Adelphia Communications Corp. wants a U.S. Bankruptcy Court in New York to support its federal suit against three New Hampshire towns that opted not to renew its cable franchise.
In a lawsuit filed in U.S. District Court in Concord, N.H., the MSO alleges that the towns of Milford, Litchfield and Hudson all based their decision not to grant Adelphia a new cable franchise on the company's bankruptcy filing.
All three localities said they wouldn't renew the franchises last June, the same period when the operator filed for Chapter 11 bankruptcy protection. But local officials said that timing was coincidental.
The decision was made because franchise-renewal negotiations haven't been resolved after dragging on for two years, local officials said.
Adelphia filed suit on Oct. 23, but also asked for a Dec. 6 hearing before the bankruptcy court for an injunction in that proceeding against the communities. The three towns cooperate in their cable negotiations, but each community's selectmen make the decision on behalf of their individual towns, said Coleman Kelly, chairman of Hudson's cable-advisory committee.
Over the past two years, three operators have held the franchises: Cableco, Harron Cablevision of New Hampshire Inc.; and Adelphia. The system is still known legally as Harron Cablevision.
The towns are home to a total of 12,000 subscribers, according to Kelly.
Adelphia obtained a transfer in 1999 from Harron, according to the filing. As a term of transfer, the operator is obligated to upgrade its plant 750 megahertz by August of 2004, and to introduce high-speed Internet service by February of 2005.
Kelly said the upgrade is underway and customers in upgraded areas can get digital services.
When the decision not to renew the franchise was announced, the operator requested a written explanation and received "no substantive response," according Adelphia's lawsuit.
The operator's suit alleges that the municipalities violated informal and formal federal franchise renewal-procedures, as well as Adelphia's civil rights, and represents a breach of both the franchise and the transfer agreement.
Adelphia asked the District Court to declare the nonrenewal to be void and to direct the communities to schedule a public hearing so the company can hear and respond to any complaints about its service.
Municipal attorneys, who term the Adelphia legal action a "critical attack on (local franchise authorities') jurisdiction," are watching the case closely. LFAs note they have state and federal authority to protect local infrastructure and administer franchises, but fear the bankruptcy court will supersede them at every step.
The LFAs have been striving to guard their power, first by applying to Adelphia's trustee for standing as unsecured creditors. They were denied, as cities are not considered "persons" under bankruptcy law.
Next, localities applied directly to the judge in the bankruptcy proceeding. Earlier this month, he issued a bench ruling against city participation on the unsecured creditors committee.
Matt Leibowitz, attorney for St. Lucie, Fla., which brought the representation action, said the judge did his state support for city police powers.
Municipalities want the judge to remember those sentiments as he hears Adelphia's case against the New Hampshire cities. Adelphia's bankruptcy court hearing on the New Hampshire towns' actions is set for Dec. 6.
The suit filed in U.S. District Court will not be heard until 2003.