Moreno Valley, Calif., will conduct a hearing this week on whether AT&T Broadband illegally transferred control of the community's cable system to Adelphia Communications Corp.
Adelphia executives acknowledge the MSO is managing the 27,000-subscriber system in Moreno Valley, a town of 150,000 about 60 miles east of downtown Los Angeles.
But because no transfer was ever approved, AT&T remains the operator of record and could be breaching the franchise it picked up when it acquired Tele-Communications Inc.
"We didn't approve any of this," said Moreno Valley spokeswoman Angela Rushen. In April of 1999, she added, the City Council rejected a transfer of control from AT&T to Adelphia because it needed additional information.
But by the following December, she said, Adelphia's name was in place throughout the system, including on service trucks and the monthly bills delivered to subscribers.
Bill Marticorena, a Costa Mesa, Calif.-based attorney acting as the city's general counsel, said an illegal transfer would constitute a "material breach" of the franchise. The city would then give AT&T 30 days to remedy the problem.
Failing that, revocation would be just one option, he said.
Complicating the situation are franchise-renewal talks and Adelphia's attempt to cast the council as the reason it's put a $12 million upgrade on hold.
Another complication is Adelphia's management of a separate system owned by Act 5, a small operator that serves about one-third of the community. Adelphia inherited the role of manager for Act 5's plant from AT&T.
At about the time the city thought it was near an agreement with Adelphia, the MSO began trying to pressure local officials, Moran said. On a locally distributed door-hanger, Adelphia said it was already upgrading nearby Rialto, Calif., but would not do so in Moreno until the city "formalizes our relationship."
It urged consumers to contact their local elected representative, insisting consumers were in line for high-speed Internet access, digital cable and lower phone bills "unless the Moreno Valley city government slows things down."
Rushen said Adelphia's tactic apparently backfired. Most comments heard at City Hall, she said, were along the lines of, "What is Adelphia doing now?"
"And our council members are not going to be bullied," she said.
Adelphia regional vice president of operations Bill Rosendahl said he was confident both sides could work out a resolution. But he would not address the question of who technically owns the systems.
"That's for lawyers to talk to lawyers about," he said. "But the reality is that [the city's] constituents are our customers. Hopefully, reasonable people will be able to work things out."