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Mediacom Woos Newly Bought Iowa Subs

Mediacom Communications Corp. has hit the ground running in Iowa, where its acquisition of 530,000 AT&T Broadband customers in 220 communities has made it the state's top operator.

And less than one month after closing the deal, the MSO is expanding its network in Des Moines, the state's largest market.

By moving fast, the MSO has also won over local regulators who were initially worried that the operator would balk at following through on AT&T's franchise obligations.

Mediacom will spend $7.3 million in Des Moines to extend fiber to the suburbs of Altoona, Clive, Pleasant Hill, Urbandale and West Des Moines. Other communities scheduled for upgrades include Fort Dodge, Clearlake, Waverly, North Liberty and Maquoketa.

Although the systems acquired from AT&T are scattered throughout three states, most of the upgrades are set for Iowa. Of $800 million budgeted for improvements, according to Mediacom officials, $500 million is earmarked for Iowa, which contributed most of the MSO's 840,000 new customers.

"The [AT&T] deal isn't even 30 days old, and Mediacom is making a significant investment to bring in proven technology," said Deb Blume, spokeswoman for the company's new north central divisional office located in Des Moines.

Tele-Communications Inc., AT&T Broadband's predecessor company, updated the Des Moines system to 800 megahertz in 1999. Now, Mediacom will expand that into the suburbs, bringing those communities up to the same specifications.

"We're going to replace the old plant with new fiber optics and electronics," Blume said.

Mediacom has won the confidence of Dubuque officials by agreeing to offer universal service in a community where over-the-air broadcast channels can't be received.

"In practical terms, cable is a utility to local subscribers," city spokesman Merrill Crawford said.

City officials are happy that Mediacom has returned decision-making authority to a local general manager, Crawford said.

Still, Mediacom faces the prospect of municipal overbuilds in several Iowa localities. Officials in dozens of towns are watching Mediacom's court fight against Spencer, which the MSO has accused of illegally funding its $16 million cable overbuild.

"If Mediacom wins, it could have a chilling effect on them going forward," said Spencer Municipal Utilities spokesman Curtis Dean.

One factor working against the MSO is that consumers know Mediacom's rates in Spencer are well below those of nearby communities that lack competition.

Mediacom appears to have won over some supporters in Springfield, Mo., where officials did not agree to transfer the AT&T franchise until after studying other Mediacom systems.

"We looked at things like complaint levels, if Mediacom kept its promises and whether it had a high employee-turnover rate," said assistant city attorney Nancy Yendes. "I think we surprised them with our due diligence. But we found no reason to say no."