's no consensus on how to address those changes in consumers' technology preference.

"Everybody in this business is going to deal with the fact that young folks don't use landlines," DePriest said. "It's a generational thing. I don't think it will happen extremely quickly. It won't happen overnight, but that's an irreversible trend."

Comcast is launching apps to allow users to record and watch TV shows, and testing apps that control a home's air-conditioning and even apps that will allow Xbox 360 users to watch live TV on their game consoles.

The company has purchased more content than both its competitors combined and owns NBC Universal, and by controlling what people see it can avoid becoming just a pipe.

AT&T already owns a chunk of the wireless market through its AT&T Wireless subsidiary, and has set up more than 30 Wi-Fi hotspots in the Chattanooga area, which U-Verse customers can access for free, said Lewandowski.

The company is betting big on Wi-Fi, especially since its nationwide user base made 37 Wi-Fi connections every second in the third quarter, tripling the number of connections to 301.9 million from the third quarter of 2010.

"Wi-Fi connections made in a single month now exceed the total connections made in all of 2009 and are five times the total number of connections made in 2008," Lewandowski said.

EPB has taken a different tack, preferring instead to simply charge others, like the City of Chattanooga, to build Wi-Fi on top of EPB's fiber grid.

But the biggest danger providers face is themselves, DePriest said.

Wireline providers have a long history of becoming complacent, dictating to customers instead of listening to them, he said.

"To stay on top, we have to invest in tech and what people want," DePriest said. "We have met the enemy, and he is us."