California Supreme Court's Decision a Major Win for Telecommunications Industry

Nossaman News Release

LOS ANGELES (April 16, 2004) - The California Supreme Court Wednesday let stand a decision issued in December 2003 by the California Court of Appeal which allows telecommunications companies to lay fiber optic lines without paying fees to local governments. The debate over the fees charged, which resulted in the suit by Williams Communications, LLC (Williams Communications, LLC v. City of Riverside), has been raging since the telecommunications industry began massive installations of fiber optic lines in California streets and highways.

Fredric W. Kessler, a Los Angeles-based partner with Nossaman Guthner Knox & Elliott LLP and the attorney for Williams, said, "we are obviously very pleased with the Supreme Court's decision to deny review of the case. Telecom companies shouldn't be the victims of local government's attempts to create additional revenue sources."

The debate began when some California cities and counties decided to impose heavy charges (rents, fees and other exactions) well beyond their own costs for such installations, despite statutory and case law that appeared to prohibit the practice, and over vociferous industry protests. Telecommunications companies, faced with competition, revenue needs, contractual deadlines to deliver new service, and a clear pattern of rapidly eroding market share if not among the first to reach new markets, came under pressure to accede to local demands.

The City of Riverside was one city that imposed such fines. When Williams requested a permit to install fiber optic conduit and lines in city streets, Riverside conditioned issuance of the permit on execution of a license agreement under which Williams had to pay more than $750,000 ($1.50 per lineal foot of conduit) as compensation for use of the streets, in addition to the usual permit fees and charges. Williams paid, but later protested under the Mitigation Fee Act and sued for a refund. Williams lost in the trial court but prevailed on appeal. The appellate court's decision and the California Supreme Court's denial to review the case end the debate and should bring to a halt local government attempts to squeeze revenues from fiber optic installations in local streets.

Nossaman Guthner Knox & Elliott LLP, a California-based law firm, specializes in complex civil litigation; infrastructure; land use, environmental, real property and water; healthcare; corporate transactions and public policy law. The firm represents a variety of public and private sector clients with interests ranging from aerospace and transportation to real estate development and water. Founded in 1959, Nossaman has more than 140 attorneys and lobbyists throughout offices in Los Angeles, San Francisco, Sacramento, Irvine and Washington, D.C./Virginia.

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