WOW's Latest Franchise Deal Raises Questions

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WideOpenWest LLC was back in the news last week, albeit on a slightly smaller scale.

After inking its deal to acquire 310,000 Ameritech New Media cable customers from SBC Communications Inc. in three states in May, WOW was issued a franchise for Hillsdale, Mo. — a St. Louis suburb in search of a broadband competitor for incumbent Charter Communications Inc.

The move raised questions about WOW's plans for communities where it has either signed or pending franchise agreements that predate the Ameritech deal. Paul Martin, a St. Louis attorney who represents Hillsdale, said as many as 40 Gateway City-area communities are in such a position.

"What I told Hillsdale is that WOW's intentions are very much in doubt," Martin said. "An agreement was negotiated, but we have not received any executed copies."

WOW began its push into St. Louis County last year. Its first deal was with 24,000-household St. Peters, Mo., where municipal officials believe the project is still on track.

A St. Peters spokeswoman said the Ameritech deal does not affect WOW's agreement with the city, and officials aren't interested in delaying the project.

WOW president Mark Haverkate declined to discuss whether plans for any of the overbuilder's new franchises would have to be put on hold while the company concentrates on the former Ameritech.

"I don't think it would be appropriate to discuss it until we've talked to the cities and come to some kind of understanding," Haverkate said. "It's a question of timing. We want to meet with these cities, discuss these franchises, tell them about our circumstances and find out what works for them, and what works for us."

Meanwhile, WOW announced that it had filed for franchise transfers in 115 towns served by Ameritech New Media. Over the next few weeks, its senior management team will meet with officials in each community.

Haverkate said meetings have already been scheduled with 80 of 115 towns. He continues to expect the transfers will be approved by the fourth quarter.

"We're very confident of our qualifications to own and operate these systems," said Haverkate, a former RCN Corp. executive who helped launch overbuilds in Boston and San Francisco. "Our top priority is to ensure a smooth transition."

Haverkate said WOW has been greeted enthusiastically in each of the ANM communities it has approached, especially those starved for high-speed Internet access.

"They're excited about the competition, and like what they've seen on our [transfer] applications," he said.

Once the franchises are transferred, WOW hopes to begin rolling out high-speed data services in the first quarter of next year. But industry sources believe getting the Ameritech properties transferred by year's end will be a stretch.

One source said legal consultants are already out promoting business by contacting municipal officials and urging them to use the transfer process to renegotiate their current franchises.

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