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Aldous McCrory
Audio clip
Stacey Briggs
A Davidson County chancellor has dropped a lawsuit trying to block EPB from becoming the nation’s largest city-owned cable television provider, and a utility official said the company will quickly roll out fiber-optics to home customers.
“This basically clears the hurdle (the cable industry) tried to put in our way,” said Aldous McCrory, EPB vice president of legal services.
Davidson County Chancellor Ellen Hobbs Lyle issued an order Monday afternoon to dismiss the lawsuit.
The head of the Tennessee Cable Telecommunications Association, which filed the lawsuit, vowed to continue fighting EPB.
“All she’s done today is more or less ... determined that procedurally she does not think the proper venue is here in Davidson County,” said Stacey B. Briggs, president and executive director of the cable association.
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File Staff Photo by Kelly Wegel — Dillard Smith Construction Co.employees Cory Wade, left, and Grant Barker fasten old cable together to prepare for pulling the Electric Power Board’s new fiber optic cable across the Tennessee River.
EPB officials said, however, that the chancellor’s ruling clears the way to offer fiber-optics to the home. Mr. McCrory said he expects EPB to start rolling out cable television, telephone and high-speed Internet to residential customers in the late fall or winter, about six weeks later than planned. The delay comes from a volatile bond market caused by the subprime lending crisis, he said, and not the lawsuit.
To pay for the expansion, Mr. McCrory said he expects that EPB could issue $230 million in bonds within a week. The bonds would pay for part of the smart grid, an upgrade to the electric system and the backbone of the fiber home service.
The smart grid, which is expected to be finished this summer, will help EPB perform maintenance more efficiently, restore power outages more quickly and work with customers to conserve energy, officials have said.
Fiber to the home would be funded by a loan of up to $60 million from the electric system, officials have said. Sales of residential cable television, Internet and telephone service would repay the loan, they said.
However, Ms. Briggs said she believes that constitutes a cross subsidy, illegally subsidizing the residential telecommunications plan with electric system revenue.
Cable association officials on Monday afternoon were deciding whether to file the lawsuit in Hamilton County, to appeal to the Tennessee Court of Appeals or ask the chancellor to reconsider her ruling, Ms. Briggs said.
“The issuance of an electric bond to build a network is not proper and it’s a cross subsidy,” Ms. Briggs said.
Mr. McCrory said he does not expect the lawsuit to be appealed. The chancellor’s ruling clarified what EPB has been saying all along, he said, that EPB’s smart grid upgrade to the electric system is totally separate from its telecommunications plan.
“That clears up the whole cross-subsidy issue they tried to mislead the court with,” Mr. McCrory said.
The chancellor ruled that she could not consider the lawsuit unless EPB had actually used electric revenue to finance fiber to the home, he said.
The court also said that, even if fiber to the home was cross-subsidized, the cable association did not have authority to file the lawsuit, Mr. McCrory said.
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