With its purchase of Century Communications last year, Adelphia Communications Corp. became the largest cable operator in Los Angeles, with nearly 150,000 subscribers in the San Fernando Valley alone.
It also became owner of a company with a history of customer complaints. In 1998, Century agreed to pay a record $12.3 million in refunds and rate reductions to settle charges that it overbilled Los Angeles customers.
But officials with the Coudersport, Pa.-based Adelphia are promising big changes--including improvements in technology and customer service.
"We have to meet the competitive threat," said Michael Rigas, Adelphia's executive vice president of operations. "And also, there is a lot of revenue to be made."
Rigas can be expected to sing Adelphia's praises. But the company also gets high marks from outside observers.
Richard Siderman, managing director with Standard & Poor's, said Adelphia has a better-than-average record for updating its systems and providing customer service.
Most of the company's customer base has been in the East, including Dover Township, N.J.
"In my opinion, they've done an excellent job," said Edmund Corrigan, vice chairman of Dover Township's local cable TV advisory committee. Corrigan said the company made good on a promise to upgrade the system to fiber-optic cable.
Adelphia will be leaving Dover Township because it is swapping that system in a deal with Comcast Corp. "We're disappointed they're leaving," Corrigan said.
In the Los Angeles area, Adelphia officials say they are committed to rebuilding an aging infrastructure--at a cost of at least $100 million, and perhaps up to $250 million. This will enable Adelphia to offer the latest high-tech services, including high-speed cable modems, digital cable and residential telephone service.
Adelphia has 800,000 customers in Southern California, including 106,000 former Tele-Communications Inc. (TCI) customers in the East Valley, and about 40,000 former Century subscribers in Tarzana, Encino, Sherman Oaks, Studio City and Woodland Hills.
By mid-year, Adelphia will swap some territories with Comcast, giving Adelphia another 100,000 subscribers in the Antelope Valley and other areas.
Rebuilding the infrastructure in the Valley has not yet begun. Bill Rosendahl, Adelphia's Los Angeles-based vice president of operations, said the company will replace coaxial cable with an architecture that includes fiber optics during the next 18 months. Such wiring improvements are needed if Adelphia is going to offer high-speed Internet access and telecommunications service over its cable lines.
Competition is another factor. Pacific Bell and GTE are on a major push to sign up subscribers for high-speed Digital Subscriber Line service over copper phone wires--an alternative to cable Internet access. Wireless services also loom as another potentially huge competitor, with the potential to obliterate cable.
Although the upfront costs are high, the rewards could be great.
Los Angeles is "the second-largest media market in the country. Any time you can get a complex that large with such upscale demographics, it's attractive," Rigas said.
Industry experts say such an investment is necessary if Adelphia wants to recoup the $3.6 billion ($3,600 per subscriber) that it shelled out to acquire Century.
"They wouldn't do it [buy Century] without the intention of offering new services," said Paul Janis, acting assistant general manager for the Information Technology Agency in Los Angeles. "They have to upgrade their plants to do that."
Adelphia was a relatively obscure mid-sized cable operator last year when it acquired Century at a fat price, emerging after Microsoft co-founder Paul Allen's Charter Communications left the negotiating table.
The Century deal made Adelphia the fifth-largest multi-system operator in the United States, with nearly 5 million customers under franchises in Florida, New England, New York state, and areas of Virginia and North and South Carolina.
Founder John Rigas, 75, established the company in 1952 with an initial investment of $100. Today, he runs it with the next generation, sons Michael, 46; Timothy, 43; and James, 42. The family owns about 60% of the voting stock.
Although Century and TCI have never been at the forefront of advanced technology in this community, both operators had been taking modest steps in that direction.
In the East Valley, for example, there are currently 17,000 customers receiving digital cable, possible through digital compression technology.
Those customers pay an extra $10 a month for the digital tier (plus $3.85 for special equipment), which adds 92 channels to the former TCI's expanded basic 70-channel service (40 of the digital channels are music.)
Bill Rosendahl said Adelphia intends to start selling residential telephone service by 2001. But before Adelphia tackles this challenge, it's focusing on fundamentals: customer service and its work force.
Under Adelphia, the time that customers have to wait for a service appointment is shrinking from four hours to two. And worker training and pay also is being improved.
Century's service personnel had earned $3 to $6 per hour less than their industry counterparts, according to Adelphia's Rosendahl, who previously worked for Century.
"The Century people were grossly underpaid," he said. "We were losing people to other cable operators."
Under Adelphia, starting pay in the service ranks has been raised to between $10 and $12 an hour.
"It's smart business. You get what you pay for," Rosendahl said.
Rosendahl, a fixture in local cable for years, has achieved a measure of fame here as the host of cable-delivered public affairs programs that attract top politicos. As a result, he's often recognized on the street. Customers call him directly, and he doesn't seem to mind.
"I think the customer should know who's in charge and if they want to get a hold of me, they should get a hold of me," he said.