Small Iowa LEC Goes After Cable Franchise

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A small, rural phone company wants to be the next
local-exchange carrier to get into the Iowa cable business, continuing a trend that is
gaining momentum statewide.

The board of directors of Wellman Cooperative Telephone Co.
voted recently to pursue a cable franchise that would allow the company to compete against
Triax Cablevision in Wellman, a community of 1,125 residents in southeast Iowa.

"It's really in the beginning stages, but we will
be applying for a franchise," general manager Jayne Hochstedler said.

For Triax, competition comes at a time when the city has
refused to grant the MSO an extension of its franchise. City officials are also preparing
to unveil a survey that found that local residents were disenchanted with their existing
service.

"We've had poor service, poor telephone-response
time and a lot of service outages," city clerk Donna Wade said.

Pat Callahan, president of Municipal & County
Management Services, a local consulting firm that represented the city in franchise
negotiations, said WCTC has shown its interest in the local market by asking for copies of
the city's telecommunications-needs assessment and its new-franchise regulatory
ordinance.

"I'd say that they're interested. And I
would think that the city would be interested in talking to them," he said.
"That's what Congress intended when it passed the 1996 Telecommunications
Act."

Callahan said WCTC will likely want to have its franchise
in hand by year's end in order to begin construction after the weather improves
sometime next year.

Triax spokesman Tom Bordwell conceded that Iowa has become
"a hotbed" for local telcos wanting to get into the cable business as a way of
cashing in on deregulation.

"It's like the shakedown that the cable industry
went through," he said. "They want to keep growing before somebody else sweeps
by and eats them up."

WCTC's interest in the cable business is nothing new
among small Iowa telephone operators.

According to the Iowa Telephone Association, out of 158
LECs in Iowa, it's estimated that 70 independent and rural co-ops are already
offering cable to 120 communities in the state.

Many are located in rural communities that cable never
reached, while others are simply looking to capitalize on the benefits of bundling video
with existing telephone service, thereby enticing local subscribers away from incumbents
like Triax.

Wellman is the latest LEC to take on Triax in Iowa.

Montezuma Telephone Co. currently offers cable in Montezuma
and neighboring Lake Ponderosa -- communities where it claims that most of its 700 cable
customers have come at Triax's expense.

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