Insight Loses Ky. Franchise Ruling

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The city of Louisville, Ky., did not breach its contract with Insight
Communications Co. Inc. when it granted Knology Inc. the city’s second cable
franchise, a state appeals court ruled.

The Commonwealth of Kentucky Court of Appeals June 27 upheld an earlier
Jefferson Circuit Court ruling in the city’s favor in a suit brought by the
operator.

Knology, a West Point, Ga.-based overbuilder, had answered Louisville’s
invitation to bid in 2000, and the two parties eventually negotiated a franchise
that Insight then challenged as a violation of its arrangement.

Insight’s franchise is nonexclusive, but the city is required to issue
competitive franchises with terms neither more nor less favorable than those
applied to the incumbent.

A spokesman for Knology declined to comment on the ruling, citing ongoing
litigation.

Insight -- which received a new 12-year franchise in 1998, with specific
construction deadlines -- argued that several aspects of Knology’s deal gave it
an edge over the incumbent.

For one, Knology’s franchise has a 15-year term.

Second, Insight was also held to a 15-month timetable on its rebuild, while
Knology was given 54 months to complete its buildout.

And Insight objected to the fact it was required to perform a "simultaneous
build" -- improving all of its plant throughout the city all at once -- while
Knology could concentrate construction in a specific part of the city each
year.

Insight also had 60 days, after notice from the city, to cure any defaults.
Failure to do so has penalties up to franchise revocation. But the penalties to
Knology were set at $600 per day, the incumbent argued.

The parties tried to arbitrate an agreement, but both cable operators ended
up suing.

Insight asked the circuit court for summary judgment on the issues, but Judge
Lisabeth Hughes Abramson ruled that Knology’s franchise terms were
"substantially similar" to Insight’s.

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