Kentucky Community Considers Municipal Overbuild

Author:
Publish date:

Frankfort, Ky., which launched one of the nation's
first municipal overbuilds of an incumbent cable television operator, apparently wants to
try it again.

This time, it's talking to officials in nearby towns
about offering cable and high-speed data services to four surrounding counties, where it
would compete with the incumbents, Intermedia Capital Partners and FrontierVision.

The Frankfort Electrical and Water Plant Board currently
offers cable television service to some 17,000 of the community's 26,000 residents.
Industry executives have criticized the city for wanting to expand further into the
private sector.

"They're a municipal utility," said Patsy
Judd, executive director of the Kentucky Cable Television Association. "They're
purpose should be to serve their specific area."

Predictably, Frankfort officials are dangling lower cable
rates in front of county officials, pointing out that their subscribers pay $17.20 a month
for 53 channels of programming compared with the $26.32 a month former Tele-Communications
Inc. subscribers in Anderson County are charged for 34 channels.

The utility estimates it could provide the same service in
the community of Versailles for $23.80, or almost $4 a month below FrontierVision's
current rate.

Under a controversial scenario, Frankfort would provide
headend equipment to communities, which would build their own infrastructure to distribute
programming delivered by the utility.

David Sandidge, business manager for the municipal plant
board, conceded the city hasn't heard back from the counties.

"I think they were looking for a quick solution,"
Sandidge said. "We told them we could not overbuild, but this was one way we might
work together."

One local industry executive called the proposal "a
lot of huffing and puffing."

"If they find anybody who will swallow their bait, I
would be amazed," said Reavis Gibb, managing director of FrontierVision's
Southeast Division, which serves 109 communities in Kentucky.

Gibb said Frankfort's proposal hasn't touched on
the cost of providing cable to sparsely populated areas of Woodford, Scott, Anderson and
Shelby counties, where customers can run as low as 13 to a square mile.

"It's important to get a return on
investment," Gibb said. "I don't think they have a drift about the
economics involved."

Apparently, however, some city officials are paying
attention to the bottom line.

Versailles mayor Charlie Reed, whose community is
considering Frankfort's game plan, recently told The Lexington Hearld-Leader
that the proposal was enticing "until you tally up the figures."

A long-time critic of FrontierVision, Reed is apparently
reluctant to jump into an overbuild situation because of estimates that place
Versailles' share of the project at some $2 million.

"It looks like the cities are starting to consider the
financial investment they'd have to make," Gibb said.

Related