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Virginia ISP Sues Everybody After Being Forced to Compete
Lost Exclusivity Deal Due to Awful Service, Sues Entire County

Back in 2007 you might recall that there were a lot of complaints about OpenBand, a provider of broadband to housing developments in Loudoun County, Virginia. With help from a local developer, OpenBand apparently convinced a lot of communities to sign exclusive franchise agreements that ran for between 25 to 75 years. While users in these developments could sign up for other TV or broadband services, they still had to pay the $150 monthly association fee to OpenBand.

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Complaints grew and grew over the years, with customers saying it reached the point where they stopped contacting the ISP, given their exclusive arrangement resulted in them being totally unwilling to improve service. It got so bad, some locals wound up getting a second broadband provider -- and just paid two bills for service with nothing they could do.

Ultimately, government heard the user complaints, with the FCC passing rules that tried to ban these extremely exclusive deals, and the local Loudoun County, Virginia government and homeowners associations deciding to decline the company's franchise agreement renewal. OpenBand's response? Last fall they decided to sue everyone, including the county Board of Supervisors, two supervisors individually, and several homeowners associations.

OpenBand (in part) is trying to argue the FCC lacks the authority to block such exclusivity arrangements, and that their original order banning exclusive deals did not specifically cover the use of easements:
quote:
Saunders also argued that neither Lansdowne or Southern Walk could receive the relief they seek from the courts because the FCC order only addresses video service and not Internet or telephone, both of which the communities get from OpenBand. Saunders said during arguments of the Southern Walk case that the relief sought from the court is "overreaching." "They are trying to provide homeowners with the option to buy a triple play—video, Internet and telephone," he said. "The 2007 order only prohibits exclusivity as to video. There is no issue as to exclusivity to Internet and telephone services."
The latest news is that the county is still looking for a Judge to hear the case, after all of the county's Judges recused themselves for knowing one of the homeowners association lawyers. The story is an amazing example of how difficult it has been to get out from underneath some of these exclusive contract arrangements, when all residents want is the right to choose their own broadband and TV provider. It's also a shining example of just how far some companies are willing to go in order to avoid having to compete.
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Bob61571
join:2008-08-08
Washington, IL

Bob61571

Member

One possible solution is

Breach of Contract - for provider's failure at providing reasonable service and support, to 1000's of their customers.

PapaMidnight
join:2009-01-13
Baltimore, MD

PapaMidnight

Member

Re: One possible solution is

said by Bob61571:

Breach of Contract - for provider's failure at providing reasonable service and support, to 1000's of their customers.

That's assuming there is even a standing agreement on a viable service level.

Trimline
Premium Member
join:2004-10-24
Windermere, FL

Trimline to Bob61571

Premium Member

to Bob61571
Another solution, send in Google. They are looking for another "test" bed...

wizkid6
join:2002-03-31
Opelika, AL

wizkid6

Member

CTVEA

Reminds me of Cable TV of East Alabama and Mr. Greene's coziness with the city council.

I feel sorry for those live in Smiths Station/Phenix City.

Probitas
@teksavvy.com

Probitas

Anon

! HOLY OVERCHARGE BATMAN !

Almost barfed when I heard 150$ monthly bill. OMG, people should be smacking the faces of whoever signed these exclusive bills. What kind of moron allows a company to not just slave themselves, but their future offspring to a company. Corporations are practically slave traders pulling that crap.

AVD
Respice, Adspice, Prospice
Premium Member
join:2003-02-06
Onion, NJ

AVD

Premium Member

Re: ! HOLY OVERCHARGE BATMAN !

$150 triple play is not bad.
mr2
Premium Member
join:2002-08-07
90254-3122

mr2

Premium Member

Re: ! HOLY OVERCHARGE BATMAN !

The quality of the product that is delivered for the $150 must be taken into consideration.
Apparently numerous customers are greatly dissatisfied with the product that is delivered.

Probitas
@teksavvy.com

Probitas to AVD

Anon

to AVD
Looked like they just did internet to me. And even if it WAS for phone, internet, and tv, allowing customers to seek other providers for two services but trap them into paying 150 is no deal at all, particularly if they offered hamburger for services but charged for prime rib.

battleop
join:2005-09-28
00000

battleop to Probitas

Member

to Probitas
Better yet, what kind of moron moves into these neighborhoods?
Hanko
join:2001-12-28
Eatonville, WA

Hanko

Member

Re: ! HOLY OVERCHARGE BATMAN !

