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Small City Fights Comcast Over Institutional Network
Fifteen years ago, West Bloomfield, Michigan, population about 65,000, wanted an Institutional Network (I-Net) to connect all the important services, like emergency response, police, fire, and water, with a dedicated high-speed network. The town entered into a franchise agreement in order to share the construction costs with the incumbent cable company, which at the time was MediaOne. According to the township, MediaOne offered to contribute $400,000 to the cost of construction as part of that agreement.
The agreement was transferred to Comcast in 2000; Comcast acquired MediaOne in 2002. MediaOne and successor Comcast have provided "free high-speed bandwidth transport as well as interconnectivity" during the life of the network claims Comcast in a letter submitted to the court. The cable giant also describes the practice as a "benefit not provided by Comcast's competitors" and wants it to stop. The franchise agreement expired on October 1 but was renewed until 2025.
To The Courts
Comcast and the town are now fighting over ownership of the infrastructure. With Comcast demanding new fees, the town is bringing a lawsuit. Comcast, however, maintains that it owns the I-Net that the town uses for all its important communications. The Detroit News reports that the township is coming out swinging:
The township said it is illegal to use public funds for private commercial purposes and insists there was never any reference to a cable company ever retaining ownership of the I-Net and said it has paid all other costs including upgrades and maintenance of the system which is “imperative to public safety operations of the township and will impact the township’s budget which is currently being prepared for 2016.”
The township not only seeks a preliminary and permanent injunction against Comcast, it wants the company’s act declared a “wrongful conversion of township property” and to be awarded three times the actual damages plus costs and attorney fees.
In the past, these agreements made sense to small towns that needed economical internal communications. All across the U.S., towns signed onto franchise agreements with large providers that offered to build I-Nets and supply connectivity.
As original franchise agreements expire, ownership issues and rate changes are popping up. After years of dependency on big corporate providers in an environment where there is little or no competition, communities like West Bloomfield often find themselves at the mercy of companies like Comcast.
What Can Cities Do? Take Control
There’s another way though. Many towns have built their own I-Nets - often with better connectivity and more savings than franchise agreements offer. The infrastructure can be expanded for other public policy programs too, like economic development or residential Internet access. The “Institutional Networks” page is full of stories about communities that have built their own I-Nets. Rather than trusting big corporate providers, towns control their own infrastructure and are better able to predict connectivity costs.
Franchise agreements are expiring across the country. Big corporate providers like Comcast and Time Warner Cable use this strategy to squeeze more dollars from institutional customers. Martin County, Florida, overcame a similar situation when Time Warner Cable tried to extract exorbitant fees as their franchise agreement expired. Rather than pay an increased rate of more than 800 percent, they chose to invest in a publicly owned fiber I-Net. The community is now able to control their costs with fast, affordable, reliable infrastructure that the community can expand. Read more about Martin County in our 2012 Report, Florida Fiber: Martin County Saves Big with Gigabit Network.
Other towns can expect to find themselves in the same situation as West Bloomfield, Michigan. Raising rates and demanding new fees, large providers put profit before the best interests of the community. With these franchise agreements expiring, there’s a chance for cities and towns to take back local control by building their own networks.
The time to act is now. To learn more about what to do at the local level, check out our Community Connectivity Toolkit.