Bay Area Draws Cable Overbuilders Attention4/04/1999 8:00 PM Eastern
Minnesota's largest electric and natural-gas utilityplans to overbuild AT&T Broadband & Internet Services in two San Francisco-areacommunities.Through its Seren Innovations Inc. subsidiary, Northern States Power Co. hasapplied for cable franchises in Walnut Creek and Concord, Calif. -- two East Baycommunities with a combined 45,000 subscribers formerly served by Tele-Communications Inc.
If approved, Seren hopes to begin delivering a bundledpackage of cable television, high-speed Internet access and local and long-distancetelephone services over an 860-megahertz hybrid fiber-coaxial system sometime later thisyear.
The Bay area is one of the densely populated, affluentregions that have been able to attract wired competitors to incumbent cable operators.
Last week, Princeton, N.J.-based RCN Corp., a competitivelocal-exchange carrier that serves the East Coast, said the city of San Francisco gave itthe go-ahead to start building a fiber network to serve city residents with telephone,cable and Internet access. RCN would still need to obtain operating permission later.
RCN already has municipal invitations from South SanFrancisco and San Mateo, Calif., and it is negotiating with other municipalities in atarget area running to San Jose in Silicon Valley. In South San Francisco, RCN is buildingunder an open-video-system agreement.AT&T Broadband officials said they were aware ofSeren's plans for the East Bay area, and they plan to have their systems in WalnutCreek and Concord upgraded in time to meet the competition.
"I don't think that there will be any lag timebetween the time when they construct their networks and when we get our rebuildsdone," AT&T Broadband spokesman Andrew Johnson said.
Walnut Creek and Concord -- with 21,000 and 24,000 AT&TBroadband subscribers, respectively -- are potentially the fifth and sixth venues whereSeren will compete against former TCI systems. It's already offering service underthe "Astound" brand name to AT&T Broadband customers in St. Cloud, Minn.,and the surrounding suburbs of Waite Park, Sartell and Sauk Rapids.
But how quickly it will be able to get into the Bay-areamarket remains a question. Under California law, an Environmental Impact Report must becompleted and distributed among state agencies before the company is allowed to proceed.
"[But] as soon as the franchises are approved,we'll begin building our networks," said an NSPC official, who asked not to beidentified.
Lori Tinfow, cable administrator for Walnut Creek -- acommunity of 65,000 residents east of San Francisco -- said the two cities are working to"streamline" the EIR process.
"But I don't know how speedy the process is goingto be," she said. "Seren indicated that they wanted to be in the market by June,but I think they may be realizing that this could be overly ambitious."
When it does begin offering service, Seren will find alucrative market for broadband offerings in both towns -- affluent bedroom communitieswith well-educated populations and computer-penetration rates above 70 percent.
"It's going to be a great place for high-speedInternet access, because it does not have broadband services right now," the Serenofficial said.
Tinfow said AT&T Broadband has been slow to recognizewhat it has in Walnut Creek, and it would previously only commit itself to upgrading thelocal network over the next four years.
"That seems like a long time to me," she said."Here's a brand-new company that sees what we are. TCI has not seen that."
As a result, city officials hope that the introduction ofcompetition will help to hold the line on local cable rates. AT&T Broadband hasalready announced that the cost of basic service in Walnut Creek will increase by 8.4percent June 1, from $10.93 per month to $11.85, while expanded basic will go from $17.80to $18.30.
"Hopefully, Seren's arrival will help with therate issue," Tinfow said.
TCI has also been struggling with its local customerservice, Tinfow said, resulting in increasing interest among consumers in Seren'spending arrival.
"Clamoring would not be too strong a word," shesaid. "People are calling up and saying, 'Please, please, give me thatcompany's phone number.'"
Johnson said AT&T Broadband has responded by bringingits local telephone-response time in line with the National Cable TelevisionAssociation's "On-Time Guarantee" program, which requires that 90 percentof all calls be answered within 30 seconds.
It's also gone to six- and seven-day-per-weekinstallations in some area communities, along with expanded summer hours, he added.
"Always mindful of the AT&T brand name, we'regoing to do whatever is necessary to improve customer service," he said."We'll fight neighborhood-by-neighborhood, house-by-house, to protect oursubscriber base."
Over in Concord, a town of 104,000 residents, cityspokesman Peter Dragovich said Seren hopes to begin offering its service by October.
Meanwhile, the company has indicated that it plans to seekfranchises in other area communities, including nearby Danville."There are still anumber of things to be worked out," Dragovich said, "but we're excitedabout what this could bring to our residents and businesses."