Having lived in Leesburg, VA for 4 years I can tell you what kind of moron lives there. Ones with more money than sense. The average price of a home there is 700K+ with many of them going for well over a million.

If you can afford a home at that price, $150 a month is pocket change.

Homer J
Mmmm, Free Goo
join:2000-10-05
Knoxville, TN

Homer J

Member

Re: ! HOLY OVERCHARGE BATMAN !

I lived in Northern VA in the late 80's and early 90's. Loudon county was all fields and horse farms at the time.

rit56
join:2000-12-01
New York, NY

rit56 to Hanko

Member

to Hanko
The issue here is the service being delivered is terrible not the 150. Sure they can afford it but do you like getting ripped off or overcharged for terrible service?
axus
join:2001-06-18
Washington, DC

axus to battleop

Member

to battleop
The morons who will be most impacted by the Sequester, thankfully.

Squire James
@embarqhsd.net

Squire James to Probitas

Anon

to Probitas
Add "a few" in front of that word "corporations" and I agree with you. Corporations in general are in reality no more evil (and no less evil) than the people who control them. If the government wouldn't accept these deals, the corporations wouldn't propose them.
Chubbysumo
join:2009-12-01
Duluth, MN
Ubee E31U2V1
(Software) pfSense
Netgear WNR3500L

Chubbysumo to Probitas

Member

to Probitas
When i go to buy a house, if it was in a development like that, the first question I would ask would be about ISPs, and who I can get, what I can get, and if there is an agreement like this. If there was an agreement such as this in place, I would move on.

Homer J
Mmmm, Free Goo
join:2000-10-05
Knoxville, TN

Homer J to Probitas

Member

to Probitas
If I recall, the developer signed the original agreement. They probably got paid handsomely by the provider for the right to exclusivity as well as the right to provide crappy service.

KrK
Heavy Artillery For The Little Guy
Premium Member
join:2000-01-17
Tulsa, OK

KrK

Premium Member

They had a great deal (OpenBand)

... all they had to do was not drop the ball entirely and not be so greedy.

Fail. I hope the people win and OpenBand has to issue refunds. (And thus goes out of business because I'm sure the owners already pocketed all of it.)

Probitas
@teksavvy.com

Probitas

Anon

Re: They had a great deal (OpenBand)

I'm thinking they've 86'd any future business anyway, once word gets out of this crazy trap they made. Who would want to do business with any company comfortable enough to provide substandard service at exhorbitant rates?
tmc8080
join:2004-04-24
Brooklyn, NY

tmc8080

Member

Smell test

A MONOPOLY contract the community can't agree to unreasonable advantages by the monopoly or else it won't hold up in court and if they did it will be set aside and end up a worthless piece of paper. The $150 out clause should have had some reasonable QOS levels maintened by this monopoly or they should have never agreed to this in the first place. The FCC, FTC and DOJ along with state attorney's general's offices have legal authority over telecom and ANY services rendered over "LAST MILE" telecommunications. So unless those signals are sent by carrier pigeon they don't know what they're talking about.
rradina
join:2000-08-08
Chesterfield, MO

rradina

Member

Did Local Reps Screw Citizens?

I don't like extremely long-term agreements like this and I would never encourage my local representatives to back such agreements. However, if this was an under served area with no HSI because heavy infrastructure investment was needed, it may have seemed like a good idea with mutual benefit. OpenBand incurs debt or uses existing capital to invest in connecting these areas in exchange for an exclusive deal that enables them to repay the debt or earn a greater return on their capital investment.

However, signing such a deal for an extremely long period doesn't seem equitable for customers. I could see a long-term deal (25 years) where every five years the incumbent has first right to an extension. However, there has to be some detailed measurable specifics that they must fulfill to be guaranteed a continuance. The specifics should also have a clause to make sure they remain technologically relevant (modern).

This would be similar to a deal where a sports team agrees a long term stadium lease with the option to exit every five years if the stadium owner does not keep the venue modernized.

Although I don't have specifics, whatever the deal is, it doesn't seem like the local representatives protected their constituents from non performance. Regarding whether or not the government should be involved -- this is a case of "legal" monopoly, right? Therefore the government (i.e. the FCC) should provide a framework under which deals like this can be fruitful for companies and customers. There has to be a way to force a forfeit the investment if the company does not live up to the terms of the franchise.
brawney
Premium Member
join:2002-03-02
Frederick, MD

brawney

Premium Member

Re: Did Local Reps Screw Citizens?

