Charter, Knology expected to have representation at Opelika public hearing

When the Opelika City Council meets for a public hearing Tuesday, it will be a chance for residents to voice their opinions on the city’s plans to create a city-owned telecommunications company.

It turns out they won’t be the only interested parties.

Longtime cable provider Charter Communications, as well as Knology Inc., which has recently applied for a franchise agreement with the city, are also expected to have representatives at the meeting.

Knology’s decision to seek a franchise agreement “is not dependent on what the city does in regards to building their own broadband smart grid network,” said Royce Ard, general manager for the East Alabama/ West Georgia region of Knology.

Skip James, Charter communications government relations director, said he will be present to “make Opelika’s citizens aware of who’ll be signing the check” for the proposed smart grid system, as well the track record of how other municipalities have fared in the cable business.

“It has been repeatedly demonstrated that when cities or municipal-owned power companies enter the video/data/phone business, it usually ends up costing the taxpayers at least twice as much as the consultant had suggested,” James said. “It also has resulted in many municipalities selling off the networks at significant losses or walking away from further operation of the network.

“After the initial system cost, the city has to stay abreast with the competition and changes in the marketplace by investing more money in costly upgrades. This is a high risk of taxpayer money, since the taxpayers are generally not aware that they have the ultimate responsibility for payment and/or default on the huge bonds to build and upgrade the system.”

Charter is currently negotiating a new cable franchise agreement with the city, James said.

Ard said that in addition to the expense of constructing such a network, one of the greatest challenges for municipalities is bringing those networks to profitability.

Ard said extending Knology’s service to Opelika is a “logical move” for the West Point, Ga.-based telecommunications company. Knology is currently constructing a $20 million fiber optic network in Auburn (a portion of which is actually being built through Opelika), which is slated to bring its first customers online by October.

James said that Charter already has the technology in place for smart grid.

“Our communications system is in front of almost every house and business in the city of Opelika,” James said. “Why would the city want to risk so much taxpayer dollars and go into this much debt when a network already exists that can provide services the customers want at a much lesser cost?”

Charter’s “network” makes use of a hybrid system, which utilizes both fiber optic and coaxial cable to deliver its products, James said.

“This delivery system keeps the cost down for residential customers while supplying direct fiber optic connections to businesses requiring the maximum bandwidth available nationally,” James said. “If a coaxial cable is damaged by traffic accidents or excavation procedures, it can be repaired rather quickly, whereas a damaged fiber optic cable will take hours or days to repair, depending on the scenario.”

Ard said Knology looks forward to being part of a competitive marketplace.

“Our original and current plan has always been to provide services to the residents of Opelika and Auburn,” Ard said. “Charter Communications is a large, well-respected company, but what we’ve experienced in the past is that the incumbent provider will start providing a higher level of customer service and lower prices. We expect they will raise the bar on how they serve existing customers and make it a challenge for us to convince customers to switch to Knology.”

James offered similar sentiments

“While Charter welcomes competition, we prefer to compete on a level playing field,” James said. “What this means is: will the city charge a franchise fee from its customers as the city requires Charter to do, which in turn is paid to the city? Will the city charge itself a pole rental fee the same as Charter is required to pay and will the city pay its own property tax on the system as Charter does?

“Charter has millions of customers nationwide, and that means we get a better deal from programmers for their services. The city will not have this bargaining power, which will result in a higher cost for programming. There will be a huge and expensive learning curve in servicing customers and maintaining the system. The city will find that the highly-skilled employees it will need ... will require a significant investment in on-going training.”