Wired for competition

Wired for competition

September 5th, 2009 in News

Staff Photo by Allison Kwesell EPB's Bearnard Foy assembles new fiber-optics cable at the intersection of Tennessee Avenue and West 37th Street.

Staff Photo by Allison Kwesell EPB's Bearnard Foy assembles...

On the Web

* To see EPB pricing and product options, www.epb.net

* To see Comcast pricing and product options, www.comcast.com

Initial EPB fiber areas

* North Chattanooga

* St. Elmo

* Alton Park

* Highland Park

Linda Cunningham depends upon the Internet to earn her living.

So when she lost her Comcast service for a week last year, she was temporarily unable to receive and ship the court transcriptions and records for her at-home editing business in Chattanooga.

So last month, Ms. Cunningham decided to cut the cord with Comcast and link up with the new fiber-optic Internet and video service being tested by her electric provider, EPB.

"It's very important to me to have high-speed Internet to quickly download the audio and written files I deal with all the time," she said. "Since I got on the EPB plan two weeks ago, the Internet service has been fantastic."

After years of market and technical studies, regulatory reviews and fiber-line installations, EPB is launching a new fiber-optic service this month in competition with Comcast in Chattanooga.

Ms. Cunningham is one of 13 test homes along a block of Dartmouth Street in North Chattanooga displaying blue-and-white yard signs, indicating they are one of those trying out EPB's cable, Internet and phone services.

The so-called "fioneers" of the fiber-optic service generally praise EPB's newest venture, which has been offered for free to nearly 100 residential customers this summer.

But the real market test begins this fall as EPB begins charging for its new fiber optic services.

Those hoping that EPB would cut cable TV and high-speed Internet prices significantly below those offered by Comcast may be disappointed. EPB's basic phone and cable TV options are priced the same as Comcast and EPB is not matching the lowest price Internet option from Comcast.

But EPB officials claim their new service is often quicker and includes more television options than the current Comcast service. EPB also is offering discounts of up to 15 percent on their telecom services when consumers buy two or more of the telecom services.

In its ultimate package, billed as the "tri-fi" bundle, EPB is offering high-speed Internet, television and unlimited phone service at monthly prices ranging from $111.50 up to $264.02, depending upon the speed of the Internet link and the number of premium TV channels offered.

"Our pricing is very straightforward and we don't have introductory promotional offers," said Katie Espeseth, EPB's vice president in charge of the utility's fiber optics division. "We believe we consistently are offering more for the same price, including better picture quality, faster service and more local service."

The startup of the new EPB video service has taken longer than originally forecast, but EPB officials now expect a faster roll-out of the fiber optic connections.

The Internet, TV and phone service from EPB should be available throughout Chattanooga, Red Bank and East Ridge by next summer and will be available throughout EPB's entire service territory within three years.

"Our intention is very soon -- within the next week or two -- to be able to launch the service and be able to sell on a wider scale," Ms. Espeseth said. "We took a little extra time to weigh our options, and we think we found ways all through the process to make it better."

digital competition

The EPB service is being launched in the same year that Comcast already has upgraded its Chattanooga service to an all-digital network. Comcast has invested more than $40 million over the past six years to upgrade its Chattanooga service.

Laurie Shipley, public affairs manager for Comcast, declined to comment on EPB's new pricing schedule. But she said the cable company "is consistently listening to its customers and providing them with the products and services that they are requesting from us."

"Comcast currently offers an extremely robust high-definition channel lineup consisting of 91 channels, more than any other wire-line cable service provider in the Chattanooga market," she said. "Our Video on Demand product, which is included in our digital subscription packages, offers over 10,000 titles, including over 1,000 HD titles."

Comcast was the first company to launch residential Internet speeds of 50 megabits bits per second, which EPB also will bring to the market with its fiber-optic system. Comcast added phone service in Chattanooga in July 2007 and since grown to become America's third-largest residential telephone provider.

When EPB announced it was sticking its fingers into their business, Comcast and other privately owned cable TV providers in the state objected. They claim EPB is using its electricity revenues generated in a monopoly market to subsidize its new video and Internet services in a competitive field.

The Tennessee Cable Telecommunications Association is suing EPB in Hamilton County Chancery Court, claiming the city-owned utility is violating state rules against such cross subsidization. A similar lawsuit was dismissed in Davidson County when a judge and an appellate court ruled that the case was filed in the wrong jurisdiction.

EPB officials insist the fiber optics division is a stand-alone business and the Tennessee Valley Authority regulates EPB and other distributors to ensure they don't use electric system funds to subsidize other services.

But EPB's electric system will pay for $160 million of the new fiber-optic installation expense to help improve transmission communications and to be able to install smart, controllable electricity meters at each home.

EPB's telecommunications division, which launched its telephone service in Chattanooga six years ago, is spending another $60 million to extend its television, Internet and phone service using the fiber-optic lines throughout the Chattanooga area.

In its initial business plan, EPB projects it will capture at least 35 percent of all homes with at least one of its telecommunications services within five years.

EPB is spending $220 million to install more than 300 miles of fiber-optic lines and connections to more than 160,000 homes and businesses over the next three years.

"I'd much rather get my service from someone locally," said Sam Hitchcock, one of the "fioneers" of EPB's new service in North Chattanooga.

EPB doesn't enjoy the pricing power of Comcast in negotiating for TV programming and equipment, Ms. Shipley said. But EPB officials insist they enjoy stronger customer loyalty, local service and a non-profit status.

EPB initially planned to buy its television programming through a nonprofit buying group -- the National Cable Television Cooperative -- to help secure better prices. But with its application still pending, EPB had to go out and individually negotiate with more than 100 different TV programmers for its menu of more than 300 channels.