by Mike Rogoway, The Oregonian
The communications company sues the city, alleging the government
system hurts competition.
Qwest Communications International Inc. has opened a new front in its
long-running legal battle with the city of Portland, suing to rein in
the city's internal telecommunications system.
Portland launched its network in 2002 to get around the rates Qwest
and other telecom companies charge for phone lines and high-speed
Internet connections. Portland's $14 million system links several city
offices, and a few government agencies outside the city, to a network
of fiber-optic cable that carries city phone calls and Internet
traffic.
The Integrated Regional Network Enterprise is known by its initials,
IRNE, pronounced "Ernie." Portland says IRNE provides super-fast
Internet connections the city couldn't otherwise afford. The city,
however, estimates it has already spent $150,000 on legal fees
defending the system against earlier challenges from Qwest and others.
Qwest's latest suit, filed late last week in U.S. District Court,
calls IRNE an illegal, government-sponsored competitor. Qwest
complains that the city is abusing its regulatory authority by forcing
telecom companies to connect IRNE to their networks in exchange for
permission to use city-owned rights of way for the companies' private
networks.
"It provides, basically, unfair competition and makes it very, very
difficult for the private sector to compete," said Judy Peppler,
Qwest's Oregon president.
Portland grants IRNE access to the Oregon Department of
Transportation, the Port of Portland, Metro and other government
agencies, which Peppler said robs telecom companies of large,
lucrative customers.
Qwest's suit doesn't seek to unhook IRNE or extract damages from the
city. Instead, Qwest asks the court to stop Portland from forcing
telecom companies to connect to IRNE. The suit also would require
other governments to seek competitive bids before connecting to
Portland's network.
"We're just trying to get it back on a level playing field, an equal
footing," Peppler said.
Matt Lampe, the city's chief technology officer, said Qwest's
accusations don't reflect the way IRNE actually works. Portland used
to compel phone companies to open their networks to the city, he said,
but no longer does so. And Lampe said the city collects just $100,000
in annual revenue from IRNE, so its agreements with other government
agencies are too small to threaten Qwest.
"It's almost like they're looking for a diabolical plot that isn't
there," Lampe said.
Portland and Qwest have been squabbling for years, largely over
millions in franchise fees the phone company says Oregon cities don't
have the authority to collect.
A separate round of litigation over IRNE began a year ago with suits
by Qwest's long-distance arm and a few smaller telecom companies. The
Qwest division providing local phone service filed the latest suit
last week, which may eventually be joined to the others.
Qwest has at least three lawsuits pending against the city related to
franchise fees or IRNE.
City Commissioner Dan Saltzman, who oversees the city bureau
responsible for telecom franchises, said Qwest is pushing back against
Portland's innovative approach to telecommunications.
"I think Portland has been a leader in certainly exploring a lot of
options to provide broadband services," Saltzman said. "Maybe we're
targeted by Qwest because of that."
Mike Rogoway: 503-294-7699, mikerogoway@news.oregonian.com
Copyright 2005 The Oregonian.
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