Starpower Gets 15-Year Md. Franchise

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Montgomery County, Md., one of the wealthiest areas in the
nation, moved last week to introduce competition into its local cable-television market.

After months of wrangling, it awarded a 15-year franchise
to Starpower Communications, a joint venture between Pepco Communications LLC -- a wholly
owned affiliate of Potomac Electric Power Co. -- and Princeton, N.J.-based RCN Corp.

The franchise allows Starpower to compete for some 240,000
affluent cable subscribers currently serviced by Cable TV Montgomery, a unit of Prime
Communications.

Montgomery County cable administrator Jane Lawton said
introducing competition into the cable market was a reaction to cable rates that have
risen more than 40 percent in the past three years, including a 7 percent hike last month.

Combined with franchises in the District of Columbia and
Gaithersburg, Md., Starpower will access about 500,000 households in the Washington, D.C.,
area.

CTM, which originally opposed the franchise, withdrew its
objections after local officials addressed the company's concerns about plans to cut
Starpower a deal with fewer requirements than those imposed on the incumbent.

"I can't say we got 100 percent of what we wanted, but
our concerns were heard," Prime Communications senior vice president Harris Bass
said.

Under the franchise proposed originally, Starpower's
network would have only covered 40 percent of the county, but it would have reached 60
percent of its 900,000 residents. CTM, meanwhile, operates under a franchise requiring a
build-out of the entire county.

Under an amended deal, Starpower's network must reach 62
percent of the 320,000 households passed by CTM within four years and 89 percent within
six years.

"If you're going to introduce competition, you have to
make sure that the playing field is as level as you can make it," Bass said.

However, officials did not address concerns that Pepco's
stake in Starpower may lead it to offer its affiliate more favorable terms when it comes
to access to its electrical poles.

Meanwhile, Starpower general manager Anthony Peduto said
the operator will offer subscribers a 94-channel basic lineup, or 50 percent more than the
incumbent, along with optional premium services, 12 pay-per-view channels and unlimited,
two-way, high-speed Internet services.

CTM, meanwhile, has launched a $65 million upgrade of its
network that will reach 60,000 households by year's end. "We're going to fight for
every customer," Bass said.

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