News

Iowa Town Wants To Buy System

5/09/1999 8:00 PM Eastern

Even before it takes title to Triax Midwest Associates,
Mediacom LLC will be faced with a choice: Sell one of the Triax systems, or face a
municipal overbuild.

The town of Spencer, Iowa, plans to either buy the local
cable system or to launch the state's latest municipal overbuild, city officials said
last week

The Spencer Municipal Utilities Board of Trustees rejected
a joint-venture proposal with incumbent operator Triax after learning that the MSO was
selling its 342,000 subscribers -- including 5,000 in Spencer -- to Mediacom for $740
million.

Instead, the board said it would immediately approach
Mediacom about buying Triax's local system. Failing that, the city would launch a $16
million overbuild that had been placed on hold while local officials studied Triax's
joint-venture proposal.

"A partnership is not an option," SMU staffer
Curtis Dean said. "The board didn't express much interest in going much further
with the proposal. Their attitude was one of, 'Let's get going.' So
it's either buy, or it's competition."

The idea of a joint venture that would head off an
overbuild had been floated in a letter to the SMU board by Triax president Jay Busch,
prompting immediate speculation that the Denver-based operator was looking to strike a
deal in advance of selling out.

Citing "legal reasons," Mediacom officials
declined to comment on the city's desire to acquire the Spencer system.

Dean said the city would immediately inquire about
Mediacom's willingness to sell "at a reasonable price," since it faces a
deadline on accepting bids submitted for a telecommunications network capable of
delivering cable, Internet and telephone services to the community's 12,000
residents.

"If we don't accept these bids, we're going
to lose them," he said. "And they're really good bids. If we have to start
over, we could have to spend an additional $3 million or $4 million."

Acquiring the local system would allow the city to
integrate Triax's network with the new state-of-the-art system the SMU plans to
construct, Dean added.

Triax is currently operating in Spencer under a recently
issued five-year extension of its franchise. The deal does not require a rebuild of its
local network, but the company has nevertheless launched a $3.2 million project that would
upgrade its system to 750 megahertz.

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