Telebeam Telecommunications Corp. v. City of New York

194 F. Supp. 3d 178, 2016 U.S. Dist. LEXIS 89585, 2016 WL 3771242
CourtDistrict Court, E.D. New York
DecidedJuly 11, 2016
Docket14-cv-7100 (NG)
StatusPublished

This text of 194 F. Supp. 3d 178 (Telebeam Telecommunications Corp. v. City of New York) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Telebeam Telecommunications Corp. v. City of New York, 194 F. Supp. 3d 178, 2016 U.S. Dist. LEXIS 89585, 2016 WL 3771242 (E.D.N.Y. 2016).

Opinion

OPINION AND ORDER

GERSHON, United States District Judge

Plaintiff Telebeam Telecommunications Corporation (“Telebeam”), an operator of public payphones, asserts claims under the Federal Telecommunications Act of 1996 (“TCA”), 47 U.S.C. § 151 et seq., against defendants City of New York (“City”), New York City Department of Information Technology and Telecommunications (“DoITT”), and CityBridge, LLC (“City-Bridge”). Alleging that defendants have entered into an “exclusive” franchise agreement for the operation of payphones situated "on New York City sidewalks in violation of TCA § 253(a), Telebeam seeks an injunction that annuls the franchise and permits Telebeam to retain its payphone infrastructure and provide competing service.

The parties have filed cross-motions for summary judgment on all claims asserted in Telebeam’s First Amended Complaint (“FAC”). For reasons that follow, Tele-beam’s ' motion for summary judgment is denied and defendants’ motions are granted.

UNDISPUTED FACTS

Over the last half century, the City has addressed public payphones under a series of distinct regulatory schemes. This lawsuit concerns the latest evolution in the City’s regulatory approach, best understood in historical, context.

Local Law 78

In 1959 the City enacted Local Law 78, which made it unlawful to install a payphone on any City sidewalk without a license. See N.Y.C. Admin Code § 19-128 (repealed 1996). At that time, the payphones located on the City’s streets were all owned by New York Telephone (“NYT”), then an AT&T subsidiary. The City granted NYT, and later its successors, a license to continue operating those payphones, but no other entity was granted a license under Local Law 78.

Following the breakup of AT&T in 1982, companies unaffiliated, with NYT, including Telebeam, began to install payphones both on buildings abutting the City’s sidewalks (so-called “building line” installations) and on the sidewalks themselves. While the City contends that at least the sidewalk [180]*180payphones violated Local Law 78, because they were installed without a license, they were not removed or otherwise regulated by the City. Payphones proliferated. Between 1985 and 1995, over 25,000 payphones were installed in the City — either on the building line or sidewalk — by entities other than NYT.

Local Law 68

In an effort to improve service and enhance the aesthetics of payphone installations, in 1995 the City passed Local Law 68. See N.Y.C. Admin. Code §§ 23-401 et seq. The enactment repealed the licensing regime established under Local Law 78 and adopted a franchising process applicable to all payphones located on “the street or other inalienable property of the city.” Id. at § 23-402. The City Charter defines “inalienable property” to include the City’s “streets, avenues, [and] highways.” N.Y.C. Charter § 383. There is no dispute that the City’s sidewalks are inalienable property of the City.

Under the Local Law 68 framework, a permit is required to operate a payphone on the City’s sidewalks, see N.Y.C. Admin. Code § 23-402, and a franchise is required to obtain a permit, see id. § 23-403(a). Pursuant to the City’s Charter, a franchise may “be awarded only in accordance with the provisions of an authorizing resolution adopted by the [New York City Council].” N.Y.C. Charter § 363(a). Franchises under Local Law 68 have been issued under a series of authorizing resolutions, the last two being Authorizing Resolution Nos. 2309 and 191.

In 1999, Telebeam, and more than 100 other payphone operators, obtained franchises under Local Law 68. The franchises were issued for a term of eleven years, which the City could extend to fifteen years at its sole discretion. After obtaining its franchise, Telebeam, which opex-ated approximately 1,600 public payphones before becoming a franchisee, installed an additional 1000 permitted payphones on the City’s sidewalks at a cost exceeding $25 million. The City exercised its option to extend the Telebeam franchise in 2010, setting a franchise termination date of October 14, 2014.

Over the life of its franchise, Telebeam generated approximately $171 million in revenues, mostly from the sale of advertising space. Indeed, payphone usage plummeted over the franchise period, with the City’s non-advertising payphone revenues falling 98%, and the number of franchisees dwindling from 115 to nine.

The 2014 RFP

In the years immediately preceding the expiration of Telebeam’s franchise, the City began to evaluate ways to modernize the telecommunications services being provided on the City’s streets. To engage urban designers and other experts in this effort, the City conducted a “Reinvent Payphones” design challenge, which elicited more than 125 submissions. The City also issued a Request for Information regarding the possibilities of advanced public telecommunications.

Out of this process, the City published on April 30, 2014 a Request for Proposals (“RFP”) for a new franchise to develop sidewalk telecommunications structures that would provide both telephone service and free internet connectivity via wireless fidelity (“Wi-Fi”). The RFP specified that the Wi-Fi “hotspots” provided by these structures would need to be integrated in a single network, enabling a user to remain connected to the internet as he or she moved through the system’s footprint across the City’s five boroughs. In a statement released after the RFP, DoITT’s assistant commissioner Stanley Shor made clear that “the city is currently expecting to award one franchisee contract [under] the RFP.” FAC Ex. F at 12.

[181]*181The City received 10 proposals for the new franchise by the July 21, 2014 submission deadline, including one from Tel-ebeam and another from CityBridge. Telebeam’s submission was made on the assumption that multiple franchises would be granted and asserted that issuance of only a single franchise would violate the TCA. In this regard, Tele-beam’s submission echoed a letter that CityBridge’s managing member, Titan Outdoor Communications, Inc. (“Titan”), had sent to the City in advance of the RFP. Titan’s letter stated that issuance of an “exclusive franchise” under the RFP “would prohibit or have the effect of prohibiting all other [payphone] operators from providing telecommunications service, in direct violation of Section 253” of the TCA. See FAC, Ex. D.

The CityBridge Franchise

On November 14, 2014, the City awarded the new franchise to defendant City-Bridge to develop and operate what will be known as the LinkNYC Network (“Link-NYC”) on the City’s sidewalks. Pursuant to CityBridge’s franchise agreement, City-Bridge will implement LinkNYC by installing 7,500 “Link Kiosks” on the City’s inalienable property across the five boroughs. The Link Kiosks will provide Wi-Fi internet access within a 150-foot radius at up to “gigabit speeds” — that is, internet service 100 times faster than average municipal Wi-Fi and more than 20 times faster than average home internet service in the City. The system will be designed so that users travelling 'through the City will automatically connect to internet “hotspots” as they are encountered.

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Cite This Page — Counsel Stack

Bluebook (online)
194 F. Supp. 3d 178, 2016 U.S. Dist. LEXIS 89585, 2016 WL 3771242, Counsel Stack Legal Research, https://law.counselstack.com/opinion/telebeam-telecommunications-corp-v-city-of-new-york-nyed-2016.