Sunday, May 14, 2006

Rockville Resolution Residuum

On Monday, April 10, 2006, I attended a meeting of the Mayor and Council of the City of Rockville. On the agenda was the following:
Adoption of a resolution to encourage Verizon to install its Fiber to the Premises (FTTP) and make its FIOS service available to Rockville residents, and to comply with Rockville Permit and Rights-of-Way (ROW) Management requirements
The resolution was nominally a symbolic gesture that simply said Rockville wants Verizon to install its FIOS service already. Of course, politicians being what they are, the resolution took 3 pages and a half-hour presentation to state what I just said in the previous one sentence.

So what's the point of such a resolution? It's clear that it was not meant as a communique to Verizon. Rather, it was a self-defense against the citizens who have been pestering City Hall to no end. At least that's how I interpret this preface to the resolution:
Some citizen inquiries to the City have indicated that there is, among some citizens, a misunderstanding that the City is refusing to allow Verizon to install fiber optic cable and provide high-speed Internet service. The resolution seeks to clarify that the City is not refusing entry, and that the City encourages competition while appropriately managing the public ROW.

More Detail, More Money

To explain in more detail, Rockville wants Verizon to pay the following fees:

$4.35/ft for excavation of city streets
$2.20/ft for excavation of sidewalks and grassy areas
$0.06/ft for laying aerial lines

According to Rockville, Verizon has asked for an 85% discount on those fees.

Are these fees reasonable? Well, first let's examine what the fees are not for.

The fees are NOT for any direct damages caused by Verizon construction crews. If Verizon cuts a power cable, Rockville doesn't have to pay for it, Verizon does. The fees are NOT for repairs to the roadwork. If Verizon opens up a roadbed, Verizon has to restore it.

Fee This

So what are the fees for then? First of all, they're to cover the cost of infrastructure to collect the fees. If that was it, it would be ironic indeed - like tollbooths that continue to exist only to pay for their own upkeep. But that's not all. You also get a set of four ... oh wait, wrong commercial. The fees also pay for the upkeep of the rights-of-way (mowing the grass). That and plans, reviews of plans, plan permits, plan revisions, applications, application reviews, studies, variances, inspections, verifications, investigations for work without a permit. And meetings like the one I attended.

Undoubtedly there is some justifiable work in there but it sure makes you wonder how much is necessary. Wait, no need to wonder. The city hired consultants to count the beans. (Throw in a couple more beans for the cost of the consultants.)

The consultants report explained that the fees are set to recover all expenses involved related to the permits: city buildings, computers, support of the IT department, staff labor, pensions, ... everything. The premise underlying this computation is that... for any services benefiting or being provided to individuals, and not society as a whole, the individuals should pay for the cost of the service.

That premise in and of itself certainly makes sense. But how does it apply to the current situation? Is Verizon's fiber a benefit to the community as a whole? Or is it a benefit to specific individuals?

Verizon Fiber - Benefit To All Or Some

It could be argued that since only some individuals will ever make use of Verizon fiber, it benefits individuals and not the public as a whole.

On the other hand, it could be argued that Verizon brings competition and presumably, lower prices and incentives to provide improved service, even to non-Verizon customers. Is that a benefit to the community as a whole? Ok, not everyone is a high-speed internet customer but then not everyone is a library patron either and yet we agree that libraries are a benefit to the community. And while libraries are not-for-profit, high-speed internet service is recognized by the government as a resource that is not simply significant but increasingly necessary to the quality of life in the community.

I'll side with the benefit to the community camp. Indeed, I think it's a no-brainer. And the consultants report agrees! Wait, didn't I just say the report justified the rates? Well, yes and no. The report also said that its recommendations do not apply to utilities, specifically naming telecommunications providers as excluded from its recommendations! And the report goes on to point out that there are additional circumstances in which it might be regarded as a reasonable policy to set fees at a level that does not reflect the full cost of providing the service. In either case, one has to wonder - is the council misreading the report? Or is there something else going on here?

Neither of these points were mentioned during the meeting. Indeed, it was startling what else wasn't mentioned.
  • No mention of what Comcast paid for ROW access in Rockville.
  • No mention of what Comcast paid for ROW access elsewhere in MC.
  • No mention of what Verizon paid for ROW access elsewhere in MC.
  • No mention of what other communities charge for ROW access outside MC.
Instead, the testimony dwelled on a limited set of facts and another set of what I would call innuendo-laden asides such as this one: the City has diligently and in good faith pursued these negotations and, when there have been delays, has repeatedly invited Verizon to continued negotations. You gotta love that kind of rhetoric. The City isn't saying Verizon is slime; but only the City is diligent and acting in good faith.

