As many communities examine the economics of municipally owned cable systems, one city in Georgia has decided to sell its operation.
But the Atlanta suburb of Acworth, Ga., isn't selling because business is bad. Rather, officials said they've received so many requests for service from outside the city limits that they've decided to sell the operation to an independent company that may expand beyond Acworth's borders.
Unlike many municipal operators, Acworth CableNet was not built by a municipal electric utility in order to leverage an investment in fiber optics. Here, it was the cable company that brought fiber to town, said general manager Michael Williams.
Acworth jumped into cable in 1999. At the time, the incumbent operator was MediaOne Group Inc.
Acworth is a suburban community populated by high-tech workers who commute to Atlanta. Residents were aggravated that MediaOne had no plans to upgrade its system to roll out cable-modem service, Williams said.
The city issued $6.8 million in tax-exempt municipal bonds and built 100 miles of plant, which now passes 6,200 homes. The system was activated in March 2001 and now has 2,600 video customers and another 500 high-speed-data subscribers.
The system is currently expanding its service within the city limits by signing on to serve multiple dwelling units whenever their exclusive agreements with AT&T Broadband expire, he said.
To expand outside the city — and to add telephony, video-on-demand or interactive services — Acworth must turn the system over to another operator and revise its financing. Acworth officials have signed a letter of intent to sell the system to United Telesystems Inc. of Savannah, Ga.
UTI is very familiar with the system: it consulted Acworth as it vetted the viability of municipal cable. It has also aided with the launch of Knology Broadband Inc. and other overbuilders.
UTI president Allen Davis said his company is finalizing a lease-sale arrangement in which the city will have to convert its outstanding tax-exempt bonds into taxable debt.
Davis has ambitious plans. The headend he is purchasing could serve a large part of Atlanta, he noted.
After the first phase of expansion, Acworth CableNet will pass a total of 8,000 homes, said Davis, who added that he's interested in launching telephony.
The parties expect to complete the deal in August.