Two Iowa Towns Plan Overbuilds

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Two more Iowa towns have joined the list of local
franchising authorities with plans to compete against AT&T Broadband & Internet
Services.

The rural communities of Alta and Osage have joined five
others in Iowa with plans to use their municipally owned electrical utilities as
springboards to offer cable, Internet-access and local phone service to area residents.

In Alta, a northeastern rural village of 1,820, contracts
have been signed for the construction of a $3.7 million telecommunications utility that
could be up and running by next summer, Alta Municipal Utilities manager Ron Deiber said.

Local residents voted by a majority of 83 percent to
green-light the project almost two years ago.

"People were starved for better cable service,"
Deiber said. "We're at the tail end of AT&T's Storm Lake system, so the picture
quality isn't very good. But when you're paying $30 per month, you deserve quality
service. We're hopeful that we'll be able to offer more channels at equal or lesser
prices."

Deiber said the immediate result has been to goad AT&T
Broadband into upgrading its system in parts of Alta as it has in nearby Storm Lake, a
community where it's facing a private overbuild from Dakota Telecommunications Group.

With more than 500,000 subscribers, AT&T Broadband is
Iowa's dominant cable operator, which also makes it the most beleaguered when it comes to
municipal-overbuild fever. At last count, five cities had competing networks, with several
others studying the issue.

AT&T Broadband regional spokeswoman Deb Blume said the
MSO hopes to complete its rebuild in Alta early next year, which would allow it to expand
the "three-pack" digital-programming package it's already launched in the
community.

"Once we finish the upgrade, we'll have more space and
we'll be able to offer more," she added.

In Osage, meanwhile, 83 percent of voters recently
authorized the creation of a telecommunications utility, while 79 percent agreed that it
should be operated by Osage Municipal Utilities.

The town is readying a feasibility study that could produce
a municipal network within three years, said Dennis Fannin, general manager of the local
electrical and natural-gas utility. "There's nothing better than having something
like this driven by the citizens," he added.

Fannin said residents had seen how numerous other Iowa
communities were building municipal telecommunications systems, rather than waiting for
their local cable or telephone companies to get around to upgrading locally.

"If you look at what's happening in Iowa, nobody wants
to get left in the dust," he added. "We had people here asking, 'What's Osage
going to do about this?'"

Blume agreed that Osage must first determine if it can
afford to compete against an entrenched incumbent -- something many studies indicated
would undercut both competitors.

"We've already added channels there, and it remains on
the upgrade list for 2000 or 2001," she said. "We're going to do whatever we
need to do to have a successful business in Osage."

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