The North Carolina Court of
Appeals recently issued an opinion in a case that should be reviewed by
any municipality in North Carolina who has, or is considering
constructing a fiber optic network or similar infrastructure. It will
also be of interest to any municipality considering utilizing the
technology of broadband over power lines.
Starting in 1996, the City
of Laurinburg constructed and then expanded the bandwidth of a fiber
optic network. The City's facilities, Scotland County government
buildings and schools, and the local hospital, were all connected to the
network. They all used the network for data transmission and internet
services, which were provided through a contract Laurinburg entered with
School Link, an internet service provider. Laurinburg received certain
fees from School Link.
This put Laurinburg into
competition with BellSouth. BellSouth sued, claiming Laurinburg did not
have the requisite authority to operate a fiber optic network and to
enter into the arrangement with School Link. The trial judge granted
summary judgment in Laurinburg's favor. In a unanimous decision, the
Court of Appeals recently affirmed that ruling of the trial court.
The Court of Appeals opinion
is noteworthy for several reasons. One is its discussion about how the
courts should generally construe municipal powers granted under Chapter
160A of the General Statutes. The other is whether authority exists
under the public enterprise statutes for this venture of Laurinburg's.
The Court ruled that Laurinburg had authority to enter this venture
because the network constituted a "cable television system" as
defined in the public enterprise statutes, which municipalities are
authorized to operate.
Since the Court of Appeals
decision was unanimous, BellSouth will have to successfully petition the
Supreme Court to review the matter. There is also the possibility that
this may prompt the telecommunications companies to ask the General
Assembly to address the authority of municipalities to be involved in
the provision of telecommunications and internet access services.
Arguably, our public enterprise statutes need to be updated to account
for the new technology Laurinburg is utilizing.
The case is BellSouth
Telecommunications v. City of Laurinburg and School Link,
COA04-145 (opinion rendered Jan. 18, 2005).
For further information,
please contact Keith Johnson
at 919.783.1013 or kjohnson@poynerspruill.com.
