State regulators will revoke the franchise held by former cable service provider Spirit Broadband, LLC, after the county claimed the business’ application for the franchise authority was based on false and misleading information.
“The Spirit Broadband LLC application … was filed under false and misleading pretenses and therefore should have never been granted and should now be revoked,” states a complaint filed by Cumberland County Attorney Philip Burnett with the Tennessee Public Utility Commission.
Franchise agreements allow cable television providers to operate a cable system using the public right-of-way. In return, companies agree to pay franchise fees, comply with service standards, and provide other public benefits.
The complaint was filed in January 2020. A hearing was held July 13. Burnett told the Cumberland County Commission during its July 19 meeting the state would grant the county’s request.
“They’re not going to be eligible to service anything in Cumberland County once we get an order on that,” Burnett said.
Burnett told the Chronicle that, to the best of his knowledge, Spirit Broadband no longer serves any customers in Cumberland County or elsewhere, but seeking revocation of the franchise agreement is critical to prevent the company from returning to the area to provide cable services in the future.
With the allegations on file with the state, the action also makes it more difficult for Spirit Broadband or its chief executive Vincent King from applying for a certificate of franchise in the future.
According to the complaint, Spirit Broadband purchased Midsouth Cable TV in 2007. Midsouth had a franchise agreement with the county, granted in 1999. That agreement did not allow the franchise to be assigned to another party without the county’s approval.
Burnett writes that Spirit operated without a written agreement with the county from 2007 forward.
Telecommunications providers can provide services to the public through a franchise license granted by the county or through a Certificate of Franchise Authority granted by the Tennessee Public Utility Commission.
“The Petitioner [Cumberland County] allowed Spirit Broadband to continue providing cable and video services inside the Petitioner’s boundaries with the understanding that Spirit would abide by the agreement previously held with Midsouth Cable. Unfortunately, Spirit failed to pay franchise fees and on April 12, 2016, Petitioner was forced to file suit against Vincent King and Spirit Broadband,” the complaint continues.
That lawsuit claimed Spirit Broadband failed to pay franchise fees from 2008 through 2015 and that King did not pay franchise fees from Dec. 10, 2015 through the date of the lawsuit.
It also noted that the February 2015 ice storm damaged some of the company’s equipment, leaving residents without cable service.
“Despite the county’s repeated requests for defendants to repair the equipment used by them to provide cable service to the county’s residents, they have failed and refused to do the same,” the 2016 lawsuit says.
The county sought payment of the franchise fees and $1 million in punitive damages for “maliciously, recklessly and intentionally” violating the county’s rights.
In 2018, Spirit agreed to pay $100,000 to settle the case. The county has not received any of the agreed-upon settlement funds. The county has hired two debt collectors to attempt to locate assets. Burnett said those efforts have been unsuccessful to date but the county will continue to seek payment.
County Finance Director Nathan Brock told the Tennessee Public Utility Commission in January 2020 that the company had made no franchise payments or any other payments to the county since Oct. 12, 2017.
As the lawsuit was progressing, King sought a new franchise agreement from the state. The county contends the application for that franchise certificate falsely claimed the company was an “incumbent cable service” under state law. That allowed the company to avoid a state review of its management, financial status and technical qualifications to provide cable and video service.
“Had the department performed the managerial, financial, and technical qualification analysis, Spirit would never been granted the Certificate of Franchise Authority,” the complaint states.
At the time of the application to the state, the company owed the county at least $100,000 in unpaid franchisee fees. Four months earlier, a federal tax lien was registered against the company for failure to pay self-employment taxes in the amount of $14,796.91. The company had been administratively dissolved by the state from Dec. 9, 2015 until April 26, 2016, though it continued to provide services. The Tennessee Secretary of State had filed a Notice of Determination against Spirit on Oct. 1, 2017, because the entity had failed to file an annual report.
The state issued the company a Certificate of Franchise Authority on Oct.. 12, 2017. Seven weeks later, Spirit Broadband was again administratively dissolved, according to Secretary of State records, and did not beome active again until March 29, 2018.
The company did not pay any franchise fees to the county after being issued a franchise certificate by the state.
Another federal tax lien was filed against Spirit Broadband in January 2018 for $7,566.27 for failure to pay self-employment taxes.
The state again administratively dissolved the company on Dec. 6, 2018, and it was dissolved again on Dec. 10, 2018, due to issues with labor and workforce development.
“Since Dec. 10, 2018, Spirit Broadband, LLC has remained a dissolved Limited Liability Company and therefore has no legal ability to act as an entity in the state of Tennessee,” the complaint states.
The Tennessee Public Utility Commission has not yet issued its written order regarding the franchise certificate, though Burnett said that could come this week.
Burnett also reported that the transfer of ownership of the Cumberland Homesteads Tower on Hwy. 127 S. at Hwy. 68 from the Cumberland County school system to Cumberland County. The transfer was delayed as the county waited for a survey to be completed. Burnett said the quit-claim deed, signed by Cumberland County Director of Schools Ina Maxwell, had been delivered to him that day.
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