Insight Challenges Terms of Knology Pact

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What are "equal" terms when one telecommunications firm overbuilds another? Insight Communications Co. has asked a Kentucky court to answer that question.

The Louisville City Council recently gave Knology Inc. the go-ahead to overbuild Insight's system in that city. In response, the incumbent filed a "complaint for declaration of rights" Nov. 3 with the Jefferson (County) Circuit Court.

Insight has a clause in its franchise that demands that any direct competitor be held to "substantially similar" terms. CEO Michael Willner said that the MSO determined Knology's franchise was "substantially different."

When Insight failed to convince the city of this interpretation, Insight filed the suit. Willner said his company did not file for monetary damages, just reconsideration of the franchise.

The dispute centers on several contract terms. Knology was awarded a 15-year franchise; Insight has a 12-year term. Knology has 18 months to cure construction defaults, but Insight has 60 days to correct problems with its rebuild.

Knology was given 54 months to complete its buildout; Insight was ordered to improve its system within 15 months.

The overbuilder did not comment on Insight's lawsuit. In the past, Knology has said it believes its franchise was substantially similar to the one offered the incumbent for a new build.

Another competitive wrestling match is underway in Philadelphia. The city council's Committee on Public Property convened hearings on a proposal by RCN Corp. to overbuild Comcast Corp. in part of its hometown. RCN wants franchises in the city's Northeast and Northwest Philadelphia.

Interest was piqued when, in mid-October, the
Philadelphia

Inquirer

published a story that said Comcast's fees for expanded basic, plus The Disney Channel, were $15 to $20 higher than the national average. Comcast disputed the story and its conclusions.

Committee members expressed hope a competitor would bring rates down, but concerned subscribers in monopoly areas would see rates rise to fund a price war.

RCN had an ally at the initial hearing: Dave Davis, general manager of ABC Inc. owned-and-operated TV station WPVI.

Comcast and The Walt Disney Co., ABC's parent, are negotiating terms on a new retransmission-consent deal. Davis contended that the two sides were at loggerheads in part because Comcast, as a monopoly, has a position of strength.

Comcast and ABC have until Nov. 29 to reach an agreement or to delay the drop-dead date on the deal once again.

Defending Comcast is Time Warner Cable, which does business in west Philadelphia as Urban Cable Works (formerly Wade Cable). The incumbent operators that argue RCN is cherry-picking profitable neighborhoods and doubted that RCN would ever extend its reach into the urban core.

The committee will hear more testimony before the issue reaches the full council for a vote.

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