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State Laws/Franchising

Law ‘Carves Out’ Santa Cruz

9/01/2006 5:19 AM Eastern

While the new legislation in California will allow incumbent cable operators to seek state operating authority, one system won’t be filing anytime this decade.

That would be Charter Communications’ Santa Cruz County system.

Though not named in the newly passed legislation, specific terms in the bill target the system and prevent it from taking advantage of the new policy until July 2014.

The language says no system operating under a consent decree from federal court can expand its system boundaries, and it can’t apply for state authorization until that date.

It’s being referred to as the Santa Cruz carve-out, said Bill Marticorena, outside attorney for the county.

In 1998, that county challenged the transfer of the local system by Sonic Communications to Charter, arguing that Charter had paid so much for the acquisition that it would hike rates to consumers. The county asked for a broad array of information, a request Charter deemed excessive. When the company did not provide all the data, the county rejected the transfer, leading to a lawsuit by Charter.

The suit went all the way to the U.S. Supreme Court, which refused to hear it. That let stand a decision by the Ninth Circuit Court of Appeals, which supported the rights of cities to request a broad array of information in vetting transfer requests. The battle, including charges of breech of franchise, continued in U.S. District Court in California, ending with a consent decree in 2004 governing Charter’s operations. Marticorena said that decree keeps rates about $18 lower than expanded basic rates charged in the region by Comcast, for instance.

Supporting the original county suit was the Santa Cruz City Council. One of the council’s members was John Laird. Laird is now the democratic assemblyman for Santa Cruz and Monterey counties, and he got the amendment inserted into the state franchising bill preserving the local agreement, according to Marticorena.

 

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