Cablevision of Boston v. Public Improvement Com'n

Citation38 F.Supp.2d 46
Decision Date27 January 1999
Docket NumberNo. 98-12531-MLW.,98-12531-MLW.
PartiesCABLEVISION OF BOSTON, INC., Plaintiff, v. PUBLIC IMPROVEMENT COMMISSION OF THE CITY OF BOSTON, et al., Defendants.
CourtU.S. District Court — District of Massachusetts

J. Anthony Downs, Stephen D. Poss, Michael K. Murray, Goodwin, Procter & Hoar, Boston, MA, for Cablevision of Boston, Inc.

Merita A. Hopkins, Boston, MA, for Public Improvement Commission of the City of Boston, Joseph F. Cassazza, Michael Galvin, Gary Mocia, Para M. Jayasinghe, Stephen Shea, City of Boston.

Roscoe Trimmier, Ropes & Gray, Boston, MA, for Boston Edison Co.

Michael J. McHugh, Rich, May, Bilodeau & Flaherty, Boston, MA, for Becocom, Inc., RCN Telecom Services of Massachusetts, Inc., RCN Corp.

Roscoe Trimmier, Ropes & Gray, Boston, MA, Michael J. McHugh, Rich, May, Bilodeau & Flaherty, Boston, MA, for RCN-Becocom, LLC.

MEMORANDUM AND ORDER

WOLF, District Judge.

This memorandum is based upon the transcript of the decision rendered orally on January 22, 1999, expressing the court's intention to deny Cablevision of Boston, Inc.'s ("Cablevision") Motion for Preliminary Injunction. This memorandum adds citations, deletes some colloquy, clarifies some language, and represents the court's decision in this matter for the purpose of any possible appeal.

* * * * * *

Upon consideration of the literally voluminous pleadings and exhibits, and of the testimony and argument at the six-hour hearing on Cablevision's Motion for Preliminary Injunction, that motion is being denied.

FINDINGS OF FACT

I find the basic facts to be as follows. I will refer to certain additional facts as they are relevant in the explanation of my analysis of the applicable law.

Plaintiff Cablevision has for many years provided cable television services in the City of Boston. Affidavit of Richard S. Hahn ("Hahn Aff.") ¶ 38. Until recently, it enjoyed a statutory monopoly. Id. It still has about 97 percent of the market. Id. The private defendants in this case have about three percent of the Boston cable television market. See id.

Defendant Boston Edison Co. is a public utility which has for more than a hundred years provided electricity to Greater Boston. Id. at ¶ 7. In order to do so, it has built, among other things, a large network of underground conduit for cable, used to transmit electricity and, to a limited extent, to transmit communications relating to the delivery of electricity. Id. at ¶ 9.

Defendant Public Improvement Commission of the City of Boston (the "PIC") is a division of the City's Department of Public Works. Defendant Joseph Casazza is its Chairman. The PIC is responsible for construction projects involving the City streets. As part of this, the PIC administers a process to permit the construction of new conduit under the City streets and to record its location. It does that pursuant to M.G.L. c. 166, § 22, which provides municipalities the power to issue what are called "grants of location" for new conduit and establishes the legally required procedure for doing so. Although it is not clear to the court at this point what empowers the PIC to do so, the PIC also records the uses to which authorized conduit is to be put and records amendments to such uses.

In February 1996, a new federal telecommunications statute was enacted. It is known as the Telecommunications Act of 1996, (the "TCA"), 47 U.S.C. § 151 et seq. The proposed statute was the subject of lengthy debate. In essence, it provided for a revolutionary deregulation of the telecommunications industry. See 142 Cong. Rec. H1078 (daily ed. Jan. 31, 1996) (H.R.Conf.Rep.104-458). The goal of the TCA was to create competition in the provision of telecommunications services, including video services. S.Rep. No. 104-23, at 1-2 (1995).

The TCA is premised on the philosophy that vigorous competition will serve consumers by providing wider choices, better service, and lower prices. Id. at 7. In enacting the TCA, Congress and the President specifically anticipated that electric utilities, which already had networks of conduit and fiber-optic cables, would become competitors to existing cable television operators. Id. Since enactment of the TCA, Congress has encouraged and, when it has occurred, applauded the entry of utilities into the cable television market. See Federal News Service, Competition Among Video Delivery Systems: Hearing of the Telecommunications, Trade and Consumer Protection Subcommittee of the Committee (July 29, 1997) ("Federal News Service") at *32.

