The MSO Goliath is looming larger over the independent operator David in Rhode Island.
The giant, Cox Communications Inc., just obtained a construction certificate that will allow it to overbuild incumbent Full Channel Cable TV in the towns of Barrington, Bristol and Warren. If it completes that work, Cox will have access to nearly 100 percent of the state's homes.
And Cox has upgraded 96 percent of its network, so the new customers should be offered telephone, digital TV and high-speed Internet access.
But not until the David in this scenario, John Donofrio, has exhausted all of his remedies. FCTV president Donofrio has already appealed a prior pro-Cox ruling from the state Division of Public Utilities and Carriers in state court. That action is still pending.
And he said he'll also appeal the construction certification in court.
Full Channel serves 11,500 customers to Cox's 298,000 in Rhode Island. And it stands to lose customers in Barrington, Bristol and Warren should the MSO proceed with its plans to wire those communities.
Donofrio calls Cox's overbuild plans retaliation for his refusal to sell his system to Cox for a subpar price.
"Their plans make no economic sense," he said.
According to state documents, Cox plans to spend $19 million on the FCTV overbuild. If the operator captures 20 percent of the market — the level at which analysts contend overbuilders must hit to be financially viable — it will have spent $6,350 to capture 3,000 homes, Donofrio said.
And "Cox is not following the rules" of the permitting process, Donofrio said. He claimed the DUPC's actions are "arbitrary and capricious" and ignore both state law and public policy.
For instance, Rhode Island state franchising law mandates that cable operators must conduct their businesses under equivalent terms. But Cox — which bought out the rest of the state's systems — operates only one government channel and no public or educational access channels. It also charges the state college to transmit its telecourses.
Operators must also submit supporting information to other agencies in the state, such as its public works department. But the DPUC awarded the construction certificate in the absence of a final pole-attachment agreement between Cox and regional Bell operating company Verizon Communications.
The DPUC order said Cox was "on the verge" of the needed agreement, and added that FCTV's arguments were unpersuasive.
Donofrio is also galled that the New England Cable Television Association, of which he was a founding member, files petitions before the DPUC on competitive issues of interest to member Cox. Donofrio dropped his membership in the lobbying organization when the dues became too high.
"They have no standing here," he said. "Cox should act like a big boy and stand up for itself."
Cox regional vice president of government affairs John Wolfe did not return phone calls by deadline.
As the permitting fight plays out, Donofrio has moved to make his operation more competitive. One-third of his system has been upgraded with fiber-to-the-curb, allowing those consumers two-way high-speed Internet access. The rest of the system has one-way Internet access.
He's also working on a Verizon deal of his own, one which would allow FCTV to resell telephone services to its cable customers, he said.
Rhode Island regulators have acknowledged the changing dynamics in the telecommunications industry by forming an 11-member committee charged with updating regulations. Full Channel Cable TV executive Mike Davis will have a say on that body, but Cox Communications has two seats and the NECTA also has a slot. Regulators, an educator, two public-access producers and a public advocate will occupy the other seats.