At & T Comm. of Southwest v. City of Dallas, Tex., CA 3-98-CV-003-R.
| Decision Date | 07 July 1998 |
| Docket Number | No. CA 3-98-CV-003-R.,CA 3-98-CV-003-R. |
| Citation | 52 F.Supp.2d 756 |
| Parties | AT & T COMMUNICATIONS OF THE SOUTHWEST, INC., Teligent, Inc., GTE Southwest Inc., Southwestern Bell Telephone Company, Caprock Communications Corp., Golden Harbor of Texas, Inc., and Westel, Inc., Plaintiffs, v. CITY OF DALLAS, TEXAS, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
George Harmon Tarpley, Sheinfeld Maley & Kay, Dallas, TX, Andrew William Austin, Sheinfeld Maley & Kay, Austin TX, for AT & T Communications.
Richard L. Crozier, Davidson & Troilo, Austin, TX, for Taylor Communications, Inc., USLD Communications, Inc., Caprock Communications Corp., Golden Harbor of Texas, Inc., Westel Incorporated.
Michael Anthony Shaunessy, Bickerstaff Health Smiley Pollan Kever & McDaniel, Austin, TX, Diane M. Barlow, Casey Gentz & Sifuentes, Austin, TX, for Teligent, Inc.
E. Russell Nunnally, Sally Christine Helppie, Tammy Sue Wood, Bell Nunnally & Martin, Dallas, TX, Anthony V. James, Irving, TX, Steven Gill Bradbury, John P. Frantz, Kirkland & Ellis, Washington, DC, for GTE Southwest Incorporated.
Lionel M. Schooler, Gilpin Paxson & Bersch, Houston, TX, for Sprint Communications Co.
Emily Williams, Washington, DC, for Association of Local Telecommunications Services.
Weston C. Loegering, Robert Edwin Davis, David John Schenck, Hughes & Luce, Dallas, TX, David Randall Johnson, Dallas, TX, Barbara R. Hunt, Dallas, TX, for Southwestern Bell Telephone Co.
The plaintiffs in this case are all telecommunications companies that have challenged the adoption and enforcement by the City of Dallas of a form franchise ordinance attempting to regulate the provision of local telephone services in the City. This Court granted a preliminary injunction in this case to AT & T Communications of the Southwest ("AT & T") at a hearing held on April 9, 1998, and recently issued an opinion explaining the basis for that decision.1 In the opinion I held that Dallas may require a telecommunications provider to obtain a franchise in order to use the City's rights-of-way for the provision of local telephone services. The franchise is limited, however, in that it may only be conditioned on a company's agreement to comply with the City's reasonable regulations of its rights-of-way and fees for use of those rights-of-way. Dallas does not have the authority under state or federal law to require a wide-ranging franchise application, to impose conditions on a franchise that are unrelated to the telecommunications provider's use of the City's rights-of-way, or to impose fees that are unrelated to use of the rights-of-way.2
The Court is now presented with a motion for preliminary injunction filed by plaintiff Teligent, Inc. ("Teligent"). While this motion raises many of the same issues discussed in the earlier opinion, it entails a somewhat different factual situation. Teligent plans to provide local telephone services using wireless technology involving microwave transmission and base-stations placed on private property. Teligent, therefore, differs from AT & T in that it will not own or occupy any City rights-of-way. Under protest, Teligent applied for and was granted a franchise ordinance. Teligent now argues that because it will not use any City rights-of-way, the City does not have the authority to require it to agree to a franchise, or to impose any conditions on its provision of local telephone services. For the reasons discussed below, the Court agrees and GRANTS Teligent's motion for preliminary injunction.
In the earlier opinion issued in this case I described the history of local telephone services in Texas and the adoption of the Federal Telecommunications Act of 1996 ("the FTA"),3 as well as the details of the form franchise ordinance adopted by the City of Dallas on November 18, 1997.4 will not restate that discussion here, but rather I will summarize the particular factual situation of Teligent and the services it hopes to provide in Dallas.5
Teligent is a corporation founded in 1996, just after the passage of the FTA. Teligent intends to provide voice, data and video telecommunications services primarily to small and medium-sized businesses. In Dallas, Teligent proposes to deploy a "fixed wireless point-to-multipoint broadband local network" to provide local telephone service.6 The network equipment will use digital microwave radio technology to transmit signals between each customer and a Teligent base station antenna site. Each base station will be located in and on top of a private building, and will have a coverage radius of approximately three miles. Unlike traditional copper and fiber based systems, Teligent's fixed wireless system will not require any physical wires between the customer's antenna and the base station antenna.
