Minnesota Towns Plan Local-Exchange Net

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Three Minnesota communities with existing municipal cable
systems want to link their networks in order to provide telephone and Internet access.

The joint network would deliver local phone service via
cable to Lakefield, Windom and Jackson, Minn. -- towns in the southwest corner of the
state where it's a long-distance call between each community, despite the fact that
they're just 13 miles apart.

Accomplishing their plan will require multimillion-dollar
upgrades of their cable systems -- an expense that opponents have been quick to harp on.
The systems currently average 300-megahertz capacity, and they can only offer some 36
channels of programming.

"If we can do this, we could create a virtual
community of 10,000," said Mark Erickson, city administrator for Lakefield, with
1,600 residents located 10 miles from the Iowa border.

Not surprisingly, cable executives didn't think much
of the idea, arguing that local officials are overlooking plans by Bresnan Communications,
Dakota Telecommunications Group and Mediacom LLC to deploy advanced services in their
areas.

Meanwhile, under Minnesota law, cities cannot offer
local-exchange service unless they receive a 65 percent "supermajority" from
voters in a special election.

This produced a setback when voters in Lakefield
overwhelmingly approved the idea, but Windom voted the measure down. In Jackson,
meanwhile, officials haven't decided when -- or even if -- to take the issue to
voters.

For now, though, residents of Lakefield -- which has
offered municipal cable service for six years -- approved the plan by an 82 percent
margin.

"We liken it to 100 years ago, when electricity was
being introduced," Erickson said. "Just like now, with telecommunications, the
power companies were busy in the big cities and said, 'We'll get around to
you.' But we feel like we shouldn't have to wait."

Erickson dismissed the cable-industry argument that cities
should not have the right to compete against private operators and that such projects are
economically dangerous, ultimately resulting in higher taxes.

"We're at the bottom of the technological food
chain," he said. "If we don't have the right to do this, who's going
to do it for us? We certainly don't have any leverage to get these service providers
to talk to us."

Lakefield plans to upgrade the town's existing cable
network from 300 MHz to 870 MHz, allowing for telephone traffic that would account for 80
cents of every $1 in revenue generated. Another 15 cents would be produced by cable
service.

That leaves five cents in revenue to come from Internet
access, which will likely be farmed out to an outside Internet-service provider, making
the community the latest municipal cable operator to run its system on an open-access
model.

Officials in Windom -- which has operated its own cable
system for 16 years, and which would bring 4,500 potential customers to the joint project
-- were not available to discuss why their ballot initiative failed.

However, Erickson said, the measure was torpedoed by U S
West after the regional Bell operating company decided to take the Windom exchange off the
market. It managed to convince voters that local tax dollars would go to pay for the
network expansion.

"They stood up and lied," Erickson said.
"There would be no tax money used to build these systems." He added that he
expects Windom to revisit the issue next spring.

In Jackson -- where 3,800 residents have had city-offered
cable since 1959 -- Mayor Gary Willink said the local telecommunications committee chose
to wait until it had time to educate voters on what was at stake.

Willink, who supports the project, said he doesn't
plan to let the issue become the subject of endless committee meetings. "We're
either going to do this, or we're going to quit meeting," he said.
"Personally, I believe we should test the waters. We need to know this year what
we're going to do."

Whatever happens, Erickson said, the question of
municipally offered telecommunications service is gaining momentum in Minnesota. "The
whole issue is going to explode," he added. "There are a number of communities
looking at it."

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