The testimony also repeatedly noted (proof by repetition):
  • The rates were fair based on other communities (without any evidence presented).
  • No other company has requested a discount (without any evidence as to whether other companies were made to pay the current rates).
  • A recent phone Verizon outage shows the burden Rockville must bear (without observing that Rockville was in part to blame).
In speaking to staff after the meeting, I was unable to get any further information concerning what Comcast may have paid either in Rockville or what either Comcast or Verizon paid elsewhere in Montgomery County. Subsequently, I contacted the Montgomery County Deptarment of Permitting Services and asked what Verizon was paying outside of Rockville. A representative could not give me specific figures but said that ROW permits were usually 'per job' and depended on things such as width and depth of cuts. However, he proceeded to offer top-of-the-head figures such as $97 for a minor road, $200 for a major road, or $1/ft for a grass shoulder.

The last figure is the only one directly comparable ($1/ft for MC, $2.20/ft for Rockville), however it should also be noted that Verizon in many cases doesn't even use the ROW in MC, either using easements (not subject to ROW agreements) or existing access for which they need pay no additional fee. (Some access requires an annual charge.)

While browsing the MC Permitting website later, I also noted the following: No fees are charged for most utility companies, but some utility companies & private companies doing work for utility companies are required to pay fees.

Bottom Line

Digging up figures from various jurisdictions and for various jobs was painful enough (and in part why this report was delayed as I waited and waited for responses that never came) that I'll dump it in Rockville's lap: I think Rockville has to explain the reason for the rates and why they are set so high as to be preventing competition in an area or, for that matter, why they are charged at all.

While it is true that Verizon's fiber upgrade in parts of the County has had significant problems and Rockville has a right to be concerned as they have ultimate responsibility, it also appears to be the case that Verizon is working out these problems, is acting in good faith, and has significantly improved to the point that Montgomery County wants Verizon to continue installing fiber to the remainder of the county as quickly as possible.

What I see here is not an economic cost-recovery issue but a political issue. Does Rockville want competition? Does Rockville have a vested interest in favoring a sole incumbent provider? I'd like to see the Rockville Mayor and Council cut out the hyperbole, drop the posturing, and think clearly and speak honestly regarding the future of competitive high-speed internet service in Rockville.

Meeting With Comcast

The next CCAC (aka TAC or Telecommunications Advisory Committee) meeting includes a Comcast representative (presumably the VP of Government Affairs). If you'd like a question posed, don't send it to me (which doesn't work now that the CCAC is refusing questions from the public during meetings). Instead, send questions directly to your CCAC representative.

You can check the Frapper map to find your nearest CCAC representative (look for the green icons). Most of them are publicly listed in the white pages. Call one up and express your thoughts. These people represent you!


Anonymous said...

Great interpretation of the Council's intent - just to cover their rear end!
It would be interesting to know what, if any, Comcast paid for ROW access. Maybe a resident of Rockville could get that info?
Actually, every resident of Rockville should want to know.

Anonymous said...

Before reading this, I already had traded emails with COR's Douglas Breisch. In it, he stated "In answer to your question about permit fees, and as stated in the attached resolution...has requested or received a discount on ROW-related permit fees. The cost-based permit fees were established in early 2000 based on a study and recommendations by an outside firm. Comcast's rebuild schedule called for most of its work to be done between 2000 and 2003. The permit fees were increased slightly in July 2003, and have not been increased since."

So I guess this means Comcast paid the Rockville ROW fees, but I am not sure. In either case, Comcast is a sponsor of Rockville's Hometown Holidays--I wonder how those $$$ impact the Council's inaction on Verizon.

Anonymous said...

Doug's answer is as vague as the resolution. No one knows what "increased slightly" means. All we can surmise is that Comcast did NOT pay the rates recommended by the consultant. The resolution is so obviously worded to hide what really happened. For instance, it says "no company has requested or received a discount" but that's meaningless if the rates were so low that no company would need to make such a request.

Anonymous said...

Comcast rents buildings in the complex on the corner of 355 and Guide Dr. Montgomery County is full of nearly empty office buldings, many which would welcome a tenant that just would cover the utilities and cut the grass. Drive down 270 and there is a for lease sign in front of most every building. Comcast is holding over the City of Rockville the threat of moving to a new building and leaving another vacant office building in Rockville if they lose their monopoly over cable and permit Verizon to supply tv service. Don't also forget that Comcast provides a 24 hour channel on its service just for the city of Rockville that shows tapes of city council meetings round-the-clock. This exposure for the Mayor and Council who have goals of higher office is priceless, and I bet Comcast would pull it in retaliation if the Rockville politicians permitted Verizon to compete. I would not also be surprised if Comcast has been working with the City government to find a way to make satelite dishes illegal.