The Teligent network will also include a switch — a large computer that will analyze telecommunications data and route calls — located in a building in Dallas. Signals will be transmitted from the base station antennae to the switch either through the air via microwave or through wires in conduits leased from another local telecommunications carrier. These wires may be located in City rights-of-way, but they will not be owned by Teligent, but by another carrier that has a franchise from the City, such as Southwestern Bell.
If a call is being made from a Teligent customer to a customer of another local carrier, the switch will route the call to a switch of the other carrier, which would then complete the call over its own facilities. In such a situation Teligent would compensate the other local carrier for completion of the call pursuant to their interconnection agreement. Therefore, by using the fixed wireless system, and base stations located on private property, Teligent will not construct, own, install or maintain any facilities in the City's public rights-of-way.
On October 1, 1997, Teligent was granted a Service Provider Certificate of Operating Authority ("COA") by the Texas Public Utility Commission ("PUC"). The PUC analyzed detailed financial and technical information about the company and determined that it should be authorized to provide local exchange service in Texas, including Dallas.
The Dallas City Charter provides that the City "shall have the power ... to confer upon any person, firm or corporation the franchise or right to use the public property of the city for the purpose of furnishing to the public any general public service or benefit."7 Relying upon this provision, the City requires all holders of State COAs to apply for and obtain a telecommunications franchise before they can provide local service in Dallas. The franchise application requires a company to submit extensive financial and technical information, as well as information about the company and its long-term plans in the City. The form franchise itself contains numerous conditions and calls for a fee equal to four percent of the company's gross receipts for all of its operations in the City.8
In addition to challenging the form franchise ordinance as inconsistent with the FTA and State law, Teligent also challenges the City's "9-1-1 Resolution." Under the Terms of the COA issued from the Texas PUC, Teligent is required to provide its customers with access to the 9-1-1 emergency services network, and to work diligently with local 9-1-1 entities to ensure there is no degradation of such services. As a home-rule city, Dallas has chosen to establish and administer its own 9-1-1 emergency services network. City Resolution 961121 (the "9-1-1 Resolution"), approved by the City Council on March 13, 1996, authorizes the City Manager to enter into a 9-1-1 service and billing agreement with a telecommunications provider only when the provider has been issued a COA from the PUC, and a franchise from the City. Thus, without a franchise from the City, Teligent is precluded from obtaining a 9-1-1 agreement.
On October 6, 1997, while reserving its rights to challenge the City's franchise requirement, Teligent applied for a franchise to provide local telecommunications services in Dallas. The application was approved by the adoption of City Ordinance 23325 on November 12, 1997. Again subject to protest and reservations, Teligent accepted the franchise. Teligent also applied for and received a 9-1-1 service agreement. Teligent anticipated that it would be ready to provide local services in Dallas in June, 1998, and that it would commence marketing efforts approximately one month in advance of that date.
Teligent filed this suit on December 12, 1997 seeking declaratory and injunctive relief. Specifically, Teligent asks the Court to (1) enjoin the franchise requirement as it applies to Teligent; (2) enjoin the requirement that Teligent be franchised before it can obtain a 9-1-1 agreement from the City, and (3) enjoin enforcement of the franchise ordinance it did obtain from the City.
To be entitled to a preliminary injunction, the Fifth Circuit requires that a movant carry the burden of persuasion on the following four elements: (1) a substantial likelihood of success on the merits of the movant's claims; (2) a substantial threat that movant will suffer irreparable injury if the injunction is not granted; (3) the threatened injury to the movant outweighs any harm that the other party might suffer if the injunction is entered; and (4) an injunction will not disserve the public interest.9
Teligent argues that under the FTA and the Texas Public Utilities Regulatory Act ("PURA"), Dallas may not prohibit telecommunications providers that do not install any facilities in the public rights-of-way from competing in the City unless they obtain a franchise agreement.10 Imposing a franchise requirement on a provider that does not use any City rights-of-way is merely an unlawful attempt to expand the City's revenues....
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