Iowa Town Opts for Dakota Overbuild

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The city of Storm Lake, Iowa, will temporarily shelve plans
for a municipal overbuild of AT&T Broadband & Internet Services' system, instead
bringing in Dakota Telecommunications Group to compete with the MSO.

By a vote of 412-13 -- a margin of 97 percent -- residents
in the northwest Iowa community of 8,800 have authorized issuing DTG a franchise that will
allow the Irene, S.D.-based outfit to offer a full suite of telecommunications services.

However, Storm Lake city administrator Alan Winders said
the town has not necessarily abandoned plans for a $6 million municipal network that would
be leased to other private service providers seeking to get into the local market.

"Our plan is the same as before: to give the private
sector a chance to perform. If they don't, then we'll pursue a municipal overbuild,"
Winders said. "We're not making plans for an overbuild, but we're hanging on to the
right to do it."

If the town does ultimately build its own network, it won't
approach the project as a cable overbuild, Winders said. Instead, Storm Lake officials
want to ensure that the community will not be left without all available
telecommunications services.

"We have never seen this as a cable-television
issue," he said. "We see it as an issue of need. Storm Lake can't afford to be
left behind technologically."

Nevertheless, he said, residents noticed that improvements
on the town's local telecommunications infrastructure didn't begin until the community
announced plans to build its own network or to bring in outside competition.

A wholly owned subsidiary of Cedar Rapids, Iowa-based
McLeodUSA, DTG's plans for Storm Lake include offering video and Internet access, along
with phone services to compete with U S West, the state's dominant local-exchange carrier.

Winders said plans for a municipal telecommunications
network were placed on hold earlier this year, when DTG said it was willing to fund the
entire Storm Lake project.

Since then, AT&T Broadband, which operates the city's
former Tele-Communications Inc. system, has opened an office in Storm Lake. The MSO has
begun planning an upgrade of its network, and it plans to launch its high-speed @Home
Network cable-modem service. It is already offering "TCI Digital Cable."

TCI of Iowa regional communications director Deb Blume said
the MSO does not object to a private competitor entering one of its markets -- only to
publicly funded municipal overbuilds.

"[DTG] is a private company doing business every day,
much in the way TCI does," Blume said. "It's not using public money, so we don't
have an issue with this."

Meanwhile, with 11 overbuilds scheduled for Iowa, Minnesota
and South Dakota this year, construction on a new 750-megahertz, 63-channel system in
Storm Lake is at least one year away, DTG assistant general counsel Bill Heaston said.

Heaston added that the system will likely be a combination
fiber optic-copper network. "That solves the return-path problems you experience when
you try to send data over cable," he said.

DTG is currently pursuing similar franchises in other Iowa
locations, he added.

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