The Association of U S West Retirees



Qwest hears cable-TV deal calling
Metro-area model agreement likely to get OK in early 2006
By Jeff Smith
Rocky Mountain News
Thursday, December 8, 2005

Qwest Communications likely will gain approval early next year on a model cable-TV franchise agreement for metro Denver, paving the way for the telco to offer competitively priced video services in additional metro communities later in 2006.  Qwest offers video services in parts of Highlands Ranch and Lone Tree and has a number of other franchise agreements in its 14-state local phone region, including Phoenix, Omaha and Salt Lake City.

The possible stumbling block to the negotiations centers on what build-out requirements Qwest may face.  Qwest has said there should be no provisions, while Comcast argues Qwest should be forced to offer video services to every neighborhood in a community as Comcast is required to do.

Qwest recently won a cable-TV franchise agreement in Salt Lake City where build-out provisions kick in only if the Denver telco gains a 51 percent market share.

"(Build-out) is the big issue," said Ken Fellman, attorney for the Greater Metro Telecommunications Consortium, which represents 32 metro governments and is negotiating the model franchise agreement.

"We're working on it with Qwest and hoping we're going to come to a resolution," Fellman said Wednesday.  "Our committee has a variety of opinions, but I think we've come to a consensus that makes sense."  He declined to elaborate.

"Without talking about substance (of the negotiations), I think we're going to know by early February on whether we're going to have a model agreement or not," Fellman added.

The consortium's board would have to vote on the committee's recommendation.

Steve Davis, Qwest senior vice president of public policy, said in an interview with the Rocky Mountain News editorial board Wednesday that he is optimistic that the model franchise agreement will be successfully completed soon.

While Qwest still would need to negotiate franchise deals with individual cities, that could be little more than a formality in municipalities that endorse the model agreement.

Davis said Denver is at the top of its list and an example of where "we think cable-TV competition is long overdue."  He noted that while cable-TV prices continue to go up, almost every other technology business is seeing price declines.

"It just so happens that there's a cable monopoly, and there may be a relationship," he said.

Comcast has argued that Qwest will "cherry pick," offering video services only to affluent neighborhoods.

"Qwest wants special treatment, a competitive advantage," said Cindy Parsons, Comcast spokeswoman in Colorado.  "Qwest is lobbying for a loophole that will ultimately limit competition because they won't be required to serve every neighborhood."

In contrast, Parsons noted that Comcast has undergone a "universal upgrade" of video, voice and high-speed Internet services.

John McCormick, Qwest's assistant vice president of public policy in Colorado, likened a build-out requirement to Frontier and Southwest Airlines being required to fly the same routes out of Denver International Airport as United Airlines.

Davis noted that Qwest competitors aren't required to offer telephone service throughout a community.  And Internet providers are unregulated.

Where cable-TV providers have been required to offer services in every neighborhood, they soon have found themselves in financial trouble because of the heavy investment required, Davis said.  He said predecessor U S West ran into that problem in offering video services in Phoenix in the mid-1990s and had to renegotiate its franchise agreements.

But Davis said Qwest wants to offer video services as broadly as possible, especially in dense areas such as Denver.

"Look at where we've offered DSL (high-speed Internet)," Davis said.  "You can't show any evidence that we've engaged in red-lining or cherry-picking."

Davis said high-speed Internet services are available in about 80 percent of the households in the metro area and that Qwest's plan would be to upgrade that infrastructure for video services.

Comparing prices

Qwest Digital TV services (Highlands Ranch): $39.99 a month for 155 channels (45 are music) plus some calling features

Comcast Digital TV services: $52.94 a month (73 analog and 76 digital channels),2777,DRMN_23910_4297939,00.html