U.S. Court of Appeals Upholds Houlton Cable Case, Permitting Eviction of Incumbent Provider

Bernstein, Shur attorneys' victory for the Maine town to impact cable negotiations throughout the state

BOSTON -- The U.S. Court of Appeals for the 1st Circuit has upheld a lower court ruling permitting the Town of Houlton to discard its long-time cable TV operator in favor of another provider in a dispute over quality and services.

"The U.S. appeals court decision shows that even small towns in Maine can successfully replace an inadequate cable operator with a new company that is willing to provide the modern facilities and services that customers expect and deserve," said Patrick J. Scully, one of the four Bernstein, Shur, Sawyer & Nelson attorneys who represented the town in the two-year case.

The appellate court decision, released Wednesday afternoon, may serve to further loosen the hold cable operators have over communities throughout Maine, said Scully, a municipal attorney who has won other cases for Maine towns related to cable franchises. A Brunswick resident, Scully presented oral arguments in Boston in December.

The Houlton case may be the first example in Maine where a community has successfully evicted the incumbent cable provider and replaced it with a new company, said Lee Bragg, the lead attorney in the Houlton case. With this ruling, a procedure has now been established which should help other towns create a level playing field with cable companies when it comes time to renew franchise agreements, he said.

"The Court of Appeals upheld the town's decision to award the new cable franchise to Pine Tree Cable and to reject Houlton Cable's request to continue as the monopoly provider of cable services in Houlton," Bragg said. "The town conducted an innovative competitive RFP process soliciting the best proposals for future cable service in Houlton. Houlton Cable's proposal was simply inferior to the proposal by Pine Tree Cable. The town legitimately chose the best proposal, and the appeals court upheld that decision."

(Note to Media - A copy of the decision is available online. Please call Pat Scully, 774-1200, or Wolfe PR, 775-5115, for the link. Thanks.)

Other Bernstein, Shur attorneys involved in the Houlton case were litigators Joseph Hahn of Freeport and Kate Debevoise of Yarmouth.

The federal appeals court ruling followed a federal judge's finding last summer upholding the Town of Houlton's decision to replace its existing cable operator. Houlton Cable appealed that ruling by U.S. Magistrate Judge Margaret J. Kravchuk in U.S. District Court in Bangor.

"These court decisions send a strong message to cable operators in Maine to work with their cities and towns to provide more services," added Bragg. "Cable providers across Maine are now on notice that towns can seek competing proposals and can refuse to renew franchises with current providers in certain situations."

Houlton Cable had provided service to Houlton residents for 15 years, but negotiations on a new franchise agreement broke down and the town sought a new provider. Houlton Cable and the town negotiated for nearly a year before the Town Council decided that the cable company could not meet the needs of the community in several areas, including quality of programming, quality of service and high-speed Internet access, Bragg said. After receiving input from citizens at public hearings, the council decided to solicit proposals from other cable providers based on a model franchise agreement that the council determined would meet the town's needs. Pine Tree Cablevision, a company with 26 franchises in the Machias area and numerous franchises outside of Maine, was awarded a contract.

The new legal clout given municipalities comes as Adelphia, one of the nation's largest cable companies, continues to renegotiate the terms of an historic transfer agreement with towns across the state.

In 1999, Bragg and Scully, represented a consortium of 56 towns throughout Maine that had been asked to approve the transfer of existing franchises as part of Adelphia's $2.1 billion purchase of FrontierVision. That effort concluded with the signing of a transfer agreement that gave the towns a number of benefits that had not existed in the individual franchise agreements. It was hailed as a major victory for the Maine towns.

The Town of Houlton's legal success may be viewed as an incentive for Adelphia, which currently has approximately 200 franchises in Maine, to live up to the terms of that agreement in those communities, Bragg said.

Bernstein, Shur, Sawyer & Nelson is one of northern New England's largest law firms, with more than 70 attorneys in offices in Portland and Augusta. For more information, visit the firm's web site at www.mainelaw.com.

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