Saturday, Nov. 12, 2005 | 2:05 a.m.
Cox Communications, the cable provider that serves the Las Vegas Valley, is getting competition in Henderson -- and crying foul.
The Henderson City Council is scheduled Tuesday to award a limited cable franchise to Las Vegas-based Kelley Technologies, which has designed and built television and surveillance systems in many hotels and casinos. In some cases, the company resells programming like a cable provider.
Kelley's cable franchise will be limited to Tuscany Village, a 1,900-home master planned community under construction near Lake Las Vegas.
Cox, which has a franchise to provide cable service throughout Henderson, is currently installing its own cable to compete with Kelley and expects to be up and running in December.
Although Steve Schorr, Cox's vice president of public and government affairs, claims that the cable giant welcomes competition, Cox representatives will appear at the council meeting to challenge Kelley's right to obtain a Henderson franchise.
Schorr argued it is unfair for Kelley to carve out a prime section of the community without being required to serve the entire city as Cox does. While there are some areas of Henderson and other cities where Cox's penetration is less than 30 percent because some homeowners cannot afford cable, the company makes a substantial investment and serves the neighborhoods as required under its franchise, he said.
"We don't mind competing with anybody," Schorr said. "It makes for a better company. We compete on a daily basis. But they want to cherry pick and redline this economic advantageous area to their betterment. That does not create a level playing field. It does just the opposite."
The Greenspun family, the owner of the Las Vegas Sun, has a minority interest in Cox.
In 2002 then-developer Commerce Associates awarded Kelley a bid to wire the 600-acre Tuscany Village for cable. The developer is now Rhodes Homes, which assumed Commerce's contract.
In return Kelley agreed to give a 15 percent discount to residents through the homeowner's association and lock in price increases over the next 10 years to the Consumer Price Index. Under that plan, price hikes cannot exceed 3 percent a year, said general manager John White, who called it a rare case of customers knowing what they will pay for a utility over the next decade.
Mark Backus, Henderson's franchise officer, said Nevada law precludes any company from having an exclusive franchise. But there is no requirement that Kelley, a publicly traded traded company established in 1988, must wire the entire community. The city awarded a similar franchise to the developer of Lake Las Vegas, he said.
"It seems to me that would dilute the benefit of competition," Backus said.
White, pointing out that Cox had the same chance as Kelley to bid for Tuscany Village's wiring, said requiring his company to serve the entire city would be unfair. Under that mode, cable companies would never have any competition, he said.
Schorr said Cox refused to bid on the contract, saying it did not need to do so because it already has a franchise for the area.
Despite encroaching on Cox's territory, White said he does not consider it a shot across the bow to the cable giant.
Kelley has been awarded similar franchises in master planned communities in Sacramento and Southern California. Although this is the company's first such venture in Nevada, White said he will wait for developers and home builders to approach him if they are interested in exclusive cable systems for their communities.
"This is more of a straight up-and-down business proposition than us getting into the cable TV business," he said.
Kelley plans to install a coaxial network capable of carrying 116 analog video channels and up to 1,100 digital channels. The programming will be beamed into the development on satellite dishes and dispersed on the cable to residents who also have access to high-speed internet.
Residents will pay $24.50 a month for a basic package of 50 channels that includes over-the-air networks and some national cable channels, and more for other premium services, he said.
Cox charges $31.08 for a package of more than 70 channels featuring local stations and national cable networks. Lake Las Vegas Communications charges $40 a month for 80 channels.
Backus said he has not received any other requests for cable franchises in master planned communities. He said, however, that it makes sense for companies to look for untapped areas that are yet to be constructed.
Under state law, Kelley must follow the same requirements as Cox in operating the franchise, Backus said. Kelley is required to pay a 5 percent franchise fee on gross revenues, which is expected to net the city about $60,000 annually when the community is built out. Cox pays Henderson more than $2.1 million in franchise fees a year, charges that are tacked onto customer bills.
Kelley has designed and built more than 70 race books, sports books and off-track betting facilities in Nevada and across North America. It also has wired such casinos as The Palms, Green Valley Ranch, MGM, Mandalay Bay, Mirage, Bellagio and Venetian, and has other clients that include UNLV, auto dealers, restaurants and night clubs.
Brian Wargo can be reached at (702) 259-4011 or at [email protected].
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