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Richmond has filed suit to stop Cavalier Telephone from selling television services in the city without a license.
The lawsuit filed late yesterday in Richmond Circuit Court asks for an injunction to stop the company from serving customers in the city without a franchise to do so.
Cavalier officials could not be reached for comment yesterday.
A franchise agreement has financial value to the city, which says it is entitled to a franchise fee and a consumption tax on the service.
Richmond officials say they are trying to negotiate a franchise with Cavalier and that the company must stop providing service until they reach agreement. The company has been selling cable television to customers in Richmond since June, the suit states.
Mayor L. Douglas Wilder informed Cavalier officials on Oct. 27 that selling cable services without a license is illegal.
In addition to an injunction, the suit asks the court to require Cavalier to give the city a complete account of all cable television customers and payments made, and to pay all business-license taxes and fees owed to Richmond since the company began providing the service.
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Cavalier, Richmond at odds
Company says TV product not 'cable' TV; city believes otherwise and files lawsuit
Cavalier Telephone has cut a few legal corners that cable companies must take to sell its television service, city officials say.
Cavalier, however, disagrees with a city lawsuit that claims the company is breaking federal and state law. Cavalier says its TV product, which it began selling to Richmonders in June, is not "cable" TV.
Instead, Cavalier pumps video through the same communications wires that have relayed its Internet service for years. Internet service is unregulated, and the company believes its TV product should be, too. The Richmond-based telecommunications provider has operated since June without a business license or a franchise agreement to sell video in the city, where it has 828 TV customers. The city maintains it needs both.
Cavalier and the city also are at odds over whether either has attempted to create a franchise that lays out conditions for the company to sell TV. Cavalier says it has tried to negotiate a franchise and received no response, while Richmond officials claim the opposite.
Cable franchises outline, among other terms, TV taxes and fees for localities along with customer-service standards.
With no official agreement, the city claims there is no way to protect consumers or determine the amount of taxable revenue it is owed.
Cavalier filed for a business license needed for any company to sell a product or service -- on Tuesday after a threat of legal action from the city. A lawsuit filed Wednesday seeks to stop Cavalier from serving customers until the company obtains the authority to do so.
The dispute traces to May 9, when Cavalier President and CEO Brad Evans sent a letter to Richmond officials announcing his company's intent to sell TV to city residents within 30 days.
Evans stated that his company's TV technology was not cable service and instead ran over existing copper voice and DSL high-speed Internet lines. Therefore, he wrote, Cavalier did not have to dig up streets and yards to install a distribution network around the city to offer TV, as competitors have.
Evans planned to seek a TV franchise with the city in the summer and, until then, said Cavalier would act like a traditional cable provider, meeting customary service standards and remitting a percentage of the company's gross TV revenue to the city.
The next month, Evans received a letter from William E. Harrell. The city's chief administrative officer noted that he was excited at the prospect of an alternative TV provider but, nonetheless, told the businessman that selling video without a franchise is against federal law.
Evans wrote the city July 17, making Cavalier available to negotiate terms on a franchise. A new state law took effect July 1, cutting the time it takes for aspiring TV providers to enter the largely monopolized cable marketplace.
Before that law, Cavalier was already selling about 150 channels of TV in Richmond without any agreement.
According to court documents, Cavalier TV pulled in nearly $2,500 in taxable receipts in Richmond during June and nearly $8,500 in July. By October, the company was just shy of $30,000 in sales. Until a few days ago, Cavalier held city taxes and fees on that revenue in an escrow account.
In October -- three months after Evans requested franchise negotiations -- the CEO got a letter from the mayor.
L. Douglas Wilder wrote that the city offered in September to negotiate a franchise but had not gotten a response. Wilder also accused two company officials of using false pretenses to try to discuss with city workers how to go about offering public-access channels to consumers. Cavalier believes the allegation is invalid.
"The conduct on the part of Cavalier is unacceptable and will not be tolerated," the mayor wrote, before saying he expected the company to immediately pull the plug on its TV service.
Cavalier has kept it running. City officials made no comments yesterday.
The company and city met in mid-November to hammer out a franchise agreement. Cavalier came with a draft agreement.
At the end of last month, city Director of Finance Harry E. Black sent a letter informing the company that it was in violation of city code -- operating without a business license is a misdemeanor, and not paying some fees is considered a criminal violation.
On Tuesday, Cavalier paid the taxes and fees and filed for a business license, paying $564.60 to cover the application fee. The company sent two checks totaling $7,964.49 to the city for six months of franchise fees and the city's cable utility tax.
In the lawsuit filed the next day, the city claims that without a franchise or audit of the company's financial records, city officials have no way of determining if the sum Cavalier paid is accurate, court documents say.
The city believes television running through Internet wires is considered a form of cable TV.
Cavalier attorney Stephen T. Perkins said the firm does not own or manage the technology components required of a cable operator and is instead an Internet Protocol TV provider. The definition falls outside that of a cable system, Cavalier claims.
It is also "perplexed why after a year of making numerous written and verbal requests, the city has not even taken the first step in trying to negotiate a franchise agreement," company vice president of regulatory affairs Martin Clift said in a statement yesterday.
Still, the company believes it is operating within Virginia cable law.
Cavalier said it will continue to sell TV service in Richmond while the dispute is settled.
