Nashville Loses a Potential Overbuilder

6/25/2000 8:00 PM Eastern

The potential competitive landscape in Nashville, Tenn., has diminished by one.

Everest Connections Corp., which had applied to offer bundled services in the city in competition with InterMedia Partners, has stepped away from its application, citing the high costs of pole attachment quoted to the potential competitor by the municipally owned electrical utility.

"Unless the muny reconsiders, we'll withdraw the application," Everest president Michael Roddy said. The company is part of St. Louis-based GLA Networking Technologies.

Everest has earned a cable franchise in Kansas City, Mo.

Roddy said the withdrawal was solely due to the pole rates and conditions Everest was quoted, which Roddy stated were four times the national average. Nashville Electric Service priced its pole attachment at $17 per pole, per year.

Pole rates are escalating due in part to a recent federal court decision. Florida-based power companies successfully argued that telecommunications companies that deliver Internet services are no longer subject to pole-attachment-rate protection in the federal Cable Act.

"If Internet is in there anywhere, the pole-attachment rate is well above anything we can justify," Roddy said of the Nashville situation.

Although a request for reconsideration of the pole-attachment decision has been filed, some power companies are already revising their rates. NES indicated that its rates are based on a cost-recovery analysis predating the court decision.

InterMedia pays $9.50 per pole annually, but its contract expires next year, and power-company representatives indicated that the incumbent's rates will be raised.

The pole-attachment rates have been an issue all along, Roddy said, but the potential competitor had hoped to negotiate a more favorable situation. Dropping Internet connection is not an option: Everest's business model is based on bundled telephony, Internet and video, he added.

Further, the company can't argue that the rate is not market-based because another potential competitor-Knology Holdings Inc. of West Point, Ga.-has reached an agreement with NES. Digital Access Inc. of Bala Cynwyd, Pa., has also applied to the city.

Roddy said it's more attractive for the business to pursue other markets. Everest is "very close" to an agreement to serve communities in the Minneapolis-St. Paul, Minn., region, he said. The telecommunications provider is also in active discussions in other markets he did not identify.

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