8th Circuit Rules in North Kansas City Municipal Broadband Case

December 29, 2005. The U.S. Court of Appeals (8thCir) issued its opinion [6 pages in PDF] in Time Warner Cable v. City of North Kansas City, a dispute between a municipality and a private sector service provider over municipal provision of broadband services. The municipality won this round.

The City Council of the City of North Kansas City adopted a resolution to construct a fiber-optic network that would provide data, voice, and video to customers in the City. The City did not decide whether or not to also provide cable television services. However, the City's own engineering firm recommended that providing cable-television services would be necessary in order for the network to be self-supporting.

The relevant statute of the state of Missouri (Mo. Rev. Stat. 71.970) provides in part that "[n]o municipality may own or operate cable television facilities and services unless approved by a vote of the people."

KCCP Trust, dba Time Warner Cable (TWC), provides services in the City.

TWC filed a complaint in U.S. District Court (WDMo) against the City seeking to enjoin the City from constructing its planned fiber-optic network without a public vote. The District Court dismissed the complaint, without prejudice, for lack of jurisdiction. The District Court concluded that the case was not yet ripe, because the City had not yet stated that it would use its fiber-optic network to provide cable television services.

See, April 4, 2005 opinion [PDF] of the District Court. (The phrase "without prejudice" means that TWC is not barred from filing another complaint, for example, if the City decides to offer cable-television services.)

TWC appealed. See, appeal brief [70 page PDF scan] of TWC and opposition brief [40 pages in PDF] of the City.

The Court of Appeals affirmed. It wrote that the statute "expressly prohibits municipalities from owning or operating cable-television facilities unless the municipality's populace votes to approve the endeavor. The pertinent question then is whether the City owns or operates such a facility or is threatening to do so in violation of 71.970(1). In order to own cable-television facilities, the City would require the capacity to receive cable-television signals for transmission over its fiber-optic network. It is factually undisputed that the City's fiber-optic network is not connected to the required head end facility to receive such signals nor is there any plan to acquire it."

The Court of Appeals continued that "Thus, Time Warner's statutory claim rests on a contingent future event: the ownership or operation of a cable-television facility by the City; therefore, Time Warner's claim that a vote is required under Missouri law is not ripe in that the City does not currently own or operate a cable-television facility because the planned fiber-optic network will not be capable of transmitting cable-television signals and because the City recognizes that in order for it to provide cable-television services a public vote would be required."

The Court added that "If the City seeks to upgrade the network without a public vote, Time Warner may again seek a preliminary injunction."

While the Court of Appeals may consider the court case ripe at that time, voters might consider the political issue moot at that time. That is, if the City builds a fiber-optic network, and incurs the considerable expense that this would entail, but makes no decision as to whether to offer cable television service, it can avoid putting the issue before the voters. Then, after the completion of the construction project, if it announces plans to offer cable television service, it must put the question before the voters. However, the only further costs to be passed on to taxpayers at that point would be the cost of connecting to an existing head end facility, or constructing its own. Voters would have little reason not to support the offering of cable television service at that point.

TWC made this point in its brief. It wrote that "without holding the required prior public vote until the money is spent ... it can present its plan to the voters as a fait accompli".

TWC is represented by the law firm of Lathrop & Gage. The City of North Kansas City is represented by the law firm of Blackwell Sanders.

TLJ spoke with Jim Baller of the Baller Herbst Law Group, which focuses on representing local governments in telecommunications and broadband matters. He stated that the Missouri statute at issue in this case "is pretty specific to Missouri". However, he added that "another victory in an incumbent provider's challenge to a municipal provider is always welcome".

Baller also stated that "we run into litigation in almost every one of our projects". He noted, for example, that BellSouth has challenged a municipal broadband project in Lafayette, Louisiana.

He added that the North Kansas City opinion is the second victory for municipal broadband providers in two weeks. On December 16, 2005, a state court in California issued a decision in Cebridge v. Nevada County. See, story titled "California Superior Court Rules in Cebridge v. Nevada County" in TLJ Daily E-Mail Alert No. 1,281, December 30, 2005.

See also, Baller's paper [PDF] titled "Deceptive Myths About Municipal Broadband". And see, story titled "US Chamber Hosts Panel on Municipal Broadband" in TLJ Daily E-Mail Alert No. 1,160, June 23, 2005.

This case is KCCP Trust, dba Time Warner Cable v. The City of North Kansas City, U.S. Court of Appeals for the 8th Circuit, App. Ct. No. 05-2265, an appeal from the U.S. District Court for the Western District of Missouri, D.C. No. 04-1119-CV-W-ODS, Judge Otrie Smith presiding.