Cascade Telephone Co. of Cascade, Iowa, sees a future in bundling cable with telephone and high-speed data service. Mediacom Communications Corp., the city's cable provider, is trying to consolidate its Iowa operations into one efficient network.
So the two struck a deal in which Mediacom will sell its 500-plus subscriber cable system in town to the utility.
The parties said Cascade Telephone will pay $771,000 for the cable system. The two companies have executed a purchase agreement, but the deal will not close until later this month.
The transaction passed its last local hurdle Nov. 10, when the council representing the town of 1,950 agreed to waive its right of first refusal to buy the system, according to city administrator Randy Lansing. The City Council then voted to approve the transfer of ownership from the MSO to the telephone company.
The deal allows Mediacom to eliminate a system in the outermost reaches of its Iowa divisional cluster. The town didn't even have its own headend, but instead received signals via a fiber link to Cedar Rapids, noted MSO senior vice president of business development Calvin Craib.
"Where possible, we've been tying systems together. But Cascade is too far down the line for the economics to work for us," he said.
Mediacom is not just shedding systems, but buying ones that fit better into the network it is trying to create. For instance, the company recently bought a system in Decora, Iowa, he said.
Cascade Telephone has a lot of work to do before it can reach its goal of offering a one-bill, multiservice bundle, said general manager Dave Gibson. The company must build a headend to take the place of the Cedar Rapids link.
Mediacom has agreed to continue to service cable customers after the deal closes, if the telco hasn't gotten its infrastructure in place by that date, he said.
The telephone company also must renegotiate programming deals for the local system.
While Cascade is taking a step forward into the bundled-services world, it will take a step back, technologically, when it begins to operate the system. Gibson plans on taking the plant back to analog-only service, he said. Mediacom has introduced digital service in town, "but it's my understanding it's not very popular," Gibson said.
If digital service is desired in the future, the telephone company may contract with Iowa Network Services of Des Moines, he added.
Gibson declined to detail financing for the purchase. Cascade Telephone passes 2,100 homes in and around the city.
"Industry-wide, we see telephone companies looking to get in [to cable]," he said. "We're all crossing over. We've been interested in cable for a couple of years. We see it as an important part of our future."