Metro advisory panel OKs pact, smoothing path for telco’s video services
Copyright 2006 Denver Publishing Company
Rocky Mountain News (Denver, CO)
May 19, 2006 Friday
By Joyzelle Davis, Rocky Mountain News
From Lexis Nexis
There may soon be a new cable operator in town.
A metro-area advisory group on Thursday unanimously approved Qwest Communications’ model franchise agreement to provide pay TV to local cities, paving the way for the telco to compete with Comcast for area cable customers.
Increased competition could result in lower prices for Denver cable subscribers and a broader choice of programming packages.
The 61-page pact doesn’t mandate that Denver-based Qwest offer video services to every neighborhood in a community, known as a “build-out provision,” as incumbent Comcast is required to do. Instead, the Greater Metro Telecommunications Consortium recommends cities that want such a build-out provision take a pass on talking to Qwest.
The model franchise agreement isn’t binding with each of the 33 consortium-member cities, but it eliminates the vast majority of issues that pop up during a franchise negotiation.
“Now we reach out to each of these communities and start filling in the blanks,” said Chuck Ward, Qwest Colorado president.
Comcast, which has about 700,000 cable subscribers in Colorado, argued that the franchise agreement gives Qwest an unfair advantage because it won’t have to bear the cost of upgrading its network throughout a community.
John Aragon, Comcast’s senior director of government affairs, also urged the panel to consider the “public policy implications” of such a pact, saying that Qwest might “cherry pick” the most affluent neighborhoods. That could mean that only the well-off would benefit from lower prices that might come from increased competition.
“It’s a very perverse result,” Aragon said after the vote.
The Rev. Patrick Demmer of Graham Memorial Community Church in Park Hill echoed some of those sentiments to the consortium, saying that equal access to technology is a civil rights issue.
“It would bother me if this service were offered in Cherry Hills but not in Park Hill,” Demmer said. “I do not want to see people of color left further behind in the digital divide.”
Qwest’s Ward countered that the franchise agreement as well as state and federal law bar discrimination based on income.
“We will offer service to anyone,” he said. “We want customers.”
Qwest currently offers video service in parts of Highlands Ranch and Lone Tree and has a number of other franchise agreements in its 14-state local phone region, including Phoenix and Salt Lake City. Most of those franchises were drafted years ago by U S West, which Qwest purchased in mid-2000.
The latest push into the Denver area comes after Comcast launched phone service, luring Qwest customers with bundles of digital voice, video and Internet in most of the company’s largest markets.
Qwest hasn’t announced a timetable, pricing or details of program packages. Qwest’s Ward wouldn’t say which cities the company plans to approach first, although he made clear that Qwest will approach only cities that don’t want any kind of build-out requirement.
That means Aurora and Lakewood likely won’t be at the top of Qwest’s list. Aurora’s representative abstained from the vote because the city’s policy is to require build-out provisions, and Lakewood’s representative indicated his city would want some kind of build-out, too.
The franchise agreement includes some lucrative benefits for cities, like a six-year term instead of the standard 15 years. It also includes a broader definition of gross revenues that will result in higher franchise fees paid to cities, video-on-demand playback of government access channels and an additional public access channel dedicated to regional government.
The consortium’s vote comes as Congress is drafting national cable franchise legislation that would eliminate the need for Bells such as Qwest to negotiate municipal agreements.
If such a bill is passed, “then all of this goes away,” said Ken Fellman, a lawyer for the consortium. “This all becomes a bad dream.”
Qwest’s video offerings
* Satellite television as part of a package with DirecTV.
* U S West, which Qwest purchased in 2000, in the late 1990s began offering video over DSL lines in Phoenix and surrounding areas, Omaha and Highlands Ranch.
* Fiber to transmit digital television in new housing developments in Lone Tree and suburban Salt Lake City.