Duncan Forwards Starpower Proposal to Council; Competitive Cable TV Coming to Montgomery County

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Contact: Jane Lawton 301-217-7372
Donna Bigler, 301-217-6537
Starpower, Tony Peduto 202-955-7960

For Immediate Release: April 1, 1999

Duncan Forwards Starpower Proposal to Council;
Competitive Cable TV Coming to Montgomery County

County Executive Douglas M. Duncan today forwarded the Starpower cable television franchise agreement to the County Council with the recommendation that it be adopted. The proposed agreement, negotiated with Starpower Communications, LLC, will provide competitive cable services within three years to approximately 60 percent of the County's population, including fourteen municipalities. These services will offer residents, for the first time, an alternative to the incumbent cable television provider, Cable TV Montgomery.

"Vigorous competition should benefit County residents in a number of ways," said Duncan. "For instance, we fully expect that cable service rates will stabilize or decrease, in real terms, once Starpower begins to make its presence felt. We also anticipate that the competition Starpower will introduce into the market with its services will meet the needs of the community."

One such service is high-speed Internet access, which Starpower will offer, along with traditional video programming and telephone service. Starpower's ability to bundle telephone and cable services will provide a new benefit to residents.

Starpower Communications, LLC is a joint venture between RCN Telecom Services of Washington, D.C., Inc. and Pepco Communications, LLC. Starpower is also seeking authority to provide service in other parts of the metropolitan area, including Arlington County, Virginia and Prince George's County, Maryland. Starpower is already authorized to provide service in the District of Columbia and Gaithersburg, Maryland. Companies affiliated with Starpower currently provide services to Boston, Philadelphia and parts of San Francisco.

The agreement that Duncan is forwarding to the County Council today incorporates the cable-related needs and interests of the community, and reflects the concerns articulated by affected persons, including the fourteen municipalities located in Starpower's proposed service area, and Cable TV Montgomery.

The key terms of the agreement include: (1) a new state-of-the art cable system; (2) 94 channels of basic analog programming, with additional premium and pay-per-view channels also available; (3) a franchise fee of five percent of annual gross revenues; (4) 13 channels set aside for Public, Educational and Government (PEG) use, and up to 10 percent of the system's total downstream digital capacity for PEG use (subject to a 25 "channel" limitation); (5) payment to the County and the participating municipalities of an additional three percent of annual gross revenues, to be used for PEG access purposes and support for institutional networks; (6) free Internet access services and connections for County agencies and participating municipalities; and (7) performance guarantees.

In negotiating the proposed franchise agreement, consideration was given to the fact that Starpower will incur substantial capital costs as it constructs its system. Since Starpower believes that these costs make it uneconomical to serve low density areas in the County if the company is to survive as a competitor, Duncan is recommending that the County Council grant Starpower a franchise that would encompass certain portions of the County, rather than the entire County. The demographics of the service area included in the proposed agreement are virtually identical to those of Cable TV Montgomery's franchise area and the County as a whole. If Starpower is successful in its initial service area, it may extend service to other parts of the County in the future.

"This is an important day for cable television subscribers," said Duncan. "The proposed agreement I am sending to the Council opens the door to competition, and provides substantial financial and in-kind compensation to the County and the fourteen participating municipalities."

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