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Court battle shows two faces of US West

A Nebraska entrepreneur takes on US West for access to the company's cable systems and gets mired in a legal battle.

Five years ago, Nebraska entrepreneur Rick Dahlgren set his sights on a corner of the local telecommunications business, hoping to use a piece of US West's cable TV network for his own content.

That decision launched a legal battle that now leaves Dahlgren facing potentially crippling fines for sending US West documents that were publicly available to federal telephone regulators.

Dahlgren's Omaha-based company, called Cottonwood Communications, has been battling US West in court since 1994, in a bid to offer its own content and Internet services over the telco's Omaha cable TV network.

In the course of that case, Cottonwood has won access to thousands of pages of internal US West documents. These were originally protected by court order, but many of them are now openly available to the public.

Dahlgren sent some of these documents to the Federal Communications Commission late last year as part of a regulatory fact-finding proceeding. Last week a judge said that action had violated the documents' original protective order, effectively ruling that Dahlgren and his wife were the only members of the public barred from publicizing the records.

Ironically, Dahlgren's case against US West is based on an argument very similar to one that is now being made by the Baby Bell on a much larger stage: in front of the FCC and Congress.

Both companies are essentially asking for the same thing--access to competitors' high-speed cable networks. Dahlgren wants in to US West's Omaha network, while the telco wants AT&T and Tele-Communications Incorporated to open their cable network to competitors.

"The thing is that I am asking for the same thing that [US West CEO] Solomon Trujillo, who is fighting me, is asking for," Dahlgren said.

But US West says it is under no pressure to open its own network until other companies do the same.

"We've been out there advocating this with an eye to parity of regulation," said David Beigie, a US West spokesman. "But the FCC, at least at this stage, has not ruled that it is an important issue. So we'll apply whatever ruling they have made and apply it to our cable holdings."

Some are more public than others
Although the case stretches back more than half a decade, the most recent skirmish came after Dahlgren sent many of the records publicly available in his case to the FCC, hoping to persuade regulators that US West had a history of trying to stifle competition.

These documents came out in the early stages of the case, only under the condition that neither party use them outside the context of the case. But once they were entered into the record as open evidence--something US West could have protested--they became available to the public. Legally, this means that anyone can go to the courthouse, copy the documents, and use them.

Nevertheless, the telco argued in court that Dahlgren had broken his original agreement not to use the documents outside of the case.

The judge in the case backed US West. The court agreed that the documents were in the public record, but said Dahlgren was not just any member of the public.

"The average member of the general public?probably does not have the desire or incentive to peruse thousands of pages of court files for secret documents," the magistrate judge in charge of the case wrote. "In contrast, [Cottonwood] knew of the existence and location of US West's confidential documents, had recently lost their lawsuit against US West, and apparently wished to place US West in bad light against the FCC."

Because Dahlgren had agreed not to use the documents in any forum other than the trial, it didn't matter that they were available to any member of the public, the judge said.

The judge recommended that Dahlgren pay US West's attorneys fees and other costs associated with the alleged violation of the protective order. The telco has argued to the judge that this should include any costs that stem from the company defending itself against use of the documents by the FCC.

Neil Shapiro, a Landels, Ripley & Diamond attorney specializing in First Amendment law, said the judge's ruling was surprising.

"Most courts readily accept the reality that when a document is public, it's public," Shapiro said. Dahlgren's intentions should not have entered into the decision, he added. "It's bad legal analysis by the court. Motive is not an issue."

Ordinarily, once a company has allowed records to be opened to the public, the company waives the ability to enforce a previous protective order, the attorney added.

"There would have been potential for US West to protect [the documents] in the trial," Shapiro said. "It seems to me that the court is really protecting US West's interests in a way that they didn't do themselves."

Uncomfortable symmetry
Dahlgren's trial has put US West in an uncomfortable position in more ways than one, even though the telco has won every round in the courtroom.

Cottonwood Communications is making essentially the same argument in Omaha that US West is making in front of the FCC and Congress--that another company's proprietary cable TV network be opened for use by competitors.

In Omaha, US West has a city-granted cable TV franchise and cable network that passes about 50,000 households, and competes with Cox Communications. The company offers cable TV, telephone service, and Internet access through the system, bundling the products at an attractive price for consumers.

Dahlgren has been fighting to win access to this system since 1994, when it was rolled out in an earlier version called "video dial tone." He originally wanted to offer content for cable TV channels, but since has switched his focus to the Internet, eyeing broadband Net and content services through US West's cable.

After a long discovery and pretrial process, that case came to a head in March 1998, when a court ruled in US West's favor, rejecting Dahlgren's bid for access. He and his wife are appealing that decision now.

Meanwhile, US West has spent the last several months as one of the chief corporate spokespersons for an "open access" movement targeted at the merger between AT&T and TCI.

Along with America Online, MindSpring, and a host of smaller Internet service providers, US West has argued that AT&T and TCI should be required to give outside ISPs access to the cable network.

Today, consumers in the TCI cable network can only access the Web via cable by using the @Home cable net service, which is controlled by TCI, as their ISP.

But US West says there is no contradiction in trying to keep its own cable network in Omaha closed to competitors while trying to have other companies' cable networks opened to all ISPs.

"What we've insisted all along is that there is that there be parity of regulation," said Beigie, the US West spokesman. "We've said it makes sense to have not just one national standard that applies not just to telephone lines, but to cable lines as well."

The FCC has said it would not make AT&T provide open access as a condition of its merger with TCI, and has refused to take up the issue in broader contexts, he added.

"If that's their decision then we will accept that as precedent and act accordingly," Beigie said.

Meanwhile, Dahlgren said his company will appeal the case, as far as his money and the good graces of his attorney will allow.

But the contempt judgement, if it winds up being a significant sum of money and is upheld, could bring the case to a halt, he said.

"We're two people in a basement embroiled in this stupid fight against this huge entity," Dahlgren said. "This could be the end of it. This could be the end of us."