Another Iowa Town Opts Vs. Overbuild

Author:
Publish date:

The town of Atlantic, Iowa -- an agricultural community
located 70 miles outside of Des Moines -- will not pursue a municipal overbuild of
Tele-Communications Inc., local officials confirmed last week.

Cable Commission chairman Phil Barrett said a two-year
study revealed that a network capable of competing with TCI's would cost up to $10
million, and that it would not generate positive cash flow for 10 to 15 years.

"We learned very quickly that cable was not the only
component in this," Barrett said. "It had to include Internet access and
telephone service. If we tried to offer just cable, we were going to lose money."

Atlantic thus became the third Iowa community in recent
months to forsake a municipal overbuild based on cost, joining Humboldt and Winterset.
Residents of Greenfield, Iowa, rejected a similar project in 1997.

One-dozen communities in the state are continuing to at
least study the issue. "But most of the communities that voted last November
haven't moved on it," said Debora Blume, communications director for TCI of
Iowa.

Blume said municipal officials are increasingly asking
"realistic questions about how they're going to pay these loans off, especially
since a lot of these small communities are getting smaller. People are asking,
'Who's going to be left to pay off these systems?'"

Barrett said the decision to scrap the project was made
easier by TCI's efforts to improve service in the community of 7,500 residents in
north central Iowa.

For example, the MSO responded to calls for expansion of
its 34-channel lineup this past January by unveiling its TCI Digital programming package
in Atlantic even before it had been fully launched in the more lucrative market of Des
Moines, Barrett said.

It also worked to ensure that ESPN2 would be carried on the
digital tier, thereby ensuring that local sports fans would be able to follow University
of Iowa and Iowa State University football and basketball games.

"It took some doing, but it was a direct response to
the community's request," Barrett said, adding that previous TCI officials had
been unresponsive to consumer complaints.

And finally -- in line with TCI president and chief
operating officer Leo J. Hindery Jr.'s directives -- a new round of rate hikes
imposed in June was held to 3 percent, compared with an industrywide average of 8.5
percent.

The result has been a significant turnaround in the
public's attitude toward TCI, which faced a "strongly negative" customer
base two years ago, when local residents were first polled about whether they wanted to
pursue a municipal overbuild.

"They're providing better service, and they have
a much, much better relationship with the city," Barrett said. "The community
has seen a 180-degree turnaround in TCI."

Related