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Conn. Utility Plots Comcast Overbuild

7/15/2001 8:00 PM Eastern

A local utility in Groton, Conn., will try to prosper where Southern New England Telecommunications Corp. failed by launching a cable service to compete with the local Comcast Corp. system.

SNET, the state's dominant local phone provider, obtained a statewide cable franchise, but later opted to leave the business. Meanwhile, Groton Utilities had been planning a $6.9-million foray into telecommunications.

In 1999, voters approved a project to deploy fiber throughout the electric and water utility's service area to deliver Internet access and other high-speed data services.

On July 2, the town voted by a four-to-one margin to support expanding the project to include cable-TV delivery. The Groton City Council has unanimously endorsed the project, with the hope that cable profits will translate into revenue that helps to keep local taxes down.

The New England Cable Telecommunications Association opposes the move, arguing the utility knows nothing about running a cable system. Proponents countered that their forefathers knew nothing about running an electric utility, but Groton Utilities has operated for more than 100 years.

A cable build would not be limited to the 11,000 customers in Groton. Connecticut state law requires the utility to overbuild all of Comcast's franchise, which would include 38,000 homes in neighboring Ledyard, North Stonington, Stonington and Voluntown.

Groton Utilities — the state's second-smallest provider — still must gain state Department of Public Utility Control approval. It will also have to come up with an estimated $25 million to $30 million to build the system.

Other communities have also declared their independence from local cable operators. On July 4, Alameda, Calif., launched its municipal cable operation in 5,000 homes. Alameda Power & Telecom hopes to build out the city by year's end.

In 1998, as it began to install $2 million fiber backbone to monitor electric service, officials turned to voters to gauge support for an expansion into the cable business. Vectren Communications Services was then hired to help build and operate the system.

The municipal cable plant cost an estimated $16 million.

Vectren will go head-to-head with AT&T Broadband, which delivers service to 50 percent of the community's 33,000 homes.

About half of Alameda residents apparently resist cable because of the good over-the-air reception it receives from stations in both San Francisco and Oakland.

The competitors offer similar packages and pricing. The utility's basic package is 75 channels for $31.98. AT&T offers 77 channels for $34.13.

Customers pay the same price for high-speed Internet access: $39.95. But if a consumer bundles cable and Internet from Alameda Power, the price drops to $32.50.

September