AT&T Overbuilder Still Seeking Sites

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Dakota Telecommunications Group, a subsidiary of McLeodUSA,
continues to beat the bushes for cable-television franchises in rural Iowa communities.

In its latest move, the South Dakota-based
telecommunications outfit has launched preliminary talks with officials in Humboldt and
Dakota City, Iowa -- two communities that sit side-by-side about 100 miles northwest of
Des Moines.

"It's very preliminary," DTG assistant
general counsel Bill Heaston said. "Right now, we're looking at the franchises
held by the incumbent in those communities."

If it does pursue franchises in Humboldt and Dakota City,
it would be setting up another showdown with AT&T Broadband & Internet Services,
which operates the local Tele-Communications Inc. system in each community.

In addition to cable service, DTG's usual strategy is
to also overbuild the incumbent local-exchange carrier.

In the meantime, DTG has a franchise up for vote next week
in Storm Lake, Iowa, where voters will decide whether the company will offer cable,
Internet access and local and long-distance phone services to 8,800 residents in the
community. Storm Lake is another TCI location.

If approved, a DTG franchise would likely result in Storm
Lake officials canceling their plans to spend $6 million on a telecommunications network
that would have been leased to private providers of video and telephone service.

DTG's plans for South Lake call for a 750-megahertz,
63-channel cable system.

TCI, on the other hand, plans to upgrade its local network
later this year, followed by the introduction of its high-speed @Home Network cable-modem
service.

Moreover, it has begun offering digital programming and
opened a local office in the community, MSO officials said.

Meanwhile, Heaston said, DTG is looking at a number of
other Iowa communities, including Rock Rapids, Sheldon and Sibley.

"We've got people putting in a lot of windshield
time looking at communities in Iowa, Minnesota and South Dakota," he added.

With 11 overbuilds scheduled for this summer, any Iowa
systems will not be built until next year, Heaston said.

The company currently has a total of 34 cable franchises in
three states, with 26 systems up-and-running.

In Dakota City, a community of about 1,000 residents, the
City Council was expected to begin discussing the possibility of issuing DTG a franchise
at its meeting last week, city clerk Nadine Odor said.

Odor added that city officials are intrigued by DTG's
proposal, which would result in the company footing the entire bill for building a local
network.

"It looks like [city officials] are interested in
talking to the company, because it wouldn't cost the city a thing," Odor said.
"It's too good to be true."

Odor added that another reason why the city is willing to
consider bringing in DTG is TCI's failure to begin an upgrade on its local system in
1998, as scheduled.

"As a whole, I don't think they've been real
happy with the service," she said.

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