Wireless (and Wired) Minneapolis

CONTACT:      Becca Vargo Daggett, 612-379-3815 x209, becca@ilsr.org

Minneapolis v. Time Warner Cable dismissed by circuit court judge

Minneapolis, November 18, 2005 – U.S. Circuit Court Judge Ann D. Montgomery dismissed Minneapolis’ suit against its cable franchisee, Time Warner (see Minneapolis v. Time Warner, Memorandum Opinion and Order Civil No. 05-994ADM/AJB). The ruling all but ends the city’s effort to force Time Warner to comply with provisions of its original cable franchise agreement.  “The city should learn an important lesson from this adverse decision,” insists Becca Vargo Daggett, a researcher at the Minneapolis based Institute for Local Self-Reliance.

“Minneapolis negotiated a cable agreement that was very favorable to the community, but Time Warner knew how to use federal law to dismantle the agreement when it no longer served the company’s purposes. This case demonstrates once again that local governments cannot rely on the kindness of corporations or the wisdom of federal lawmakers. Yet for some reason the Mayor and Council seem hell bent on repeating their mistake, this time with their privately owned citywide wireless initiative.”

Minneapolis made two claims in its suit. First, Time Warner’s failure to pay the city 5 percent of its revenue from sales of cable modem services violated the franchise agreement. This claim was dismissed on the grounds that the 1996 Telecommunications Act preempts any provision of a local franchise agreement that is inconsistent with federal law. Time Warner and other companies began withholding franchise fees on cable modem revenues in 2002 after an FCC decision to classify cable modem service as an information service rather than a cable service.

The second claim made by the city was that since 1982, Time Warner and its predecessor had used for their own purposes channel capacity that was designated for public use. This claim was dismissed on the grounds that the suits filing exceeded the 6-year statute of limitations on conversion actions. “The city could probably have avoided this dismissal if it had claimed damages since 2000 rather than 1982,” notes Ms. Daggett. “It’s almost as if they didn’t want to win.”

Minneapolis also filed a motion to remand the case to a state court, where it would have received a more sympathetic hearing. The city, however, waited to file its lawsuit until six days after Time Warner Cable became the sole partner in the local cable entity, KBL Cablesystems. The City of Minneapolis had approved this transaction in 2002. Prior to Time Warner’s consummating the partnership, KBL was a Minnesota company and the case would have fallen under state jurisdiction. Since the parties are now “citizens” of different states (Time Warner is based in Delaware and Connecticut), the case falls under federal jurisdiction.

 “The City had years to file this suit. The fact that they did so six days late doesn’t exactly build confidence in City Hall’s ability to negotiate the best wireless deal for their citizens,” said Ms. Daggett.

“When it comes to telecommunications, I fear that the City is offering its citizens the worst of two worlds.  It refuses to endorse a publicly owned telecommunications infrastructure yet is clearly incapable of stopping a privately owned telecommunications system from taking unfair advantage of its monopoly.”

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