News

Overbuild Deal Costs an AT&T Vendor

2/04/2001 7:00 PM Eastern

A contractor caught in the crossfire between AT&T Broadband and officials in Provo, Utah, is crying foul because the MSO fired his company.

King Comm, a Salt Lake City-based outfit that handled local installations and marketing for AT&T Broadband, was axed after it agreed to manage Provo Cable, a small system recently acquired by the city.

King Comm owner Steve King believes AT&T made an example of his firm in order to intimidate other the contractors the city will need if it proceeds with a proposed $40 million overbuild.

"It certainly appears that way," said King, who said he was unaware of any concerns until AT&T trucks showed up at his warehouse to carry away the MSO's equipment.

AT&T in the past had not objected when King Comm worked for direct-broadcast satellite provider EchoStar Communications Corp.'s Dish Network or Switchpoint, a high-speed Internet service provider that competes with AT&T@Home, he said.

Because of the lost AT&T contract, King was forced to lay off 30 of 45 employees, or two-thirds of his workforce.

Provo telecommunications manager Paul Venturella said he worries that AT&T was using its market power to slow any attempt to introduce competition in the local telecom market.

"I'm concerned when a large company that wields market power-AT&T must control 90 percent of the cable subscribers in the state-uses that power in ways that may stifle competition," he said

Venturella said he asked the Provo city attorney to look into possible anti-competitive behavior by AT&T.

"I think, intentional or not, AT&T has sent a message to all contractors," he said. "That message is, 'Don't work for Provo Cable, or you won't work for us.'"

AT&T officials have offered somewhat varying explanations for firing King Comm. In stories that appeared in the local press, a spokeswoman first said the company basically decided to fire a contractor that opted to work for a competitor.

But in a later quote, she said AT&T wanted to bring more of its work in-house.

AT&T spokeswoman Barb Shelley told Multichannel News
last week the company was concerned because King Comm had access to AT&T technology and marketing information that would be of value to a competitor.

"We decided that it only made good business sense to terminate the contract," she said.

Shelley said the city should not criticize AT&T for firing King Comm, especially because city officials not only regulate AT&T locally, but also have gone into business against it.

"When they criticize us, are they speaking as a regulator, or as a competitor?" she asked. "Are there going to be some punitive actions if we don't use the government-approved contractor? They're trying to be a regulator and competitor and it's a conflict for them."

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