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ADELPHIA SPURS QUESTIONS
COMPANY'S PURCHASE LEAVES CLOUDED FUTURE FOR RATES, 1,700 LOCAL JOBS

The reported sale of Adelphia Communications means a new provider will pipe cable TV into Western New York homes, spurring questions about rates, service and the future of Adelphia's 1,700 local jobs.

After 2 1/2 years in bankruptcy, Adelphia has dropped plans to reorganize as a stand-alone company and accepted an $18 billion bid from Comcast and Time Warner, according to published reports. The deal requires creditors' approval.

What the sale means for local cable customers is unclear. Either of the two buyers -- or possibly even a third company not now involved -- could wind up as the region's provider, analysts said.

Cable companies set rates based on regional competition, one analyst said, while the level of their service depends on the state of the existing network.

"The technology in place can't be overhauled too quickly -- I doubt existing subscribers would see a change instantly," said Gary Arlen of Arlen Communications, a Bethesda, Md., research firm.

In Western New York, Adelphia is a major employer as well as the provider of cable TV to about 300,000 homes. Of its 1,700 workers, about 1,000 work in customer service call centers that could be threatened in a merger.

Now based near Denver, after moving from Coudersport, Pa., in 2003, Adelphia wouldn't comment about the sale reported Friday by the New York Times and Wall Street Journal.

The reported buyers also remained mum about the deal. New York City-based Time Warner covers Rochester and much of upstate New York, while Philadelphia-based Comcast operates nearby in Ohio and Western Pennsylvania.

Rates offered by the major cable competitors are similar. Adelphia recently increased rates on its standard plan of 80 channels to $48 or $49 per month in Western New York. Comcast charges $44.29 for its "standard cable" package in Pittsburgh. In Rochester, Time-Warner recently increased the price of its standard service to $51.70 per month.

Still another cable company could emerge for Western New York if the buyers decide to sell off unwanted pieces of Adelphia's 5.3 million customer system, analysts said.

Buffalo's franchise agreement with Adelphia will need to be rewritten to reflect new ownership of the system, said council member Richard A. Fontana, chair of the Legislation Committee that oversees the agreement. The city has been negotiating a successor to the current agreement, which expires Dec. 31.

The Council can urge the buyer of the system to maintain Adelphia's jobs, Fontana said, but can't require it to do so.

"It could go either way -- (a buyer) could pull them out, or they could bring more in," he said.

The 10-year agreement requires Adelphia to pay 5 percent of its Buffalo revenues to the city as a fee for using public rights of way.

There was little disruption for city cable subscribers when Buffalo's system was sold to Adelphia in 1998 by then-owner TCI, Fontana said. In that deal, local management remained in place, something that can't be counted on under the sale of Adelphia, he said.

Cable companies are consolidating to build their scale and help them extend the "triple-play" of TV, Internet and telephone service, Arlen said.

Adelphia markets AT&T's voice service over its high-speed Internet platform but lacks its own telephone offering in the region.

e-mail: fwilliams@buffnews.com and mglynn@buffnews.com