Texas Electrical Co-op Will Fight Charter

12/13/1998 7:00 PM Eastern

Southlake, Texas, a community of 20,000 residents near Fort
Worth, has granted a cable franchise to a telecommunications start-up outfit with ties to
an area electrical cooperative.

The plan is for Millennium Telecom, which is partially
owned by Tri-County Electrical Cooperative, to offer cable and Internet access in
competition with Marcus Cable, as well as long-distance telephone and home-security

Millennium Telecom is believed to be just the second
electrical co-op to throw its hat into the Texas video business, joining Denton County
Electrical Cooperative.

"But it's not the first [utility] by any
stretch," said Bill Arnold, president of the Texas Cable & Telecommunications
Association. "There are some telephone cooperatives that are also offering

Southlake is Millennium's second dual-franchise city.
The company has a similar agreement in Roanok, and it has a telephone franchise in Fort
Worth, where it is also seeking a cable agreement. Both communities are served by Marcus

Moreover, the company is also looking into obtaining
telecom franchises in 13 additional Texas communities.

Initially, the strategy will be to strike a deal with area
housing developers that would allow it to install its cable and telephone infrastructure
in new subdivisions before the rights-of-way are dedicated.

Once its plant's in place, it will contact consumers
purchasing homes in the new development to determine what level of cable and telephone
service they want the day they move in.

"That way, they don't have to call around and get
all of these things connected," said John Belcher, Millennium sales and marketing

Belcher said competition prevents the company from offering
deep discounts on individual services. However, consumers taking the entire package of
services can get as much as 20 percent shaved off their bill.

Meanwhile, Arnold called the strategy a form of
"cherry-picking," since Millennium will be able to pick and chose the locations
where it will offer its service.

"It would seem to be pretty advantageous, because they
have no plans of going to an established area and building parallel electrical or cable
service," he said.

Kevin Hugman, Southlake's director of community
services, said the city limited Millennium's franchise to just five years because of
its start-up status. At the end of that time city officials will go back and review the
deal, he said.

In the meantime, Southlake has joined a consortium of 20
area communities that are trying to light a fire under Marcus Cable by demanding tougher
customer service standards as a condition of transferring their franchises to Charter
Communications Inc., Marcus' new parent company.

Dave Barford, Charter senior vice president for the Western
division, said many area cities had been frustrated by Marcus's poor performance and
were now receptive to bringing in competition, even if on a "preferential

"We're reviewing the [Millennium] franchise, and
if it reaches a point where we think it's significantly more favorable, then
we'll certainly sit down with them and challenge it where we can," Barford said.
"We want to make sure it's a competitive market going forward."

Meanwhile, Southlake officials have been "fielding a
lot of complaints" over Marcus' poor telephone response time in the past, and
that an upgrade of the system requires subscribers to pay for new set-top boxes, Hugman

Charter has been meeting with area regulators in recent
weeks and promised to take steps to correct any service problems.

Barford said that since taking over control of the Marcus
systems, Charter has improved its telephone response time to a point where 90 percent of
incoming calls are answered within 30 seconds, and cut its service call times from four
days out to same-day service.

Hugman conceded that "Charter seems to be making
strides toward improving its service."

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