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When Comcast took control of the Chicago cable market nearly a decade ago, it was faced with aging plant, a confusing channel lineup and hodgepodge of service offerings, and one of the more intense competitive landscapes of any single market in the cable industry.
Today, while the competitive landscape hasn't changed much - one new competitor, AT&T U-Verse, entered the market three years ago - Comcast has a new set of priorities.
Now, instead of network upgrades and channel alignment, Comcast is focusing on new ethnic programming packages, customer service and localized marketing efforts to attract and keep customers.
Comcast took over the Chicago system in 2002, part of its $47.5 billion acquisition of AT&T Broadband. Although one of the largest markets in its footprint - it has about 2 million customers in 753 franchise communities in the region which includes Chicago, its surrounding suburbs, areas in central Illinois, northwest Indiana and southwest Michigan - Chicago was one of its most fragmented markets.
Not only did Comcast have to undergo a massive upgrade of its Chicago network - it rebuilt the network infrastructure, realigned its channel offerings so that all of its subscribers had the same number of networks to choose from and introduced pricing and packaging parity -- it also had to deal with one of the nation's most competitive markets.
COMPETITIVE CITY
While most cable operators have to do battle with the two major national satellite-TV providers (DirecTV and Dish Network) and a telco or two, Comcast has had to fight off offerings from five separate competitors - the two satellite companies, two overbuilders (RCN and WideOpenWest) and AT&T's U-Verse offering.
RCN has primarily stuck to the Gold Coast area surrounding Lake Michigan. WideOpenWest, which purchased telco video operation Ameritech New Media in 2001, is available in 23 communities in the Chicagoland area and is expanding in towns like Glenview and Rolling Meadows.
WOW has about 90,000 customers in the area and is in the process of upgrading its network to all-digital, which should expand its HD offering from about 35 channels to more than 100, said senior vice president Kelvin Fee. WOW also has a strong high-speed data offering - roughly 90% of its customers take the service.
"We're known by and hang our hat on customer service and our bundled package," Fee said.
The newest competitor, AT&T U-Verse, appears to be the most formidable, though. Since launching service in January 2008, U-Verse is available to about 1 million households in 270 Chicagoland-area communities.
While U-Verse spokeswoman Mari Melguizo wouldn't reveal specific expansion plans, she said the company "continues to expand our availability on an ongoing basis."
U-Verse has opted to compete mainly through advanced video offerings - it has about 160 HD channels, offers Multiview, which allows customers to access programming on their TV's, computers and mobile devices and interactive apps to give customers more control and more personalization U-Verse has also placed at the top of J.D. Power Customer Service rankings for the North Central Region.
Comcast vice president of marketing for the Greater Chicago Region David Williams said that Chicago's fragmented cable history is mainly due to the many different operators that built out the area. At one point, Continental Cablevision, Tele-Communications Inc., Jones Intercable and Metrovison all had franchises in the area at one point.
Even after Comcast consolidated the market with its purchase of AT&T Broadband in 2002, the Chicagoland market remained a patchwork of disparate networks.
Last year, Comcast completed its all-digital conversion in Chicago, which helped expand its HDTV package to more than 115 channels and gave it room to expand its ethnic offerings.
ETHNIC CHOICES
Comcast has been offering a Hispanic package in Chicago with 55 channels and is beefing up offerings for Southeast Asian, Filipino and Polish ethnic packages. Digitization has also enabled the rollout of DOCSIS 3.0 ultra high-speed Internet service - Comcast now offers service tiers ranging from 1.5 Megabits per second to 105 Mbps - and laid the foundation for its Comcast Content Distribution Network, which enables Internet-protocol delivery of on-demand content to customers. With CCDN, Williams said that Chicago customers have access to about 55,000 hours of content, versus the 10,000 hours previously available.
Williams said that more and more Spanish-speaking customers are moving out to the suburbs and the expanded channels are proving to be a popular offering. He added that Comcast also has aligned with the local Major League Soccer club - the Chicago Fire - which also has a large Hispanic following.
Williams said that Comcast's efforts aren't just centered on programming. The system also has put together Latino-oriented double- and triple-play packages to target the community, which he said represents about 16% of the total population of the area and continues to grow.
"The old school of cable was to create a package of a few channels and bolt it on to your other programming," Williams said. "Now we have a whole suite of packages targeted to the Hispanic consumer, everything from a very simple video product to the full triple-play suite."
Williams said that Comcast is offering similar packages and programming aimed at Southeast Asian customers (the fastest growing ethnic segment in the market), and customers of Filipino and Polish ethnicity. Williams said that while the growth in the Polish-American market is not huge, Chicago's Polish population is second in size only to Warsaw's.
"We have launched specialty channels and we're marketing in everything from churches to newspapers and radio and TV, restaurants, everywhere to reach that marketplace," Williams said. And though satellite-TV providers operators have long had a finger on ethnic channels, he said that they lack the local presence, which is Comcast's advantage.
"No one has served this market very well," Williams said. "Probably the best would be on the DBS side, but they're not local in the community like we are."
Comcast also has had to be innovative on the marketing front. It already has a relationship with area professional sports teams through its interest in the Comcast SportsNet Chicago -- the home of Major League Baseball's Chicago White Sox and Cubs, the National Basketball Association's Bulls and the National Hockey League's Blackhawks. Comcast also has a local news channel - CN 100 - which airs local high-school games and games from the Women's National Basketball Association Chicago Sky and American Hockey League Chicago Wolves, which has helped it endear it to customers.
HUDDLING WITH THE BEARS
Last year, it initiated a Bears Bundle, tied to the National Football League's Chicago Bears. New customers would receive a Bears-branded remote control by signing up for the triple-play package.
Comcast has made several local TV and radio spots with local sports reporter Lou Canellis touting the offering.
"It really does a great job of driving subscriber growth, which is what we really want, by associating us with a successful organization like the Bears," Williams said. "It's amazing how excited our call-center reps, as well as the customers, get when they're talking about their teams. Even something as simple as a remote control just drives that passion."
Williams said the program was successful - they handed out about 5,000 Bears remotes last year - and are planning a similar promotion with the White Sox this year. Comcast is currently in talks with the Cubs concerning a similar deal.
Comcast Chicago also has been pushing the customer-service button hard over the last 12 months - it has four call centers in the area and has made significant improvements in reducing call volumes and truck rolls. Williams said that the Chicago system also has been working alongside the corporate initiative to reduce service windows to two hours and in some cases one hour, initiating dynamic dispatch of service techs to assure that the closest technician to a job gets assigned to that task. Comcast started a Chicago-specific move campaign earlier this year that allows customers who relocate within the service territory to take their equipment with them and install the service themselves.
"Moving is always an opportunity to look at other competitive options," Williams said. "This is a great opportunity for us to take away those options and make that move very simple for the consumer. We're already starting to see some success from that."
It also eliminates the need for a truck roll to the house, he added.
The Chicago market has almost come full circle in the past decade, Williams said - starting with getting the infrastructure up to snuff add now focusing on more customer-facing aspects of the business.
"The past few years have all been focused on consolidating the network and plans and processes," Williams said. "The last year was really spent in investing in the network and on the customer-experience side, so that's allowed us to deliver what we think is the best product value out there. We'll now continue to leverage that investment to drive the growth of the market."
