TCI Gets Competitor in Hiawatha, Iowa

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The community of Hiawatha, Iowa, recently became the latestcity in the state to award McLeodUSA a cable franchise, setting up still anothercompetitive showdown with Tele-Communications Inc.

In a special election, the bedroom community of 6,000,located on the north edge of Cedar Rapids, voted 597-52, or by a 91 percent margin, togrant McLeodUSA a 15-year deal.

The Iowa-based telecommunications outfit now has five cablefranchises in the state, with Hiawatha joining Cedar Rapids, Marion, Coraville and IowaCity in introducing competition to their local video markets.

McLeodUSA is also reportedly nearing an agreement on afranchise with the city of Des Moines -- the state's largest market, and another TCIstronghold.

Local officials said McLeodUSA has already begun buildingits network in Hiawatha.

"I expect that within 12 months, they'll beserving a significant portion of the city," city manager Oliver Merriam said.

Hiawatha is a suburb of Cedar Rapids -- McLeodUSA'shometown and the first Iowa venue where the company began offering cable service earlierthis year.

"This is a growing, aggressive company that'sgoing to give the town a fiber optic cable system," Merriam said. "TCI'sservice was never an issue. McLeod came to us and asked us to have the election [on afranchise], and there was no reason not to allow them to seek one."

Unlike some Iowa markets, however, competing against TCI inHiawatha will not be easy.

The company serves the community from its operations inCedar Rapids -- a 550-megahertz system that it acquired from Cox Communications Inc.,which is easily expandable to 750 MHz -- said Deb Blume, regional-communications directorfor TCI of Iowa.

Moreover, the MSO has already launched its "TCIDigital Cable" package locally, and it plans to introduce its TCI@Home high-speedInternet-access service by year's end.

Predictably, TCI has not raised any objections toMcLeodUSA's entry into the market, arguing that it would rather compete against aprivate entity than a municipal overbuilder.

In addition to meeting the same franchise obligations asTCI, McLeodUSA has agreed to broadcast Hiawatha City Council meetings.

"We're looking forward to having a professionalbroadcast, rather than the amateur one that we have now," Merriam said

More important, it also agreed not to work in the streetswithout notifying the city first -- a problem in recent times with the private gas andelectrical utilities that serve the community.

"Some of our older utilities would just come in [andstart working]. I'm always getting calls asking me, 'Who's digging up thestreets?'" Merriam said.

Characterizing TCI's service as "a littleexpensive," Merriam said bringing McLeodUSA into the local market represents "anopportunity for some pure competition."

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