SMATV Requests OVS License in Denver

9/13/1998 8:00 PM Eastern

LyncStar Integrated Communications LLC, a Colorado-based
SMATV operator, has asked the Federal Communications Commission for a second
open-video-system license to compete against Tele-Communications Inc. in the Denver area.

After receiving an OVS license Aug. 7 to serve a portion of
Aurora, Colo., LyncStar filed its latest request Sept. 4, despite word that Denver
officials planned to file comments with the FCC opposing the request.

In its filing, the company is asking for approval to build
a system capable of delivering 325 video channels to multiple-dwelling units in an area
around Denver International Airport.

The FCC has 10 days to act on the request, which means that
LyncStar should have its answer by today (Sept. 14).

The company received its OVS license to serve Aurora after
a snafu caused the city's objections to be filed too late for the FCC to consider

That did not happen in Denver's case, as the city
immediately filed against the company.

Dean Smits, director of the Denver Office of
Telecommunications, said the city opposes LyncStar's filing because it does not
comply with the 1996 Telecommunications Act, which created the OVS process to allow
local-exchange carriers to begin offering multichannel-video services.

"LyncStar is not a telephone company," Smits
said, "and although the city encourages effective competition, and it would support
an application from a true OVS operator, we feel that this application does not qualify
because it fails to satisfy the statute's requirements."

Although FCC rules do not require OVS operators to serve
entire communities, the city objects to LyncStar's plans to limit its operations to
the airport area.

Jim Honiotes, LyncStar's vice president of operations
and a former executive with Jones Intercable Inc., said a little-used section of the 1996
act allows the company to obtain an OVS license as long it allows nonaffiliated third
parties to lease up to two-thirds of its channel capacity.

The company, however, must still comply with the same
must-carry, retransmission-consent, and PEG-access (public, educational and government)
requirements as TCI.

Moreover, even though FCC rules do not require that it
negotiate a franchise with the city -- an obvious sticking point for local officials --
LyncStar would have to pay franchise fees.

In the case of its filing for the sparsely populated
airport area, LyncStar said it expects apartment complexes to begin springing up in the
near future.

"We've been in discussions with developers that
are going to be building some significant units out there," Honiotes said. "We
think that maybe we can get a head start, expand our system and get there before anybody

In this case, "anybody else" is TCI, which has a
stranglehold on the Denver cable market.

"Maybe we are inviting the wrath of [TCI chairman and
CEO] John Malone," Honiotes said. "But I think that we're anonymous to
them. We're just a small SMATV operator trying to provide a little competition
against every major MSO in the country."

SMATV stands for satellite master antenna TV, also known as
private cable.

LyncStar operates 72 separate private-cable systems serving
14,500 customers in MDUs in 12 states, or just under 200 subscribers per location.

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