A Sleepy City Where Hopes Run High

Cable World, August 11, 2003

Byline: ANTHONY CRUPI

If there seems to be little to distinguish Harrisburg, Pa., from most other medium-sized cable markets, it's probably a function of the area's statistical "averageness." Sifting through Scarborough Research data on the capital city is an exercise in near-perfect equilibrium; line by line, the demos paint a picture of a place that skews hard to the median in nearly every category. The ordinariness is uncanny.

Which brings us to the "B" word. A familiar complaint among younger Harrisburg residents is that the city is boring. (Certainly, the concentration of state government employees working banker's hours translates into a downtown district that rolls the sidewalks up at 5 p.m.) But a group called the Harrisburg Young Professionals is tired of hearing that same old refrain, and is hoping to use technology and social networking to breathe new life into the capital district.

"People are looking for jobs and quality-of-life stuff," said Julie DeSein, an HYP member who has been a leading proponent of the group's "Growing a Younger Pennsylvania" initiative. "If the city continues to invest in infrastructure, especially technology infrastructure, that will attract and retain jobs."

Broadband is of particular importance to the revitalization of Harrisburg's work force, DeSein said. "A wired community is a young community," she said.

According to the 2000 Census, Pennsylvania today ranks as the fourth-oldest state in the union, with a median age of 38. Overall, the state is one of the slowest growers in the country, adding just over 7,000 people between April 2000 and July 2002. An older population coupled with slow population growth can present significant challenges to boosting the state's economic competitiveness, DeSein said.

That's where Comcast comes into the picture. If we were to pull focus a bit, we'd see that the cable business on the whole has already proven itself as a shot in the economic biceps, as it were. The recently released Bortz Media report (Reinvesting in America: An Analysis of the Cable Industry's Impact on the U.S. Economy) found that the cable industry accounted for 1.1 million jobs in 2002, more than twice the 1990 figure. Over the same period, cable accounted for 3% of U.S. job growth. Not a bad little nugget of information to bring to the table when the local mucketymucks are making a fuss about franchise fees.

Drilling down into the HLLY ("Hilly") DMA - that stands for Harrisburg/Lancaster/Lebanon/York, a loose confederation of Pennsylvania townships with a collective population of about 1.6 million people - we can see that Comcast has an unassailable advantage in terms of its potential broadband take. DSL subs don't even show up on Scarborough's radar, such is the state of Verizon's local presence.

Here's why Verizon is a dirty word in Hilly: In 1994, the telco was handed over $2 billion in cash and gifted $1.5 billion in tax incentives to rewire the state with fiber optics for broadband services. Essentially, the company promised it would replace its ancient copper wiring with fiber, which in turn would allow for breakneck data transfer speeds of 45 Mbps in both directions. Verizon also agreed to wire rural and urban areas with fiber-to-the-home.

None of this came to pass. In a report filed in February 2003, Bruce Kushnick, chairman and executive director of New Networks Institute, concludes that Verizon's "bait-and-switch" cost consumers up to $785 per household. In late July, however, state regulators let Verizon off the hook, saying that the language in the original agreement needn't be followed to the letter and that the telco's copper wiring could serve the 45 Mbps demand as well as fiber. (This, of course, is lunacy.)

Pennsylvania Public Utility Commission Commissioner Terrance Fitzpatrick, who had long accused Verizon of backpedaling on the original agreement, was the lone voice of dissent in the 4-1 vote. "I do not believe this decision is equitable," he wrote.

That kind of public opprobrium hasn't hurt Comcast HSD sales, said Michael Doyle, president of Comcast's Eastern division, and de facto overseer of the HLLY DMA. "We've been growing HSD subs at a very high rate in a tight market," Doyle said, citing a 20% Internet penetration rate in the division - roughly 1.5 million subs.

Caffeinated young professionals who telecommute - or those who are just looking to download tons of, ahem, legal MP3 files - take heed: Comcast is not content to sit on its 1.5 Mbps laurels. Doyle confirmed that Harrisburg is "looking to double download speeds to 3 Mbps"; a trial of this sort of souped-up HSD service has already begun in the MSO's Knoxville, Tenn., market.

"We're happy to make a big splash in the Hilly DMA," Doyle said. "You can see that in our rollouts. What we've done is taken a traditionally tired market and made it very robust."

All of which meets HYP's (that's pronounced "hip," not "hype") stated purpose of retaining and attracting business in downtown Harrisburg. According to a recent Nielsen NetRatings survey of area SMBs with 100 employees or less, 71% used some kind of broadband connection, including cable and DSL. That's in line with a national jump in business HSD use of 42% between January 2001 and 2002.