Seems you are right about coax drops to the customer.
Here is Western's Website
winfirst.com
Denver startup hopes to beat telecom giants
By Andrew Backover
Denver Post Business Writer
Jan. 29 - A newly minted Denver company with deep roots in cable TV is betting $2 billion that it can
outmaneuver the telecom giants by selling video, telephone service and high-speed Internet access in Austin,
Dallas and San Antonio in Texas and Sacramento, Calif.
Western Integrated Networks was launched almost secretly in October by local cable veteran Jim Vaughn. This
week, he told The Denver Post, "I always run covert operations. Plus, I'm a recluse." In short order, the
company has quietly raised a whopping $450 million to build fiber-optic networks in those fast-growing cities.
Western Integrated's plans have flown underneath the radar in Colorado, but they've made a big splash in
recent weeks in Dallas, Austin and Sacramento.
Until last year, Vaughn could have been called the cable guy. Now, broadband guy is more like it. Broadband is
industry jargon for the fat communication "pipes" that carry all kinds of information - video, voice and data - at
ultrafast speeds.
The 54-year-old Vaughn can make this latest bet partly because of the $2.1 billion sale in 1999 of his former
cable company, FrontierVision Holdings.
In addition to investing some of his own money, Vaughn garnered backing from J.P. Morgan Capital, Madison
Dearborn Partners, Columbia Partners, First Union Capital, Providence Equity and The Blackstone Group. A
public offering might be a possibility, he said.
Each market will require a $500 million investment, according to the company.
As early as mid-2001, customers could tap into the fiber network through coaxial cable or telephone lines,
although fiber connections direct to the home eventually could happen, Vaughn said.
Vaughn's migration from cable to broadband symbolizes a big shift in communications.
U S West is merging with Denver-based Qwest Communications International to provide similar services
through fiber-optic cables, beefed-up phone lines known as "digital subscriber lines," and wireless
connections. Long-distance phone giant AT&T plans to use cable networks, wireless and DSL to do the same
thing.
Littleton-based WideOpen West, another start-up, wants to provide high-speed Internet communications,
digital cable-TV and telephone service using Internet technology. Mark Haverkate, the company's chief
executive, is a former senior executive and a founding member of RCN Corp., a company that is employing a
strategy similar to Western Integrated's on the East Coast.
Broadband is barely available to most residents and businesses, but companies are competing fiercely to
provide it first. As the end of 1999, the U.S. had about 2.4 million cable and DSL customers, with average
residential plans costing about $40 to $50 a month.
"They can't meet the need or the demand that's being created by this Internet activity," Vaughn said of
competitors.
"There's a case to be made to build a brand-new network that has the capacity to meet the exploding needs of
the future."
For Western Integrated, a big foe in Dallas will be AT&T Broadband and Internet Services, which is upgrading
cable networks in major markets for broadband use. It has about 11.4 million cable customers nationwide and
will add about 5 million through a pending acquisition of Media One.
It has about 475,000 cable customers in metropolitan Dallas and owns cable operations in Denver, Seattle,
Chicago and San Francisco, among other places. Media One will add cable holdings in Atlanta, Boston, Miami
and Minneapolis.
"We are prepared to compete on all fronts," said Matt Fleury, a spokesman for AT&T's broadband operations.
"Certainly, we believe very firmly that AT&T's investment in a broadband platform to provide all these
services is going to be very successful in our markets."
Fleury said he is not familiar with Western Integrated's plans, but broadband industry analysts say the start-up
has potential.
"The fact that they are smaller means they can be a little more flexible," said Sean Badding, vice president with
The Carmel Group in Monterey, Calif. "They have strong support with the backing and funding. They are
going to have to raise probably a couple hundred more million to build out their infrastructure."
Vaughn, who has been in the cable business for 35 years, last year sold FrontierVision to Adelphia
Communications Corp. for $2.1 billion.
At the time, FrontierVision had 702,000 cable subscribers in New England, Virginia, Ohio and Kentucky.
But he has brought along others with cable backgrounds to Western Integrated: Chief Financial Officer Jake
Kane, who came from Adelphia, and Bill Mahon, senior vice president of government relations for Western
Integrated, who worked for Vaughn at FrontierVision.
Western Integrated has applied to provide telephone and cable service in California and Texas. Approval for
Sacramento likely will come first, perhaps next month, Vaughn said.
"All these markets that they are going into are really in a boom with businesses and people moving out there,"
said Badding of Carmel Group. "I think they are great choices."
Construction on the network - a combination of underground utilities and wire strung from telephone poles -
could begin about six months after the approvals. |
