Minn. Utility Sets Sights on TCI

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St. Cloud, Minn., is about to become a major battleground
in the state's increasingly competitive cable market.

That's where Northern States Power Co., the
state's largest provider of electricity and natural gas, will become the first
investor-owned utility to enter the Minnesota telecom market when it takes on
Tele-Communications Inc.

At its recent annual shareholders meeting, NSP said it will
offer St. Cloud residents advanced telecom services, including cable and Internet access,
beginning next year. The town of 58,000 is located some 60 miles northwest of the Twin
Cities.

Plans call for its Seren Innovations subsidiary to build a
300-mile hybrid fiber-coaxial network that will serve St. Cloud and the suburbs of Waite
Park, Sartell and Sauk Rapids.

That will mean a showdown with TCI, which has eight
franchises in the area covering some 80,000 residents in St. Cloud and the surrounding
suburbs.

The Seren network will also offer alternative local
telephone service, although the company would not specify which local-exchange carrier it
plans to align itself with.

Industry executives admit that NSP represents a formidable
challenge to TCI, which recently dodged a bullet in Breckenridge, Minn., when voters
rejected a plan that would have built the state's first municipal telecom network.

However, with its deep pockets and established brand name,
NSP represents a bigger threat.

"NSP is certainly not something you look forward to
competing against," said Mike Martin, executive director of the Minnesota Cable
Telecommunications Association. "It's an enormously successful company that does
business all over the world."

NSP officials did not return phone calls requesting
comment.

However, in an interview with the St. Paul Pioneer Press,
NSP CEO Jim Howard called the project "too big of a service opportunity to let go
by."

"We think that people will pay for high-quality
television, high-speed Internet access and video-on-demand," Howard said "This
[technology] will change the way people live on the earth."

Seren is expected to apply for a telecom franchise shortly,
and hopes to begin building its network by this summer.

City officials, meanwhile, seemingly welcomed the
utility's arrival on the scene.

"This is exactly what the 1996 Telecommunications Act
envisioned," said St. Cloud city attorney Jan Peterson. "That competition is a
valuable commodity, and is something to be encouraged."

Peterson said that St. Cloud, a college town with a
well-educated population and low unemployment, is a natural site for NSP to launch its
telecom offering.

"There's a mind-set that's receptive to
this," Peterson said. "It's a real opportunity for us, too."

Citing "the competitive situation," TCI officials
declined to detail plans for protecting the MSO's share of the local market, which
they called "significant."

Instead, they promised to compete on a track record of
providing quality service in St. Cloud, where the company recently introduced its digital
programming package.

"We're looking at every possible way to remain
competitive," said TCI spokesman Scott Sobel. We have more experience and access to
the most versatile cable technology. We think that will spell a winning situation for
us."

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