Colo. SMATV Gets OVS Go-Ahead from FCC

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Denver -- Ignoring opposition from local regulators, the
Federal Communications Commission last week granted a second open-video-system license to
a Colorado-based SMATV operator.

The authorization by the FCC's Cable Services Bureau
means that LyncStar Integrated Communications LLC can offer cable service to
multiple-dwelling units from Denver International Airport south through Aurora, Colo.

"We're very excited, and we look forward to a
good relationship with the city and to doing our best to make it work," said Jim
Honiotes, LyncStar's vice president of operations.

However, in granting LyncStar's request, the CSB
rejected Denver's argument that the Telecommunications Act of 1996 created OVS
licenses only as a means for local-exchange carriers to get into the video market.

It also claimed that the five calendar days that were
granted to the city to respond to the company's application violated the Due Process
Clause in the Fifth and 14th Amendments to the Constitution.

The agency ruled that under the act, "any person"
may obtain an OVS license, as long as the proper paperwork has been filed. As for charges
that LyncStar would only serve apartment complexes, the CSB said Congress excluded
"built-out" requirements to avoid impeding "the rapid development and
operations of open-video systems."

It also ruled that the short turnaround time on OVS
licenses -- the FCC must act within 10 days of receiving an application --- was mandated
by statute.

Dean Smits, director of the Denver Office of
Telecommunications, said the city is weighing its options of whether to appeal the
decision or to await a ruling from the Fifth Circuit Court of Appeals, which is hearing a
challenge to the agency's OVS rules.

Helping LyncStar to obtain its license was a little-known
provision in the statute that permits companies to become OVS operators as long as they
allow nonaffiliated third parties to lease up to two-thirds of their channel capacity.

In this case, the company plans a system capable of
delivering 325 video channels, leaving it with a 110-channel network once the remaining
capacity has been leased, Honiotes said.

Preliminary engineering on the network is expected to begin
within 60 days, he added.

Honiotes said LyncStar's strategy will be to offer as
many channels as incumbent cable operator Tele-Communications Inc. does, but at a lower
price.

"It's going to be a street fight and door-to-door
marketing," he added.

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