Telecom Provider Eyes TCI in Des Moines

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McLeodUSA, which already plans to take on
Tele-Communications Inc. in Cedar Rapids, Iowa, has set its sights on the state's
largest cable-television market.

The telecommunications-services provider is talking to
officials in Des Moines, Iowa, about a cable franchise that would go before voters in a
special referendum in November.

McLeodUSA, which already provides phone service to 5,500
residences and 2,500 business in Des Moines, proposes to build a fiber optic network
capable of delivering video, phone and Internet-access service to the city's 190,000
residents.

The decision to enter the Des Moines market comes just
weeks after McLeodUSA inked a deal to provide cable service in its hometown of Cedar
Rapids, the state's second-largest city.

Des Moines, however, with more than 400,000 residents in
the metropolitan area, represents McLeodUSA's boldest move yet into the Iowa cable
business.

City Councilman Tom Vlassis said McLeodUSA's arrival
on the scene would give Des Moines "two companies with the capability of providing
the city with everything that it will need over the next 25 years."

Vlassis said the city hopes to have a deal with McLeodUSA
in place within 60 days. To avoid problems, the agreement is expected to be identical to
any agreement that TCI ultimately signs.

However, his characterization of McLeodUSA as something
that the city "desperately needs" raised some hackles at TCI, which is in the
midst of a $20 million rebuild of its own local network.

"We've told our story, and told our story,"
said Debora Blume, regional communications director for TCI of Iowa. "TCI is
delivering everything that they're searching for. We have 220 miles of active fiber
optic plant, and still they say, 'We want a company that will give us fiber
optics.' Well, we say, 'You've got it.'"

The MSO introduced its TCI Digital Cable package in Des
Moines in December, and it plans to launch its @Home Network Internet service by
year's end.

Blume also took issue with Vlassis alluding to a survey
conducted by a Des Moines radio station that indicated that 94 percent of local cable
viewers want a new service provider.

Calling the poll "unscientific," she noted that a
needs assessment that was done for the city as part of the process of renewing TCI's
franchise found that 80 percent of the MSO's local customers expressed "some
level of satisfaction with their cable service."

"The city's own survey shows very clearly that
we're doing the job," Blume said. "Why point to an unscientific survey,
when you have one indicating that people are satisfied doing business with TCI?"

Sources close to the situation, meanwhile, said McLeodUSA
apparently has plans to seek franchise in other TCI cities in Iowa.

Industry officials said the company is also talking to
officials in Dubuque and Marion, two other TCI venues. And it's reportedly interested
in the communities of Hiawatha, Iowa City and Waterloo.

McLeodUSA officials did not return calls for comment.

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