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Wednesday, January 23, 2013 8:42 PM

New York company acquiring Allegiance cable, Internet services

By DOUG CARDER, Herald Senior Writer

Ottawa city commissioners on Monday will discuss a proposal to transfer a franchise agreement for broadband telecommunications services from Allegiance Communications, Ottawa’s current provider, to BCI Broadband, Purchase, N.Y.

Allegiance provides Internet, cable TV and digital telephone services to Ottawa customers.

“The city attorney [Bob Bezek] is currently reviewing the documents that would transfer the franchise agreement from Allegiance to BCI,” Richard Nienstedt, Ottawa city manager, said Wednesday. “The commission will discuss it at our study session Monday, and I anticipate it will be on the agenda [of a regular commission meeting] in February.”

BCI and Allegiance, Shawnee, Okla., announced last Wednesday they had signed a definitive agreement under which a newly formed subsidiary of BCI would acquire Allegiance in a transaction expected to close early in 2013. Allegiance operates non-urban broadband systems across Kansas, Arkansas, Texas and Oklahoma.

Nienstedt said it was too early to tell how the BCI acquisition would affect service and rates for Ottawa customers.

“We don’t know all the details yet,” Nienstedt said.

The City of Ottawa’s current franchise agreement with Allegiance runs through April 2015, Scott Bird, city finance director, said.

City attorney Bezek said his preliminary understanding of the transfer is that BCI Broadband would have to assume the franchise agreement as is, though he said Wednesday he was still reviewing the documents that Allegiance had sent to him. He said he plans to make a report of his findings to the city commission Monday.

Upon completion of the Allegiance transaction and subsequent capital investment, BCI executives said in a news release the company would deploy advanced broadband networks to more than 150,000 homes and businesses in the Allegiance footprint with high-quality services, including modern, high-speed Internet, high definition video and voice services, across an upgraded fiber network.

BCI is a broadband telecommunications company founded in 2012 by the senior management team from cable operator, Bresnan Communications, according to a BCI news release. Led by Jeffrey DeMond, president and chief executive officer, and Andrew Kober, executive vice president and chief executive officer, the team is acquiring the Allegiance properties as the first transaction in an aggressive growth plan by the company, the release said.

“Since the early days of our industry, the Bresnan name stood for exceptional performance and a deep commitment to our customers, our colleagues and the communities we served,” DeMond said in the news release. “The Bresnan management team remains largely intact within BCI, and that makes us extraordinarily well positioned to develop the Allegiance properties to their greatest potential. Our success across much of rural America as well as markets in Chile and Poland was built upon a distinctive balance of aggressive, yet thoughtful capital investment and a single-minded focus on the customer experience. Our team looks forward to once again creating value for our partners while providing immediate benefit to both existing and new subscribers in the former Allegiance communities.”

Shawn Beqaj, BCI’s vice president of public and government affairs, said Tuesday he could not comment beyond what information was contained in the company’s press release until the transaction is closed. He said the company is working as quickly as possible to close the transaction.

BCI’s acquisition of Allegiance also would require approval of the Federal Communication Commission, which typically takes 60 days to 90 days to complete, based on previous transactions in the telecommunications industry.

BCI’s announced acquisition of Allegiance also marked the origination of a partnership between BCI’s management and BBH Capital Partners, a private equity fund sponsored by Brown Brothers Harriman & Co., New York City.

Bresnan Communications, through acquisitions, served 300,000-plus customers in Montana, Wyoming, Utah and Colorado in 2011, according to news reports. At one time the company purported to offer faster high-speed Internet service in Billings, Mont., than what was available in Denver, according to industry observers.

In a July 2012 article in the Bozeman (Mont.) Daily Chronicle, BCI’s Beqaj said Bresnan had spent $1.4 billion to bring high-speed Internet to Belgrade, Bozeman and Manhattan, among other places.

Bresnan is part of Cablevision Systems Corporation, the nation’s fifth largest cable operator and one of the nation’s leading media and telecommunications companies, according to Bresnan’s website, www.bresnan.com

Doug Carder is senior writer for The Herald. Email him at dcarder@ottawaherald.com

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