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ICG

icg/bjs/21″/dt1st/jc2nd By BEN SULLIVAN Staff Reporter In the escalating battle between cities for well-heeled, tax-generating businesses, Burbank has a wily field commander in Assistant City Manager Frederic Fletcher. Forget issues like business taxes, public safety and transportation. It was Fletcher’s idea five years ago to use a sophisticated telecommunications infrastructure as a way to attract businesses to town. Firms that use high-end telecom services, it turns out, also tend to buy a lot of electricity, generate substantial revenues and provide high-paying jobs. And once the city has recruited a company as a telecom user, Fletcher believes, it will be easier to convince them to contract with the city for electricity when the power market opens to competition in January 1998. “That’s been at the heart of my marketing plan from the start, but most people haven’t gotten it,” Fletcher said. To that end, Fletcher in 1995 ushered through the City Council a plan to build a 12-mile loop of fiber-optic cable linking Burbank’s downtown, the Media District and outlying commercial areas. Then he implemented the plan and saw it completed last October. Ostensibly, the telecommunications loop’s purpose is to connect the city’s electric utility substations to one another. In fact, it was in the very tunnels and cable rights-of-way that once housed the utility’s copper-based telecom system that the new network was built. But the data that flows between the electric stations fills only about 5 percent of the loop’s capacity. Fletcher and the city are leasing out the remaining 95 percent to animation, post-production and other local entertainment and non-entertainment businesses for their use. The companies supply their own equipment to tap into the loop and can transmit voice and data between buildings along the miles-long circuit. The Entertainment Network Inc. set up shop in Burbank in May specifically to use the fiber optic loop for its system, which digitally connects studios, animation houses and post-production facilities. Chief Operating Officer Rick Ryan said his company will begin testing the system this summer with at least one of the Burbank movie studios so they can, for example, transmit megabit-heavy computer animation files between their animation, production and post-production facilities. (He declined to identify the studio, and neither Walt Disney Co. nor Warner Bros. would comment). In a higher-profile deal, Denver, Colorado-based ICG Communications Inc. signed a 15-year agreement with Burbank last fall to lease capacity on the loop. ICG in turn is using the capacity to offer local telecom services to Burbank clients, including Disney. The company hopes to sign similar deals with Disney neighbors NBC Studios and Warner Bros., and has targeted companies in 45 buildings along the loop that it hopes to gain as telecom customers. “Burbank in terms of the business community is very dense,” said Brian Renner, ICG vice president for business development. “There are a lot of highrises in close proximity to each other, which makes it very efficient for us to access.” While relatively small by telecom industry standards, Burbank’s 12-mile fiber-optic cable can accommodate a tremendous amount of data. The 5 percent of capacity or so that ICG leases from the city, for example, consists of just eight of the loop’s 96 strands. Every two strands can support 48 lines, each of which can carry 672 simultaneous telephone calls. “We can handle about 130,000 calls at a time,” Renner said. Because not all customers will use their telephones simultaneously, the company uses a so-called “contention ratio” of 10 to 1 that allows it to sell more than 1 million connections. For that right, ICG pays Burbank about $150,000 a year, a rate that will remain constant for the duration of the 15-year lease. Burbank doesn’t get rich off the deal, but the ICG rent alone would pay the $1.1 million cost of building the fiber optic loop within a decade, Fletcher said. With the other deals Burbank has penned with local entertainment industry customers, including the Entertainment Network, he said the loop should be paid off within four years. Fletcher said the city did not seek a commission on ICG revenue. “We decided we didn’t want to be a local telephone company. There’s too much red tape,” he said. For ICG, the leasing of Burbank cable gives the company a toehold in a potentially lucrative market. ICG has made similar lease arrangements with Southern California Edison and the Los Angeles Department of Water and Power, giving it access to about 1,450 miles of fiber optic cable stretching from downtown Los Angeles to West L.A. and Sherman Oaks. ICG’s Renner acknowledged that Pacific Bell and GTE California Inc. currently dominate both the Burbank and greater L.A. markets, with about two-thirds and one-third of the local telecom market respectively. ICG provides services to about 1,300 small to mid-sized companies, Renner said, providing about 100 million minutes of telephone use per month. Burbank’s Fletcher said deals such as those with ICG and the Entertainment Network represent just the tip of the iceberg, because there is plenty of room for expansion of the network. “We’ve got a lot of fiber and a lot of capacity available, but the amount is only going to grow,” he said.

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