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Adelphia, Vermont Strike Deal

3/12/2004 4:04 AM Eastern

Adelphia Communications Corp. and Vermont officials have reached an agreement that will end a lawsuit between the two parties and ensure that 1,500 miles of broadband plant will be installed in the state’s rural areas by 2009.

The line extensions represent a 40% increase in Adelphia’s base of installed plant in the state.

Adelphia became Vermont’s dominant cable company after buying up its other operators throughout the 1990s. Under terms of the ownership transfers, state officials required the MSO to build further into less-populated communities.

The state Department of Public Service audited Adelphia’s performance and determined in 2000 that the MSO was 1,262 miles short of the agreed-upon line extensions. Regulators then opened a proceeding designed to compel compliance just days before Adelphia filed for Chapter 11 bankruptcy protection in June 2001.

Adelphia tried to persuade officials that rising costs had made the line extensions commercially impractical. But construction would have been less expensive if Adelphia had started immediately after the franchises were granted, regulators countered.

PSC commissioners also levied a $567,500 penalty against the MSO for failing to meet extension deadlines and other deficiencies.

Adelphia sued to challenge the state’s action in a Vermont federal court, even as the parties continued to negotiate.

The agreement will extend Adelphia’s reach by 20,000 homes in 70 communities over a five-year buildout. It must also complete 200 miles of plant this year or be fined $25,000 for each mile it falls short.

The schedule -- and fines -- ramp up in subsequent years, peaking at 1,000 miles constructed, or $28,000 per mile short, in 2007.

Should Adelphia fall more than 20 miles short in a year, it must post a larger construction bond, according to the agreement.

The deal also addressed unresolved PEG-access (public, education and government) issues.

The agreement helps regulators to meet Gov. James Douglas’ goal of deployment of broadband to at least 90% of Vermont homes and businesses by 2007.

DPS officials also said they were pleased with how Adelphia’s new management responded. "By their actions, Adelphia is sending a strong message that this is a new company, headed in a positive direction," commissioner David O’Brien said in a prepared statement.

 

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