Cable firm bids to compete in city

March 17, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

A local cable television company has submitted a proposal to become the second major provider of cable service in Baltimore City, challenging United Artists' monopoly.

UltraVision LLC's plan, a draft of which was submitted to Mayor Kurt L. Schmoke Wednesday, would create the first cable competition in the city since United Cable Television of Baltimore Inc., a division of United Artists, was awarded a nonexclusive franchise agreement for the television service in 1984.

"I think there's been enough of an outcry in this city for competition that something needs to be done," said Gary I. Goldberg, UltraVision's president. "I feel they're not adequately serving people, and we need to provide competition and better value."

Earlier this month, the city warned United Artists that it is in danger of violating its franchise agreement because of delays in supplying converter boxes to customers.

A spokesman for Mayor Schmoke said last night that the mayor had seen UltraVision's proposal and asked the city's Office of Cable and Communications to review it.

Under its plan, the Dickeyville firm would invest $36 million to install necessary cable wiring throughout the city and begin providing basic service free of charge to residents by January 1997. The basic service would include local broadcast channels, a Baltimore City government channel, an emergency communications link and an on-screen program guide. Unlike United Cable, UltraVision's service will not require cable boxes to provide service, Mr. Goldberg said.

UltraVision already supplies more extensive cable services to 700 subscribers in 13 apartment and condominium buildings, where the Federal Communications Commission allows nonfranchise operators to do business, in the Coldspring New Town and Greenhill sections of the city. The cost to establish the service there was roughly $240,000, Mr. Goldberg said.

United Cable, by contrast, provides service to roughly 101,000 subscribers, out of a potential base of about 250,000 households. From that base, United Cable generates annual gross revenue of roughly $45 million, of which the city receives 5 percent under its franchise agreement with the company.

Coles Ruff, United Cable's general manager, said his company "would welcome the competition."

"But it takes a lot of money, because of the significant capital required up front," Mr. Ruff said. "We scheduled our franchise agreement for a 20-year span, because we know it will take that long to recoup our investment."

UltraVision's ability to compete comes in the wake of the FCC's Cable Act of 1992, which permits competition among cable operators. The company, which has two full-time and four part-time employees, was formed the same year.

"Competition in cities doesn't happen that often, mainly because of the huge undertaking and capital expense required up front," said Pat Gushman, a vice president of the Cable Television Association, a Virginia-based trade group.

By its second full year of operation, Mr. Goldberg estimates, UltraVision's cable service could have 60,000 subscribers citywide and generate gross revenues of $2 million per month. UltraVision's 1995 revenues from the Coldspring and Greenhill contracts are expected to be around $250,000.

But a number of obstacles would have to be removed before UltraVision could proceed.

For starters, Mayor Schmoke would have to grant UltraVision's request for a second franchise. Mr. Goldberg, despite Mr. Ruff's welcoming words, expects United Artists to attempt to block that approval. Although UltraVision isn't seeking financial incentives from the city, it is hoping to use the city government's existing excess cable capacity to control the cost of installing new underground cable.

"There's a lot to consider when evaluating a franchise application," said Joyce Daniels, director of the Office of Cable and Communications, who added that she has not seen UltraVision's proposal. "One has to look at financial strength, what services are being offered, engineering and other criteria. But with so many potential competitors out there, there's no reason starting off to say we wouldn't consider it."

Legislative approval from the City Council would also be required, as was the case with United Cable.

If the legislation is approved, it is likely to face stepped-up competition from United Cable, whose parent firm, Tele-Communications Inc., is the nation's largest cable television operator, and from others.

For instance, Bell Atlantic Corp. has already begun offering limited TV service through fiber optic lines in places such as New Jersey and Virginia, and the company is waiting to hear from the FCC on whether its application to provide similar service in Baltimore City and the surrounding counties will be approved, said Dave Pacholczyk, a Bell Atlantic spokesman.

The Baltimore Gas and Electric Co. also has entered the TV fray, selling satellite dishes on installment plans to city customers.

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