In the anticipation of the TCA, in 1995, Boston Edison told Casazza that it intended to use its existing conduit under the City's streets to compete in the telecommunications business when the federal law was changed to deregulate the industry. Hahn Aff. ¶ 28. Casazza told Boston Edison that he did not believe that the PIC's policy for building new conduit was applicable to Boston Edison's proposal. Id. at ¶ 29. The PIC's policy for constructing new conduit was adopted in 1988. Affidavit of Joseph F. Casazza ¶ 4. It provides that, in order to minimize future disruption to the streets, parties seeking to install new conduit must build additional, empty shadow conduit that can be employed if future demand increases, and also open their project to other service providers who may wish to participate. Policy Relating to Grants of Location for New Conduit Network for the Provision of Commercial Telecommunications Services ("Policy for New Conduit") at ¶ 12.

Boston Edison's request and the foreseeable possible deregulation of the telecommunications industry prompted Casazza to begin to consider developing a new PIC policy concerning changes in the use of existing conduit under City streets. Hahn Aff. ¶ 29; Tr. of Prelim. Inj. Hr'g ("Tr.") at 213-14 (Jan. 20, 1999). Casazza convened a small group of potentially interested parties, including Boston Edison. Hahn Aff. ¶ 30; Tr. at 213. In April 1996, that group furnished Casazza with a proposed possible policy for changes in the use of existing conduit. Hahn Aff. ¶ 30.

That proposed policy provided, among other things, for the submission of plans to the PIC, by utilities, identifying the location of all existing cable and conduit that were intended to be utilized for commercial telecommunications purposes. Proposed Application of the City of Boston Fiber Optic Conduit Policy to Existing and Newly Constructed Non-Commercial Telecommunications Utility Cable and Conduit at 1. The proposed policy would also have required a utility to petition the PIC for an amendment to its grants of location for the cable and conduit that it intended to use for commercial telecommunications purposes. Id.

Casazza, however, did not act on the proposed policy. Tr. at 215. He did nothing with regard to it, in part because the recently-enacted TCA would require the City to consider issues of telecommunication policy much more broadly and that was not the PIC's function. Id. at 216-17, 221-22.

Casazza had been told of Boston Edison's concept of converting its conduit and cable to telecommunications use and also informed of Boston Edison's initial planned project. Id. at 211, 220. He did not, however, know all of Boston Edison's plans. Id. at 211. Casazza did not feel that Boston Edison or anyone else was required to follow the possible proposed policy that would have required prior notice and action by the PIC before new cable could be added to existing conduit or existing cable could be converted to telecommunications use. Id. at 214-15.

From 1996 to 1998, Casazza, as Chairman of the PIC, did not believe that Boston Edison was adhering to that proposed policy. Id. at 211, 213-15. Contrary to Cablevision's contention, Casazza and the PIC were not misled by Boston Edison concerning the conversion of its conduit. Id. at 202.

Following enactment of the TCA, in 1997, Boston Edison organized defendant BecoComm as a vehicle for engaging in the non-regulated telecommunications business. Hahn Aff. ¶ 9. It is the business of BecoComm to construct telecommunications fiber-optic systems for other entities which wish to use Boston Edison conduit, which are also known as "rights of way." Id. at ¶ 21.

Defendant RCN Corporation is a holding company which includes defendant RCN Telecom Services, Inc. Affidavit of Scott Burnside ¶ 1. RCN Telecom Services, Inc. provides cable, telephone and Internet services. Id. In September 1996, BecoComm and RCN formed a joint venture, the defendant RCN-BecoComm, LLC (the "Joint Venture"), which provides telecommunication services, including cable television, to customers in Boston and adjoining cities. Affidavit of Michael Adams ¶ 4. The Joint Venture and Cablevision are direct competitors.

The press release announcing the formation of the Joint Venture stated that the Joint Venture would utilize Boston Edison's network of fiber-optic cable. Boston Edison and C-TEC's RCN Unit Form Partnership to Offer Local Phone, Long Distance, Video and Internet Access, Press Release (Sept. 30, 1996). At various times, additional fiber-optic cable has been added to Boston Edison's conduit for use by the Joint Venture. Affidavit of Ralph J. Canina ¶ 7; Affidavit of Paul Knizer ("Knizer Aff.") ¶ 7.

Casazza was generally aware that this was being done. Tr. at 205-208. Cablevision was also generally aware that this was being done.

In August 1997, Cablevision complained to the Massachusetts Department of Public Utilities, which has since been renamed the Massachusetts Department of Telecommunications and Energy (the "DTE"), that according to public documents, the Joint Venture was currently using "Boston Edison's fiber optic network, rights of way, plant facilities, and name." In re: Application of Boston Edison Co., DPU 97-63, Reply of Cablevision Systems Corp. to Mtn. of Boston Edison Co. to Clarify Scope of Proceeding, at 3 (Aug. 20, 1997).

In early 1998, a representative of the Joint Venture and...

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