Overbuild fever arrived in the Kansas City suburbs recently, where a community of 40,000 will bring in a pair of start-ups to challenge Time Warner Cable.
As a first step, the city of Lenexa, Kan., authorized tele-communications franchises that will allow Everest Connections Corp. and Digital Access Inc. to compete with Southwestern Bell for local phone service customers.
The city could approve cable deals for both companies as early as next month. "I think we're close to getting those done," Lenexa assistant city attorney Eric Arner said.
Both newcomers plan video; local and long-distance telephone service; and high-speed Internet access for residential and business customers.
Arner said incoming competitors would find data services lucrative in Lenexa, where the population virtually doubles during the workday.
"There are a lot of opportunities here," he said. "The community is upper-middle-class and college-educated, which hits the mark when a company is putting together a business plan."
Philadelphia-based Digital Access arrives after pocketing franchises in Brentwood, Franklin and Williamson County, Tenn., all Nashville suburbs. It wants similar deals in Milwaukee and 29 surrounding communities, and in Indianapolis and eight area suburbs.
Digital Access CEO Joseph W. Cece objects to the label "overbuilder."
"We think of ourselves as a provider of a bundled package of broadband services," said Cece, who was a former CEO of Suburban Cable before it was sold to Comcast Corp. and a former new-services executive at Cablevision System Corp.
Cece added that with $1.3 billion in financing, plans for 870-megahertz systems serving 75 homes per node and a management team headed by longtime cable executive Stephen J. Rabbit, Digital Access is prepared for newcomers in tier-two cities like Milwaukee, Indianapolis and Kansas City.
"We'll see who can build a network and attract customers," he said. "We know this business, and we have done it before."
Founded three months ago, Everest Connections is talking with most of the suburbs around Kansas City as it prepares to build a $700 million network. It's also negotiating with most of the communities in a seven-county area around Minneapolis/ St. Paul., where it expects
to begin signing agreements within two weeks.
Everest Connections president and chief operating officer Mike Roddy foresees tough sledding ahead in Lenexa. "Our challenge will be getting people in a market with a 2 percent unemployment rate," he said. "And access to capital and materials is always a challenge."
Roddy added that the Lenexa market will not support more than two service providers, making it essential to "start building as fast as we can."