Cable Operators

K.C. Burb’s Muni Isn’t OK With Time Warner

1/09/2005 7:00 PM Eastern

Time Warner Cable is pursuing a court injunction against a municipal fiber-optic project in North Kansas City, Mo., claiming the city must seek voter approval to develop a publicly owned network.

The motion, filed in U.S. District Court for the Western District of Missouri, Western Division, notes that a state law passed in 1997 and recently affirmed by the U.S. Supreme Court says, “No municipality may own or operate cable television facilities and services unless approved by a vote of the people.”

Unless the court issues an injunction against the entire project, Time Warner wants it to prevent the city from using the network it’s planning for cable TV, unless it puts the issue on a ballot.

THE BACK STORY

According to the Dec. 10 motion, officials in North Kansas City, a suburb of about 4,700, formed a commission in June 2003 to review and analyze the town’s infrastructure and determine the viability and cost benefit of a municipally owned or operated cable network.

That September, North Kansas City approved an agreement with a contractor, Black & Veatch Corp., to conduct the viability study, according to the suit. The mayor sent news to city residents addressing the study, announcing a network would deliver voice, data and video, providing “improved service and reduced prices” compared to incumbent providers.

In the study released this past March, Black & Veatch said consumers were “satisfied” with current telecommunications services — but asserted that a city-owned network would provide competition and decrease costs to citizens.

The contractor projected prices at 10% less than Time Warner’s charges, and predicted 20% to 33% of residents would switch to city services.

Two months later, the city council approved a contract with Black & Veatch to provide design and planning services for the broadband network, a project costing an estimated $9.5 million.

In the court motion, Time Warner Cable said it wrote the city twice to raise the issue of the necessary public vote.

According to the filing, the city’s outside counsel responded that the project was “capable” of delivering cable services, but said the city had not yet decided whether to offer video.

Attorneys for North Kansas City did not return repeated calls to respond to the lawsuit.

The MSO argues the city should be stopped now, because a vote after the network is completed would be unfair to incumbent providers.

“Once the city has sunk $10 million into this project, why would any citizen vote against the no-cost option of adding cable television services to the network?” Time Warner asks in the motion.

OP IS UPGRADING

Time Warner also questions the wisdom of the expenditure. The cable company is upgrading all of its Kansas City division, a project slated to be completed by mid-2005.

Missouri’s law curbing construction of municipal telecommunications systems without a public vote has withstood court scrutiny. Just this March, the U.S. Supreme Court affirmed the right of states to block city and county municipal broadband projects.

September