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Memphis Operator Sues for Utility Data

Executives of Time Warner Cable's Memphis, Tenn., system will go to court this week to seek enforcement of the state's open-records law regarding a municipal division contemplating a telecommunications overbuild.

To date, the division-Memphis Networx, part of Memphis Light, Gas and Water-has released 4,000 pages of documents in response to a demand by Time Warner late last fall. But further requests have been rebuffed.

Cable officials said the data released to date lack key documentation of the venture's finances and a consultant's report that justifies the city department's contemplated move into data delivery.

"It's a $450,000 study, and we can't find anyone outside [of the division] who's seen it," said Dean Deyo, president of Time Warner's 230,000-subscriber Mid-South Division.

Concern was also raised in the minds of competitors when they read, among the documents Memphis Networx itself released, a printout of an e-mail discussing information requests and whether the partners could refuse them.

Tennessee law was changed recently to allow utilities to expand into related businesses. The board of the city department voted last year to spin off a telecommunications division. Soon afterward, Memphis Networx announced a partnership to build a $100 million fiber-optic network.

The venture will deploy wholesale services to Internet-service providers, long-distance phone companies and competitive local-exchange carriers.

MLGW president and CEO Herman Morris Jr. said in a prepared statement that the division is a "logical" extension of the primary business in Memphis and Shelby counties. The utility has been urged for some time by the mayor to be more proactive and aggressive in its search for ways to further serve its customers, he added.

Ed Horrell, an independent telecommunications consultant advising Memphis Networx, asserted in a recent local newspaper op-ed column that the division will keep utility rates low and help to guard against a digital divide by deploying to all homes.

The venture may be risky, he added, but it carries more revenue potential than taxpayer-funded projects like parks or sidewalks.

The electric division loaned its spinoff start-up money, which is legal as long as the funds are repaid and interest is charged that reflects current rates. But competitors want to check the books to assure themselves that this has been done.

Deyo said Time Warner asked for 1999 financial records, but the division's response was not acceptable.

"The [Tennessee Regulatory Authority] allows for start-up costs. But [the venture has] opened an office, hired staff, let contracts to third parties. Whose money is that? Potentially, it [belongs to] ratepayers," he said.

Deyo also criticized the entire legislative process. Early discussions of the possibility of a telecommunications division were brought up off-agenda, so competitors did not see early signs of the venture.

Memphis Networx has filed for a certificate of public convenience and necessity from the TRA, the state utility regulatory board. Time Warner has filed as an intervenor, as have BellSouth Corp., ISP Nextlink Communications Inc. and the Tennessee Cable Telecommunications Association.

Time Warner also filed a court action on the alleged record violation. That hearing is set for Wednesday (May 3).

But when the TRA announced that it would hold an entire week of hearings on Memphis Networx, beginning today (May 1), the cable operator scrambled to find an available judge that would take up the record request April 20.

Executives wanted a court ruling in time to get the records released and analyzed before the certification hearing. The second judge frustrated operators, though, by refusing to act.

Time Warner's hearing has already been added to the docket in another court.

In a related item, a bill floated by utilities in the state legislature that would modify the open-records law has stalled.

The legislation would allow utilities to declare some information in competitive businesses as confidential. The proposal was sent to a study committee, and it will not be taken up again until next session.