News

L.A. OK for WIN

7/24/2001 7:19 AM Eastern

Despite vociferous opposition by city councilman Nate Holden, the Los Angeles
City Council approved the first citywide cable franchise, to be built by Western
Integrated Networks LLC.

When the system is completed, it will pass 1.3 million cable homes. The
overbuilder was awarded a 15-year franchise.

Holden was hotly critical of the pact, which he predicted will never be
completed. The franchise has value and is more likely to be sold, probably to an
incumbent, rather than built out, he said. That will raise cable prices, he
added.

He suggested that the franchise agreement be amended to prevent the sale of a
WIN system unless the plant is constructed and operational. He received no
support for the amendment. Council members noted that incumbent franchisees have
flipped ownership repeatedly, adding that it would be unfair to hold WIN to a
different standard.

The franchise arrived on the council desk with no recommendation by the
city's accountants, who questioned the validity of WIN's business model. The
company will start the build with $200 million and fund ongoing
construction.

Incumbent operators -- including AT&T Broadband, Adelphia Communications
Corp. and Time Warner Cable -- alleged that the competitor won't be able to woo
enough customers, especially in its first phase, to bankroll its business
plans.

The vote occurred without a full council present. The franchise was approved
on a 5-2 vote. New Mayor James Hahn, who was formerly the city attorney, still
must approve it.

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