Telecom Industry Challenges Minnesota Contract

Jennifer L. Morey

Telecommunications companies are battling with Minnesota over rights to install fiber optic cable along the state's interstate freeways. Other states are grappling with similar issues, so industry members across the nation are watching to see how things play out.
"All eyes are on Minnesota right now," said Kathryn Lovik, communications manager at the Minnesota Telephone Association, which, along with Means Telcom, has filed a lawsuit in district court to nullify a state contract that allows only one company to install the transmission facilities on the freeway rights of way. This is the first case to go this far: Industry representatives have sought a permanent injunction against government control of telecom networks, Lovik said.
In 1990, the Federal Highway Administration passed jurisdiction to the state departments of transportation to decide how freeway rights of way would be governed. In late 1997, the state of Minnesota signed a contract with Denver-based Universal Communication Networks, granting it exclusive access to Minnesota's freeway rights of way. In exchange, the firm would provide the state with 20 percent of the free capacity. The contract's 10- to 20-year life also constrains action by future state legislatures or future commissioners.
Means Telcom and the Minnesota Telephone Association, however, say the contract violates state laws as well as the 1996 Federal Telecommunications Act, which prohibits governments from putting up barriers to competition among telecommunications providers.
Although the contract includes a provision that allows other providers to lay down their cable, it can be done only while Universal Communication Networks has trenches open, Lovik said.

Local access
The Minnesota government is planning to use its free capacity as part of a project called "Connect Minnesota." "People think [the contract will] bring advanced services to rural areas, but there are no electronics hooked up to the pipes," Lovik said, explaining that providers still need to hook up networks. "They are not bringing fiber to the local loop."
The remaining 80 percent of capacity is available to all telecom service providers, according to Al Strock, president of Universal Communication Networks, who said his company is a wholesaler of broadband communications. "Basically, it is a telecommunications toll road," he said.
When the state signed the contract, Lovik noted, the state attorney general filed a petition with the Federal Communications Commission for a ruling on whether the contract was legal. The docket is still open on the federal level, she said.