McLeodUSA Adds Marion to Its Iowa List

Author:
Publish date:
Updated on

McLeodUSA didn't waste any time in adding to its
cluster of 160,000 potential cable-television customers in Iowa's second-largest
market.

Having secured a franchise in Cedar Rapids, the
telecommunications-services provider has inked a similar deal in the adjoining town of
Marion -- a bedroom community of 21,000 residents currently served by Tele-Communications
Inc.

Residents of Marion voted 736-40 recently to grant
McLeodUSA a franchise that runs through 2007.

Under the deal, McLeodUSA, which currently offers local
phone and Internet-access service in Marion, has agreed to provide cable service
comparable to TCI's, city manager Jeff Shott said.

"Cable is the only thing that we regulate," Shott
said, "and they've said that they'll offer at least as many channels as
TCI, and probably more."

Shott added that the scope of McLeodUSA's election
victory should not be taken as a sign of dissatisfaction with TCI.

"I wouldn't imply anything against TCI,"
Shott said. "It's more that people here value competition. How can you be
against competition?"

McLeodUSA has indicated that it expects to begin offering
cable service in select areas of Marion early next year, and that it will complete
construction of its system within 18 months.

McLeodUSA officials were not available for comment last
week.

However, if the Marion programming package is comparable to
McLeodUSA's offering in Cedar Rapids, area cable subscribers can expect a 63-channel
expanded-basic package priced at, or near, the cost for TCI's offering.

Another possibility is two 10-channel "Value
Tiers" for $5 apiece and premium-movie-channel offerings ranging from $2.75 for a
multiplexed Encore package to $11.50 for four channels of Home Box Office.

Marion marks the latest Iowa community where McLeodUSA
plans to compete against the nation's second-largest MSO.

In addition to Cedar Rapids and Marion, the company is
pursuing cable franchises in Des Moines and Iowa City, two other TCI strongholds.

Predictably, TCI officials were taking a moderate approach
to McLeodUSA's entry into Marion.

MSO officials have consistently said that the company
doesn't object to competing against a private entity, but that it does object to the
municipal overbuilds that have been sweeping across Iowa.

Nevertheless, Debora Blume, regional communications
director for TCI of Iowa, said the company will "compete in the marketplace" for
each of its local subscribers.

So far, TCI has responded to the approaching competition by
introducing its TCI Digital programming package, and it plans to follow up by unveiling
TCI@Home high-speed Internet access in the fourth quarter of 1998, Blume said.

Related