Denver -- Colorado may soon be the most competitive market
in the nation when it comes to cable, Internet-access and telephony services.
With AT&T Broadband & Internet Services already
entrenched in the local market, area regulators confirmed last week that two new service
providers are seeking franchises that would set up showdowns with the nation's
largest MSO.
U S West, the state's dominant local-exchange carrier,
and WideOpenWest LLC, a start-up company led by former RCN Corp. executives, are looking
to compete for 465,000 metro cable customers currently served by AT&T Broadband.
With plans to deliver cable and high-speed Internet access,
both companies have approached the Greater Metro Telecommunications Consortium, a
coalition of municipal regulators for Denver and 25 surrounding communities.
WideOpenWest is also negotiating with the City of Portland,
Ore., where AT&T Broadband is locked in a legal fight over open access. Intriguingly,
it has agreed to allow Internet-service providers in both communities onto its
860-megahertz network.
"They haven't even blinked at that
requirement," Denver Office of Telecommunications director Dean Smits said, adding
that a second network open to unaffiliated ISPs may force AT&T Broadband's hand.
"You go from one provider to three, with one offering
open access, and it changes the dynamics," he said. "I think it will exert some
kind of pressure on AT&T."
WideOpenWest president and CEO Mark Haverkate, a founding
member of RCN, called Denver and Portland "two underserved markets."
"They're both high-density, high Internet
usage," he added. "We'll have plenty of capacity for any number of ISPs.
And we think it's good business to have as many customers on our network as
possible."
Haverkate said the company plans to spend $750 million
building networks in Denver and Portland, using equity financing obtained from
Boston-based ABRY Broadcast Partners L.P. and Oak Hill Capital Partners of Fort Worth,
Texas.
Meanwhile, AT&T Broadband continues its 750-MHz upgrade
of its network throughout the metro Denver area at a cost of $200 million.
"We have polished our customer care, we have launched
digital video, we are deploying high-speed Internet service, and it is well-known to our
competitors that we're working to roll out local telephone service," AT&T
Broadband spokesman Matt Fleury said.
U S West appears headed toward its first deal -- a 15-year
franchise allowing it to serve 123,000 affluent residents of unincorporated Douglas
County, south of Denver. County commissioners last week delayed a final vote on U S
West's franchise at the request of AT&T Broadband, which said it needed more time
to review the deal. The commission will take up the proposal -- which has been endorsed by
official staff -- this week.
"It's pretty exciting for us," county
administrator Doug DeBord said. "There are a lot of people who don't have an
alternative to the incumbent. Now they will."
U S West's franchise also covers an unwired
residential development "a stone's throw" from AT&T Broadband's
corporate headquarters, where low population density had made offering cable uneconomical,
DeBord said.
The regional Bell operating company will run fiber optics
to within 4,000 feet of area homes, then combine its copper telephone wires with the
video-digital-subscriber-line technology it used to introduce cable service in Phoenix.
U S West officials, who were unavailable for comment last
week, are also talking with officials in Aurora, Boulder, Cherry Hills Village, Jefferson
County, Lakewood and Littleton, Colo.
Aurora officials expect to finalize a deal by early as
February, since a second franchise won't deviate much from the agreement the city
signed with AT&T Broadband last year.
"The hard work has already been done," Aurora
spokesman Joe LaRocco said, noting that a franchise with U S West could act as a model for
other local communities. "U S West is very serious. They want to start building
really soon."
WideOpenWest is also talking to officials in Aurora, which
could produce cutthroat competition in a community of 260,000 where AT&T Broadband has
upgraded its local 55,000-subscriber network to 750 MHz and launched Internet services,
along with a limited commercial rollout of local telephone service.
Smits characterized talks with U S West as
"exploratory," but he expects negotiations to begin heating up early next year.
"It could happen any time," he said.
He also expects WideOpenWest to pass muster when the city
reviews the company's financial, technical and legal qualifications. "We've
been impressed with what we've seen and heard. And it's my understanding that
some of the other members of the GMTC have been equally impressed," he added.
Lurking in the wings, meanwhile, is Seren Innovations Inc.
Although the Minneapolis-based overbuilder has only
announced plans to introduce broadband services in four northeastern Colorado communities,
its parent, Northern States Power, is in the midst of acquiring Public Service Co. of
Colorado, making its video subsidiary a potential fourth player in the metro Denver
market.
In the meantime, LaRocco and Smits aren't looking
forward to several years of having multiple service providers in their public
rights-of-way.
"We need to accommodate these companies, while at the
same time lessening the intrusion on our rights-of-way and people's backyards,"
Smits said. Added LaRocco, "It's going to be hell. But in the end, what a deal
for the citizens to have that much choice."
