AT&T Faces Pocahontas Overbuild Arrows

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Encouraged by neighboring communities that have competition
in their local cable markets, the city of Pocahontas, Iowa, has chosen to launch an
overbuild of AT&T Broadband & Internet Services.

By a vote of 306-18, residents of the northwest Iowa town
recently chose to build a municipally owned telecommunications network that will compete
for 750 local AT&T Broadband subscribers, as well as with U S West for area phone
customers in the community of 1,000 households.

City administrator Greg Fritz said Pocahontas elected to
pursue the overbuild project after the Iowa Supreme Court ruled that local governments can
offer telephone service if they also provide cable television to their residents.

"[City officials] wanted to do this for some
time," Fritz said, "but they decided to wait until this issue was resolved. The
Supreme Court decision convinced them to proceed."

Meanwhile, the Iowa Legislature enacted a bill during the
1999 session that "clarified" the terms under which municipal governments can
get into the telecommunications business, Fritz added.

Under the new law, local franchising authorities will be
allowed to provide cable service to their residents as long as they meet the same
requirements and pay the same fees as private cable operators.

AT&T Broadband officials, however, said the city had
told voters that the municipal vote was a preliminary step, and that no decision had been
made on whether to build the network.

"We don't know if it's going to be an overbuild or
not," AT&T Broadband regional communications director Deb Blume said. "This
is not what they told the voters."

Nevertheless, Pocahontas is the sixth AT&T Broadband
venue in Iowa to vote in favor of bringing competition to its cable market.

Fritz said residents voted in favor of the project because
AT&T Broadband's annual rate hikes have not come with corresponding increases in the
town's 27-channel program lineup.

"That's not too good," he added, "especially
when you see some towns around us that get 40 or 45 channels for less money than we
pay."

In nearby Laurens, Iowa, for example, cable viewers receive
45 channels of programming from their municipal cable system for $20.95 per month,
compared with $21.95 for AT&T Broadband, he said.

Fritz estimated that the Laurens network has captured 650
of the potential 800 households since going online six months ago.

Meanwhile, Blume said, the MSO has responded by launching
its "TCI Digital" programming package in Pocahontas, and it is in the middle of
an upgrade of its local system.

And although the Pocahontas system is one of its smaller
systems in Iowa, the operator is also examining ways to introduce its high-speed @Home
Network Internet service, she added.

Poor telephone service was also a reason for pursuing a
municipal network, Fritz said.

With U S West unable to provide new phone lines in areas
downtown, and plans being hatched to sell the Pocahontas exchange, residents were worried
that the new owner might not have the financial resources to upgrade the local phone
network, he added.

"I knew that it was going to pass because of the
general mood around here," Fritz said. "And people here like the idea of local
control. They know that the money is going to stay in the community. That really hits
home."

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