AT&T-Adelphia Transfer Disputed

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Regulators in Moreno Valley, Calif., ruled Wednesday that AT&T Broadband
illegally transferred control of its local network to Adelphia Communications
Corp.

In a 5-0 vote, the City Council said the illegal transaction took the form of
a management agreement that gave Adelphia total control and any profits
generated by the system.

The council ruled that the franchise had been violated because the city never
signed off on a request for a franchise transfer from AT&T Broadband to
Adelphia last April.

The council's staff was ordered to draft a resolution declaring that the
franchise had been violated and ordering that the management agreement be
dissolved.

'The resolution will say that AT&T transferred all of the [network's]
assets to Adelphia under a `sham' management agreement,' Moreno Valley city
manager Gene Rogers said.

Adelphia has argued that the city indirectly approved the transfer by not
taking any action on the request. Under federal law, if a city takes no action
on such a request, the transfer is considered approved.

Adelphia officials said the two sides were 'very close' to a settlement on a
franchise renewal.

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