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Boulder May Finally Have TV Alternatives

Denver -- After years of complaining about shabby cable
service, Boulder, Colo., may see competition injected into its local market by early next
summer.

City officials in the affluent Denver suburb of 277,000
will vote this week on whether to let U S West build a video digital-subscriber-line
(VDSL) system similar to the one that serves some 16,000 of its customers in Phoenix.

The network would deliver cable television and Internet
access over enhanced copper lines that currently carry U S West telephone traffic.

Boulder would be the second community in the area to
authorize U S West's entry into local video via VDSL technology. Douglas County,
Colo., has already granted the RBOC a license to compete against AT&T Broadband &
Internet Services for 123,000 of its residents.

Experts predict white hot competition in Boulder, as
divergent technologies, including traditional cable (AT&T), VDSL (U S West) and
direct-broadcast satellite (EchoStar Communications Corp) battle for the hearts and
pocketbooks of well-heeled consumers.

Adding to the cutthroat environment will be Seren
Innovations Inc., a Minneapolis-based overbuilder that plans to pursue a cable franchise
in Boulder later this year.

"It's going to be a great battle to watch,"
said Paul Talmey, president of Talmey-Drake Research & Strategy Inc., a Boulder-based
research group.

To add US West to the mix, however, city officials may have
to cross some deep waters.

Their plan is to grant U S West a so-called "revocable
permit," which authorizes the telco to start building its network and signing up
customers. But the permit would not require universal service throughout the community and
would limit U S West's public, governmental and educational (PEG) access payments to
$15,000 a year, compared with $75,000 for AT&T Broadband.

Neither is expected to sit well with the incumbent, which
has struck a conciliatory pose so far.

"AT&T has a significant investment in the
community," said spokesman Matt Fleury. "We're merely asking that our
investment not be disadvantaged because of the introduction of competition that is not
equitable."

City Attorney Joseph N. de Raismes said the lower
PEG-access payments are because U S West does not yet have cable customers. A buildout
schedule could not be established until a formal franchise agreement was negotiated, he
said.

That could take a while. Both sides agreed U S West would
challenge the city's requirement that a franchise must be approved by the voters.

Theoretically, U S West should find a receptive market in
Boulder, a community whose legal battles against AT&T's predecessor,
Tele-Communications Inc., are legendary.

One such fight landed in the U. S. Supreme Court back in
the late 1970s, after the city tried to issue a competitive cable franchise over
TCI's objection.

Resentment from that episode may have carried over into the
1990s, causing disgruntled voters to overwhelmingly deny TCI a franchise renewal in 1996.

Nevertheless, Talmey said U S West brings its own set of
"negatives" to the market, including recent headlines detailing service problems
in Colorado that prompted state regulators to slap the RBOC with a $12 million fine.

"Of all the telcos, U S West has the worst service
reputation," Talmey said. "Now they're going to be offering cable over
VDSL? That's going to be a tough one. I'm not convinced people are going to jump
from AT&T to U S West."

U S West spokeswoman Anna Osborn said construction will
begin as soon as the permit is approved, with a complete build-out in the entire community
in two to five years.

On the cable side, it will offer a 174-channel programming
package consisting of 80 basic channels, 24 premium movie channels, 25 pay-per-view
offerings and 45 music channels for $34.45 a month. Internet access will start at $34.95 a
month.