Predicting “massive losses” and “possible financial disaster,” an Adelphia Communications Corp. partnership in Colorado Springs, Colo., is pursuing a lawsuit aimed at slowing a three-year-old broadband competitor there.
In a suit filed in U.S. District Court in Denver, the Adelphia unit known as the Century Colorado Springs Partnership seeks legal support in its argument that the competitor, Falcon Broadband, is violating federal and state law as well as the municipal code of Colorado Springs. Adelphia named the city in the suit, too, arguing that local officials have not acted to enforce their own rules.
FALCON HAS COUNTERSUED
Falcon owner Randy de Young countered that Adelphia is a big bully.
“Here we have an out-of-state, bankrupt company doing everything in their power to squish us,” he said. Falcon — which has no relationship to the former West Coast operator with a similar name, Falcon Cable — has countersued Adelphia.
Coincidentally, this is not the first time Adelphia has raised de Young’s ire. The broadband entrepreneur said he lost $1.7 million due to Adelphia’s bankruptcy. Another of his companies, a cable contractor, had that amount in outstanding accounts to be paid when the Denver-based cable operator declared bankruptcy in June 2002, according to de Young.
The Colorado squabble centers on a 200-acre, 1,800-home development under construction in the city by Gold Hills Mesa Township LLC. Falcon wants to serve the development. In fact, de Young said, his company would like to serve all of Colorado Springs.
The broadband provider, a certified competitive local-exchange carrier, sells Internet service, voice over-Internet protocol service, wireless networks and fiber-to-the-home networking services.
The Federal Communications Commission certified Falcon as an open video systems provider in March 2004, a classification that allows it to establish infrastructure to enable multichannel video distribution.
It currently provides video services, obtained through the National Cable Telecommunications Cooperative, to customers in the county area beyond Colorado Springs. De Young said the company has 6,000 customers for the varied products.
In its lawsuit, the Adelphia unit argues that Falcon doesn’t have enough money to serve all of Colorado Springs and would only end up serving the affluent Gold Hills development. That would violate the city’s buildout rules, the suit argues.
Adelphia invested a total of $75 million over the last five years to upgrade the community’s cable system, according to its suit.
“Now, in its efforts to offer cable services in the city without being subject to these very reasonable [local franchise] conditions, Falcon is single-handedly eliminating the very statutory and contractual protections that justified Adelphia’s multimillion-dollar investment in the first place,” said the suit, filed late last year.
If the courts and city allow Falcon to serve only the most-affluent portion of Colorado Springs, the result will be akin to “pulling the rug” out from under Adelphia, which currently serves about 60% of the city’s residents, the MSO contends.
Open-video system providers generally build plant then allow other program providers to use the hardware to deliver services. As a result, they are not required to obtain a local franchise, but they do work with local governments on acceptable operating rules, including terms for the access to rights of way.
But in real-world application, incumbent operators scour local franchise agreements for terms that require that all video providers be treated equally under city codes.
Incumbents argue that if a competitor is providing video services, they must adhere to local universal build-out requirements and other franchising rules.
DENIES BUILDING YET
Adelphia’s suit asserts Falcon made an agreement with the Gold Mesa developer and is now constructing plant in the development. But Falcon’s de Young said that is just plain wrong.
There is no agreement and no plant construction is underway, he added. Falcon officials are talking with Colorado Springs regulators about operating terms, he said.
“A good competitor would welcome us to the market, instead of doing everything in their power to stop us,” de Young said. “I’m not going to let the big bullies bully me around. We’ll continue on growing.”
An Adelphia spokesman said the company’s lawsuit spoke for itself.