Mediacom readies lawsuit against Iowa City

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.

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.

"In the event Mediacom is forced to go forward with this action, Mediacom will seek money damages as a result of the city's wrongful grant of a more favorable franchise to ImOn," Larsen wrote.

On Nov. 10, the City Council approved a five-year lease with ImOn for space in the Tower Place parking ramp at 6 S. Linn St. for about $2,000 per year. ImOn President and CEO Patrice Carroll has said the company plans to bring Internet and phone service to Iowa City and plans to build out its service over the next five to 10 years based on the success of the company.

Iowa City Media Production Services Coordinator Ty Coleman has said that Mediacom currently is the city's sole provider of combined Internet, cable TV and telephone services, and ImOn would need to acquire a state franchise agreement in order to provide cable TV service.

Mediacom's suit contends that because ImOn already provides franchised cable TV services in other Iowa municipalities, it should be given the same treatment in Iowa City.

"Approving these leases in this way does not help to create a good business climate," said Ed Pardini, the senior vice president of Mediacom's National Field Operations Group.

ImOn also was allowed to rent excess capacity on the city's fiber-optic network, which serves public buildings, traffic signals and other municipal functions, and it was granted a license agreement that allows for future expansion of its underground fiber-optic network.

The lawsuit, which has been filed but will not commence unless Mediacom takes action, alleges that the city bypassed its own ordinance and state regulations related to cable TV franchising and breached its contract, as well as its good faith and fair dealing with Mediacom.

"These actions constitute illegal acts of a municipality, which are not only void, but which violate Mediacom's agreement with the city," according to the suit.

Pardini and Phyllis Peters, the company's communications director, have requested a meeting with city officials.

Pardini said the company seeks one of two resolutions: either Mediacom be permitted to cease paying all fees and complying with the local franchise agreement and requirements not imposed on ImOn, or the city void the agreements with ImOn and require the company to obtain a cable TV operators license or franchise and comply with the same regulations as Mediacom before significant work is done.

"I'm not sure that other businesses would be comfortable to conduct their business if they were worried that the city would do something to subsidize their competition," Pardini said.

Iowa City Manager Tom Markus said Monday that the city's legal department was reviewing the issue, but he could not offer any comment. Assistant City Attorney Sue Dulek said she could not comment on the suit since the city has not been formally served.

According to the suit, Medicom's local franchise fee payments totaled about $651,000 in 2014, and the company paid fees for public, educational and governmental channels equal to 60 cents per subscriber. Pardini said those and other fees have totaled about $1 million per year.

Those fees are used by the city to support services such as Iowa City's nonprofit Public Access Television station.

"Since Day 1, we have been in complete compliance and we agreed to do these things, but our competition is being granted a free ride by the city," Pardini said.

Iowa City's local franchise with Mediacom is set to expire at the end of July 2018.

Reach Andy Davis at 319-887-5404 or at aldavis@press-citizen.com, and follow him on Twitter as @BylineAndyDavis.