(CN) - A phone company's attempt to block city officials from setting up a competing broadband network failed to connect in the Minnesota Court of Appeals. The judges determined that networks carrying phone, cable and Internet connections qualify as "utilities," allowing the project to be funded by municipal bonds.
Bridgewater Telephone Co. argued that the city of Monticello was prohibited from issuing $25.7 in revenue bonds to finance start-up costs for its broadband network, which would create competition for its services.
After Bridgewater sued, the city downsized its project to create fiber loop for Internet, but not telephone or cable. The smaller project would be funded by existing reserves, not bonds.
Bridgewater moved to amend its complaint, arguing that the city couldn't do the smaller project either, because it would violate the city's cable franchise ordinance.
The trial court ruled in favor of the city, and Judge Connolly agreed.
Connolly ruled that the bonds were legal because the broadband network qualifies as utility and the start-ups costs are not "current expenses," which bonds cannot be used to finance.
"Internet service seems to meet the definition (of a utility)," Connolly wrote. "Email, instant messaging, and talking via web-cam are all ways to communicate at a distance utilizing Internet service."
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