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Qwest angling for TV market
With a model TV franchise pact in hand for 33 metro communities, the telecom is likely to call on Denver next.  But some say Qwest just wants to cherry-pick customers.
By Beth Potter, Staff Writer
Denver Post
Monday, June 5, 2006

Now that Qwest has a model television franchise agreement with 33 Denver metro-area communities, the city of Denver expects Qwest to come calling.

The model agreement provides the framework by which Qwest could build a pay TV service that could compete with Comcast cable TV service.  However, the Denver phone company would still have to negotiate details with each city and town, including whether it would build its network out to every house and business.

"I would imagine they would want to approach Denver sooner in the process, because we have more potential customers," said Darryn Zuehlke, director of the city's office of telecommunications.

But Qwest isn't talking much about specifics of its TV strategy.

Chuck Ward, Qwest's Colorado president, declined to say where the telecommunications company plans to go first, how much it might pay to build new infrastructure, or when it might get started.

"This (agreement) gives us a chance to compete and presents consumers an alternative to the incumbent cable providers," Ward said.

But Ward did say that Qwest is not willing to build its network to every house and business in any city where it does business.

Qwest already offers video service in Lone Tree's RidgeGate subdivision and in Highlands Ranch, where Douglas County officials are negotiating for $1.75 million in compensation, saying Qwest did not meet a five-year build-out requirement by 2005.

Separately, Qwest re-sells DirecTV satellite TV service.

"We're not making a build-out commitment," Ward said.  "This is a competitive market, and there's going to be a lot of uncertainty."

Qwest hasn't talked to any local communities since the model franchise agreement was passed on May 18 by the Greater Metro Telecommunications Consortium.

Before that, Qwest had approached Denver, Arapahoe County, Aurora, Littleton and Parker, according to officials in those communities.  But none of them have yet talked about specifics of a franchise agreement, officials said.

Philadelphia-based Comcast, which has about 700,000 customers in Colorado, is opposed to Qwest cherry-picking customers if it goes into a community.  Comcast's franchise agreements in the metro area requires it to provide service to all customers.

"You're setting in motion a situation where many people in older and less-affluent neighborhoods wouldn't see the benefits of competition," said John Aragon, Comcast's senior director of government affairs in Colorado.  "We don't think the local franchise process is an impediment at all."

Officials in Aurora agree there should be a "level playing field," said Larry Beer, an Aurora City Council member.

"We're concerned about economic cream-skimming by anyone coming in and asking for permission to use the public right of way," Beer said.

Qwest is currently required to get a franchise agreement with any city in which it wants to operate because of federal cable regulations.  In Congress, several bills are up for debate that might do away with such local agreements in the future.

Qwest hopes to reach agreement on issues related to build-out requirements, spokesman Michael Dunne said.

"Build-out requirements hurt consumers because they stifle competition," he said.

The economic build-out tussle, and whether it might discriminate against low-income customers, is an old issue dating back to Qwest's predecessor US West.

Twelve years ago, US West faced charges from consumer and civil rights groups over a proposed TV service in the Denver metro area.  Those groups said the plan would divide Denver by race and income by not building a network in an area that had minority and lower-income residents.

At that time, US West argued that its plans represented "a good cross section of the city."  US West never followed through on its local TV plans.

When the new model franchise agreement was approved, the Rev. Patrick Demmer told the Greater Metro Telecommunications Consortium he was worried about low-income neighborhoods not having the same access to Qwest's new services as higher-income neighborhoods.

"If you're going to wire the city of Denver, you do all the city of Denver," Demmer said.  "You shouldn't be allowed just to skip over Montbello.  Inevitably, there's going to be some technology that's high-demand, and because people in Cherry Hills can afford it, they'll get it."

Staff writer Kimberly S. Johnson contributed to this story.

Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.


http://www.denverpost.com/business/ci_3899429