Cable Competition Waltzes Across Texas

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Competition swept across the Texas cable market last week, with Houston and Fort Worth welcoming new operators and Dallas preparing to grant two new franchises this week.

Officials in Houston green-lighted 15-year franchises for Western Integrated Networks LLC and Grande Communications, a pair of newcomers intent on competing with Time Warner Cable.

Fort Worth, meanwhile, authorized a 15-year deal for WideOpenWest LLC, a Denver-based start-up with designs on AT & T Broadband customers in the Dallas metroplex.

WIN, headed by industry veteran James Vaughn, hopes to cash in on Houston's robust economy by offering cable, Internet and telephone services.

"We fully expect that with the coming of competition, residents of Houston and the surrounding communities will ultimately be better served as a result of the competitive environment our presence and enhanced service offerings will provide," Vaughn said.

Because of the size of the market-80 percent of the 4 million area residents live inside the city limits-the first WIN customer will not come online for about 18 months, vice president Bill Mahon said.

Under its agreement with Fort Worth, WOW will compete for 215,000 households currently served by Charter Communications Inc.

"The city of Fort Worth is interested in providing a competitive cable market so its citizens can shop for the service they want at a price that meets their needs," Mayor Kenneth Barr said.

At Charter's request, the City Council agreed to insert level-playing-field language into the MSO's existing franchise, assuring competitive neutrality between the two companies, assistant city manager Pat Svacina said.

Otherwise, WOW would be subject to the same requirements as Charter, including some of the toughest customer-service standards in the industry, he added.

Hopefully, Svacina said, WOW's plans for providing open access to area Internet-service providers will force Charter's hand. "We think competition will make Charter do the same thing, even though it's not required by their franchise," he added.

Despite its agreement with Fort Worth and the nearby communities of Grand Prairie and Irving, WOW is struggling to lock up a franchise in neighboring Dallas, the crown jewel of the local metroplex.

Dallas officials said they are still actively negotiating with WOW, which expects to take on AT & T Broadband and WIN.

WOW senior vice president and general manager for Texas Julia McGrath said the company is reviewing a proposed franchise in Dallas, and still expects to strike a deal. "We're prepared to move forward," she added.

The Dallas City Council, meanwhile, held a hearing last week to take public comment on a proposed franchise for WIN and a renewal for AT & T Broadband. The council is scheduled to give both deals final consideration this week.

"I don't know of anything that would prevent them from being approved," Dallas manager of regulatory affairs and utility franchising Nick Fehrenbach said.

In an unexpected development, Eric Kaalund-head of the Dallas Comptrollers Office and one of the chief negotiators of WIN's franchise-resigned last week to head up WIN's local operations.

Faced with the appearance of an impropriety, Mahon said he did not approach Kaalund until franchise negotiations were complete. Kaalund was also preparing to accept another position with an entity not related to WIN nor the telecommunications industry, Mahon added.

Elsewhere, WOW recently gained a foothold in the St. Louis suburbs by signing an agreement with St. Peters, Mo., a community 25 miles west of St. Louis. The franchise is for five years, with performance clauses that could extend it to 15 years.

With the St. Peters deal, WOW now has franchise pacts covering more than 840,000 homes in Colorado, Texas, Arizona and Missouri.

O'Fallon, Mo.-based Everest Connections Corp. is also looking St. Peters under a broader plan covering 290,000 residents in St. Charles County, Mo.

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