Thursday, June 24, 2010

Telecoms Try to Deter City From Collecting Right of Way Fees

Yesterday, Indianapolis Star report Francesca Jarosz reported on the City's latest effort to collect revenue - letting telecom companies lay fiber optic cable along the trails:

Indianapolis has come out with its latest idea for generating revenue from an existing resource. Trouble is, it might not be legal.

Last week, city officials issued a public request seeking ideas on how they might make money from the city's 59 miles of greenways by laying fiber optic cable networks along the trails.

The idea is that cable and Internet companies or data-storage providers could build and use those networks as ways to expand fast, high-tech services -- and compensate the city for use of the space.

But a telecommunications trade group argues that charging rent to occupy rights of way violates state law.

Late Tuesday, city officials said they were not clear on the interpretation of the statute and emphasized that the intent of soliciting information is to work out those kinds of kinks.

I have reviewed the statute in question - IC 8-1-2-101(b). The statute authorizes municipalities to charge utilities to use municipality public right-of-way. The greenways (which I refer to as "linear parks") is clearly a "right-of-way." A "right-of-way" is public property upon which people, goods or services move from one place to another.

I think I know what the telecom's legal argument is - that the term "right-of-way" should be defined as an easement.. An easement is not ownership of property but rather the right to use property for a particular purpose and when that purpose ends the property goes back to the underlying fee owner.

Municipalities and other government entities do not acquire easements any more when they build roads, trails, etc. Rather they buy fee simple title to the property. When they did that the term "right-of-way" lost its meaning as just referring to an easement. Clearly the legislature did not mean for this statute to just apply to easements but meant the broader, more modern definition of "right-of-way." Suggesting "right-of-way" just means an easement would turn upside down the code which is littered with references to "right-of-way," references that clearly don't refer to the antiquated definition of a "right-of-way" only being an easement.

Of course, nobody is making the telecoms buy access to the greenways, so what's the fuss? What Ms. Jarosz missed in the article is a larger story. The fact is telecoms are currently using the city's right-of-ways for free. Most cities require telecoms to pay for their use of public property. But Indianapolis does not. Indianapolis gives it away, to the tune of foregoing millions of dollars every year. I'm sure the telecoms do not want a precedent established that might cause the City to re-examine its giveaways.

The City's giveaway to telecoms was the reason for the blowup regarding Rick Maultra's work as director of the City's telecom agency. Maultra insisted that telecoms should have to pay for its use of public property. This didn't sit well with Joe Loftus, who is an attorney for the mayor, partner at Barnes & Thornburg, and, most significantly, a lobbyist for AT&T. Loftus had tired of Maultra's taking a position for his client the City and against his other client, AT&T, and worked behind the scenes along with AT&T officials to have Maultra's job phased out.

I can recall that at the time, Chris Cotterill, then head of City Legal, and now Chief of Staff, argued forcefully in an email that telecoms should not be charged by the City because they would simply pass along those costs to consumers. While it's not a philosophy I buy (businesses can't always just pass along charges to consumers - sometimes the competitive marketplace will not allow that), it is interesting that Cotterill's philosophy is selective enough to allow him to argue for raise business fees and and for charging telecoms use of greenways.

It's all about the green...not the green of our linear park, but the green telecoms get to keep when the City doesn't charge them for using public property. Maultra was right. It is time we put a stop to people like Joe Loftus using their positions in city government. Telecoms need to be charged for using City rights-of-way.


Marycatherine Barton said...

It is WAY past time that we put a stop to people, like Joe Loftus, misusing their positions with city government. Thanks for this analysis, Paul.

Nicolas Martin said...

I fail to see how consumers or taxpayers will benefit from Right of Way fees. Of course it will increase revenue, and the politicians will then increase spending. Meanwhile telcom rates will have increased.