BusinessTN

When the Jackson Energy Authority begins signing up its first cable television subscribers this spring, excellent customer service will make or break the venture, utility officials say. For its part, Charter Communications, the incumbent cable and Internet services provider in Jackson and much of rural West Tennessee, promises to do what it can to compete and predicts it will not lose its customer base.

JEA operates as a private act governmental utility authority separate from the City of Jackson. Though JEA has no customers yet for its E Plus Broadband, this fight has been brewing for years.

Controversial since the utility began active pursuit of it in 2001, JEA’s plan has been challenged in court and in front of the Tennessee Regulatory Authority (TRA) Its use of city-backed municipal bonds drew a public protest and petition drive to overturn a City Council decision to issue supporting bonds. In the end, JEA issued $54.3 million of bonds itself to start building the network. The bonds are guaranteed by the telecommunications division’s ability to make money, then by JEA’s electric division and then by the City of Jackson.

Now, JEA has prevailed on the regulatory front—on Jan. 5, it was awarded a certificate of “convenience and necessity” from the TRA to allow it to provide cable, Internet and telephone service over a large fiber optic network. Addressing Charter’s concerns, TRA’s approval requires outside audits from JEA verifying the absence of cross subsidization.

After 10 years of customers asking JEA to enter the cable business, the utility decided to enter the fray. “They want the opportunity to choose and are not satisfied with the present choices,” says Kyle Spurgeon, JEA’s vice president for business development.

After almost three years of planning and securing financial backing, the utility company began in late December installing about 658 miles of fiber optic wires past the city’s 31,000 homes and businesses, says Kim Kersey, a 30-year veteran of the cable industry who left Charter two-and-a-half years ago to lead JEA’s telecommunications unit.

Expected to be completed in mid-2005, the fiber system will provide cable television service over a “fiber to the home” network to compete with Charter and satellite television companies.

JEA also plans to provide Internet and telephone service through other companies who will lease space on its network. But it’s the cable television system that likely will grab the headlines. Fierce competition and a price war are sure to erupt once JEA announces its programming and pricing structure on April 1.

“It all comes down to taking care of the customer,” says Kersey, who claims his ex-employer staffs too lightly to provide good customer service.

Unbowed, Charter vows it’s ready for the competition.

“We will reduce rates to compete,” says Curtis Person, Charter’s director of government affairs and public relations. (Charter currently prices its standard digital package, with no premium channels, at about $44 a month.) “We will do what we have to do to remain competitive and not lose our customer base. We will not be underbid.”

Person’s father, State Sen. Curtis Person Jr., R-Memphis, was the only state legislator to vote against JEA’s charter change in 2001. The move gave the utility a new name and the green light to enter the cable television market.

Charter has roughly 18,000 households in Jackson. JEA has said it expects to grab about 12,000 initially, to which Person responds, “good luck.”

“They must be basing that on taking away satellite customers and former Charter subscribers who were cut off because of bad debt,” Person says. “That means about 3,000 of their initial customers won’t pay them either.”

Charter has spent $90 million in Jackson in the past few years to upgrade its technology and facilities. It also plans to make Jackson a regional office, investing roughly $500,000 in a new 5,000-square-foot building and hiring roughly 30 new director-level employees.

Even so, consumers are showing interest in the new competitor. “It seems expensive for them to get into it, but if the rates come down, I’d be happy to switch,” says Jan Hamilton, a 53-year-old Jackson resident who is both a JEA power customer and a Charter cable subscriber. While pleased with JEA’s service, “with Charter, sometimes it’s hard to get someone on the phone,” she says.

It’s little things like that, Kersey hopes, that will assure JEA’s success. “If you get customer service right, everything else will fall into place.”