Fifth Iowa Locality Overbuilds AT&T

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Muscatine, Iowa, a town of 24,000 residents on the
Mississippi River, has become the fifth community in the state to launch its own municipal
cable system.

Operating as MPW Cable, municipal electric utility
Muscatine Power & Light is offering video services to a limited number of area
households over a 750-megahertz system capable of delivering cable, Internet and telephone
services. MPW is competing for 10,000 area households against TCI of Iowa, which is now
under the umbrella of AT&T Broadband & Internet Services.

City residents authorized the creation of a cable utility
by a 94 percent margin during a special election last July.

But unlike the Iowa communities where TCI is playing
catch-up, the competitive situation in Muscatine is already a battle of equals. The cable
operator had upgraded its network to 750 Mhz, added several analog channels and introduced
its TCI Digital Cable package before the city unveiled its new cable service.

"But we didn't set out to build a cable network,"
said Muscatine public relations and utilities manager Gary Wieskamp. "We want to
fulfill the needs of our citizens. Plus, we have businesses that have telecommunications
needs."

Project manager Sal LoBianco said two area businesses are
currently using the town's new two-way, interactive network as a conduit for transporting
data between multiple sites.

"Business leaders here have long considered this a
community that was underserved, from a data and long-distance-access perspective,"
LoBianco said.

The city's plans call for launching Internet access service
later this year, which would compete with the MSO's planned high-speed TCI@Home
cable-modem service.

"Right now, we're looking at sometime next fall when
we would introduce that product into the market," said TCI of Iowa regional
communications director Deb Blume.

Until then, the fight in Muscatine will be waged on the
video front.

Muscatine's network offers 67 channels of expanded basic
programming for $25.75, compared with TCI's 53 channels for $23.84.

"Our mission in Muscatine has always been to provide
quality services and prices," Blume said. "And if you look at our channel lineup
and price list, you see we're doing that."

Meanwhile, LoBianco said, the city has been contacted by a
number of area communities interested in jumping on the bandwagon.

Most notable is Whilton, Iowa, a community 14 miles to the
north, where the Whilton Telephone Co. has entered into an agreement to purchase cable
programming from Muscatine, then resell it to its customers.

However, the real effects of competition were most evident
when TCI failed to raise rates in Muscatine, Wieskamp said.

"They did in all the surrounding communities, but not
in Muscatine," he said.

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