New CenturyLink cable TV service could ignite price war with Cox

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Posted: Saturday, April 13, 2013 12:00 am

CenturyLink is preparing to launch a new cable television service, Prism TV, throughout Douglas and Sarpy Counties, a move that will expand the geographic reach of its cable services and set up more intense competition with cable provider Cox Communications.

“We hope to have more price competition,” said Omaha deputy city attorney Thomas Mumgaard.

Prism TV has negotiated cable franchise agreements with governments in Douglas and Sarpy Counties that will enable it to launch in the metro. Two local government officials said the hope is to start Prism TV by the end of the month.

A CenturyLink spokesman declined to discuss the company's plans.

A Cox spokeswoman, Gail Graeve, declined to comment on the competitor.

“The marketplace for video has evolved with an increased number of entities offering a product,” Graeve said. “With the growth of online offerings, consumers have more viewing options than ever before. To be competitive, our overall business strategies are driven by innovation in technology, providing the products customers are seeking and delivering superior customer service.”

Prism TV, already available in cities such as Orlando, Fla., Colorado Springs and Phoenix, is a digital cable service delivered through a fiber-optic network. It includes local, premium and high-definition channels.

Its plans in other areas start at $39.99 a month and allow customers to bundle Prism TV with phone and Internet service.

CenturyLink has called Prism “a feature-rich alternative to cable and satellite.” Those features include an interactive, searchable Internet-based platform and the ability to program DVR recordings through a smartphone app.

CenturyLink already offers DirecTV, a satellite-delivered service, in the metropolitan area.

The company signed an agreement with the City of Omaha in December, expanding and extending until December 2022 a franchise originally awarded in 1996. Cable franchise agreements describe the terms under which cities let cable providers install a cable system in city rights of way. The agreements set fees and set the cable provider's responsibilities to provide educational and governmental programming.

Mumgaard said the latest agreement expands CenturyLink's cable footprint in Omaha, giving it citywide service rights. Before, CenturyLink had a smaller franchise territory west of Interstate 680, which dated to an experimental cable service that its corporate predecessor, U S West, started in 1996.

The new agreement sets phased requirements for CenturyLink to expand its cable service, based partly on its market success.

Within the first three years, CenturyLink must offer the service to 25 percent of living units in the city, which Mumgaard said would double its footprint.

After that, CenturyLink is obligated to expand its cable reach only if 27.5 percent or more of potential subscribers sign up. If so, the company must build out to an additional 15 percent of Omaha living units within two years. That cycle would continue when the company again meets the 27.5 percent subscriber threshold.

Mumgaard said federal law prevented the city from requiring CenturyLink to offer Prism TV citywide from the beginning, although that would have been his preference “so they don't cherry-pick and just take the areas where they can do well and ignore the areas where they don't do well.”

Instead, he said, the agreement was a “negotiated compromise.”

CenturyLink will pay the city a franchise fee of 5 percent of gross revenue, the maximum law allows.

CenturyLink agreements also have been approved with Sarpy County, Douglas County, Papillion and Springfield. Agreements are in negotiation or pending approval in LaVista, Bellevue, Gretna and Ralston.

Springfield Mayor Mike Dill said his town was looking forward to having a second choice for high-speed Internet service as well as cable television. The city is now served by Charter.

“Any time the people of Springfield have options that they can make their choices from, the better off it is for everybody,” Dill said.

Bellevue's city administrator, Dan Berlowitz, said he expected to have an agreement before the City Council there in the next few weeks, possibly at the first May meeting, but said some provisions were still being hammered out.

CenturyLink “had a desired time frame. But our position was we would take the time we needed in order to be able to arrive at an agreement that was in the best interest of the city,” he said. “These agreements become pretty important once they're in place.”

In Gretna, City Adminstrator Jeff Kooistra said a franchise agreement was still being negotiated.

“I think it's a great opportunity for the area and the community to have more competition,” he said.

The Ralston City Council will vote on an agreement Tuesday.

“What we hope is going to happen,” said City Attorney Mark Klinker, “is that there's going to be competition between them and Cox, and prices would be driven down for the consumer.”

LaVista spokesman Mitch Beaumont, too, said an agreement was in negotiation.

Contact the writer: 402-444-1336, barbara.soderlin@owh.com

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