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from: Rocky Mountain News

Changes in city councils could aid Qwest
Arvada, telco set tentative hearing on video franchise
By Jeff Smith, Rocky Mountain News (Contact)
Saturday, December 1, 2007

Qwest Communications is getting a fresh start in municipalities such as Arvada in its efforts to win TV franchises.

In Arvada, the recent elections brought in three new city council members, including Mayor Bob Frie, who defeated Ken Fellman, considered by many to be a Qwest adversary.

Qwest has taken Arvada off a 90-day shot clock to force a decision on its video franchise application, with the two sides tentatively agreeing on a public hearing Feb. 4.

The city's staff and Qwest say negotiations are progressing, and Frie indicates he's open to a possible agreement.

"I'm not sure what Qwest wants, but I'd like to meet with them and see if we could start fresh," Frie said. "It probably would be an advantage to have some competition to Comcast in Arvada."

Other area municipalities also have undergone council makeovers, but it's too early to know whether that will help Qwest win TV franchises. Qwest said it also is in discussions with Littleton and Thornton, but no longer actively in negotiations with Broomfield and Colorado Springs. It terminated discussions with Denver this year. It does offer TV services in Highlands Ranch and RidgeGate in Lone Tree.

It's also unclear how aggressive Qwest will be in pursuing franchises and following up with capital investments and deployments.

New CEO Ed Mueller is still developing a strategic plan. Mueller announced recently that Qwest would spend an additional $300 million to extend fiber into neighborhoods, which could be a precursor to offering TV services.

But he also told analysts the company isn't changing its video strategy of reselling DirecTV satellite-television services.

Qwest also could try to circumvent the franchise process, as AT&T has tried to do, by offering a TV-over-Internet product.

"If I was advising Qwest I think I would adopt that strategy," said Mike Glaser, chairman of the telecommunications practice of the Denver law firm Shughart Thomson & Kilroy. Glaser also said he would push for a statewide video franchise law.

Qwest is trying again to drum up support for such video franchise legislation. A bill last year lacked a Democratic sponsor and was soundly defeated by a legislative panel.

"We've had conversations with legislators and other interested parties," Qwest spokeswoman Jennifer Barton said. "We're currently evaluating where we're going from here."

In Arvada, Qwest said, it made sense to delay a public hearing until early next year, given the new council members. Meanwhile, Barton said Qwest believes it has "made real progress" in its negotiations with city staff.

City Attorney Chris Daly concurred that negotiations "have been moving well and have been straightforward. There have been very good, open discussions."

Arvada Assistant City Manager Clark Johnson said he's "cautiously optimistic" an agreement will be reached.

If so, it would be presented to the council for approval or rejection. City officials wouldn't disclose details.

Fellman wanted Qwest to meet certain conditions, including a build-out provision that would at least require Qwest to provide TV services in different geographic areas of the city.

He said his defeat and the arrival of three new council members "will have some impact but whether it changes the outcome no one knows for sure."

"In part, it will turn on how they feel about the issue, how successful the staff is in negotiating an agreement and whether (the seven council members) feel comfortable with the agreement," Fellman said. "There's definitely three other players involved right now."

Fellman said 17 or 18 states have passed video franchise legislation, and the recent trend is to have some kind of build-out provision.

Fellman will continue to have some clout on the video franchise issue as the attorney for the Greater Metro Telecommunications Consortium, a group of more than 30 municipalities that drafted a model video franchise agreement.

TV services

* Qwest resells DirecTV satellite-TV in its 14-state region.

* Is negotiating for pay-TV franchises in Arvada, Littleton and Thornton. Discussions have been suspended or terminated in a number of other communities including Denver.

* Has a franchise agreement in Douglas County and offers its TV services in Highlands Ranch and at RidgeGate in Lone Tree.

* Is trying to find support for a statewide video franchise law so it doesn't have to negotiate agreements with individual municipalities.