Fiber to the mansion? Scottsdale gets prickly over U S West's FTTC plans

As far as U S West is concerned, its decision to build a fiber-to-the-curb, switched digital video network in a planned community in Scottsdale, Ariz., represents an opportunity for the telco to test the architecture's economic and technical viability.

Pointing to the development's high-priced homes, the cable industry calls it cream-skimming.

U S West has applied to the Scottsdale city council for a license to deliver voice, video and data to the development, scheduled to begin construction this month, that will include about 7200 homes and several businesses. The telco will use the NLevel3 SDS Access System platform from General Instrument 's NextLevel Broadband Networks Group to deliver telephony, 150 channels of video and high-speed Internet access.

The Scottsdale system represents U S West's first foray into switched digital networks since the telco withdrew applications to build SDV networks in five cities in mid-1995. U S West has been delivering video services over a hybrid fiber/coax network in Omaha since September 1995.

"The situation in Omaha is an overbuild of the existing telephone network," said a U S West spokesman. "This is an opportunity to build an infrastructure from the ground up, and from there we can determine whether it's cost-effective on an overbuild basis.

The size of the Scottsdale development makes it ideal for such a test, he added. "To invest the kind of money we're talking about, it needs to be an extremely large development," he said.

But the region's cable operators don't buy it, particularly given that the price tags on the new homes range from $150,000 to $500,000, compared with an average cost of $100,000 elsewhere in Scottsdale.

"Historically, cable operators have been discouraged from cream-skimming, which is clearly one way to describe what U S West is talking about doing," said Ivan Johnson, vice president of community relations for Cox's Phoenix-area systems. "They want to come in and serve only the attractive part of the city.

Both Cox and the Arizona Cable Telecommunications Association want to make sure that U S West will be subject to the same requirements imposed on Cox.

"Our concern is that if U S West is going to be a cable operator, it needs to meet the same requirements, both financial and channel-wise, as the current cable licensee is required to produce in Scottsdale," said Susan Bitter Smith, executive director of the ACTA. "Cox is required to dedicate a certain amount of capacity to access channels and has made a heavy investment to make those channels operational. It would be unfair for U S West to waltz in now and not participate in the same kind of requirements.

But ensuring parity is difficult when the incumbent operator has already made significant investments in the community. Most recently, the city of Elgin, Ill., opted to hold off on a franchise for Ameritech New Media, citing concerns that Ameritech's franchise proposal is not on par with incumbent Jones Intercable's investment.

"We have certain obligations to the city, such as dedicated channels, license fees and other financial obligations, all of which divert resources from our customers to the city," Johnson said.

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