Despite Some Losses, Overbuilds Persist


Western Integrated Networks still has some company in the shrinking fraternity of "triple-play" cable overbuilders.


Perhaps the most intriguing of the remaining overbuilders is WideOpenWest LLC, a Denver-based outfit that recently went from builder to buyer, thanks to its pending $300 million acquisition of Ameritech New Media, the cable arm of SBC Communications Inc.

WOW officials insist the Ameritech deal does not mean the company intends to renege on 13 metropolitan Denver franchises that cover 800,000 residents. WOW says Ameritech New Media's revenue — approximately $150 million last year — will help fund construction along Colorado's Front Range.

In March, the company launched service in the Denver suburb of Lakewood, Colo., offering video, high-speed Internet access and long-distance telephone service from a state-of-the-art headend situated in a partially refurbished automobile dealership on Denver's west side.

As of late May, it had signed 200 customers from among 800 homes passed. That's a 25 percent penetration rate, fueled by a door-to-door sales campaign that closes the deal 90 percent of the time, if the salesperson can get off the "front steps" and into the home, said WOW president Mark Haverkate.

What they're selling is 3 megabits of Internet access packaged with 1,000 minutes of long-distance service for $74 a month, or Internet service, 75 channels of broadcast and cable networks, 45 digital channels and 1,000 minutes of long-distance service for $124.95 per month.


Another newcomer with a leg up on the competition is Seren, a subsidiary of Northern States Power Co., Minnesota's largest investor-owned utility.

The company is almost done with a broadband network that will pass 30,000 households in St. Cloud, Minn., and surrounding communities. Seren also wants to expand into 13 adjacent towns.

In the San Francisco Bay area, it continues to build networks in the affluent communities of Concord and Walnut Creek. But it's only been able to offer service in Concord — Walnut Creek has become a victim of California's energy crisis.

Utility PG&E Corp. has not been able to provide electricity for the nodes that will serve Walnut Creek, said Seren spokeswoman Janey Palmer.

"We're not a priority for them," Palmer said.

Nevertheless, Seren is pushing ahead with bids to obtain franchises in the nearby communities of Antioch, Pittsburg and Martinez.


Texas-based Grande Communications is building a competitive fiber network that will reach from Austin to San Antonio. Eighty-five percent of its backbone is for rent to other companies, such as Qwest Communications International Inc., and even other cable operators, notes Grande president Bill Morrow.

Grande has launched services in San Marcos, San Antonio and Austin. It's also involved in a Houston strategic partnership with Reliant Energy that should result in the rollout of bundled services next year.

Grande projects that 15 of every 100 homes it passes will subscribe to at least one product, seven of those homes will take two products and another four will take all three.


Another overbuilder experimenting with the next wave in services is St. Louis-based Millennium, which has completed a streaming-media trial across its three clusters, using technology from Motorola Broadband Sector and Liberty Media Group.

The company reports that customers throughout the country viewed 100 hours of streamed content. MDM operates in three major clusters: the Mid-Atlantic, with systems in Maryland; Central, serving Michigan; and Northwest, based in Washington. The latter group's Bellevue, Wash., operation delivers high-speed data to 1,000 customers.


Georgia-based Knology and subsidiary Knology Broadband Inc. are also touting success in markets that include Augusta, Ga.; Charleston, S.C.; Columbus, Ga.; Huntsville, Ala.; Knoxville, Tenn.; Montgomery, Ala.; Panama City, Fla.; and West Point, Ga.

The company reported 192,714 connections and 388,710 "marketable passings" at the end of the first quarter. More than 13,600 on-net connections were made in the same period, the largest quarterly gain to date, according to Knology executives.

The telephone and high-speed data customer levels grew 106 percent and 152 percent, respectively, compared to last year's first quarter.

In January of this year, the company completed $93.5 million private placement to existing investors, and $13 million more in March and April.


In Indiana, Utilicom Networks — which does business in Evansville as SIGECOM — reported that its system had connected 25,000 telephone lines by earlier this month. Cable connections total one-third of all passings, added Dan Hanssel, vice president of marketing and sales.

Utilicom is in the preliminary construction stages in Indianapolis and Dayton, he added. Service to commercial and residential locations is anticipated in 2002. Private placements to fund those two bills will close soon, Hanssel said.

Utilicom is still able to attract investment capital "because we're past the PowerPoint [computer presentation] stage: We're actually delivering service. We've been successful at market penetration."


In Los Angeles, Altrio, a startup headed by three former executives of Intermedia Partners, is pushing ahead with plans to offer a full range of telecom service to 427,000 Southern California homes.

The company believes its initial $125 million in financing will be enough to build its first five markets. It has commitments for additional $125 million in funding.

Unlike some overbuilders, Altrio executives are shying away from trying to build a national presence, preferring to target the one market they know best.