Muni Cable Op Expands Into Telephony

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The city of Manning, Iowa., which has been offering
cable-television service over its own municipal system since 1984, plans to expand its
telecommunications offerings.

The town of 1,400 residents has agreed to purchase
wholesale telephone, Internet-access and high-speed-data-transmission services from
Iowa-based Pioneer Holdings LLC for resale to area consumers.

The deal will put the city in competition with GTE Corp.,
the area's dominant local-exchange carrier.

However, it's also significant because it could
encourage other Iowa communities that are currently weighing whether or not to build
municipal networks capable of delivering cable-television service in competition with
incumbent operators.

"If they're looking at these systems, I would say
that they're going to need a telephone component to make the operation's cash
flow," said Dean Fara, chairman of the Manning Municipal Communications and
Television System Utility, which offers local residents 30 channels of basic-cable
programming for $15 per month.

Municipal overbuilds of incumbent cable operators have
become the rage in Iowa, where 12 communities voted in November to at least study such
networks.

Manning, however, built its cable network because it did
not have a local cable operator, Fara said.

"We didn't have anybody interested in coming in
here," Fara said of the community, which is located in north-central Iowa.

Nevertheless, towns currently considering building their
own networks would be able to offer packages of cable, telephone, Internet-access and
high-speed-data-transmission services by entering into similar agreements with Pioneer
Holdings.

"This is the second such agreement that Pioneer has
signed to assist an Iowa city in bringing high-tech services to market in the last six
weeks," said Pioneer Holdings president Mike Thompson, in a prepared statement.
"The people of Manning and [nearby] Coon Rapids are changing the way that small towns
and rural communities think about the future."

Another community that is apparently ready to jump on the
bandwagon is Hawarden, a town in extreme northwest Iowa, which completed a municipal
overbuild of Tele-Communications Inc. last fall. Hawarden officials are also reportedly
looking at entering into a similar agreement with Pioneer Holdings.

Meanwhile, Manning plans to spend $2.8 million on building
the infrastructure over which it will deliver its new services beginning sometime next
year. It estimates that it will need 58 percent of the town's 920 access lines in
order to be profitable, Fara said.

So far, it has some 400 advance sign-ups for its municipal
telephone service, he added.

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