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SNET Plant Hard to Lease

7/01/2005 8:00 PM Eastern

The attempt by a small Hartford, Conn., firm to lease the unused cable plant left over from the unsuccessful foray into cable television by Southern New England Telephone appears doomed.

Gemini Networks CT Inc. has been working with state utility regulators to attempt to compel SNET, now part of SBC Communications Inc., to lease the unused cable plant. The competitor scored a preliminary win at the state Department of Public Utility Control, but that decision has been challenged both in court and in a pre-emption request to the Federal Communications Commission.

'BACK-ROOM DEAL'

On June 7, the state legislature passed a bill providing pricing decontrol to SBC in the state, and an 11th-hour amendment could now bar the lease of the plant. The amendment gives the DPUC authority to broker memoranda of understanding (presumably relating to sale terms) and banned the unbundling of SBC hybrid fiber-coax plant unless the FCC orders it.

Attorneys for Gemini Networks called the bill the “worst example of a back-room deal,” and filed a five-page letter of objection with Connecticut Gov. M. Jodi Rell.

In turn, the governor has sought guidance on the complaint from the state's ethics commission.

Gemini attorney Jennifer Janelle said the amendment was added only after SBC, in a meeting called by a state senator, offered a deal to sell the plant to Gemini. But Janelle said the competitor was given no details of the current state of the plant and was pressed to decide in less than 48 hours.

Gemini also claims SBC hasn't removed the unused plant, so as to leave in place a physical blockade to newcomers. Connecticut's telephone poles are so short that there is no room for other attachments.

John Emra, executive director of external affairs for SBC, confirms a deal was proffered: $8 million up front, and Gemini would have to bear the cost of disentangling the fiber still in use by SBC from the coax part of the plant to be sold.

That's about 8 cents on each dollar spent to build the plant, Emra said. By comparison, SBC could get 10 to 20 cents to the dollar if the plant were sold for scrap.

Gemini would also pay to disentangle the fiber, still in use by SBC, from the coax. That part of the equation could cost up to $15 million. SBC's old cable plant passes 200,000 homes.

SBC has no current details of the plant, he added, only the “as-built” maps that are several years old.

Gemini's ethics complaint is based on the participation in the bill-writing process of DPUC commissioner Jack Goldberg. Ironically, it is Goldberg who has been overseeing Gemini's docket and handed them a victory in early rounds. Gemini attorneys say it was improper for him to participate in talks with SBC and senators without Gemini representatives present.

During discussions on the bill, senators made reference to an memorandum of understanding, but Gemini has been denied access to the “secret” document, Gemini attorney Richard Rowlenson said.

'ETHICAL McCARTHYISM'

Emra branded Gemini's claims of wrongdoing “ethical McCarthyism.”

There is no memorandum between the DPUC and SBC, he added — a draft was given to some lawmakers who, in considering the bill, wondered what such a document would hypothetically contain.

As for the pole-attachment claims by Gemini, Emra notes that if SBC were doing anything wrong, Gemini or others would have raised the issue at the DPUC, and it has not been raised.

The bill still needs to be signed by the governor in order to become law.

 

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