Overbuilt Ops Get Relief in Iowa

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After years of trying, Iowa cable operators have succeeded
in passing legislation that partially levels the playing field between them and municipal
overbuilders.

Senate File 190 -- a compromise hammered out between the
industry and the Iowa Association of Municipal Utilities -- requires municipal cable
systems to meet the same requirements and pay the same fees as their private counterparts.

"That was the paramount thing we needed," Iowa
Cable Telecommunications Association executive director Tom Graves said. "It's
something we've needed for a long time. Right now, municipal utilities that get into
cable don't pay any franchise fees."

Graves added, "It also means you can't require
things like better service or channel capacity from an operator without requiring it from
your municipal utility, as well."

Municipal officials conceded that they agreed to the
compromise partially because "we didn't have the votes to kill it."

"But we also agreed because it's a fair way to do
business," IAMU legislative counsel Julie Smith said.

The law becomes effective July 1.

Cable-industry officials noted that the measure is far from
perfect, however, since it does not address whether municipalities must pay property taxes
on their cable networks, or if one locally owned utility can subsidize a new cable
utility.

"Knowing Tom Graves the way I do, I imagine that will
come up next year," Smith said.

The legislation is nevertheless a small victory for the
state's private operators, which, in recent years, have seen municipal overbuilds
become all the rage in Iowa -- a state with an exorbitant number of municipally owned
electrical utilities.

There are currently five municipal cable systems up and
running in the state, with a number of others in various stages of development. Not
counted among those are cable systems launched or planned by local telephone operators.

So far, the MSO most plagued by local overbuilds has been
Tele-Communications Inc. -- the state's dominant operator, with more than 500,000
subscribers -- which now does business as AT&T Broadband & Internet Services.

"We haven't reached total fairness, but it's
a step in the right direction," TCI of Iowa regional communications director Deb
Blume said.

But despite the landmark bill, separate telephone
legislation may undermine AT&T Broadband parent AT&T Corp.'s plan to offer
telephony services.

Under the phone legislation, municipal telephone utilities
will be allowed to close their meetings and records to the public if they determine that
disseminating any marketing or pricing information would compromise their competitive
situation.

"If they close their records, how do we know if
they're meeting the other provisions of the bill," which include a ban on using
public funds to prop up a municipal telephone utility, Blume asked.

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