IOWA CITY — Officials with Mediacom Communications Corporation, one of Iowa’s largest telecommunication providers, have cried foul on recent Iowa City resolutions that allow competitor ImOn Communications access to the city’s fiber-optic network.
In a Monday letter to letter to city staff and the Iowa City Council, Mediacom argues that Iowa City regulations — which have required Mediacom to acquire a franchise agreement with the city, but don’t require such an agreement from ImOn — violate municipal code and state law.
“Why the decision-makers in Iowa City chose to skew the playing field, we don’t understand,” Phyllis Peters, Mediacom director of communications, said Tuesday. “We are seeking an outcome that puts Mediacom on a level playing field with its competition, we think it’s inappropriate that government picks winners and losers.”
In the letter, Mediacom officials say the matter could be taken to court if a resolution is not reached.
Last month, the Iowa City Council approved lease agreements with ImOn, whose investors include The Gazette Company, that include leasing for space in the city’s data center to create a communication hub, access to the city’s existing fiber-optic network and rights to install and maintain a network in the city right of way.
Tom Larsen, Mediacom senior vice president of government and public relations, said in the Monday letter such agreements — which he says subsidize ImOn’s entry into the community — between the city and ImOn undermine Mediacom’s franchise agreement and provide ImOn with an unfair advantage.
“This sort of Jekyll and Hyde treatment of competing service providers results in Mediacom and its Iowa City customers being saddled with considerably more regulatory burdens than ImOn,” Larsen writes in the letter.
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Mediacom officials ask the city to either void the existing lease agreements with ImOn and require the company to acquire a local franchise agreement in accordance with state and local law, or give Mediacom a deal like ImOn’s, which doesn’t require a franchise requirement or franchise fees.
Mediacom seeks a response from the city by the end of the year and has prepared a legal complaint against Iowa City on the matter, which Mediacom officials say is being held as a placeholder in the event that an acceptable resolution is not reached.
Iowa City Manager Tom Markus said the Monday letter was unexpected, adding that as a legal matter, he couldn’t comment further.
“We were surprised by it,” he said. “We’re evaluating it.”
Ed Pardini, senior vide president of Mediacom, said Monday Mediacom’s franchise agreement includes a list of obligations, including close to $1 million in annual payments for use of city right of way and public access grants, as well as operating a local office and provide free basic cable services to schools and government buildings.
Iowa City municipal code includes language that says no company shall construct, maintain or operate within public property for the distribution of cable services without first acquiring a franchise.
Markus said further information will be available after the city attorney’s office evaluates Mediacom’s claims, but said he believes a franchise agreement is only required when a provider plans to offer cable TV services.
“That’s a legal question, but from a layperson’s standpoint, that’s my understanding,” Markus said.
Jeff Janssen, vice president of sales and marketing with ImOn Communications, said Tuesday he had not seen the Mediacom letter, but said ImOn has lease agreements similar those with Iowa City in other communities like Hiawatha and Marion.
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Janssen also noted a franchise agreement only becomes required when cable TV is added to the list of service offerings. ImOn’s current plans for Iowa City are strictly for telephone and Internet services, he said.
“Franchise agreements are all around cable TV,” he said. “Once we decide, or if we decided to offer cable TV in Iowa City, we would get that franchise agreement, we are required to.”
However, Mediacom’s argument is that Iowa City is allowing ImOn to create a fiber-optic infrastructure — which would be capable of handling cable TV services — free of the franchise agreement, thus giving them a leg up over Mediacom.
“To come back after it’s already built to say, ‘Now we’re going to use this network in an additional way,’ is really using a backdoor approach,” Peters said.