AT&T Broadband has informed officials in 12 suburban Chicago towns that upgrades planned for their cable systems may be pushed back as many as five years.
At a recent meeting with local Chicagoland-area officials representing some 500,000 area residents, AT&T "dropped a bomb" by admitting it would not be ready to introduce cable-modem service next year, as it had originally promised, one observer said.
Systems in 11 of the 12 towns represented at the meeting were once owned by Jones Intercable. The systems were acquired by Tele-Communications Inc., which later sold out to AT&T Corp.
"They told us that these networks were the most capital intensive, because they were the oldest," said Naperville, Ill., spokesman Gary Karafiat.
Karafiat said he was puzzled as to why AT&T would defer an upgrade in fast-growing Naperville, where overbuilder Ameritech New Media has siphoned off 50 percent of the cable market since 1996.
There's a danger that there won't be much of a market left for AT&T to pursue by the time the upgrade is finished, he added, as Sprint Corp. has already started to sign up customers for wireless broadband services.
"You would think that would be an incentive for AT&T to upgrade," he said.
When it acquired TCI in 1999, AT&T said it hoped to begin rolling out high-speed Internet access in the Chicago suburbs by 2001.
"Originally, they said they expected to complete the upgrades in two years, said Wheaton, Ill., media manager Gary White. "And that was two years ago."
The upgrade of Wheaton's 13,000-subscriber system is officially on hold.
And when questioned by local officials at the meeting, the company said it didn't have a specific plan for bringing modem service to the Chicago suburbs. It blamed financial constraints brought on by the nervous capital markets, and recent changes in its local organizational structure.
The news will affect more than just those 12 communities. According to AT&T spokeswoman Pat Andrews-Keenan, all of the MSO's upgrade plans in the area are now on the same five-year schedule.
AT&T Broadband, which is working to complete the upgrades TCI began in 1996, now must take on an even bigger task — absorbing the Chicagoland systems it purchased along with the former MediaOne Group Inc.
It was not immediately clear how many of AT&T's systems in the Chicago suburbs have been upgraded. Those systems will be important as AT&T focuses its efforts on marketing of new services.
Andrews-Keenan said the MSO would try and avoid problems with local officials by informing each city about its plans.
AT&T may run into franchise-renewal trouble in five suburban towns, Karafiat said. Those communities would want specific rebuild language written into a new deal, he said.
"They'll likely insist on that language," he said. "And I think AT&T is going to resist."