Flanked by advocates and experts, Memphis Mayor Jim Strickland elaborated on his proposal to expand high-speed internet throughout Memphis, including its low-income communities, to Memphis City Council members during the Tuesday (Oct. 10) session.
Strickland, whose term ends Jan. 1, made the presentation to council members, who were both questioning and skeptical about the proposal during the council’s Economic Development, Tourism & Technology Committee meeting.
“Our solution to provide digital equity is the ordinance that is before you. In short, that ordinance says that if somebody – any group – would bring fiber to the premises of 60 percent of our city and 60 percent of low-income areas, we would provide incentives,” said Strickland.
The fiber optic cable-driven “Smart City Fiber Access System,” a $750 million deal with Paris-based Meridiam, would provide incentives to build out a broadband internet network across 85 percent of the city.
These include waiving the city’s telecom fees and simplifying its permit process. The 60 percent access threshold applies to the city at-large, as well as its U.S. Census-designated low-income areas.
The city would also receive 12 strands of fiber optic cable and 100 connection points.
Made from thin layers of glass, fiber optic cable is widely considered the fastest cable speed available. Most providers offer speeds up to 1 Gbps (short for gigabit per second), which is 10 to 20 times the average cable speed.
Meridiam is a global investor and asset manager that specializes in developing, financing, and maintaining public infrastructure projects.
During his pitch, the mayor tied the deal to the ongoing Memphis 3.0 plan, which calls for the modernization of infrastructure, particularly in underserved communities. A critical piece of that infrastructure goal is greater fiber optic access, the mayor explained.
Currently, only 28 percent residing along the upscale Poplar Avenue corridor enjoy the service.
Although the plan has generated enthusiasm, longtime provider Comcast is accusing the city and Meridiam of engaging in unfair business practices.
“This ordinance has been prepared and is there for one company. We heard last week, my friend the mayor, talk about, ‘any company can come in here and do this. Any company’s welcome to come.’ But you’ve got to give 12 strands of fiber to the city. You’ve got to have 100 connection points…,” said attorney John Farris, representing Comcast.
Farris also complained that the city would pay $15 million for the deal. Yet, if another company wanted to provide the same service, they would be on the hook for the cost.
“That’s not in the ordinance. The ordinance requires that if ‘John Farris Fiber Co.’ wants to come to Memphis, I’ve got to give the city of Memphis 12 strands of fiber – for 40 years,” said Farris. “This ordinance actually eliminates competition because it doesn’t treat fiber companies fairly … It doesn’t treat Comcast fairly.”
Stressing speeds, Farris also countered the proposal by offering a “technology neutral” amendment, which he presented as a “level playing field.”
Farris said, “If Comcast meets all the speed…all the build-out requirements in this ordinance…all the low-income requirements in this ordinance – many of which it’s doing today, or will be, as required by this ordinance – then Comcast should have the same benefit that Meridiam is getting.
“We’ve been here. We’ve been trying to get people connected on our dime, not $7 million that is going to be given from the city to Meridian.”
After explaining the $7 million payment would be used to drop access charges for low-income Memphians, Strickland criticized the amendment for offering “substandard” technology, like cable.
While the counterproposal meets download speeds, the mayor pointed out it fails to mention upload speeds.
“They are misleading you,” said Strickland. “The only apples-to-apples comparison that I will give is the $15 million for city use. Fifteen million dollars for 12 strands. I’d be OK with offering $15 million to everyone who puts fiber to the premises and gives us 12 strands. That’s an easy amendment.”
His opinion was buttressed by council attorney Allan Wade.
“This is not my first rodeo,” said Wade. “We have adopted two ordinances, and we go through this same dog and pony with Comcast, AT&T, everybody else. They will descend on you and tell you this is not competitive and neutral under federal law.”
The ordinances included a deal to provide fiber optic cable to emergency services, such as the police and fire departments.
During the conversation, Wade confided that he just returned from ironing out legal particulars from the city’s previous foray into a publicly run network service provider – the ill-fated Memphis Light, Gas and Water Division Networx fiber optic project.
Founded in 1999, Networx allowed the provider to gain access to Memphis’s streets and rights-of-way to build, maintain and operate a city-wide fiber optics network. Per the agreement, 80 miles were completed. In exchange, it would pay a regular franchise fee.
The city sued Networx in 2002 for failure to pay. Wade was one of the attorneys representing the plaintiff. It was also beset with cost overruns. Eventually, the provider was sold to a Colorado telecom company for $11.5 million.
He grew more taciturn when the subject returned to the current deal.
“I have to be measured in what I say to you today, because this is potential litigation,” said Wade.
However, to one member of the council, the comparison between the two deals was apples to oranges.
“Memphis Networx was ahead of its time. The cost of fiber back then was so astronomical that we didn’t have the money to sustain it that way,” said Council Chairman Martavius Jones.
He also chided a well-funded media campaign criticizing the ordinance that has circulated since the proposal was announced.
“Everybody had an opportunity to respond to this. They chose not to. To have this dark money, singular name organizations…be transparent about it,” added Jones.
Meridiam was one of only two companies to bid on an RFP for the deal. Comcast didn’t offer a bid.
