The long-running row between Government and CableVision rumbled on this week, with allegations that Government regulators reneged on a promise to the cable company.

CableVision says it only agreed to continue carrying Bermuda Broadcasting Corporation channels seven and nine if it would not cost the company financially.

It also wanted its customers to be able to opt out of paying extra to receive the local channels if they wished.

The dispute came to Supreme Court this week, with CableVision's lawyer Narinder Hargun arguing that the Telecommunications Commission led the company to believe it would approve a deal struck between CableVision and the BBC on that basis.

Ultimately, however, the Commission imposed an annual fee of more than $300,000 that CableVision had to pay the BBC for the channels. And it refused to let CableVision customers opt out.

Minutes from meetings of the Commission show Commissioners were keen to support local programming.

Kent Stewart said of imposing a fee on the company: "At least it enforces Bermuda CableVision's profits down a little bit, it supports directly local broadcasting and... although Bermuda CableVision can't be trusted on not fighting it, there's a chance they wouldn't fight it."

In another comment, he said the Commission's ability to increase fees CableVision must pay meant "we've got them, to some extent, by the short and curly".

The Commission eventually voted unanimously to go against CableVision's wishes and make it pay Bermuda Broadcasting the annual fee.

That decision, was, according to Mr. Hargun, a "sea change" in the position that led to the agreement between the BBC and CableVision. He asked the court to find it unfairly went against an expectation CableVision had been given.

"CableVvision ended up in a position where at the very beginning, it said it did not want to be. It did not want to end up in a position where it had to pay a fee to the BBC without any choice being made on behalf of its subscribers," he complained.

The dispute began in November 2008 when new regulations gave CableVision a choice whether to carry the Bermuda Broadcasting Company (BBC) channels or not. Among the programmes carried on those channels are ZBM and VSB news, and soap opera The Young and the Restless.

The new regulations meant CableVision could no longer carry the channels for free, but instead would have to pay the BBC a fee, which, the company said, would have to be passed on to their customers at a cost of $3 per month,

The cable company said it did not want to have to charge its customers extra for channels they'd previously received for free, and which remained free to TV viewers with set-top antennae rather than cable service.

After CableVision announced it was dropping the channels, Government watchdog the Telecommunications Commission asked it to reconsider, and it went into mediation talks with the BBC.

CableVision eventually agreed to carry on broadcasting the BBC channels, as long as its subscribers could choose whether or not to receive the local channels on a new "tier" of service for an additional fee to be set by the Commission.

CableVision intended to increase its tariff structure for its "luxury" packages of channels so the move would not cost the company money.

An agreement along those lines was signed between the cable company and the BBC in February 2009 after the mediation.

At the centre of the dispute which went to Supreme Court this week were letters sent to CableVision by the Telecommunications Commission's lawyer Victor Lyon of law firm Attride Stirling and Woloniecki, prior to the BBC and CableVision agreeing the deal.

Mr. Hargun said those letters demonstrate Cablevision was given a legitimate expectation by the Commission that it was minded to approve the deal.

However, chairman of the Commission Ronald Simmons claimed in evidence that he never instructed Mr. Lyon QC to act on the Telecommunication Commission's behalf relating to commercial negotiations between CableVision and the BBC or to send the letters.

Mr. Simmons told the court the Commission was only involved in the regulatory side of things, and did not wish to become involved in the commercial discussions because he did not want the public body to be "compromised".

He told the court the Commission never intended CableVision to be given the impression that the commercial deal would be approved.

However, the cable channel's general manager, Terry Roberson, said the correspondence "gave me the expectation that the Commission wanted to work with us and they were represented by Attride Stirling and Woloniecki."

He said he believed "there was still an if" over whether the Commission would approve the deal, but believed the Commission "was giving us options and that they would be truthful and go forwards with us."

The case continues with legal submissions this morning. Puisne Judge Ian Kawaley is then expected to adjourn until giving his ruling at a later date.