RCN Venture Declines a Md. Buildout

Author:
Updated:
Original:

Starpower won't build out its 240,000-home cable franchise in Prince George's County, Md., because of a fee flap with the county's chief executive, company officials said.

In a June 26 letter, an attorney for the overbuilder — a joint venture of RCN Corp. and Pepco Communications LLC — said it wouldn't finish construction because it opposes a $400,000 pre-payment of public, educational and governmental channel (PEG) fees sought by County Executive Wayne Curry. Though the County Council approved the franchise 8-0 in November, it still awaits Curry's signature.

Since the council's vote, Starpower and staffers for Curry have negotiated the finer points of the franchise, officials said. Both sides came to terms on placing a third customer-service office in the county, said Prince George's deputy chief administrative officer Barbara Holtz.

As part of the give and take, the county also asked Starpower to consider a $400,000 payment in lieu of building a number of institutional-network sites, she said. Starpower would pay $200,000 in the first year of the buildout and $50,000 over the four years of construction.

"I expected a counteroffer," said Holtz. Instead, the company confirmed to reporters that it would not move forward with its buildout.

"If the point is a dealbreaker, we certainly expected to know before the news media," she added. Correspondence from both sides was only recently released to the media.

In the letter, Starpower attorney Deborah Royster called the prepayment proposal unfair, unreasonable and anti-competitive, because it was never demanded of cable incumbent Comcast Corp.

Prepayment "in advance of receiving revenues to support them would significantly hamper [Starpower's] ability to enter the market and to compete with its entrenched competitor," the letter stated.

The letter also makes reference to "deteriorating market conditions" since Starpower began negotiating the franchise three years ago. That's the real factor behind Starpower's decision, according to Holtz, who sees the announcement as a delaying tactic.

Holtz's last letter to the company indicated that Prince George's County would examine its legal options. The county official noted that Starpower does not have a final, signed agreement, so no "clock is ticking" on a construction timetable.

Prince George's County is part of a larger Starpower cluster that also includes franchises for the District of Columbia; Montgomery County, Va; Gaithersburg, Md.; Falls Church, Va.; and Arlington, Va.

Starpower has already launched in Washington and Montgomery County, where it offers a 90-channel expanded basic package for about $35 per month.

Related