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Ashland, cable firm square off

City: Falcon plan would give company too much control

ASHLAND -- Call it road rage on the information superhighway.

Competition over the provision of cable television service to a lucrative market of 8,120 households has tension rising between Falcon Cablevision and the city of Ashland.

This week, City Administrator Mike Freeman rejected a Falcon proposal to form a telecommunications partnership with the city. The proposed joint venture would have linked Ashland's existing fiber-optic network to Falcon's cable system, with Falcon controlling the majority of the city's network capacity.

What we are proposing is the doubling of the bandwidth available to Ashland, said Falcon Division Vice President Ron Hren. It would place us in the upper 2 percent of U.S. cities in terms of Internet access available to homes and businesses, said Hren.

Falcon touts the deal as a great financial deal for the city without the daunting financial risks of a municipally owned system.

In a written proposal submitted to the city Nov. 17, Falcon proposed to pay up to $235,000 annually to lease 75 percent of the total bandwidth available on the city's existing network.

But Freeman says that would be giving up too much control of the system. The city didn't get into the fiber-optic business only to relinquish control of the backbone of the system, he said.

The City Council in September adopted a business plan for the Ashland Fiber Optic Network, including the provision of cable television, high-speed data and Internet access. One of the city's goals is to provide competitive cable service for its citizens, keeping prices low and providing all city households with access to government meetings and services.

Freeman points out that under the Falcon proposal, a monopoly would still exist.

Hren says that by giving up control of cable and Internet services, the city of Ashland would wind up $900,000 richer after 10 years. Falcon also claims the partnership would save the city $4 million in capital costs.

Freeman denies that the deal could save the city any money because any capital expenditures will be repaid by user fees.

In the past, Falcon representatives have said the company has the financial resources to wage a price war with the city. But at this point, Hren is taking a more concillatory approach.

I want to move forward in a positive way to work it out, he said. Let's join together to grow this business together.

And Freeman agrees that the negotiations aren't necessarily at an end. He said the city is willing to entertain another offer from Falcon.

The City Council authorized a fiber-optic ring in 1997 to enable the city's utility to automate meter reading, detect outages and tampering and manage the power system. The 11.3-mile ring was finished in August.