Mich. Ops Beat Telco on Assets Case

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In a victory for cable operators, Michigan regulators ruledlast week that Ameritech Corp. violated the state's telecommunications statute byfailing to report a transfer of assets to its Ameritech New Media cable subsidiary.

However, the Public Service Commission chose not to slapthe Chicago-based telco with a $1.7 million fine, which had been recommended by theadministrative law judge who reviewed the original complaint brought by the Michigan cableindustry.

Instead, the PSC settled for a cease-and-desist order andruled that Ameritech must pay reasonable attorney fees to the Michigan CableTelecommunications Association and to Comcast Corp.'s Comcast Cablevision.

The PSC had ruled that Ameritech violated the MichiganTelecommunications Act, which gives the commission watchdog authority over such assettransfers in order to guard against cross-subsidization of nonregulated ventures.

In its decision, the PSC recognized that incumbentlocal-exchange carriers have "considerable resources at their disposal.

"As a result, they are in a position to use theseadvantages not only to gain entry into unregulated markets, but also to underminecompetition once they gain entry," the PSC said.

The PSC decision marked the second time in three monthsthat regulators have ruled against Ameritech in Michigan. The commission previously struckdown the telco's "AmeriChecks" marketing plan, saying that vouchers issuedby the phone company discriminated against consumers who did not take ANM's cableservice.

"Once again, Ameritech broke the law and gotcaught," said MCTA executive director Colleen McNamara, in a prepared statement."If there was a three-strike law for violations of the MTA, Ameritech would have beensent up the river a long time ago."

Ameritech had argued that the fiber optics and computerequipment transferred to ANM were intended for a video-dialtone trial that was scrapped,and that the Michigan act only requires it to inform regulators if it's transferringequipment that was previously used to deliver local telephone service.

MCTA spokesman Chris Horak said it was unusual for Michiganregulators to order fines against a utility.

"But we're still disappointed," he said."We felt that a $1.7 million fine would have acted as a deterrent to furtherviolations."

Ameritech spokeswoman Sara Snyder said the company wasreviewing its options for an appeal of the decision.

"Obviously, we're disappointed thatthe commissioners found us in violation of the MTA," Snyder said. "Our readingof the law is that we're not required to communicate any of this to the commission inthe first place." 

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