News

Minn. Regulators Take Charters Side in Dispute

1/04/1998 7:00 PM Eastern

The state agency governing local phone service in Minnesota
has moved to block U S West Inc.'s attempt to maintain control of the Minneapolis
cable market.

In a recent Federal Communications Commission filing, the
Minnesota Department of Public Service (MDPS) called the Baby Bell's request for an
extension of its FCC cross-ownership waiver a bid to circumvent the 1996
Telecommunications Act.

U S West is under an FCC order to divest itself of the
Minneapolis cable properties it acquired from the former Continental Cablevision Inc. It
appeared ready to comply when it announced last year that it would sell the Twin Cities
systems to Charter Communications Inc. for $600 million.

Since then, it has asked for an extension of its waiver in
order to split U S West Communications and U S West Media Group into separate companies, a
move it claims would abrogate federal regulations barring it from purchasing cable systems
inside its service territory.

The MDPS was not convinced.

'If U S West were merely requesting some additional
time to complete a divestiture in progress in order to avoid a'fire sale' of
valuable assets, the department would not object,' the MDPS said in its filing.
'The current request, however, appears designed to evade the spirit and the letter of
the 1996 Act, and should be denied.'

The filing said the public interest would be best served by
'separate ownership of local exchange companies and cable operations,' and that
U S West's request represented a 'change in corporate strategy, which now favors
a spin-off over the previously promised divestiture.'

U S West Media Group spokesman Steve Lang said the filing
indicated that the agency 'doesn't get it.'

'They argue for separate ownership of the telephone
and cable company. Well, that's exactly what they would get under the
split-off,' Lang said.

MDPS officials were unavailable for comment last week.

U S West responded in a consolidated FCC filing that also
addressed a recent petition by Charter opposing the extension request.

It repeated its insistence that the split of its two
business units would be 'complete and total,' with a 'separate board of
directors with fiduciary duties to different groups of shareholders.'

It called Charter's filing a 'hodgepodge of
'makeweight' arguments' that suggest 'without a shred of factual or
legal support' potential cross-ownership abuses by U S West 'even though none
have occurred in the 14 months' since the FCC waiver was granted.

Charter president Jerry Kent called U S West's filing a
'regurgitation' of its past statements. More importantly, he said U S West's
position has also been opposed at the FCC by the Consumer Federation of America and by a
group led by Ralph Nader.

'That shows that we've been right all along, that an
extension is not in the public interest and that it raises serious questions about the
competitive situation,' Kent added.

Meanwhile, U S West has gotten a boost in recent weeks from
several local franchising authorities that favor its position.

Each of the franchising authorities has apparently been
swayed by MediaOne's promises to upgrade their local networks in the near future,
projects that they believed were questionable if their systems had been transferred to
Charter.

Kent noted that the four franchising authorities supporting
U S West represent some 70,000 area cable subscribers, while commissions representing well
over 100,000 customers favor a divestiture of the properties.

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