An unsuccessful bidder for the District's cable television franchise filed a $23-million lawsuit in federal court yesterday alleging that District Cablevision Inc., the firm that was awarded the 15-year contract, engaged in unfair competition, fraud and "racketeering."
District Telecommunications Development Corporation, the plaintiff, claims that it would have been selected to build a cable television system here if District Cablevision had not improperly "conspired" with a national cable operator to win the franchise.
The suit also maintains that recent City Council action granting economic concessions to District Cablevision in effect changes the contract requirements after the bidding process had been completed. The suit could add a new complication to District Cablevision's efforts to overcome legal and financial problems.
District Cablevision president Robert L. Johnson said yesterday that he does not believe that the suit will affect the company's plans to begin wiring the city for cable next year. He said he would not comment further until company attorneys have reviewed the suit.
However, William T. Johnson, an Ohio-based cable operator and a District Cablevision investor who has pledged $50,000, said that the suit comes at a bad time for District Cablevision and could delay the start of construction.
"Some folks may see it as a form of greenmail," Johnson said. "It's like having someone stepping up and stalling the process to make you buy them out."
District Cablevision sought $32 million worth of contract modifications from the City Council and obtained most of them earlier this month when the council modifed the agreement for a 90-day period. The council plans to make a final decision on the modifications in the fall.
District Telecommunications said that it spent $750,000 in preparing its cable proposal. The suit seeks $13 million in actual damages and $10 million in punitive damages from District Cablevision, Tele-Communications Inc. (TCI), the nation's largest cable operator and a shareholder in the franchise, and TCI Development Corporation, a subsidiary of TCI.
The suit claims that District Cablevison's proposal was based upon "false assumptions concerning the financial viability" of its system and contained "fraudulent misrepresentations concerning the extent and level of service which DCI would provide to the District."
In addition, District Telecommunications alleges that the modifications sought and largely obtained by District Cablevision would, in effect, substitute a "completely new franchise agreement" for the one the cable firm signed in February.
Harold E. Jordan, the attorney who filed the suit, said that the Denver-based TCI knew or should have known that the information used in District Cablevision's original proposal, including the number of subscribers needed to make the system economically viable, was false.
The suit maintains that District Cablevision and TCI's activities affect interstate commerce and were conducted for "the purposes of having DCI obtain the cable television franchise and bolstering TCI and its subsidiary's financial interest and control of DCI, through a pattern of racketeering activity . . . ."
Officials for TCI could not be reached for comment on the allegations. Johnson declined to comment until he has reviewed the suit.
The other losing bidder, Capital City Cable, filed a $125.7 million suit against District Cablevision last year but dropped the suit after obtaining a $300,000 settlement.