Triax Begins Upgrade Without Franchise Renewal

12/06/1998 7:00 PM Eastern

Triax Cablevision has launched a $3.2 million rebuild of
its system in Spencer, Iowa, despite the fact that it is still at odds with the city over
its franchise renewal.

The MSO began upgrading its 4,500-subscriber system to 750
megahertz, even after weeks of talks with local officials failed to produce a new
franchise for the town of 11,000 residents.

"Basically, we've gone ahead and launched the
upgrade separately from the franchise process," Triax spokesman Tom Bordwell said.
"We had planned to do it all along. But now, we feel like it's an advantage to
get it done quicker."

Bordwell said the $3.2 million cost of the upgrade will not
include the price of additional programming, nor the introduction of digital and
Internet-access services.

Negotiations stalled over a city proposal that would have
relieved Triax of any immediate rebuild requirements in exchange for accepting a
three-year franchise.

However, plans for a municipal overbuild of Triax may have
forced the company's hand.

Industry officials said Triax had to rebuild its network or
face being overshadowed in the market.

"They want to be ready to compete if [an overbuild]
happens," said Tom Graves, executive director of the Iowa Cable Telecommunications

Brian Grogan, a partner with Moss & Barnett, a
Minneapolis-based law firm representing Spencer, said Triax's decision to proceed
with a rebuild doesn't change the city's position.

"Our position is that we're not going to mandate
an upgrade," Grogan said. "But if they choose to go ahead, we certainly welcome
that, and we hope that they'll be a viable competitor in the future. But it
doesn't alter our position on wanting a shorter-term franchise."

A short-term franchise was originally conceived as a way of
allowing the city to decide whether to launch an overbuild. Presumably, if it did not,
regulators would only have to wait three years before they could require Triax to upgrade.

Bordwell said Triax has not made an official decision on
the city's proposal.

Meanwhile, Bruce Gifford, chairman of the Spencer Cable
Commission, confirmed last week that the city will go ahead with its municipal cable

The idea now is to sign Triax to a short-term deal, to get
the municipal network up and running, then to ink both sides to 15-year franchises and
"let them fight it out," Gifford said.

Gifford was surprised that Triax elected to proceed with
its upgrade, given the fact that 91 percent of the voters supported the creation of a
telecommunications utility.

Moreover, a recent survey indicated that 60 percent of the
community's residents favored a municipal cable network, he added.

"I know that the public wants to see it," he

Apart from cable, the municipal network is expected to
deliver Internet-access service. It could also offer telephone service if municipal
governments in Iowa are successful in overturning a recent state Supreme Court decision
prohibiting municipalities from operating telephone utilities.

"We're watching that pretty closely,"
Gifford said.

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