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Wash. Ops Question Overbuilder's Plan

A utility overbuild is proceeding in Ephrata, Wash., amid questions from competitors about the venture's business viability and fairness.

Ephrata-based Grant County Public Utility District, a 50-year-old electric utility, announced last week that it will partner with Myrio Corp. to install the software vendor's interactive-TV platform for use over the utility's Zipp fiber-optic network.

The Myrio ITV platform would allow customers to buy 120 channels of digital TV, including local signals, access video-on-demand with VCR functionality and purchase games and other content on a per-use basis. The venture would also enable high-speed data delivery.

Grant County PUD initially built the fiber-optic network to monitor its substation and hydroelectric facilities. But the utility cites a 2000 state law that urged the creation of broadband telecommunications networks.

Using excess capacity, the utility believes it can deliver cable service to 70,000 residents in 40,000 homes and to numerous businesses in the county.

But other communications providers question the utility's proposed business model.

PUD fiber-optics marketing specialist Sarah Monford said the Zipp Network will charge a one-time $300 installation fee, plus $40 a month to use the network. Any cable programming and other charges would be added to the carriage fee.

Myrio and Grant Country PUC still need to tie up some major loose ends before launching the service, including pricing and obtaining a franchise agreement.

As was the case with Ameritech New Media, cable competitors typically obtain franchise agreements before announcing plans to deploy a video service. Grant County and Myrio, however, hope to launch the service this summer, even though they don't have a franchise deal in hand.

Myrio spokeswoman Lynda Melugin said Grant County would be required to obtain a franchise, but said she didn't think it would be a problem. She noted that one of the providers with whom Myrio is working-Livingston Telephone Co. of Livingston, Texas-was able to win a local franchise agreement last year in just two weeks.

Myrio bills itself as a full-service provider that helps local telcos and utility companies obtain hardware, cable programming and interactive content, including video-on-demand titles.

In addition to Grant County PUD and Livingston Telephone, Myrio has an agreement with Churchill County Telephone and Telegraph in Nevada and Panhandle Telecommunication Systems Inc. in Oklahoma.

Grant Country PUD is obtaining its programming from the National Cable Television Cooperative, according to Myrio CEO Robert Manne. Myrio is negotiating programming contracts directly with cable networks, and has agreements with 80 cable networks in place, Manne said.

Myrio also has a VOD output pact with New Line Cinema, but hasn't cut deals with any other studios, Manne said.

Grant County plans to use digital set-tops from Germany's Fujitsu Siemens Computers, which cost about $500 each, Manne said. The set-tops contain a 30 gigabyte hard-drive for personal video recorder use; a magnetic strip reader that can scan credit cards; two expansion slots that would allow the box to be hooked up to a printer; and the ability to insert an integrated DVD, Manne added.

Grant County is in the midst of a pilot project, delivering content to 130 homes and businesses now, Mouford said. No date has been set for launching in the rest of the county, Monford said. Manne said he expects the companies will be able to begin marketing the service this summer.

Myrio is also trying to convince the Grant County PUD to cut its pricing so it can compete with cable operators, Melugin said.

"We're trying to discourage them from a one-time $300 charge. I think that will make it cost prohibitive for subscribers in rural sections of Washington to afford it," she added.

The county promotes open access, Monford noted, so the county's local cable providers, which include Northland Cable and USA Media, can pay to use the network as well, she said.

Barry Mangen, regional manager for Northland, said the company has met with the utility and sees no reason to climb on board the county network at an increase of $40 a month to consumers. Further, Mangen asked if the county would drop pole attachment fees should the operator utilize the Zipp network. County officials said the operator would only get pole relief if it removed all its plant, and that would leave the operator without back-up should the county plant ever prove unreliable.

Northland is also launching digital TV and Mangen is irked that Myrio and the county are championing themselves as subscribers' high-tech saviors. "We're 21st-century technology," he said.