State Challenge To Utility Stands

1/18/2008 7:00 PM Eastern

A Davidson County, Tenn., chancellor has rejected an attempt by the Chattanooga Electric Power Board to dismiss a state cable association challenge to the municipal utility’s broadband build.

The Tennessee Cable Telecommunications Association filed suit Sept. 24, 2007, against the board’s fiber broadband plans in the county’s Chancery Court, alleging that the broadband plan violates a 1998 state law setting the terms under which local governments can enter the telecommunications business.

The TCTA asserts that the broadband plan underestimates costs and overestimates revenue and thus will require illegal cross-subsidization to survive.

The suit, filed after the EPB approved its project but before Chattanooga officials unanimously approved it, asserts only 17% of the project’s $220 million price tag is attributed to the cost of delivering services beyond electricity.

The power board countered the lawsuit with a motion of its own, asserting that the suit was filed in the wrong place: the challenge should take place in Hamilton County, the location of the state comptroller’s office. That state official is charged, under state law, with vetting the broadband plans of communities.

For that and other procedural reasons, the board asked Chancellor Ellen Hobbs Lyle to dismiss the case.

But the chancellor ruled Jan. 8 that the TCTA had filed in the correct court. State law directs plaintiffs to file suit in the county where the violation is or may take place, and that is Davidson County, home of the municipal power division.

TCTA executive director Stacey Briggs was pleased with the decision, which will allow the challenge of the broadband build to have its day in court.

The power board is moving forward with the project, in the meantime. City officials have approved a project that will deploy 3,000 miles of fiber to deliver a triple-play bundle of phone, Internet and video services.

The utility will be in competition with the incumbent providers, including Comcast.

The city is seeking an underwriter for those bonds as the legal challenge is pending.

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