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VOL. 129 | NO. 111 | Monday, June 9, 2014

City to Rework Rights-of-Way Fees

By Bill Dries

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Allan Wade points to the patchwork pavement on many Memphis streets – square, sometimes rectangular.


They are the signs of private companies making utility and telecommunication connections beneath public rights of way – streets, alleys and other types of easements.

For 10 years, the city has not been able to charge a fee for such access unless the companies agreed to continue paying, which has been the case with AT&T.

But the Memphis City Council, for whom Wade serves as attorney, is making moves to create a new fee structure.

In its own way, the fees issue – and the legal history behind the upcoming council votes – is as complex as the network of pipes, cables, lines and other technology just beneath the surface of the city.

In 2004, the city lost a lawsuit brought by BellSouth that contested the fee structure for access to the rights of way. The court decision was that the fee structure didn’t match the city’s cost for allowing use of the rights of way, and the city dropped its enforcement of the fees.

Some continued to pay under interim agreements until such a fee structure could be implemented. But a decade later, some are seeking the fees they have paid thus far.

Wade estimated the city takes in $400,000 annually now. He put the city’s take before the BellSouth ruling at around $12 million.

“They pay nothing. Something’s wrong,” Wade told council members last week. “You have an obligation to do something.”

But Chuck Thomas, regional director of external affairs for AT&T, said the council action surprised his company and others who want to be involved in the council’s next steps on the issue.

“We invest in Memphis,” Thomas said, citing the 1,000 AT&T employees in the Memphis area. “We don’t take away from Memphis.”

“We’re not trying to be antagonistic,” Wade replied.

His recommendation is for the council to subpoena all companies believed to be using city rights of way, getting what amounts to an inventory of who is using what and how it is being used. The subpoenas are necessary, Wade told the council, because he expects that most, if not all, of the companies will not comply voluntarily.

“We have to be poised to act once we get our study,” Wade said of the next step of approving an ordinance that would set the usage fee for rights of way.

He cited three pending lawsuits by companies using the city’s rights of way, including AT&T and XO Communications.

AT&T, which has continued to pay an estimated $3 million to $4 million a year, is seeking to have those payments returned because of the lack of a fee structure and some companies not paying at all.

XO is seeking $1.5 million in damages, according to Wade, in a dispute over the Memphis Fire Department and Memphis Police Department using XO’s telecommunications network in exchange for access to the rights of way.

Last week, the council approved on the second of three readings an ordinance that sets the fee structure and terms of the rights-of-way agreement.

The council is considered likely to delay the third and final vote on the ordinance for six to eight weeks, based on Wade’s advice to the council to subpoena material for an inventory and then set the fee structure.

Some council members moved to delay the second reading until July 1. But the delay motion was voted down.

“It’s tough to be partners with people suing you,” said council member Shea Flinn.

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