Municipal Overbuild Hits 2nd Ohio Town

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The city of Lebanon, Ohio, was set to begin commercial
service of its municipal cable overbuild today (March 8), following a 35-person beta-test
conducted over the past several weeks.

According to Jim Baldwin, deputy director of
telecommunications for the suburb of Cincinnati and Dayton, the Lebanon system is only the
second municipal overbuild in Ohio (see related story, this page). Both compete against
incumbent Time Warner Cable systems.

Part of the City of Lebanon Telecommunications System, the
cable service will be followed next month by a high-speed cable-modem service offered in
conjunction with a local Internet-service provider.

The network will also support automated meter reading for
the city's water and electric services. And the city is investigating whether it
makes economic sense to add a competitive phone service.

"We're a lot more excited about our data service
than about cable TV," Baldwin said. "Anybody can do cable TV."

Baldwin added that the municipal cable service would be
priced about 45 percent lower than what Time Warner currently charges locally.

A preliminary marketing study predicted that the
municipality could capture 90 percent of Time Warner's subscriber base if the service
were priced only 10 percent below the incumbent.

If Time Warner engages the municipality in a price war,
Baldwin predicted, nearby communities would be more inclined to offer competitive services
of their own.

While Lebanon has no plans to promote its service to other
towns, Baldwin acknowledged that Lebanon could generate additional revenues from its
headend if nearby towns expressed interest.

He said Lebanon's network was expected to see a profit
sometime next year, with 3,400 customers.

Baldwin added that smaller cities tend to get overlooked
when it comes to new technologies. With the new, $7 million network, "We're
buying our people time," he said. "They're getting [high-speed Internet]
services early."

Jennifer Mooney, vice president of public affairs for Time
Warner Cable's Cincinnati division, said the MSO will ultimately launch its Road
Runner high-speed-data service in Cincinnati-area towns, but she could not say when.

She added that it would be speculative to say whether Time
Warner would lower its cable prices to compete against the municipal service.

Time Warner counts more than 3,000 subscribers in a town
with a population of 11,500.

Coaxial Communications also serves roughly 500 customers in
a northeast corner of the city, Baldwin said.

The municipal network has already passed 7,500 homes,
Baldwin said, and 2,000 residents had preregistered for the service by early last week.

"We hope to get 4,000 subscribers" eventually,
Baldwin added.

The city of Lebanon has promised to televise every local
high-school football game, as well as additional sports and government events. The cable
service will also show local programming from both Dayton and Cincinnati broadcast
stations.

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