Right-of-way ordinance on road to Council vote

by Karen E. Culp

SBJ Staff

For about two years, the discussions about telecommunications companies' use of Springfield's rights of way has been limited. Though a proposed ordinance emerged in 1996, it has been on hold since then.

Until now. At a meeting of City Council's Telecommunications Infrastructure Committee Oct. 5, assistant city attorney Nancy Yendes presented a new draft of the ordinance, a draft which will likely go before City Council before year's end, Yendes said.

Members of the committee, including Mayor Lee Gannaway, expressed interest in getting an ordinance in place.

"I think we should move forward with the ordinance," Gannaway said.

The right-of-way ordinance deals with the city receiving compensation for the use of its right of way by telecommunications companies, Yendes said. Among other items, the proposed ordinance establishes franchise or license fees for the use of the right of way.

Those fees are in addition to any taxes, such as a 6 percent gross receipts tax, for example, that the companies may pay to the city, Yendes said. This draft of the ordinance calls for a one-fourth of 1 percent fee on annual gross revenues for providing Internet services.

The Internet service providers weren't "carved out" in previous drafts, Yendes said. Doing so is in response to pending federal legislation, the Internet Tax Freedom Bill, which may exempt Internet service providers from the 6 percent gross receipts tax.

"If Congress wipes out the 6 percent, we wanted to provide something that would take the Internet providers into a special rate," Yendes said.

The franchise or license fee for those telecommunications providers leasing dark-fiber capacity to others will be 5 percent of annual gross revenues, and on all other services or goods, 2 percent of annual gross revenues, according to the ordinance.

As to a fee for a franchise or license for an open video system, the fee will be equal to 5 percent of gross revenues, or equal to that paid by any cable television provider, whichever is greater.

Another provision of the ordinance is that any operator who works in the city's right of way will allow the city to place conduit in any of its trenches, ditches or excavations.

The 2 percent paid on all other services was reduced from 5 percent in previous drafts, Yendes said. That percentage can be raised by 1 percent every four years by City Council. The Telecommunications Infrastructure Committee was, at its Oct. 5 meeting, examining a way to cap the figure at 6 percent.

"The committee is definitely looking at a cap for that percentage, because we want to be fair, and we want the operators to have some idea of what to expect," Yendes said.

Yendes said it was the desire of the city to get an ordinance in place that is fair to everybody.

"I think during the initial discussions, people were worried we might pass something that was too onerous and expensive. I hope we've demonstrated that we want to be fair to everybody," Yendes said.

Pending this ordinance's passage, telecommunications providers have been operating under temporary licenses in the city. Last summer, three telecommunications providers allowed their licenses to expire.

One of those, Digital Telecom, or DTI, has since renewed its license, Yendes said, but the others, Southwestern Bell and Worldcom, have not renewed theirs. Worldcom did not renew its license because it has no immediate work in the rights of way planned, Yendes said, but Bell needs a license for ongoing and pending work it is doing in the city.

At the committee meeting, members discussed what the city could do to get Bell to sign a license. The company needs to build out to reach some areas in the city where it will offer service. Gannaway suggested that Bell could sign a temporary license under protest, or that the city could file a motion for declaratory judgment.

"I would hate for us to get a black eye over the situation. I think we should try to get something resolved on this so the company can continue its business, but we need to move forward with the ordinance so we have something in place for the future," Gannaway said.

Steve Vaught, area manager for Southwestern Bell, said the company is negotiating with the city to continue its business as usual.

"We're going to continue serving our customers like always. We are hoping to get a right-of-way ordinance in place so we can have some stability," Vaught said.

Yendes said, as of Oct. 7, the city had not struck a temporary agreement with Bell, and the company had two jobs on hold as a result. Yendes said, however, she was confident something would be worked out between the city and the company.

Yendes said she plans to hold meetings with telecommunications providers about the proposed ordinance.

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