MYTH: Cities give preferential treatment to municipal providers over private providers.

FACT: Cities are required by law to treat municipal providers the same as private providers.

Iowa Qwest president Max Phillips was quoted in a Dubuque Telegraph Herald article, claiming that municipal telecommunications utilities put his company at a competitive disadvantage by manipulating the fees charged for use of public rights of way:

"The city controls rights-of-way, fees for how we use or build and use the city's infrastructure," Phillips said. "All of a sudden, the city has jurisdictional authority to manipulate the situation and advance themselves." (Dubuque Telegraph Herald 10-26-05)

Mr. Phillips has no excuse for making such a statement. It is not true. Both federal and state laws prohibit cities from discriminating in the management of rights of way.

 The 1996 Federal Telecommunications Act at 253A, subpart C, prohibits discriminatory practices in the regulation of public rights of way:
SEC. 253. [47 U.S.C. 253] REMOVAL OF BARRIERS TO ENTRY.
(c) STATE AND LOCAL GOVERNMENT AUTHORITY.--Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government. (Emphasis added.)
 A 1998 law that was codified as chapter 480A determines how a local government can regulate a utility's use of public rights-of-way. Section 480A.3 (see below) specifically sets forth the fees that can be imposed. Section 480A.5 provides for arbitration with local governments in the event of a dispute.

480A.3 FEES. A local government shall not recover any fee from a public utility for the use of its right-of-way, other than a fee for its management costs. A local government may recover from a public utility only those management costs caused by the public utility's activity in the public right-of-way. A fee or other obligation under this section shall be imposed on a competitively neutral basis. When a local government's management costs cannot be attributed to only one entity, those costs shall be allocated among all users of the public rights-of-way, including the local government itself. The allocation shall reflect proportionately the costs incurred by the local government as a result of the various types of uses of the public rights-of-way. This section does not prohibit the collection of a franchise fee as permitted in section 480A.6.

 In 1999, the private cable utilities passed a new provision in Iowa Code section 364.3 subsection 7, which specifically addresses the situation where a city operates a cable communication system and requires management of the right-of-way on a "competitively neutral and nondiscriminatory basis".

364.3(7). A city which operates a cable communications system shall manage the right-of-way in a competitively neutral and nondiscriminatory basis. Additionally, a city-operated cable communications system shall be required to pay the same fees and charges and comply with other requirements as may be imposed by the city by ordinance or by the terms of a franchise granted by the city, or as may otherwise be imposed by the city, upon any other cable provider. This subsection does not prohibit a city from making an equitable apportionment of franchise requirements between or among cable television providers, in order to eliminate duplication. This subsection shall not be construed to prohibit a city-operated cable communications system from making transfers of surplus as otherwise allowed or from making in-kind contributions as otherwise allowed.