The nation's largest city-owned utility has signed the
first anchor tenant for a $100 million telecommunications network that will compete
against Time Warner Cable.
Memphis (Tenn.) Light, Gas & Water has signed a
three-year, $30 million agreement with Spark Interactive Corp., an Indiana-based content
provider that plans to offer cable, Internet-access, music and gaming services to Shelby
County residents and businesses.
The means for delivering those services will be Memphis
Networx, a 50-50 joint venture between MLGW and A&L Networks, a Kansas-based outfit
specializing in underground network facilities.
Pending approval from the Tennessee Regulatory Authority,
the partnership hopes to begin construction on the system by May, with completion three
years out.
Unlike most utility-operated telecommunications networks,
Memphis Networx will be "strictly a wholesale play," offering bandwidth to all
comers.
"Anybody who has a service to offer in Memphis, this
is their vehicle," network spokesman Ed Horrell said. "They decision was made
that [MLGW] knows the mind-set of being a utility. We've seen others try to act like a
telephone company. And they suffer somewhat when they go out there with shoe leather and
try to compete with the CLEC [competitive local-exchange carrier]. It makes more sense for
us to be a landlord. We're going to build a mall, then go looking for tenants."
The first tenant will be Spark, which has been offering its
service in Venezuela, Chile and the Dominican Republic for the past two years. Memphis,
however, will be its domestic operation, after trials in New York and Nevada.
The plan is to use the space it leases on Memphis Networx
to deliver a bundled package of video, Internet and video-on-demand services to 1 million
area residents and the hospitality industry.
"Our job will be to create an entertainment and
information portal for our customers," Spark president Bill Dever said.
As far as cable is concerned, Dever said, the company will
market a 90-channel programming package for $44.50 per month that will feature such
typical premium fare as Home Box Office and Showtime. VOD will be offered on a subscriber-
and advertising-supported basis. Unlimited ISDN-supported (integrated services digital
network) Internet access will go for $19.95 per month.
Time Warner officials did not return calls for comment.
Officials with the Tennessee Cable Association said they might raise questions with
Tennessee regulators, "Like how can they be signing a contract when they still
haven't received approval yet?" TCA executive director Stacey Burks said.
