Alameda Voters OK Municipal System

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A municipal measure allowing competitive cable in Alameda,
Calif., squeaked by on Election Day, in the face of intense opposition from the incumbent,
Tele-Communications Inc.

But it will be more than a year before the 80,000-resident
community can begin to offer cable service.

Tom Evans, general manager of the bureau of electricity for
the San Francisco Bay-area town, said it has been a while since the city considered adding
video to the service offerings of the electrical company. Therefore, officials want to
update their financial assumptions before taking their plan to the city's public utilities
board.

The electrical company has been adding cable and other
services to piggyback on its fiber optic backbone since the federal government closed a
neighboring naval base last year. The loss of those customers cost the utility more than
$1 million in revenues.

Even so, however, the power company is solidly in the
black. The department transferred $2.6 million to the city's general fund for nonpower
uses last year, according to Evans.

The now-deregulated utilities see cable as a potential
growth area, and some companies, such as Princeton, N.J.-based RCN Corp., have set up
offices in the state to aid some of these new ventures.

While cities remain bullish on energy-cable suites of
services, recent studies have faulted their financial assumptions.

A recent University of Colorado report noted that even
successful municipal cable operations, such as the one in Glasgow, Ky., subsidize their
cable operations with utility money. Some of the subsidies are as high as $700 per home.

Evans said the power operation in Alameda serves 30,000
homes in the area, and the utility anticipates expanding the plant to more homes if it
decides to get into the cable business.

Pre-election projections were that Alameda's bureau of
electricity will have to spend $8 million to upgrade the backbone for video. Other
possible products are high-speed Internet access and local telephony.

TCI battled the referendum by taking out full-page ads in
local newspapers. The voting was so close that the winner was not determined until Nov.
10, when all of the absentee votes were counted.

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