Virginia Attorney General Gerald L. Baliles has ruled that Fairfax County may be sued for antitrust violations if, as expected, it grants a $100 million cable television franchise to one company while rejecting another.
The opinion, issued in the wake of a U.S. Supreme Court decision last month and expressed in a Feb. 16 letter to the Fairfax county attorney, injects further confusion into the county's controversial cable franchise process. After three years of study and debate, Fairfax last week attracted only two bidders--Fairfax Telecommunications and Media General--for what had been described as potentially one of the most lucrative franchises in the nation.
The Fairfax Board of Supervisors hopes to award a franchise by July 1, bringing more than 100 television channels to county residents within five years and offering millions of dollars in potential profits to the winning firm. The supervisors have encountered charges of unnecessary delays, threats of legal challenges and embarrassment over the paucity of competing firms.
At least one prospective Fairfax applicant, Arthur Barber of Community Cablevision, said he decided not to bid in light of the Jan. 13 Supreme Court ruling that local governments are not exempt from antitrust suits. He said he feared the county could not protect its franchise from pirate firms stealing customers.
Baliles wrote in his letter that only the General Assembly could grant counties total protection from antitrust suits by specifically granting them the right to franchise and regulate cable television. So far no such legislation has been introduced in Richmond, although a spokesman for Gov. Charles S. Robb said the attorney general has prepared a bill that Robb may introduce.
"If I were a cable company, I'd think eight or ten times about going into a massive investment right now," a spokesman for Baliles said yesterday.
Montgomery County, where eight firms are seeking a countywide franchise, is facing similar uncertainty. But in Maryland, a bill before the General Assembly would give local governments the power to grant exclusive cable television franchises. The House bill, introduced by Del. Robin Ficker (R-Montgomery), also would give localities the power to regulate cable television service and set rates.
"The bill essentially allows local governments to grant exclusive or nonexclusive franchises to cable firms," Ficker said. " . . . It allows local control where there was some constitutional question raised."
The issue is especially important in Fairfax because the county wants to award a franchise in Reston, where Warner Amex has for more than a decade provided cable television without any specific county authorization. Warner officials have said the county has no right to evict them and, fearing a legal challenge from Warner, one of Fairfax's two bidders opted not to offer cable service in Reston.
The president of that company, Fairfax Telecommunications Inc., said last week he hoped the county would seek legislation in Richmond, if necessary, to remove any cloud from the countywide franchise before it is awarded. "We're following it very closely," president L. Gary Byrd said. "We're assuming and are confident that the matter will be resolved."
Fairfax officials said yesterday, however, that they have not decided how to respond to Baliles' opinion and have not yet requested legislation.
The Supreme Court decision was prompted by a lawsuit by Fairfax Telecommunications' Denver-based partner, the giant Tele-Communications Inc. A wholly owned subsidiary of TCI sued Boulder, Colo., for attempting to limit its activities there, and the Supreme Court said last month that the local court must consider whether the city violated antitrust laws in the process.
Lawyers for both Montgomery and Fairfax said yesterday they believe the counties may grant franchises, even under existing law, as long as they do so in a reasonable manner. A spokesman for Fairfax Telecommunications' competitor in Fairfax, Media General Cable of Fairfax County Inc., agreed, saying the county is obligated only to give fair consideration to every applicant.
"The county has to consider it, but I don't think the county has to grant it," said Bruce E. Lovett, assistant vice president for Media General. "The only problem now is with the county, do they feel secure they have antitrust immunity?"