The Franchise and Concession Review Committee (FCRC) of New York City has unanimously approved the proposed 12-year franchise contract between CityBridge (a consortium that includes Control Group and Titan Outdoor) and the city of New York, despite allegations of favoritism and conflicts of interest. The scandal-plagued bidding process for the project that aims to turn thousands of traditional payphones in New York City into advertising posts (with Wi-Fi) has attracted at least one lawsuit (from Telebeam, a company that was not selected for the project) and complaints from districts outside Manhattan that won’t be enjoying Gigabit connections.
There are two serious objections against this project, one against the selection of CityBridge, and the other against the award of the entire project to one consortium (creating a monopoly — indeed Titan sent a letter in 2013 to the DoITT stating it believed that a single franchise model violates federal law and it urged the city to issue an RFP that allows for multiple franchisees).
As I’ve written in an earlier article, the involvement of Robert Richardson, who worked for the NYC DoITT, went to Control Group and is now at the NY Technology Development Corporation, raises many questions about the fairness of the process. See the letter below from Telebeam’s counsel containing more details about Control Group and Robert Richardson’s ties to Mayor De Blasio.
The second objection is the structure of the project itself: creating a monopoly franchise over the city’s telecommunications infrastructure. Telebeam has filed a lawsuit in federal court against the city of New York alleging that the city has violated the Telecommunications Act of 1996 (47 U.S.C. Section 253) by forcing other payphone providers out of the market in favour of only one company. This objection is also addressed in the letter to the FCRC above.
Indeed, Titan (part of the CityBridge consortium) sent a letter dated 15 July 2013 to Stanley Shor (Assistant Commissioner of the DoITT) asserting that awarding a single provider public pay telephone franchise violates Section 253 of the Telecommunications Act! See the letter below. Here’s a quote from Titan’s letter to the city:
Titan urges the City not to move forward with any PPT franchising regime which artificially restricts the number of PPT franchisees in the City of any district. We appreciate DoITT’s acknowledgement that a single-provider scenario would not provide the City with greater advertising revenue than a multi-franchise model. We also believe that any benefits the City might realize from “a more comprehensive and systematic Citywide approach” to PPTs would be equally achievable through multiple franchisees if they were required to accept reasonable and consistent design and operating methodologies.
(Note: The DoITT has actually acknowledged a single franchise model will not bring in as much revenue as a mult-franchise model?)