Pa. Town Gets Court Win vs. RCN

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A Bucks County, Pa., judge has affirmed the right of Newtown Township to
assess $2.1 million in liquidated damages on RCN Corp. for breach of its
overbuild contract there.

The city awarded itself the compensation in 2002 to penalize RCN for failing
to string a single strand of plant for its overbuild of Comcast Corp., the
community’s incumbent cable operator. The March 2002 action landed the parties
in competing suits in both county and federal court.

Kevin Kuryla, director of investor and public relations for RCN, said the
federal action -- pending in U.S. District Court for the Eastern District of
Pennsylvania -- will take precedent in the dispute.

"We’re confident that we will prevail because there were no damages," he
added.

RCN was awarded a franchise in the Philadelphia suburb in 1998. The city’s
Board of Supervisors was assured that the company would begin construction
promptly and finish the competitive overbuild by 2002.

But when the company failed to begin anything and had not approached
regulators for a franchise modification, according to the township’s solicitor,
the board scheduled a hearing on the breach of contract.

That’s when the town finally heard from RCN, according to solicitor David
Sander. Contract modifications must be limited to equipment and facilities,
Sander asserted, but RCN submitted "a whole new franchise proposal." RCN wanted
a new agreement with no completion deadline at all and incorporation of a
regional franchising authority with a half-dozen other localities.

Sander said it was "absurd" to expect that one city would enter an agreement
on behalf of other regulators.

The community proceeded to find RCN in breach of its local contract. Lawsuits
were filed both in federal court and the Bucks County Court of Common Pleas to
challenge the legality of the board ruling.

On July 2, Judge Robert Mellon of the County Court upheld the liquidated
damage assessment.

RCN has until Aug. 2 should it elect to appeal the County Court
ruling.

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