Wouldn't it be normal for the developer or communities to take bids?
rradina
join:2000-08-08
Chesterfield, MO

rradina

Member

Re: Did Local Reps Screw Citizens?

Probably the community should accept bids. The developer probably only cares about:

1) Are my properties more attractive if they are wired?
2) If #1 is true, do I have to share costs with someone to wire them or will they pay for the opportunity?

Obviously if providers are willing to pay developers to wire their properties, #1 doesn't matter. Without rules, the developer will seek the highest return to wire the properties.

Regardless of bids, IMO a "utility" is being created -- a legal monopoly. As such, the government should provide a framework for the agreement and the necessary oversight to protect both parties. I say both parties because if the incumbent is meeting expectations, it isn't fair to have the community pull their franchise because a new startup is offering the moon. It also isn't fair to have a reasonable rate increase -- again if the incumbent is meeting expectations and can demonstrate their costs have risen.

One thing is clear. In the absence of good rules, someone is going to get screwed. It's in our selfish nature as human beings.
brianiscool
join:2000-08-16
Tampa, FL

1 recommendation

brianiscool

Member

Bait & Trap

This is why I would never live in a association.

Squire James
@embarqhsd.net

Squire James

Anon

Stupid Housing Tricks

Those housing communities strike me as people with more dollars than sense. This wouldn't be the only crazy phenomena related to housing that happened during that time...

AnonMe
@comcastbusiness.net

AnonMe

Anon

Requirements of a contract...

One of the legal requirements of a contract like this to be valid is that there needs to be a way to severe the contract by either party. Without those terms, the contract isn't enforcable.

And agreed, anyone who signed a 25-75 year term contract for communications services needs their head examined. Even 10 years ago, I wouldn't sign anything longer than a 3 year even if it included build outs.
ConstantineM
join:2011-09-02
San Jose, CA

ConstantineM

Member

How bad is it?

I went to their web-site, and they claim to offer 100Mbps service. Is that not the case? How bad is it?

Eddy120876
join:2009-02-16
Bronx, NY

Eddy120876

Member

LMAO We angry at the Customers and they

ARE GOING TO TAKE IT AND LIKE IT MORE". Wow only a stupid greedy @ss company will do this crap. I hope they lose the case and get sued by the customers
Mr Matt
join:2008-01-29
Eustis, FL

Mr Matt

Member

Similar lawsuit filed in Palm Beach County, Florida

Similar lawsuit filed in Palm Beach County, Florida. Plaintiff lost.

In the late 60's Texaco Properties established Boca Del Mar and reserved exclusive rights to provide cable television. Texaco claimed exclusive rights to use the utility easements for installation of CATV lines by their CATV company West Boca Cable.

Homeowners were subject to the same arbitrary prohibition of outdoor antennas of any kind through deed restrictions.

Around the mid 1980's a company named Telesat began to install competitive cable lines. West Boca Cable sued Telesat claiming exclusive rights to use the utility easements for CATV installation via contractual language created by Texaco Properties in Texaco's filing for creation of a planned unit development.

The result was that West Boca Cable lost. Homeowners lost and Telesat lost.

West Boca Cable lost because the court determined that Telesat was a utility and could use any and all easements.

Homeowners lost because as a result of the decision Homeowners were required to pay franchise fees to the county.

Telesat lost because there was no database that showed where utility easements were abandoned by all utilities. Once the abandonment documents were recorded on the deed it could not be reversed. Contractors attempting to install CATV lines found things like pools and structures in the easements and when they threatened to remove a pool deck the police got involved with Telesat contractors told to get lost, the easement was abandoned. Telesat gave up with their efforts and sold off the plant they had already installed at bargain basement prices to West Boca Cable.

Openband might have a problem enforcing their contracts. Remember that the FCC and Congress passed the satellite reception act which declared all deed restrictions prohibiting the installation of Satellite or over the air antennas unenforceable.

Probitas
@teksavvy.com

Probitas

Anon

Re: Similar lawsuit filed in Palm Beach County, Florida

Then what you are saying is that there is already a public court case on file stating that cable tv is considered a utility, and then it must follow that ALL cable, ISP, or mobile services can be considered utilities and should be regulated....nicely done.
moonpuppy (banned)
join:2000-08-21
Glen Burnie, MD

moonpuppy (banned) to Mr Matt

Member

to Mr Matt
said by Mr Matt:

Homeowners were subject to the same arbitrary prohibition of outdoor antennas of any kind through deed restrictions.

