CABLE COALITION FORMS TO ESTABLISH LOBBYING CLOUT

Smaller operators aim to keep competition alive

Tired of cable bullies kicking sand in their faces, the industry's 95-pound weaklings are fighting back. Thirteen smaller providers have formed a coalition to offer a collective voice to political powers that can clear obstacles to successful deployments of competitive voice, video and data services over new broadband networks.

Whether the Broadband Service Providers Association can succeed in today's economic and political climate is a question mark that hangs like a sinister sickle over its nascent existence.

“These guys don't have any clout; they have no money,” said Michael Goodman, analyst for The Yankee Group. “In Washington, clout is equated with dollar signs.”

Indeed, at a time when AT&T Broadband is up for sale and a cable mega-merger is in the offing, this little guy could easily get overlooked. In preliminary meetings with the FCC, BSPA members were told, “‘There are folks walking around the halls of this agency telling us that you don't exist, that you are gone, finis, out of business… the entire [competitive] industry is basically drying up and blowing away,’” said Chris Rozycki, vice president of regulatory affairs for founding member Carolina Broadband.

Things are tough and could get worse, but it's too early to print the obituary that the incumbents — particularly large cable operators that are stung each time competition enters one of their markets — are poised to write, Rozycki said.

Several organization members — RCN, WideOpenWest, Knology and Grande Communications — are doing standout business. Collectively, BSPA members have built 29,000 miles of network past 4 million homes with more than 1 million customers. Now the organization wants to ensure it keeps what it has earned and gets the opportunity to earn more, said BSPA Chairman Rodger Johnson, Knology's president and CEO.

BSPA has established a three-pronged agenda to follow when it lobbies federal, state and local officials:

• Get reasonable access to consumer facilities, primarily multidwelling units where cable operators frequently have a service lock and are unwilling to share the key.

• Maintain access to vertically integrated, satellite-delivered cable programming. Cable companies' almost incestuous vertical relationships with programmers led to exclusivity prohibitions that expire in October 2002. BSPA wants to see them continued.

• Seek non-discriminatory access to construction rights-of-way, including access to poles and underground conduits for BSPA members to lay their own networks. Without that access, plant construction is stifled or delayed, and “it precludes us getting into the market on a timely basis,” Johnson said.

On the surface, those demands seem reasonable. But unfriendly and generally uncooperative incumbents are more willing to take a leg off than give a leg up to an outsider.

“You have a very strong cable industry in the U.S. — operators with a lot of clout, a lot of money. On the telephone and high-speed side, you have the RBOCs,” said Keith Kennebeck, an analyst for The Strategis Group. “It's David vs. Goliath here, and they're David.”

Johnson agreed. “I don't know if you'd categorize it as David and Goliath, but we are truly the new breed of providers of competitive services, and we do want to get our voice heard,” he said.

That voice should harmonize with what the FCC has been singing about building a competitive platform for emerging broadband services.

The BSPA talked to FCC officials about the roadblocks to entering the market and asked what the commission could do to remove them, said Richard Rowlenson, vice president, secretary and general counsel of Gemini Networks.

The biggest roadblock might be governmental. The Bush administration has yet to show any signs it is willing to mediate a fight between industries or help the smaller players get equal footing with big players.

“It's survival of the fittest,” Kennebeck said. “I don't think they'll get any preferential support from the administration on the cable side.”

And while the overbuilders are ostensibly cable operators, they're not going to get any help from the NCTA.

“The NCTA is their enemy,” Kennebeck said. “Their number one clients are the multiple system operators — AT&T Broadband, Comcast, Cox” that don't welcome competition. “That's why they need their own organization.”

THE UPSTART COALITION

Altrio Communications — Los Angeles

Carolina Broadband — Charlotte, N.C.

Clearsource — Austin, Texas

Everest Connections — Lenexa, Kan.

Gemini Networks — Falls Church, Va.

Grande Communications — Austin, Texas (see story on opposite page)

Knology — West Point, Ga.

RCN — Princeton, N.J.

Seren Innovations — Minneapolis

Starpower Communications — Washington

Utilicom Networks — Santa Barbara, Calif. (part of UC Wireless)

WideOpenWest — Castle Rock, Colo.

WINFirst — Denver