Residents of Mill Creek at Cypress Ridge can finally cut the cord on that pesky old landline phone they never use.
Homeowners in the Bluffton community are no longer obligated to buy Hargray Communications cable, internet or phone services they don’t want, according to an attorney representing members of the neighborhood homeowners association in a lawsuit against the organization’s directors, Hargray, and D.R. Horton, the developer of the neighborhood.
Late last month, Mill Creek residents voted during an annual homeowners association meeting to strike down a long-standing agreement with Hargray that required residents to pay for “bulk services” — at least two of the three services offered by the company, attorney Badge Humphries said Friday.
The vote was orchestrated through negotiations between the parties as part of an ongoing litigation process, he said.
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Humphries — who represents Mill Creek neighbors Mary and Mark Swanson, Jennifer and Craig Kovacs, and Pamela Brunson — said that the bulk service agreements represented an unfair trade practice and details of the deal were improperly kept secret from residents by the homeowners association board of directors.
The board included current and former D.R. Horton employees.
Eliminating the obligation to buy unwanted services “is a big win for the homeowners,” Humphries said.
According to an agreement signed in 2010 by Hargray and D.R. Horton representatives, Mill Creek residents would be responsible for an initial monthly payment of $115 for bulk services, “whether or not occupants of all the residences actually take or use such bulk services.”
Neighborhood resident Willie Owens said earlier this week he wasn’t pleased that he “didn’t have any choice” but to pay for Hargray services when he moved into his home about 10 years ago.
“I was paying for something I had no use for,” he said. “I got pretty fed up with that.”
After the neighbors filed suit in March, Hargray released a statement on its bulk services policy for Mill Creek.
“From time to time, some Mill Creek residents have expressed a desire for more choice because they did not want all three services,” the statement said. “ As a result, we provided residents a two-service option without cable television.”
The Mill Creek agreement — essentially the same as a deal between D.R. Horton and the defunct telecom company YRT2 that previously serviced the neighborhood — was “unlike any other that we have with other residential communities,” the statement said.
Furthermore, the recently struck-down agreement included quarterly payments from Hargray to D.R Horton.
Those payments — alleged to be “illegal kickbacks” by Humphries — amounted to 3 percent of Hargray revenues collected from Mill Creek residents.
With the elimination of the previous agreement with Hargray, the payments to D.R. Horton have stopped.
“Those are done,” Humphries said.
D.R. Horton and Hargray representatives could not be reached for comment. But in a series of court filings, attorneys for both companies deny any wrongdoing.
The agreement between the developer and the communications company was “valid, legal and binding,” according a document filed by Hargray’s attorneys.
Mill Creek residents received “good and valuable services in exchange for the sums paid to Hargray pursuant to the agreement” with the homeowners association and D.R. Horton, the filing said.
In 2010, the Federal Communications Commission considered banning or increasing regulations on “bulk billing arrangements” but ultimately decided against it.
These arrangements “predominantly benefit consumers, through reduced rates and operational efficiencies, and by enhancing deployment of broadband,” according to an FCC document. “Based on the evidence of all the effects of bulk billing on consumers, we do not prohibit any (telecom providers) from using bulk billing arrangements,” the FCC decision said.
However the FCC left the door open for reconsideration.
“We may review marketplace conditions again, however, if future events show that any of these practices is having new and significant anti-competitive effects on the whole,” FCC officials determined.
Despite the end of bulk service agreements in Mill Creek and the alleged kickbacks from Hargray to D.R. Horton, the lawsuit continues.
“We are still in the process of determining where the case will go and in what form, but it is certainly going to go forward,” Humphries said.
Attorneys for the plaintiffs are considering expanding the scope of the case to a class or mass action lawsuit involving many more Mill Creek residents.
“We want to recover damages on behalf of as many homeowners as possible,” Humphries said.
While the lawsuit does not specify a dollar figure in terms of damages, Humphries estimates Hargray received more than $2.6 million in revenue from Mill Creek residents who were forced to buy bulk services.
The courts have set an Oct. 4 deadline for the parties to select a mediator to begin settlement talks, potentially avoiding the need for a trial.