Monticello "Wins" Appeal

Monticello, a small town in Minnesota just outside the metro area, once again prevailed in court against frivolous charges from TDS Telecom, the incumbent telephone provider (doing business as Bridgewater in the court case).

Monticello, after learning that neither TDS nor Charter were interested in building a modern broadband network in the community, spent years studying the issue and eventually opted to build their own network. After the city secured revenue bonds to pay for the project in spring 2008, TDS began a campaign to delay the network -- a tactic commonly used against community broadband networks across the country.

They filed a lawsuit they could not win, but it prevented Monticello from starting the network. While they waited on the court date, Monticello lost the construction season and investor money sat in escrow. Despite winning court victory after court victory, the citizens of Monticello are unable to build the network they voted for with a stunning 74% yes on the referendum.

When the lawsuit was dismissed from district court, TDS waited as long as possible before appealing the decision in fall 2008. Due to the overburdened and under-staffed courts, the Court of Appeals took another half year to rule. Today, the Court handed down the judgment, finding in favor of Monticello:

Therefore, based on a plain and obvious interpretation of the term "public convenience" and the general intent of the legislature to promote telecommunications, the district court did not err in dismissing the action for failure to state a claim.

Regardless, even if this court were to accept Bridgewater‘s reading of the statute, the Fiber Project arguably qualifies as a utility or utility-like project. A Minnesota statute generally restricting the ability of Minnesota municipalities to issue bonds for projects outside of their jurisdiction provides an exception for bonds issued to finance property for "municipal public utilities." Minn. Stat. § 471.656 (2008). That same statute defines "municipal public utilities" as "the provision by a municipality of electricity, natural gas, water, wastewater removal and treatment, telecommunications, district heating, or cable television and related services."

The main question that remains is this: will TDS find it more profitable to appeal again and delay the inevitable competition? Our courts are overburdened enough, wasting the Court's time with frivolous lawsuits that are nothing more than a delaying tactic is frustrating.

Now more than ever, we need to prevent deep-pocketed incumbents from using the courts to stifle competition. If we let these companies act in bad faith 100 years ago, we would still be trying to electrify the country.

Update: Ars Technica has covered this story and included this:

Drew Petersen, who heads up corporate communications for TDS, was predictably disappointed with the ruling. "The Appeals Court decision sends a chilling message to the private business community operating in the state of Minnesota. The decision will likely discourage other private enterprises from doing or expanding their business in Minnesota."

Drew Petersen is 100% wrong. As the actions of his company demonstrate, a community that takes responsibility for its future encourages investment. Monticello's actions resulted in significant investments from TDS - which previously probably could not locate the city on a map of the communities they serve. While TDS has thus far been able to use the courts to prevent competition, the mere threat of competition has forced TDS to improve its services in Monticello.