A new lawsuit filed against the city of West Des Moines by Mediacom Communications claims the city is improperly financing a nearly $50 million citywide conduit network, offering a significant competitive edge to Google Fiber.
The lawsuit centers on the high-speed broadband access plan unveiled by the city of West Des Moines and Google Fiber in early July. The plan, which was expected to begin construction this fall, would start the 2½-year process of installing fiber optic conduit to every business and residence at no cost to the property owner. The public announcement of the project stated that other internet service providers would have access to run their fiber optics through the city conduit, and that Google Fiber would be the first signed tenant of the city conduit, paying the city $2.25 per month for 20 years per broadband customer.
West Des Moines has sought to offer broadband internet access as a public utility since 2015, when the city named access as a local priority in its 20-year vision plan “WDM 2036.”
Read the Business Record’s coverage of the announcement here.
Mediacom alleges the following:
- That the city improperly approved the conduit network project as an “urban renewal project” by unlawfully declaring the entire city of West Des Moines as an urban renewal area.
- That the conduit network agreement approved by the city grants Google Fiber exclusive rights to use each section of the conduit network for 18 months after the section is completed, and that the city is using public resources to market Google Fiber’s services to residents.
- That the city failed to solicit bids on parts of the conduit construction, and granted Google Fiber effective control over the conduit’s design.
- That a member of the West Des Moines City Council is the primary lobbyist for Google in the state of Iowa, and that the city did not take steps to prevent that member from influencing negotiations between the city and Google.
The lawsuit, filed in Iowa District Court for Polk County, requests that West Des Moines suspend work related to the conduit network, and that the project be brought to a vote for West Des Moines residents. Mediacom is not requesting damages in the lawsuit.
“Reducing barriers to competition is not always supported by existing industry. Reliable and affordable internet access was identified in our Citizen Survey as the number one improvement needed in our neighborhoods, and that’s especially true today with so many working and learning from home. Local government can and should play a role in addressing this need for our residents,” West Des Moines spokesperson Lucinda Stephenson said in a statement to the Business Record Thursday afternoon.
The conduit network, according to Mediacom’s lawsuit, will be built in seven sections and would result in a competitive edge as Google Fiber would be the only broadband provider for select residents and businesses for years. The city would only reserve up to 10% of the conduit network from exclusivity in “congested” areas for other broadband providers’ use.
“Our assumption was at the time that we would be permitted to access the same conduit network the city was building. But when we dug into the details, what became very clear was that the agreement was exclusive to Google for a pretty long period of time,” said Thomas Larsen, Mediacom senior vice president of government and public relations. “They’re trying to give one company a big head start over all the others.”
When Mediacom pressed the city on why Google Fiber received an 18-month exclusive right in the contract, Larsen said, “The city attorney’s response was that Iowa has long, cold winters and they’re not sure if the conduit network will make it through the winter. They don’t want to have multiple providers in there in case something goes wrong. We view that as, if that’s true, then that’s a construction component of the network … and that should have been put out for bid.”
Approval of the project is also questioned by Mediacom, which claims that city leadership cannot legally declare the entire city as an “urban renewal area” under the Iowa Urban Renewal Law, and that most areas of the city would not fall under the law.
The effect on competition will be most visible in new neighborhoods being built in West Des Moines, Larsen added.
“If you give a company an 18-month head start over everybody else, it’s going to be very hard for competition to ever really materialize in those areas,” he told the Business Record.
The lawsuit also alleges that a member of the West Des Moines City Council is a primary lobbyist in Iowa for Google Fiber, and that the city did not take steps to ensure that member was not involved in influencing negotiations between the city and Google Fiber before the City Council approved an agreement. Council member Matthew McKinney, who is registered as a lobbyist for Google Inc. and its affiliates, abstained from the July council vote that approved the agreement.
Dec. 10 3:50 p.m.: This story has been updated with a statement by the city of West Des Moines.