Iowa City OKs Cable Competitor

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Residents of Iowa City, Iowa, voted overwhelmingly last
week to authorize a second cable franchise that will allow McLeodUSA to serve their
community.

By an 87 percent margin, voters approved an
already-negotiated 10-year deal similar to the franchise granted to Tele-Communications
Inc., the city's incumbent operator.

"Most of the work is done at this point," said
Drew Shaffer, city cable administrator. "As a final step, it now goes to McLeod for
approval and signing."

Once signed, McLeod can begin building an all-digital
telecom network capable of delivering cable, local and long distance and Internet access
services to the community's 60,000 residents, as well as to students at the
University of Iowa.

The Iowa-based telecom company began competing against TCI
earlier this year under a similar agreement with Cedar Rapids, its home town. It is also
in the process of negotiating a deal in Des Moines, the state's largest cable market
and another TCI stronghold.

McLeod officials did not return repeated calls for comment
last week.

Under its new Iowa City deal, McLeod has agreed to match
TCI franchise requirements, including $160,000 in annual public, educational and
governmental (PEG access) payments, as well as a 50- cent per-subscriber, per-month fee
for community programming.

TCI, which recently completed an upgrade of its Iowa City
network, has responded to the threat of competition by launching its TCI Digital
programming package, with plans to also unveil its TCI@Home Internet access service by
year's end.

In Des Moines, meanwhile, local officials said talks on a
franchise that would enable McLeod to compete against TCI have come down to a few
"minor sticking points."

"We could have an agreement by the end of December,
maybe by the end of November," said city councilman Tom Vlassis, a longtime proponent
of competition in the local telecom market. "The leader of the discussions tells me
it's come down to a couple of dinky things."

As in Iowa City, Des Moines officials are trying to ensure
that both franchises are identical.

"We have to do that," Vlassis said.
"That's why we're going over them with a fine-tooth comb."

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