Provo, Utah, city officials last week mulled their options for maintaining competition in a local cable-television market dominated by AT&T Broadband.
The city spent $2.3 million to acquire Provo Cable, a 2,600-subscriber local operator. Now it must decide whether to convert that asset into a municipally owned system or bring in an outside company to run the business.
Not surprisingly, AT&T opposes competing against an entity controlled by the same local government that regulates Provo's cable service. The MSO is supported by some of the state's largest newspapers and a business group called Utah Citizens Against Higher Taxes and Bigger Government.
Although Provo's City Council has asked its staff to recommend which path to follow, it's widely assumed that officials want to build a $40 million municipal network to offer cable, telephone and high-speed Internet access to more than 30,000 area households.
Provo telecommunications manager Paul Ventuerella said the city bought Provo Cable to maintain competition. The operator offers video service for $22.35 a month, compared with AT&T's average of $35 a month.
But Provo Cable was preparing to close its doors, leaving AT&T alone.
City officials have held preliminary talks with WideOpenWest LLC, a Denver-based telecommunications start-up that could take on day-to-day operations at the system.
Meanwhile, AT&T spokeswoman Barb Shelley said the MSO is concerned about "competing against our own regulators."
"We're not afraid to go head-to-head with any commercial or private entity," Shelley said. "But we don't think its fair to compete against a city that also regulates us."
Shelley also questioned whether a second network was necessary. She noted that Provo Cable opted to leave town rather than compete against an upgraded AT&T network that already offers digital cable, cable-modem service and local phone service.
"We've upgraded 300 miles of plant, and are competing very effectively in Provo," she said. "So effectively, Provo Cable put itself up for sale."
Ventuerella argued that AT&T's high-speed Internet offering is not fast enough for the community's needs. It averages 128 kilobits upstream and between 1.5 and 2 megabits downstream.
"It's not the kind of network that we were looking for," he said. "We were looking for something that would be much faster."
That notion hasn't gathered much support in the local press. The Provo Daily Herald
urged the city to "hang up on the idea of getting into the telecommunications business," rather than becoming a "Johnny-come-lately" to the industry, compared with AT&T's decades of experience.
The Salt Lake City Tribune
noted "telecommunications is a fast lane that government bureaucrats aren't equipped to travel, even if their participation didn't violate the spirit of private enterprise."