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New firm seeking a slice of county's cable TV pie
TOTALink is latest prospective competitor in market, plans to build own fiber optic system.
By Courtenay Edelhart
The Indianapolis Star
Wednesday, April 19, 2000
A partnership that includes an Evansville
utility company has joined the race to offer telephone, high-speed Internet and cable
television services to homes and businesses in Indianapolis. SIGECOM Holdings this week took the first step toward applying for a local cable franchise through its new Indianapolis subsidiary, TOTALink of Indiana. TOTALink is the second company in four
months to say it intends to enter the cable TV business in Marion County, where Comcast Cablevision now is the lone provider.
In December, Digital Access announced that Indianapolis was among four cities where the Philadelphia startup plans to set up shop.And that's not the only competitive threat to
Comcast. On Monday, EchoStar Communications Corp.'s DISH Network began taking advantage of a change in federal law that allows satellite TV providers to carry local
television stations. Hughes Electronics Corp.'s DirecTV is expected to follow soon.
Before the law changed, satellite customers could watch local stations only with a separate antenna.
Digital Access and TOTALink appeared Monday before the city's Cable Franchise
Board to get the ball rolling on their own efforts -- much to the delight of Rick Maultra,
the city's top cable official. "This truly is a historic day for Indianapolis and Marion County," said Maultra, director of the city's Cable Communications Agency, which monitors compliance with cable franchises. Maultra has fielded numerous consumer
complaints about pricing and service offered by Comcast.
Congress intended to spur competition with the passage of the Telecommunications Act of 1996, but the law deregulating telecom industries has only recently begun to bear fruit
locally.
"It's been a very long time coming," said Deborah Ballou, who teaches telecommunications at the University of Notre Dame. Congress had hoped that cable, telephone and Internet companies would get into each other's lines of business sooner. For a time, consumer advocates worried that the law had backfired. Far from crossing over into new areas, many companies simply consolidated within their own industries.
The old boundaries are beginning to fall, though, and Indianapolis is among the beneficiaries. Ameritech and Comcast have begun offering high-speed Internet service
here, and it's just a matter of time before they get more ambitious.
Last year, Philadelphia-based Comcast and AT&T Corp. reached an agreement that will
permit Comcast customers to receive AT&T telecommunications services through their
cable lines. Plus, Web sites transmitting voice data over the Internet are biting into the
long-distance phone market. The big monopolies will have to broaden their scope if they want to keep up with upstarts invading their territory, Ballou said. "If you have a history, in some cases you get stuck in the business model you're used to and don't move fast enough," she said. "If you're starting new, you can view the world in terms of what's happening now.
"At the same time, there's a huge amount of risk involved in creating an infrastructure from scratch." TOTALink and Digital Access both plan to build fiber optic systems of their own, as opposed to the much cheaper option of leasing existing lines.
TOTALink's Evansville sister company spent more than $70 million to build a system
there. The Indianapolis system should be "substantially larger," but the company didn't
say how much it expects to spend. In fact, it probably would take several years to build a
network the size of Comcast's and involve wiring virtually every neighborhood in the city
-- a huge feat of infrastructure. TOTALink is expected to create at least 200
permanent jobs here and hundreds more temporary jobs as it gears up for business.
Corporate sibling SIGECOM LLC has been offering cable service in Evansville for about a year.
SIGECOM Holdings is owned by Evansville-based Vectren Corp. (formed from
the recent merger of utilities Sigcorp and Indiana Energy) and Utilicom Networks LLC, a
Franklin, Mass., telecommunications firm. Their joint venture, SIGECOM LLC,
provides cable television and broadband services. The company competes for Evansville
cable customers with Insight Communications. Having two cable providers has driven down prices, said Joan David, chief of staff for Evansville Mayor Russell Lloyd Jr.
"There's a $3- to $6-a-month difference, depending on which services you have," she
said.
SIGECOM charges $24.99 for a package that includes most cable TV networks but no
premium channels. Comparable packages are $27.12 at Insight and $35.50 at Comcast.
Comcast said it isn't worried. "As long as there's a level playing field, we welcome competition," said area Vice President David Wilson. The company says it's ready for a fight, having completed an $82 million system upgrade two years ago that paved the way not only for high-speed Internet access but also for digital television and music programming.
Comcast is well-positioned with a strong brand name and customer relationships that its rivals have yet to build, said Michael Weaver, a Chicago analyst who follows the company for Duff & Phelps Credit Rating.
TOTALink said the experience of its Evansville sister company is cause for optimism. SIGECOM blasted passed internal projections almost immediately, said Rich
Wadman, the company's president and general manager. It now has about 12,000 cable TV subscribers and another 8,000 and 6,000 customers for telephone and Internet service, respectively. Customers get discounts when they purchase multiple services. Unlike SIGECOM, Digital Access has no track record. The company was formed by a group of Philadelphia venture capitalists and has not begun serving customers. A public hearing on whether to accept new cable franchise applications is scheduled for 5:30 p.m. May 1 in the City-County Building.
If the Cable Franchise Board agrees, TOTALink and Digital Access plan to apply for franchises over the summer. Applications require approval by both the cable board and the City-County Council.
© 2000 Indiana Newspapers Inc. AP materials © 2000 Associated Press. All rights reserved.
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