At a May 6 City Commission meeting in Decatur, Georgia, city leaders approved a project budget of $2.35 million to build a municipal I-Net and award the construction contract to Georgia-based Network Cabling Infrastructures, Inc. The decision came amid demands from cable giant Comcast that the community of about 24,000 immediately begin paying exorbitant fees for infrastructure the city has used under a past local franchise agreement. The case of sour grapes was resolved, but it once again reveals how the large corporate monopolies don't hesitate to flex their muscles when things don't go their way.
Conflict Over I-Net
The infrastructure at the center of the dispute dates back to the late 1990s to a franchise agreement Decatur made with MediaOne, which Comcast has since acquired. As part of the deal, MediaOne agreed to connect city facilities with a fiber network, and the city permitted the cable company to recover some construction costs through a 25 cent charge on subscribers’ monthly bills, up to a total cap of $200,000. MediaOne finished building the I-Net in 2000. Since then, Decatur has used the infrastructure without paying fees to MediaOne or Comcast for critical city operations.
Last year after working with a consultant, Decatur decided to replace the aging I-Net with a new, city owned fiber network and began to search for a contractor to build it. Comcast was one of several companies that responded to a Request for Qualifications (RFQ) issued by Decatur in October, but it did not meet the requirements established by the city.
Less than one month after Decatur notified Comcast that it was not selected, the company told former City Manager Peggy Merriss that it planned to retire the I-Net right away, unless the city paid for its use. A few months later, Comcast reiterated its intentions to current City Manager Arnold, explaining that the company had acquired a state franchise to replace the local franchise agreement that ended in 2009. According to Arnold, Comcast decided to charge the city approximately $370,000 annually for use of the current I-Net until the new one is built.
At the Decatur City Commission meeting on April 15, City Manager Andrea Arnold explained to city leaders and attendees that Comcast was seeking payment from the city for use of the Institutional Network (I-Net) that connects public buildings, reported local news site Decaturish. At the April 15 meeting, Arnold stated:
“The heavy handed approach taken by Comcast grossly violates the way the city operates. Instead of working towards a creative solution to satisfy both parties, Comcast is bullying the city into making a hasty, uninformed decision.”
For its part, Comcast pointed out that it attempted to renegotiate with the city after the original local franchise agreement expired and that the cost Arnold quoted was not their lowest offer. Andy Macke, Vice President of Government and Community Affairs at Comcast, said in a letter to Arnold:
“Contrary to your characterization of the company as ‘bullying’ the City, Comcast has allowed the City to enjoy free use of the I-Net for ten years longer than was required, during which time you have been fully aware of Comcast’s desire to convert the network to a commercial arrangement.”
However, if the arrangement between the city and Comcast — in which the city used the infrastructure for no additional fees — has continued for almost ten years, city leaders in Decatur don't appear to have been made "fully aware" of Comcast's desire.
On May 20th, after negotiating with Comcast, the Decatur City Council approved an interim network services agreement to pay the cable company $12,500 per month for two years or about $300,000 in total.
From the Monopolist’s Playbook
Comcast’s decision to demand payment right after being denied the construction contract raises questions, especially since Comcast was content to allow Decatur access to the network without demanding payment for nearly a decade. Often companies who are party to expiring franchise agreements try to argue that they have supplied connectivity to municipalities "for free" through such arrangements. In actuality, Comcast and similarly situated cable companies obtain free or reduced cost access to a municipality's Rights-of-Way, as well as the ability to reach thousands or tens of thousands customers (often with little or no competition) and to make municipalities dependent on them for connectivity. In the case of Decatur, subscribers contributed to the construction costs, possibly paying for the construction of infrastructure which Comcast claims it owns.
Comcast and other large cable providers have taken advantage of the end of local franchise agreements to impose additional fees on local governments across the country as these agreements expire. For example, when the lease agreement that Martin County, Florida, had with Comcast for its I-Net was about to end, the company attempted to raise rates by 800 percent. Instead of paying the exorbitant fees, Martin County chose to build its own fiber network, saving the the community millions of dollars. More recently, West Bloomfield Township, Michigan, fought with Comcast over ownership of their I-Net. The township is now considering building its own network and began searching for consultants in late 2018.
Replacing an Aging Infrastructure ... and Comcast
The planned fiber network will connect 14 city buildings and 10 school locations; the local school system will contribute about $650,000 towards the cost of building the network. A redundant ring design and underground deployment will make the new I-Net more reliable than the current network. The increased reliability and capacity should improve the city’s public Wi-Fi and allow for use of smart city applications.
Decatur plans to start construction of the new network in June and hopes to have it completed within a year.
Image of downtown Decatur courtesy of the City of Decatur.