News

TCI Looks to Start New Trend in Iowa

11/15/1998 7:00 PM Eastern

Tele-Communications Inc. is close to signing a partnership
arrangement with Indianola, Iowa, a bedroom community south of Des Moines, which wanted to
compete against the MSO one year ago.

Industry observers believe that the alliance may be a
harbinger of similar deals in other TCI towns where plans for municipal overbuilds have
been undermined by an Iowa Supreme Court decision prohibiting cities from operating
telephone utilities.

"Both the court decision and TCI's willingness to
commit money to improving these systems mean that we'll see more arrangements like
this," said Tom Graves, executive director of the Iowa Cable Telecommunications
Association.

Officials for TCI of Central Iowa confirmed last week that
the company was in the "final stages" of negotiating a definitive agreement with
Indianola, a community of 12,000 residents, which voted by a 58 percent margin in 1997 to
launch a municipal overbuild of the MSO.

However, the city shelved the project after cost estimates
came in at more than $9 million.

"Basically, an overbuild is not in the cards at this
time," said Mark Ramthun, Indianola Municipal Utilities' interim general
manager.

TCI officials said the two sides have been talking for more
than one year, and they hope to wrap up negotiations by the end of the month.

"Anytime you've got cities and TCI working
together, and not against each other, that's a win for customers," said Deb
Blume, regional communications director for TCI of Iowa. "We want people to feel like
we're responsive to their needs. And sometimes, the partnership route is the way to
go."

Blume declined to offer specifics of the potential
agreement.

Nevertheless, TCI is reportedly anxious to strike a deal
that it can tout throughout the state. The company is already facing competition from
three existing municipal overbuilds, with at least another one-dozen potential municipal
competitors in the wings.

"We're kind of a test facility for them,"
Ramthun said. "If we can come to an arrangement, they'd like to advertise
it."

Ramthun said TCI has proposed launching a 750-megahertz,
fiber optic upgrade of its local system that would include a certain amount of capacity
dedicated for the city's use.

That capacity would be tied to a network that TCI would
build "at cost" to connect an estimated 25 city facilities, including schools,
libraries, substations and a local liberal-arts college.

Ramthun said that the city could also use access to
TCI's network to launch a municipal remote-meter-reading project. TCI would install
"drops" at homes that don't take its service in order to give the city
access to those locations.

At the same time, TCI would increase the channel capacity
at its local system to about 72, while also introducing its TCI@Home high-speed
Internet-access service.

"This could benefit both of us," Ramthun said.
"It's looks very positive right now."

September