Recently, government officials in Iowa City agreed to a contract with ImOn Communications that allowed ImOn to lease space in the city’s data center to create a communication hub, access the city’s existing fiber-optic network and the right to install and maintain a network in the city right of way. In exchange, ImOn will pay the city $2,000 a month and provide Internet and phone service within 5-10 years to residents of the area.
Essentially, the city was allowing a company to finally challenge Mediacom in the area who for years has been the SOLE provider of combined Internet, cable TV and telephone service in the area.
Well, guess who is not happy at this agreement?
Mediacom is threatening legal action against Iowa City over recently approved agreements with Cedar Rapids-based ImOn Communications that Mediacom says puts it at a competitive disadvantage. Representatives from Mediacom on Monday delivered to the city a letter of complaint and a copy of a federal lawsuit they plan to serve unless the city reconsiders three agreements with Internet, cable TV and phone service provider ImOn. – Press Citizen
Mediacom is claiming what telecommunication companies tend to claim whenever they are forced to deal with competition…..IT ISN’T FAIR! No, really, that is what Mediacom is telling the city. Here is one of the so-called advantages given to ImOn:
Tom Larsen, Mediacom Group’s vice president of legal and public affairs, has given the city until Dec. 31 to respond to the company’s concerns. Larsen contends in the letter that the agreements made with ImOn — allowing the company to lease excess capacity on the city’s fiber-optic network and 120 square feet of space in the Tower Place parking ramp — gave ImOn an unfair advantage.”
According to Mediacom, the city gave ImOn things that Mediacom didn’t get with the city, which should allow Mediacom to either stop ImOn from entering the area or force the city to pay Mediacom
a bribe additional compensation.
Mediacom is using the same tactics that other telecoms have done around the country whenever they want to stop competition from entering their market…..through “most-favored nation” clauses. Essentially, a most-favored nation clause allows an incumbent cable/broadband provider to renegotiate the terms of a city franchise agreement if a new cable/broadband provider receives a franchise agreement and has better financial terms included in the agreement.
In reality, cable and broadband providers use it as a way to threaten a city with a lawsuit if they feel that competition may be coming their way. For example, when Bright House was trying to stop Verizon from entering their areas of Florida, they threatened to sue the city if they accepted Verizon’s proposed franchise agreement.
When Mediacom was forced to deal with an actual competitor in one Minnesota city, they did in fact sue the city for no reason other than the city accepted another company’s proposed franchise agreement.
“Mediacom filed a lawsuit against the city in July, saying the Prior Lake City Council violated state law in June when it approved a cable TV franchise agreement with Integra, which became Mediacom’s first cable TV competitor in the city. Attorneys for Mediacom maintain the Integra agreement does not provide a level playing field for the two competitors.” – SWNedsMedia
Except, the clause does not allow the incumbent provider to be given the best terms across the board or else….it simply allows them to renegotiate if major parts of their deal are beaten by a new competitor. For example, if a new provider is given a 10-year deal with City A and pays the city $5,000 a year and an old provider has a 30-year deal with City A and pays the city $50,000 a year, the old provider has a case against the city to renegotiate.
Somehow over the years, incumbent providers have used this clause to basically get whatever they want from local/state officials. Situations like these have gotten so abused around the country that the Department of Justice spent years probing whether there are even any legitimate business reasons for such terms.
I won’t even get into the idea of a telecom crying about a “level playing field” when telecom giants in this country have used their position and power to make the telecom industry one of the least level playing fields around the country/world. Is it any wonder companies like Mediacom continue to serve parts of the country unopposed yet also finishes near dead last in just about every customer satisfaction survey?
Let’s not forget the fact that one town got so tired of Mediacom’s terrible service that they filed suit against the telecom company.