(The Knoxville News-Sentinel published the following story by Larisa Brass on its website on September 2.)
KNOXVILLE, Tenn. — A class-action settlement between a railroad telecommunications firm and landowners has finally made its way through the appeals system and is moving toward a payoff.
But a lack of demand for fiber optic cable means East Tennesseans may not get the compensation envisioned when the settlement was reached.
Announced in June 2001, the deal with Thoroughbred Technology and Telecommunications, or T-Cubed, includes about 60,000 landowners, 3,000 of them East Tennesseans living along Norfolk’s route between Chattanooga and Cincinnati.
T-Cubed is a subsidiary of Norfolk Southern Railroad set up to install and manage fiber optic conduits along its railroad tracks.
The settlement approved by a Washington, D.C., federal court provided for payments of $6,000 per mile for property on which T-Cubed installed fiber optic lines and a percentage of revenues from the sale or lease of those lines to telecom providers. The deal also gives all property owners within the settlement an equity stake in a company set up to manage a portion of telecommunications installations along track where there’s no fiber optic cable.
At the time of the settlement, fiber had been laid along some 1,600 miles of railroad track, including track between Chattanooga and Atlanta, T-Cubed President Wick Moorman said. But at the time, he said, plans called for a fiber build-out that would have included most of Norfolk Southern’s 21,000 miles of railway.
“At the time that we reached the settlement, we were certainly in discussions with lots of different parties that were interested in us building along the corridors in the settlement agreement,” Moorman said.
But in the same year the settlement was reached, the telecommunications market plummeted and, with it, the demand for thousands of miles of new fiber.
The settlement provides a period of four years after February 2003 – when final approval of the settlement was given – for property owners to benefit from future fiber installations.
At this point, said Moorman, the prospects for expansion don’t look promising.
“Market conditions in the telecom industry are such that it doesn’t make sense for us to do any installation along tracks right now,” he said. “I think market conditions are still very soft, the industry is still sorting through a lot of issues. There’s still a lot of consolidation under way. I don’t think you’re going to see a lot of construction for some time to come.”
But if East Tennesseans don’t profit from the T-Cubed deal, attorneys representing the class members say it should help improve benefits in another settlement recently approved by an Illinois federal court.
The settlement between 360,000 landowners and telecom providers Sprint Corp., Level 3 Communications, Qwest Communications and Williams Telecommunications (now called WilTel) includes about 3,000 East Tennesseans living along railroad lines between Nashville and Johnson City.
Unlike the T-Cubed class members, property belonging to each class member of the 360,000 already contains fiber optic cable laid since the early 1990s by the telecom companies without the property owners’ permission.
The Illinois settlement would pay them about $2 per linear foot of land occupied by the cable.
Nels Ackerson, a lawyer with Washington, D.C.- and Indianapolis-based Sommer Barnard Ackerson, hopes the T-Cubed deal’s larger payments will give him negotiating power. Ackerson’s firm is involved in about 50 related class-action cases across the country.
Ackerson is one of several law firms that opposed the Illinois deal, arguing that the telecom providers received too much access to railroad-adjacent land for too little compensation. Approval of the settlement also was vigorously opposed and has since been appealed by Knoxville lawyer Don Vowell, who represents Tennesseans in class-action cases against Sprint and Qwest.
But unlike Vowell, Ackerson said he hasn’t yet appealed the Illinois deal in hopes that the parties can come to more favorable terms.
Ackerson said the judge’s decision to require changes to the settlement based on intervening attorneys’ objections leaves him hopeful that further changes benefiting landowners can be negotiated.