Iowa Group is Sweet on Overbuilds

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A grassroots Iowa group, including two former governors and a state attorney general, has formed to promote initiatives to be placed on the November 2005 ballot to promote the concept of municipal telecommunications.

But representatives of telecommunications companies that would compete with city utilities are suspicious about OpportunityIowa, because one of its major promoters has started a fiber-centered business that could profit from municipal overbuilds.

Under current Iowa law, a town must hold an election to create a municipal telecommunications authority, the first step toward an overbuild.

PUBLIC INCENTIVE

According to the group’s Web site, cable and telephone companies have no economic incentive to drive fiber to the home, so cities must create the municipal authorities to preserve the option of an overbuild in the future — whether a specific project is planned or not, an OpportunityIowa spokesman explained.

Tom Graves, director of the Iowa Cable Telecommunications Association, was surprised about the initiative, announced Nov. 11.

“Well, since they have the authority to do [an overbuild] today, and since no one’s trying to stop them, it’s a real interesting announcement,” Graves said.

The new group’s board of advisers includes former Govs. Terry Branstad and Robert Ray, former Attorney General Bonnie Campbell, University of Northern Iowa president Robert Koob and Catherine Dunn, president of Clark College.

Also on the board: Clark McLeod, former CEO of the telecom firm McLeodUSA. McLeod left his eponymous phone firm in 2002, following its pre-packaged Chapter 11 filing.

McLeod now owns a business called Fiber Utilities, created as a fiber construction and consulting firm.

“We’ve met with him. We’ve told him we have no intentions of blocking municipal telecommunications,” Graves said.

Judy Pletcher of the Rural Iowa Independent Telephone Association said it is her group’s long-held opinion that governments should not be in competition with the private sector. OpportunityIowa terms the telco infrastructure “antiquated,” but Pletcher said most of her group’s 148 members have upgraded and now deliver high-speed data service.

OpportunityIowa claims the backing of 83 communities, ranging in size from 60,000 to 1,500 residents. Municipal supporters include cities that already have communications utilities, as well as those who aspire to launch them.

The group hopes to promote local initiatives, rather than a statewide vote, to ensure cities have the right to move into telecommunications businesses.

Critics compare the initiative to the Iowa Communications Network, a fiber initiative launched 15 years ago when its enabling language was dropped into a budget document on the last day of a session. That created a state fiber network that is used for distance learning for elementary through high schools, public libraries, the U.S. Postal Service and state and federal agencies. That network cost the state between $350 and $400 million, and it’s still not self-sufficient, according to recent press reports.

Some lawmakers have proposed legislation to sell the network off to the private sector.

MEDIACOM REACTION

Charles King, senior vice president of the north central division of Mediacom Communications Corp., said cable operators, Qwest Communications International Inc. and independent telephone companies in Iowa have invested millions of dollars to provide enough bandwidth for any telecom applications people might need: Mediacom alone has invested $300 million in Iowa.

“We don’t care if [cities] form utilities. We do care if they create an unlevel playing field,” he added. “I think this is a proposal the people of Iowa will see as a huge expense.”

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