Charter buyout should improve cable service

"We've been on a fast track in Medford and we're ahead of 95 percent of cable companies," says Ron Hren, vice president of Falcon's Southern Oregon and Northern California division. "If anything, we'll speed that up. We're still going full speed ahead."

Charter Communications, owned by billionaire Paul Allen, announced plans May 26 to buy Los Angeles-based Falcon Cable for $3.6 billion.

A day later, Charter announced the purchase of Denver-based Fanch Communications Inc. Terms of the Fanch purchase weren't released, but based on the price of $3,600 per subscriber that Charter paid for Falcon, the Fanch acquisition would cost Charter at least $1.9 billion.

The deals are part of a buying spree that is making St. Louis-based Charter one of the nation's biggest cable system owners, ranking behind only AT&T Corp., Time Warner Inc. and Comcast Corp. Fanch has about 547,000 subscribers, boosting Charter's base of subscribers to about 5.5 million.

Allen, who co-founded Microsoft with Bill Gates in 1975 and owns the Portland Trail Blazers and Seattle Seahawks, is the third-wealthiest American, thanks mainly to his Microsoft shares. Forbes Magazine has estimated his personal wealth at $22 billion. He purchased Charter in July 1998 and has spent about $16 billion on cable purchases over the past two years.

Like AT&T, which in less than a year has agreed to buy two of the nation's four biggest cable companies, Allen hopes to use cable TV wires as pipelines for super-fast Internet access, phone service and digital television.

The Rogue Valley's 35,000 Falcon customers may be little more than a drop in Charter's brimming subscriber bucket, but Hren says the area will benefit from Allen's vision and Charter's wide reach.

"The key benefit is that you are one of the top players in the country," Hren says, noting that the company has no plans to raise rates.

To some, Charter's purchase of Falcon may appear to be just another buyout of the Rogue Valley's main cable company. But Allen's involvement is especially pivotal as technologies converge and cable companies like Falcon reinvent themselves.

"It's really a turning point in our business," says Hren. "We're no longer a cable company. We're a broadband telecommunications company."

Fiber-optic-based networks such as the one Falcon is building in the Rogue Valley can provide television, high-speed Internet access and telephone service all through the same coaxial cable into the home. And the technological distinctions between those three services are rapidly shrinking.

There is some question as to which sector of current telecommunication companies -- cable, traditional phone utilities or wireless -- is best positioned to emerge as the dominant provider of those services. Allen's investments tell people like Hren that they've pitched their tents in the right camp.

"Paul Allen clearly understands telecommunications and his bet is on cable," Hren says. "You'll be part of a company whose No. 1 shareholder comes from the computer industry. He brings a whole new background and insight to the business."

Falcon already is testing cable modems in the Rogue Valley that will offer high-speed Internet access. The company will begin offering the services on an area-by-area basis in the next month and a half.

Falcon plans to offer local telephone service here over the fiber network it is building, but Hren said it's hard to say when that will actually hit the market. Though Charter will soon be Falcon's majority owner, AT&T owns a 46-percent stake and will play a pivotal role in providing phone service.