Richmond has filed suit to stop Cavalier Telephone from selling television services in the city without a license.
The lawsuit filed late yesterday in Richmond Circuit Court asks for an injunction to stop the company from serving customers in the city without a franchise to do so.
Cavalier officials could not be reached for comment yesterday.
A franchise agreement has financial value to the city, which says it is entitled to a franchise fee and a consumption tax on the service.
Richmond officials say they are trying to negotiate a franchise with Cavalier and that the company must stop providing service until they reach agreement. The company has been selling cable television to customers in Richmond since June, the suit states.
Mayor L. Douglas Wilder informed Cavalier officials on Oct. 27 that selling cable services without a license is illegal.
In addition to an injunction, the suit asks the court to require Cavalier to give the city a complete account of all cable television customers and payments made, and to pay all business-license taxes and fees owed to Richmond since the company began providing the service.
In a related Story
Cavalier, Richmond at odds
Company says TV product not 'cable' TV; city believes otherwise and files lawsuit
Cavalier Telephone has cut a few legal corners that cable companies must take to sell its television service, city officials say.
Cavalier, however, disagrees with a city lawsuit that claims the company is breaking federal and state law. Cavalier says its TV product, which it began selling to Richmonders in June, is not "cable" TV.
Instead, Cavalier pumps video through the same communications wires that have relayed its Internet service for years. Internet service is unregulated, and the company believes its TV product should be, too. The Richmond-based telecommunications provider has operated since June without a business license or a franchise agreement to sell video in the city, where it has 828 TV customers. The city maintains it needs both.
Cavalier and the city also are at odds over whether either has attempted to create a franchise that lays out conditions for the company to sell TV. Cavalier says it has tried to negotiate a franchise and received no response, while Richmond officials claim the opposite.
Cable franchises outline, among other terms, TV taxes and fees for localities along with customer-service standards.
With no official agreement, the city claims there is no way to protect consumers or determine the amount of taxable revenue it is owed.
Cavalier filed for a business license needed for any company to sell a product or service -- on Tuesday after a threat of legal action from the city. A lawsuit filed Wednesday seeks to stop Cavalier from serving customers until the company obtains the authority to do so.
The dispute traces to May 9, when Cavalier President and CEO Brad Evans sent a letter to Richmond officials announcing his company's intent to sell TV to city residents within 30 days.
Evans stated that his company's TV technology was not cable service and instead ran over existing copper voice and DSL high-speed Internet lines. Therefore, he wrote, Cavalier did not have to dig up streets and yards to install a distribution network around the city to offer TV, as competitors have.
Evans planned to seek a TV franchise with the city in the summer and, until then, said Cavalier would act like a traditional cable provider, meeting customary service standards and remitting a percentage of the company's gross TV revenue to the city.
The next month, Evans received a letter from William E. Harrell. The city's chief administrative officer noted that he was excited at the prospect of an alternative TV provider but, nonetheless, told the businessman that selling video without a franchise is against federal law.
Evans wrote the city July 17, making Cavalier available to negotiate terms on a franchise. A new state law took effect July 1, cutting the time it takes for aspiring TV providers to enter the largely monopolized cable marketplace.
Before that law, Cavalier was already selling about 150 channels of TV in Richmond without any agreement.
According to court documents, Cavalier TV pulled in nearly $2,500 in taxable receipts in Richmond during June and nearly $8,500 in July. By October, the company was just shy of $30,000 in sales. Until a few days ago, Cavalier held city taxes and fees on that revenue in an escrow account.
In October -- three months after Evans requested franchise negotiations -- the CEO got a letter from the mayor.
L. Douglas Wilder wrote that the city offered in September to negotiate a franchise but had not gotten a response. Wilder also accused two company officials of using false pretenses to try to discuss with city workers how to go about offering public-access channels to consumers. Cavalier believes the allegation is invalid.
"The conduct on the part of Cavalier is unacceptable and will not be tolerated," the mayor wrote, before saying he expected the company to immediately pull the plug on its TV service.
Cavalier has kept it running. City officials made no comments yesterday.
The company and city met in mid-November to hammer out a franchise agreement. Cavalier came with a draft agreement.
At the end of last month, city Director of Finance Harry E. Black sent a letter informing the company that it was in violation of city code -- operating without a business license is a misdemeanor, and not paying some fees is considered a criminal violation.
On Tuesday, Cavalier paid the taxes and fees and filed for a business license, paying $564.60 to cover the application fee. The company sent two checks totaling $7,964.49 to the city for six months of franchise fees and the city's cable utility tax.
In the lawsuit filed the next day, the city claims that without a franchise or audit of the company's financial records, city officials have no way of determining if the sum Cavalier paid is accurate, court documents say.
The city believes television running through Internet wires is considered a form of cable TV.
Cavalier attorney Stephen T. Perkins said the firm does not own or manage the technology components required of a cable operator and is instead an Internet Protocol TV provider. The definition falls outside that of a cable system, Cavalier claims.
It is also "perplexed why after a year of making numerous written and verbal requests, the city has not even taken the first step in trying to negotiate a franchise agreement," company vice president of regulatory affairs Martin Clift said in a statement yesterday.
Still, the company believes it is operating within Virginia cable law.
Cavalier said it will continue to sell TV service in Richmond while the dispute is settled.
