GEUS Fall 2000 Consumer Newsletter

The Greenville Electric Utility System (GEUS) officially announced on January 19, 2000 that they were considering expanding their current fiber optics network. Expansion of this network would allow cable television and internet services to be offered to its customers.

The whole process began in December of 1998 when GEUS hired SIGCORP Communications Services, Inc. to survey their customers to measure their electric service satisfaction and determine if other services were desired. SIGCORP conducted focus groups, personal interviews and an extensive telephone survey.

The scientifically-based data that came from SIGCORP’S studies showed two things. It showed that the Greenville community’s overall satisfaction with GEUS was very good and that they would like GEUS to offer more services. Services that the public said they would buy from GEUS, if given the opportunity, were cable television, Internet and local telephone service. (Unfortunately, under current Texas law, local telephone service cannot be provided by a municipally-owned entity.)

The positive results of this research lead to the next step. In July of 1999, GEUS Board of Trustees authorized a feasibility study to determine whether this community could support a second cable television system. This study included a conceptual design and economic analysis. The results presented to the Board in November definitively showed that GEUS entering the communications market was not only feasible, but just plain made good business sense.

“Our consumer/owners have asked for services that expert analysis has shown we are very capable of providing. We are very excited about expanding our three year old fiber optics network to provide these services to our customers.”, said David McCalla, Assistant General Manager-GEUS.

The new hybrid fiber optics and coaxial cable (HFC) network will be constructed to provide state-of-the art advanced communications infrastructure. There will be two phases of construction. Phase 1 will encompass all homes and businesses inside the city limits. Phase 2 will include the rest of GEUS’ customers outside the city limits.

Local cable subscribers who participated in focus groups stated that they would like to have local news and more channels. GEUS has plans to establish a local channel to provide coverage of local governmental meetings, to televise Greenville sports events and to report on the Greenville area news. The plan also includes subscribers receiving more channels than they are currently receiving and those being delivered at a lower price.

Local residents and businesses need faster connections to take full advantage of the Internet. High-speed Internet access is not available at this time. GEUS will offer reasonably priced high-speed Internet access to provide this increasingly important service to local consumers. Report No. CS 99-7 FCC Report on Cable Industry Prices Paragraph 2; 2nd Sentence “The survey shows that subscribers in service areas where there is effective competition pay 6.3% less on average than subscribers in noncompetitive service areas.”

It is very important for any community to have a say in what programming is aired on the local cable television system. This will be even more true in the new GEUS cable system. This new cable network will be owned by the consumer\owners of GEUS. We want a Channel Advisory Committee, consisting of consumer\owners, to take a very active role in determining what will be shown. Greenville broadcasting decisions will be made right here in Greenville, instead of New York.

Answer: Initial service will be offered in early 2001 and all areas of Greenville will have service by May 2002.

Answer: SIGCORP has estimated that initial costs for construction of the network will total $6,584,909 and central office equipment (headend) should cost $1,697,600 for a total of $8,282,509.

Answer: Absolutely not. Revenue bonds will be used to fund construction. The bonds will be paid back through revenues generated by the system.

Answer: No. Initial funding will come from revenue bonds and revenues from the cable system will pay for the system. The GEUS Board has expressed their intent not to raise rates. In fact, economies of scale through joint operation of electric and communications systems should produce cost savings that will be passed on to consumers.

Answer: The existing cable provider may oppose it, even though the Cable Television Consumer Protection & Competition Act of 1992 authorizes and supports the idea of competitive services.

Answer: Cable television corporations have not generally competed head-to-head, preferring instead to carve out niches in order to reap higher profits.

Question: Does GEUS have the expertise and experience to construct and operate a CATV and Internet system?

Answer: GEUS has recent experience with fiber optics cable. Over the last three years, GEUS has constructed and maintained 20.4 miles of fiber optics cable and related electronics equipment to provide network services for GEUS, City of Greenville, GISD and Hunt County.

One of our leading senior citizens called me several years ago and practically begged me to go into the cable television business. I told him that we could not do it at that time because I felt we had to prove ourselves by lowering rates and improving our electric service.

But, the world has changed since then. There is more emphasis on competition and diversification in the electric business. Some electric utilities, public and private, are now offering what are called “bundled services”.

Basically, it comes down to this-if we don’t provide these services, some other competitor will, but our municipal non-profit status gives you, our consumer owners, an advantage. Whether you choose to switch from your current provider or not, it is proven in other communities that your cable television rates will go down.

