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MARK STEIL: It all starts with a wire. The city of Windom already owns a profitable cable television system, which has wires running to more than 80% of the houses in town. But City Administrator Dennis Nelson says those coaxial cables have unused capacity and can deliver much more than Homer Simpson, Space Ghost, and the Antiques Roadshow.

DENNIS NELSON: The technology is such that the telephone, internet, and cable TV can all be delivered now through the coax cable right to the house.

MARK STEIL: Nelson predicts residents would find this technology bundle attractive since it means only one bill to pay instead of dealing with two or three different companies. He says most residents are satisfied with the service provided by the town's current phone company, US West. But he believes a competing city-owned phone system could become the dominant company by combining telephone and cable TV service, something US West does not offer.

DENNIS NELSON: The service will be such that we can offer good quality service and a good market price and be competitive to the major companies.

MARK STEIL: Nelson says a major reason the city is considering starting local phone service is to protect its cable television investment. He says if a private company offered local phone service, cable TV, and internet in a one-wire bundle, the town's cable TV system couldn't compete. So to counter the threat, Windom wants to be the first to offer a one-wire package.

Some nearby towns are also considering the idea. Jackson and Lakefield also own cable TV systems and are investigating whether they should build a local phone operation. But before any of that happens, there must be a vote. State law requires that 65% of voters approve the idea before a city can launch a local phone service.

That could be a difficult step. In the past few years, two Minnesota cities have voted on the question. Moorhead residents voted 52% in favor, short of the magic 65%. In Breckenridge last year, only 16% liked the idea. City Utilities Manager Jeff Mueller says, we got whomped.

JEFF MUELLER: We were outgunned and outspent.

MARK STEIL: Mueller says companies already offering local phone and cable TV service in Breckenridge campaigned against the idea. That likely would also happen in Windom.

KIMBERLY BOLTON: US West has tremendous investment in Windom.

MARK STEIL: US West Public Relations Manager Kimberly Bolton says her company will fight to protect that investment. Bolton says the 1996 Federal Telecommunications Act ended the local service monopoly phone companies enjoyed and opened the door for competitors to set up rival systems.

Currently, the only Minnesota towns with city-owned phone lines are Barnesville and Crosslake. Both started their phone businesses in the first part of this century. And so far, no other phone company has come in to offer competing services. Bolton says US West believes competition is good for the industry and customers, but says government should stay out and leave the competition to private enterprise.

KIMBERLY BOLTON: It raises the question, is this the best use of taxpayers' dollars to build products and services that could be an overlay to things that are already available by private industry?

MARK STEIL: But what if private industry doesn't spend the money needed to keep a phone system state of the art? In Hawarden, Iowa, City Clerk Patty Anderson says the town's businesses and residents feared they were being left behind by the telecommunications revolution, victims of a slow, unreliable phone system.

PATTY ANDERSON: At my home, when it rains hard, one phone line went out. And the other one was so scratchy, I couldn't use it. So when they complained, we knew exactly what they were saying was correct. We were experiencing the same thing.

MARK STEIL: So Hawarden built its own phone company, featuring fiber-optic wires and cable television hookups. Town officials feel it's worth their $4.5 million investment because they believe state-of-the-art telecommunications are as important for the growth of rural communities as highways or rail lines were in the past. City Clerk Anderson says so far, the idea has been a big success.

PATTY ANDERSON: When we turned on our cable TV utility, our competitor had about 690 customers. And within a week, we signed up 720. As far as telephone, we feel that we're going to get 80% of the telephone lines.

MARK STEIL: That sort of local loyalty is something Windom officials are counting on as they consider whether to start a telephone company. City Administrator Dennis Nelson says while residents appreciate the technology the telecommunications revolution brings to their homes, they're not so crazy about the bigness the changes produce. Just recently, US West announced it will merge with Qwest to create another mega telecommunications company. Nelson says while he doesn't know what it would cost Windom to build a local phone company, many residents like the idea because it would keep their telecommunications dollars in town.

DENNIS NELSON: Feedback that we get from our patrons is that it's nice to be able to come in and talk to somebody in person whenever they have a question about their bill or whenever they have any questions or concerns about their service.

MARK STEIL: US West officials say they have a strong local presence in Windom, which meets the needs of their customers. Windom Administrator Nelson says a committee studying whether the city should launch local phone service is expected to make a recommendation in September. If the recommendation is yes, Windom residents could vote on the idea this fall. This is Mark Steil, Minnesota Public Radio.