Squabbles that surface between regulators and cable operators over backing for public, educational and government channels commonly work out to be about operators attempting to diminish that support.
But in a federal lawsuit pitting Insight Communications Co. against local regulators in Kentucky, the cable operator is battling a regulatory rule which demands the provider carve several communities out of the local programming interconnect.
The outcome could be costly for Insight, which has already upgraded its plant in the area. If the court sides with the operating authority, which has countersued, the company could be forced to pay to somehow disconnect several communities from the current local telecasts.
When Insight acquired the local systems from InterMedia Partners in 1999, it absorbed franchise terms requiring it to “design and construct a system to physically isolate” nonmembers of the Telecommunications Board of Kentucky, a government agency set up under state rules to negotiate franchise renewals and transfers on behalf of 17 towns and the northern Kentucky counties of Boone and Kenton.
The board was negotiating for the cities of Florence, Erlanger, Crescent Springs, Union and Walton. But those communities ultimately broke away and signed separate agreements with Insight.
Insight asserts that all residents pay a PEG support fee — now 49 cents a month — to fund local cablecasting.
In regulators’ minds, that means having cable customers foot the bill for training and other costs for nonmember cities.
Board members told Insight it had until 2002 to “isolate” the five nonmembers, then extended that deadline until September 2004. Insight missed that deadline and started paying the stipulated $20,000 annual fine.
But in July 2005, regulators told the operator it would be found in violation of its franchise.
At that point, Insight sued, seeking declaratory relief from the attempt by the board to “expand its fiefdom.”
The cable provider asserts regulators are attempting to coerce nonmembers into joining the board. The board counters in filings that it’s trying to protect its members, which are paying to train producers of content seen on the six channels available in nonmember cities.
No negotiations are currently taking place, according to Insight senior vice president of corporate communications Sandy Colony. Oral arguments were heard in court on Jan. 19.
“It’s evolved into a much bigger issue,” Colony said.
Insight is now questioning how the board uses subscriber funds. The board has a $1 million reserve fund and Insight wants those funds placed in escrow until a court determines whether access funds are being spent appropriately.
The board “has held multiple meetings and has tried to threaten us with increased penalties,” she said. “Our position now is to wait for court.”