The citizens of the community we serve have a right to serve themselves with cable television and high-speed Internet services. Studies show it is feasible for the Greenville Electric Utility System to provide these services, and you have told us through the surveys that were conducted that you think it is a good idea.

Time Warner Cable’s new rate increase went into effect beginning January 1, 2000. Broadcast Basic Service rose 17.7% causing the Standard Cable Service customer’s rates to increase 5%.

In addition to this latest increase, Ray Little, Time Warner Cable-General Manager, was quoted in a December 28, 1999 Greenville Herald Banner article as saying that there will be a new rate schedule set by the Time Warner corporate offices after their system’s upgrades are complete. Little further explained that he anticipated the cost would be comparable to that being paid by subscribers to the Time Warner Cable systems in the Dallas area.

Since 1990, Greenville’s cable television (Cablevision & Time Warner) rates have increased 93%. GEUS has based all feasibility and marketing analysis on customer’s rates being less than Time Warner’s current rates.

“We will use our same not-for-profit advantage to compete with Time Warner in the cable business as we do to compete with TXU on the electrical side,” said Jimmy Dickey, Consumer Services Supervisor. “We also think that our customers will like the idea of their money staying right here in Greenville, instead of going to New York.”

As municipalities have entered the cable markets throughout the United States, privately-owned cable companies have been quick to ask the following question. Should public entities be competing with private enterprise in this type of business?

Two of our past Presidents addressed this issue many years ago. Abraham Lincoln said, “The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all in their separate and individual capacities.”

Franklin D. Roosevelt echoed these sentiments by saying, “Where a community...is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable right as one of the functions of government to set up...its own governmentally owned and operated service.”

In the electric industry, municipal utilities have provided competition to private utilities for 115 years. Alfred Kahn, who championed deregulation of airlines in the Carter administration, said “the competition of public with private power has probably been a much more powerful influence than regulation (in improving the performance of the electricity industry.)” Such competition is needed now in the cable business.

Whether you stay with Time Warner or switch to the new proposed cable system, two things will probably happen. Your rates will go down and your channel selection will go up. A few dollars saved each month by all subscribers and kept in this community can strengthen our local economy.

We envision local broadcasting. Why can’t local sporting events, governmental meetings, community events or even local news be broadcast in Greenville? Time Warner has had the opportunity to offer these services and has chosen not to offer them.

“If cable rates had not risen 93% in the last ten years, this community would not be asking us to step in and put a stop to it”, said Jimmy Dickey, GEUS Consumer Services Supervisor. “If we don’t provide another option for the Greenville community, will the cable rate increases ever stop?”

In 1987, a study committee was formed to analyze whether the City’s electric department should be governed separately. After several months of meetings, the committee recommended the creation of an autonomous board. A Charter amendment allowing for the formation of this board was approved by the City Council for a referendum vote and it was passed by the public on May 7, 1988.

The creation of a fully autonomous board, with the authority to issue bonds, approve rates and condemn property for electric use, could only be accomplished with the revision of state statues. This was all accomplished and on August 8, 1989, the Greenville Electric Utility Board was formed. Residential electric rates were lowered by 19% in late 1989.

Greenville’s Standard cable rates almost double during 10 year period! Electric rates remain steady after 19% residential decrease in November of 1989.

93% increase on the standard rate since 1990!
Who is going to stop it?
You’ve asked us to.

Robert Woodson Retires from GEUS Board

Robert Woodson Robert Woodson participated in his final Greenville Electric Utility System Board of Trustee meeting on December 15, 1999. He had represented the Greenville community for 6 1/2 years by serving on this community-owned organization’s board. Woodson was elected to two consecutive one-year terms as Chairman of this board in 1997 and 1998. During his tenure as a GEUS Trustee, the Texas Legislature began the process of restructuring the electric industry.

"Robert provided tremendous leadership during a very critical period in this Utility’s 109 year life”, said Tom Darte, GEUS General Manager, “We truly want to thank him for being a voice for the community”.

Robert has been employed by Raytheon for the last 12 1/2 years. He and his wife Ethel have two daughters and are very active members of the Bethlehem Baptist Church.

Greenville's Community-Owned
Electric, Cable TV & High Speed Internet Provider

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6000 Joe Ramsey Blvd.
Greenville, Texas 75402
(903) 457-2800
Fax (903) 457-2893
information@geus.org

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CONSUMER UPDATE

Fall 2000 Consumer Newsletter