Judge to rule on PUD, cable squabble soon
Truckee residents waiting for a new option in cable service providers might soon see the broadband ball get rolling.On Nov. 7 a judge of the California Superior Court will review documents and arguments from Cebridge and the Nevada County Local Agencies Formation Commission regarding the legality of the Truckee Donner Public Utility District’s right to provide broadband service to its customers.The district’s broadband plan was put into motion approximately five years ago when its board decided to provide high-speed Internet service, television programming, and telephone service to Truckee via a fiber-to-the-user network. In 2004 the district received final approval from LAFco, the quasi-legislative body that reviews that validity and value of such matters, and was given the go-ahead to begin securing funds for the venture. Around that same time, another media company, Cebridge, bought out USA Media, the area’s previous cable provider.Since Cebridge and the district stepped onto the same playing field, each has been reviewing the rules of the game. Cebridge officials believe the district isn’t playing fair. District officials, meanwhile, maintain that they are right on. The main point of contention for Cebridge, based on a variety of state legislative decisions, is that public utility districts are not allowed to provide non-utility services, according to Pete Able, Cebridge’s vice president of community relations, and that cable and broadband qualify as non-utility. But according LAFco executive director SR Jones, districts are able to provide a wide variety of services, including sewage maintenance, parks and recreational programs, public swimming pools and cable. Also causing ruffled feathers is the issue of cross-subsidization – the managing of one utility with funds from another. Cebridge argues that cross-subsidization is outlawed in California and that the district is in violation of that.But Peter Holzmeister, general manager of the Truckee Donner Public Utility District, said he sees it differently. “We have been providing water and electric with no cross-subsidization for 70 years. We know how to run multiple utilities at once, we can run another, and we stand that there wont be any cross subsidization with that one either,” Holzmeister said. Cebridge is also concerned with the fairness of the district’s leasing options for the fiberoptic line that will be used to provide service. The line, which runs from Sacramento to Reno through Truckee, is leased by the district. The district intends to base its lease rate for telecommunications on the cost of acquiring the line, a move that puts it at an advantage over Cebridge. “[The district is] proposing to allow use of that fiberoptic line at a cost that is well below fair market value,” Able said. “To ensure that there is not subsidization, they need to lease it at market value, not below.” The annual cost on the open market would be in the range of $83,000 to $120,000, according to Able, but the proposal from the district calls for a $9,000 annual lease, a move that was approved by LAFco as a sound business decision. “When we own an asset in one utility and it is used by another utility – our office building, for example, is owned by the electric utility, but water and share the space – we base the lease on what it cost to build the building, or acquire the [fiberoptic] line,” Holzmeister said. All the while Cebridge has been operating on a different fiberoptic system, for which they are paying market value. Despite their differences, Cebridge and the district have continued a strong and reliable business relationship in collaborating on broadcast decisions, Able said. “It’s not an antagonistic relationship, its a difference of opinion,” he said. “And I think we will compete very effectively should they enter the market.”
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