Minneapolis residents could soon have another option for cable TV service, as CenturyLink looks to dislodge Comcast’s monopoly on the market.
CenturyLink plans to seek a new franchise agreement that would allow it to provide its Prism TV cable service alongside Comcast’s offerings. The digital cable service is distributed through a fiber-optic network and allows customers to watch live programming on smartphones and tablets, in addition to their televisions.
Such an agreement would require the approval of the Minneapolis City Council, which won’t take up the issue until the new year. CenturyLink’s move could dramatically reshuffle the local television market, as cable companies nationally are under intensifying competition from other providers and Internet streaming services, such as Netflix.
CenturyLink already has rolled out Prism TV in other Midwestern cities, including La Crosse, Wis., and Omaha, Neb. The company intends to seek franchise agreements in St. Paul and other cities across the metro area in 2015.
“This brings to customers the opportunity to choose, and to have an improved customer experience,” said Joanna Hjelmeland, a CenturyLink spokeswoman.
Comcast, the largest cable provider in the Twin Cities, has a franchise agreement with Minneapolis that expires at the end of 2021. The deal requires Comcast to make its cable service available to every home in the city, with some exceptions for areas with low population density. But it does not guarantee that Comcast will be able to stand alone as the only cable provider in Minneapolis.
CenturyLink does not plan to immediately offer service to all Minneapolis residents. Instead, it would offer Prism TV to a variety of neighborhoods where its network is already in place and later bring it to other parts of the city.
Comcast said in a statement it expects competitors to adhere to the same standards it does.
“We do business in a competitive environment every day,” said Mary Beth Schubert, Comcast’s vice president of corporate affairs. “Any new provider entering the market should be held to the same requirements as our industry of bringing competition to all residents in the community, while also meeting existing state law statutes.”
Council Member John Quincy, chairman of the Ways and Means Committee — which will have to sign off on CenturyLink’s plan — said state law requires franchise holders to build out their systems over the entire franchise area. Franchise holders then pay the city a fixed percentage of their revenue.
In response to interest in a new franchise, the city has issued a formal notice of intent to accept applications. Now, CenturyLink and any other companies that want a shot at the business have a window of time to file their plans, along with a $40,000 application fee.
Quincy said Comcast has been the sole cable operator for years in part because companies must be able to prove they could serve the entire city.
“The bar’s pretty high,” he said. “If you’re going to be serious about doing it, you’re going to have to demonstrate a lot of capacity and capital to do the build-out.”
If the company’s plans sparked a lawsuit from Comcast, CenturyLink says it has agreed to pay all of the city’s legal costs.
Hjelmeland said CenturyLink is looking to expand the reach of its technology. The company has begun to offer 1-gigabit download speeds — the fastest available in the country — to some areas of Minneapolis. She said CenturyLink believes there’s a significant market for fast Internet coupled with new cable options.
Prism TV requires users to have Internet speeds of 25 megabits per second or faster.
“Minneapolis is a community that’s growing and thriving, and a community of people we call ‘early adopters,’ ” she said. “People who are interested in next-generation technology.”
In other cities, Prism TV customers select channel packages that range from 140 channels to more than 320 channels. CenturyLink advertises prices starting at $49.99 per month for existing Internet customers who bundle services. Unlike dish services, Prism TV provides local-access channels.
Quincy said the city’s process will include a formal period in which members of the public can submit comments on CenturyLink’s proposal.
He said he’s supportive of opening up the market to give more people the chance to provide and receive cable service.
“This is an amazing step forward, with whatever we do, as we’re trying to expand video services and capacity and competition for the interest of our residents,” Quincy said. “We want lots of choices to provide information to them.”