Ky. Towns Take Step Toward Muni Network

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A total of 11 Kentucky communities have received validation
of an earlier feasibility study supporting plans for a municipal telecommunications
network that would link 100,000 area residents.

The Northern Kentucky Telecommunications Authority last
week released follow-up research by Phillips InfoTech indicating that a feasibility report
by Nortel and Tamkin Fiber Corp. contained "acceptable levels of positive net
income."

The report sets the stage for the NKTA to seek funding to
build a $50 million network capable of delivering cable-television, Internet-access and
local and long-distance phone service to 11 communities located less than 10 miles from
Cincinnati.

From cable's vantage point, the proposed network
represents a threat to InterMedia Partners, which serves 71,000 subscribers in the
communities represented by the coalition. InterMedia recently took over the systems from
TKR Cable.

It's also unique because it does not involve any
municipal electrical utilities, as is the case in most towns where local governments have
decided to compete with their incumbent telecommunications-service providers.

Once the financing is in place, construction on the network
could start within six months, with completion expected to take four years.

The Phillips InfoTech research supported the earlier
feasibility study's findings that such a network would provide "high-quality and
reliable services," and that it had met with interest among area households and
businesses.

The Nortel and Tamkin study found that traditional
telecommunications services delivered over the network would produce revenues of $303
million over 10 years, not counting such municipal offerings as energy-management and
home-security systems.

Fort Wright, Ky., city administrator Marc Bergman, who
doubles as the NKTA's chairman, said the coalition decided to pursue the project
after noticing that the latest in enhanced telecommunications services were not
"crossing the river" from Ohio to Kentucky.

"We obviously witnessed what was happening nationwide,
and competition was not being offered in a universal mode," Bergman said.

Bergman said the system would be self-supporting, and that
it would be financed through a bond offering or through lease agreements with companies
that would use the system to offer services in competition with area incumbents like
InterMedia and Cincinnati Bell Telephone Co.

The idea is to bundle the individual services delivered by
companies using the network, thereby offering lower prices on a single monthly bill, he
said.

InterMedia, which serves Boone, Kenton and Campbell
counties, did not return calls for comment last week.

However, the MSO has reportedly launched a $24 million
fiber optic rebuild of its local system that is expected to be completed next year.

Nevertheless, Bergman said the coalition plans to approach
the MSO about offering its cable service over the municipal network, which would also give
the system a ready-made provider of Internet-access service.

"Why rebuild when you could be a prime carrier on our
system?" he asked.

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