HUDSON -- Al Schneider understands what his community wants, because his community voted on it two years ago.

When surveyed more than a year later, citizens again made their intentions clear: The community wants a choice in its cable, telephone and Internet services, and if Hudson can provide a viable municipal alternative, will support it.

But Schneider and the other members the Hudson municipal communications utility board he chairs also know what the town is up against as it decides whether to authorize a locally-owned alternative to cable and Internet services.

"Is it going to be good for business? Is it going to be good for local residents?" Schneider said during a recent board meeting. "And I don't think any of us are ready to make a decision."

It's an odd statement from the chairman of a group that has been meeting once a month for nearly two years and talking only about whether to form a utility. But it is par for the course: Other municipal communications utility boards created in 2005 when referendums were approved in Waterloo, Parkersburg and others cities find themselves in similar predicaments.

The boards also face voters tired of waiting for a decision.

"We need to get something done," Schneider said. "Otherwise, we'll be in pain and agony for another two years."

There is clearly community support, Schneider points out, and with that will come customer loyalty.

"If costs are the same, or lower, and quality is good, doing business with a local entity is appealing to people," Schneider said.

Plenty of statistics back his claims. Cedar Falls Utilities' financial reports claim an 86 percent market share for cable and 75 percent for Internet subscribers. Other municipalities claim similar, or higher, numbers.

There is also the matter of Mediacom, the private cable-and-Internet entity based out of New York. In many Iowa communities, especially smaller ones, it is the only cable provider, and many citizens want an alternative.

"The board is looking for the best bang for their buck, whatever that might be," said Virgil Goodrich, economic development director for the city of Parkersburg, who sits in on the sporadic meetings of Parkersburg's board. "Right now, we're at the mercy of the provider."

But even that's not impetus enough to convince a board to give the green light to what could be a $10 million-plus investment.

"If we can't do something better … then we shouldn't do it," board member Doug Wyatt said, adding, "Is it public good?"

That is the multi-million-dollar question facing Hudson and dozens of Iowa communities. If their utility can make it, as CFU has, it gives residents a choice in communications and profit from their investment. But if they fail -- going into an insurmountable debt or being unable to provide quality service -- That is the main reason so many municipal boards haven't made up their minds after years of discussion.

Ronald Rizzuto, a professor of finance at the University of Denver and a senior fellow at The Cable Center, researched the financial viability of municipal communications utilities in Iowa in 2005. He found municipal utilities normally price services below cost by borrowing from existing profitable services, such as electricity -- called cross-subsidizing.

The danger is, instead of encouraging competition, cross-subsidizing could push private companies out. Then, with no cable competition, the city is free to raise rates to recoup its debts.

"When you're competing with the government, it's not a level playing field," Rizzuto said. "They don't have to operate like a business and pay their bills."

But CFU marketing manager Betty Zeman said the utility has always set its rates high enough to cover expenses. She noted cross-subsidizing is illegal in Iowa. Zeman said if CFU uses the electric utility's truck for a communications job, for instance, the communications utility treats it as a rental and pays the electric utility for the use of it.

"Ronald Rizzuto is saying we don't generate enough profit to pay off our debt, but that's just not true of us," Zeman said, noting CFU's telecommunications system was built in 1995, became profitable in 2002 and expects to pay off its long-term debt by 2011.

Zeman noted Cedar Falls was fortunate to have a "forward-thinking" populace to pass the first vote in the state in 1994, largely because there was no other outlet for high-speed Internet service. But it wasn't without heavy opposition from Mediacom, which sends representatives to every municipal communications board meeting in cities still on the fence.

The idea behind sending company representatives, said Jon Koebrick, vice president for government relations, is not to intimidate. Rather, the company hopes to work with municipalities to find out what they are looking for and offer its expertise in the cable field.

"We're not opposed to competition, but opposed to unfair competition," Koebrick said. "Mostly, we're interested in forging good relationships. If there is a certain need, we want to try and satisfy that need."

That is exactly what members of the Waterloo municipal telecommunications utility board want. Chairman Jim Waterbury suggested board members have no intention of establishing a municipal utility, and will work with Mediacom and other providers.

"We think there are plenty of vendors out there," he said. Voters created the board, he said, but they didn't mandate the creation of a utility.

Mediacom isn't cities' only competition. Dish Network and DirecTV, although smaller portions of the market, are also video providers. And there are other companies around the state. If Gov. Chet Culver signs the new statewide franchise law, it could mean more private competition, or it could mean companies cherry-picking their way through more affluent communities. No one knows whether the law would be good for business, and neither Mediacom nor CFU takes an official stance on it.

The bottom line, says CFU's Zeman, is a municipal communications utility is possible if your community is behind you. But cities need to be in it for the long haul and understand it is an investment that, like any private company, might not pan out.

"You can never take your customers for granted for one day," Zeman said. "They can always go somewhere else."

Contact Amie Steffen at (319) 291-1405 or amie.steffen@wcfcourier.com.