CableOne may get a competitor

[cablewithaview]

Fargo residents who want cable TV channels but don’t want to subscribe to CableOne or dish services could have another option within the next couple of years.

Moorhead-based 702 Communications has picked up a cable TV franchise application from the city, said Jim Taylor, the company’s marketing manager.

The application is extensive and will take months to complete, Taylor said.

“We’ll be at least addressing it this year,” he said. “Whether or not we’ll take it to a step where we’ll commit to deployment, we’re a year to 18 months from where that’s going to happen.”

The company has spent more than a year exploring the possibility of providing Internet protocol television, or IPTV, over phone lines that would also carry voice and Internet services, Taylor said.

Doing so would require a cable TV franchise, which would allow the company to use the city’s right of way.

CableOne Inc. is Fargo’s lone cable franchise holder. City commissioners approved a 15-year, nonexclusive franchise agreement with the company in November 2005.

CableOne General Manager Scott Geston said he wishes 702 Communications luck in the application process.

“All we desire, if there’s going to be another video entrant that’s going to have a franchise with the city of Fargo, is that we have a level playing field,” he said.

Fargo officials met last week with a Minneapolis lawyer specializing in telecommunications law to discuss how to handle an application for a cable TV franchise that would use phone lines or digital subscriber lines instead of traditional coaxial cable, City Administrator Pat Zavoral said.

According to Zavoral and Taylor, this much is clear: Obtaining a cable TV franchise would subject 702 Communications to having to pay the city’s franchise fee.

Under city ordinance, franchise holders must pay the city 5 percent of their annual gross revenues for using the city’s right of way. CableOne paid $894,000 in franchise fees to the city last year.

A major point of debate will likely be the amount of time 702 Communications is allowed to extend services to the entire city, Zavoral said, adding that the national standard is about seven years.

“That’s probably the biggest issue of contention at this time,” Taylor said. “Certainly the cable industry has had 25 years to build out their facilities. You’re now going to ask me to build ours out in seven years? That doesn’t really seem fair.”

Geston said CableOne, which was granted its first Fargo franchise in 1979, initially took only 18 months to build out its system citywide.

“With growth and everything like that, they ought to be able to do it in two years or less,” he said of 702 Communications.

In other cities, cable TV competitors have cherry-picked lucrative areas and then slowed or stopped building in other areas, creating an uneven playing field, Geston said.

Fargo “has to decide how it will enforce” the mandatory citywide coverage, he said.

Taylor said 702 Communications has some existing fiber optic cable deployed in Fargo, but delivery of the equipment needed for IPTV service is “very slow at this time.”

Last July, 702 Communications announced plans to build a fiber optic network in Dilworth to provide phone and Internet services. Taylor said that project has been put on hold because of a lack of available equipment, but the company still plans to build the network.

Two of the six independent phone companies that own 702 Communications have experience with IPTV, he said.

Competition from 702 Communications may affect cable TV rates in Fargo, but to what extent is unknown, Taylor said.

“Once there are competitors in the field, certainly the rates become an issue. The video side of the business is very difficult to really understand from the consumer’s standpoint, because the content providers … really have a lock on how much it costs to deliver that signal,” he said.

Geston said CableOne already competes with DirecTV and Dish Network, as well as Internet providers such as i29 Wireless and phone providers such as Qwest.

“I guess one more choice in technology isn’t going to hurt,” he said. “It’s just going to make things a little more competitive, and we feel we have good strong legs under us to withstand competitive threats.”

If 702 Communications applies for a franchise, it will be referred to the City Commission and then likely to the city’s Finance Committee or an ad hoc committee that negotiated the franchise agreement with CableOne, Zavoral said.


http://www.in-forum.com/News/articles/166143