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, snipped-for-privacy@news.oregonian.com
Copyright 2005 The Oregonian.
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