SureWest Back On Overbuild

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After spending months straightening out the messy records of the bankrupt WINfirst cable operation in Sacramento, Calif., buyer SureWest Communications is back on track with its competitive overbuild of Comcast Corp.'s system.

The 90-year-old telephone provider recently gained approval to expand into suburban Elk Grove, one of Sacramento County's fastest-growing areas. That phase involves 45,000 homes.

But before SureWest can start work on phase three, it must activate 25% of the homes in the previous phase, which covers the central county from north to south.

There are 100,000 homes in the first two phases of the SureWest franchise.

Strict guidelines

Sacramento County has strict buildout guidelines based on ethnic and economic diversity, to ensure the overbuilder does not cherry-pick the most affluent areas while leaving depressed neighborhoods until the end of the construction schedule.

SureWest expanded into cable in July 2002, when it bought the Sacramento system for $12 million from Western Integrated Networks LLC (which does business as WINfirst). According to reports from last October, SureWest served 5,300 cable subscribers, 85% of which took three or more services.

"There were a lot of issues left behind," said SureWest Broadband senior vice president and chief operating officer Fred Arcuri, including architectural drawings that did not match the physical plant, and a "frightening number" of "gigs" — gaffes in plant placement that the county had cited for correction.

SureWest returned to the overbuild in January 2003, and found a very challenging physical environment.

In just one neighborhood, crews were confronted with above-ground plant that required replacement, greenfield construction and trenching work.

200 subs a week

Despite this, SureWest has added 12,000 homes passed since March, Arcuri said. The company is averaging a gross of 200 subscribers a week.

The most popular bundle offered over SureWest's fiber-to-the-home plant includes 260 cable channels, a 10 megabit-per-second Internet connection and local and long-distance telephone service with such popular calling features as voice mail and call waiting.

The package, called "Triple Play," costs $99.95. The most aggressively priced packages undercut those offered by competitors such as Verizon Communications Inc. and Comcast by 20%, Arcuri said.

SureWest is considering expansion into video delivery over its copper twisted-pair plant.

"We're going to leverage our technology wherever we can," he said. The company is in negotiations with Roseville for a cable franchise that would utilize extant telephony plant, according to Arcuri. There is no specific timeframe for that project.

A number of gated communities and apartment complexes want to attract SureWest into their developments. Cities with dark fiber, or those that are considering fiber-optics installation, have also contacted the company, Arcuri said.

County officials are pleased. SureWest is to complete Phase A (Natomas, Carmichael, and Arden) by December 2004, and appears to be a year ahead of schedule, said Rich Esposto, executive director of the Sacramento Metropolitan Cable Television Commission.

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