Openband might have a problem enforcing their contracts. Remember that the FCC and Congress passed the satellite reception act which declared all deed restrictions prohibiting the installation of Satellite or over the air antennas unenforceable.

In 1996, the FCC implemented the OTA rules for DBS type dishes and, for the most part, invalidated most of the restrictions baring outside antennas. 47 C.F.R. Section 1.4000

The issue at hand is whether the agreement guarantees service must be paid for by the homeowner. This goes beyond lawn cutting and other "maintenance of common ground" fees.

joako
Premium Member
join:2000-09-07
/dev/null

joako

Premium Member

Re: Similar lawsuit filed in Palm Beach County, Florida

It's probably a contract with the HOA and the cable fees are included with the payments owners make to the HOA.

blew_thru_72
@comcast.net

blew_thru_72

Anon

it was the developer that signed the deal

it was the developer who signed the deal with this company. this has nothing to do with local politicians. the deal was that the developer gets a piece of the revenue each month for the length of the contract. this type of deal was becoming common across the country prior to the real estate crash. there were all kinds of crazy deals the developers were working out for themselves to keep them earning revenues long after they finished building neighborhoods.
margegenever
join:2010-08-19
USA

margegenever

Member

Loudoun County's Internet

Loudoun county is one of the wealthiest and fastest growing counties in the nation, yet the county supervisors have signed sweetheart agreements with telco that allow then to cherry-pick and have left large areas of the county without Internet access. I live 50 miles from the white house in DC, yet have only a choice of dial-up or satellite. (I should have asked before buying, but never thought that this area would be completely without Internet - I'm in not in an unpopulated area.) I have FIOS 1/4 mile away, yet not even cable or DSL in my neighborhood.
elray
join:2000-12-16
Santa Monica, CA

elray

Member

Bring on the damage awards...

You can't have your cake, and eat it too.

The community wanted broadband, so they sought a vendor to provide it, and the vendor took the risk on the investment. Now that their system is aging, they want to abrogate the agreement.

How do you think an MDU vendor finances the massive cost of broadband, if they can't bond a group of homeowners for 25 years plus?

•••
lemonade1
join:2003-12-13
Los Angeles, CA

lemonade1

Member

lesson about buying a house lol

Now i know beofre buying a house in certain area, i have to see if there's any agreement about ISP or cable provider, I would hate myself having to pay 2 bills for 1 usable service, not just about $ but i just hate these kind of shady deal they pulled together.

AnonMe2
@comcastbusiness.net

AnonMe2

Anon

Re: lesson about buying a house lol

I looked at purchasing a certain peice of waterfront property - very rare in this area. The trouble is that while Comcast has the TV franchise (read monopoly), and they refuse to go through the process to get permission to cross a single railroad track in the middle of nowhere (like the phone company already got permission to do) to service the last mile of this street. Neighbors claim they've tried for years, and Comcast said they'd do it for $30,000. Some neighbors were willing to pitch in, but they couldn't come up with the $30k.

So what should be a highly favorable piece of property, hasn't sold in 4 years at an otherwise below market price.

Another example of Comcast servicing the profitable areas, and neglecting the others within the same town.
bekfe10
join:2010-01-18
Dover, DE

bekfe10

Member

Why sign for such a long time-frame?

The broadband industry is an ever-changing field. Why sign exclusive franchise agreements that ran for between 25 to 75 years? 2-year contract with Verizon or Comcast is already a long time to commit to something. This may even be an issue when trying to sell your home. I would not want to buy a home that is tied to a 25-year agreement. Wasn't there any clause with ETF (whatever high amount) that would allow people to get out of the contract. I guess when people want something really bad, they do not want a piece of paper to be in their way. Hopefully the individual agreement was not tied to the properties (parcel numbers). Sad to hear though!

OpenbandSuck
@speakeasy.net

OpenbandSuck

Anon

Openband Sucks

The HOA book was bigger than a phone book and was written to show that the service was good and modern, what you got was telephone without the capability to call outside your own neighborhood and cable that is quite inferior yet overpriced. All the while Mr Dean the owner is raking in tax money servicing the US Govt intell community maybe we should look that way for other deceptive business contracts.