MCALLEN, RGV – McAllen Mayor Jim Darling says if wireless companies are allowed to use a municipality’s right of way at a reduced rate, they should have to provide service throughout the city.
That is not happening, Darling said at a McAllen Chamber of Commerce event, even though he tried to negotiate such a deal when wireless providers got the go ahead to install nodes on street poles as part of their roll out of 5G technology.
Because the wireless companies were granted permission by the State of Texas to use a municipality’s right of way at a much lower rate than cities wanted – $200 instead of $1,500 a node – a lawsuit was filed.
“I had to testify in the court case and I said, you know they (private wireless companies) want to be treated like a public utility without any responsibility. My biggest concern is we don’t even have 1G in a lot of our neighborhoods,” Darling said.
Cities such as McAllen, Brownsville, Mission, Weslaco, South Padre Island, Roma, Alamo, Alton and la Feria in the Rio Grande Valley filed a lawsuit over the issue. They were joined by the cities of Dallas, Irving, Sugar Land, Coppell, Midlothian, Highland Village, Seagoville, Boerne, Rockport Lucas, Balcones Heights and Simonton. Plus, Darling in both his official capacity as mayor of McAllen and in an individual capacity.
Now, the City of McAllen is looking for the Legislature to help resolve the lawsuit, which has become known as Jim Darling vs. The State of Texas.
For Darling, the issue is all all about equality. In remarks at a luncheon hosted by the McAllen Chamber of Commerce’s governmental affairs committee, Darling pointed out that almost 40 percent of students in McAllen ISD schools do not have wifi at home.
“We tried something a year and half ago. We (McAllen ISD) gave iPads to every kid. They can’t do their homework, the parents can’t get the information. They don’t have wifi. Almost forty percent of the kids have no access, even if they wanted to pay for it (wifi) they have no access to it.”
Darling said the City of McAllen tried to negotiate with the private wireless companies to ensure wifi was available throughout the city.
“They were not very interested,” he said. “We went to push that program and it was very, very, difficult, to do that. If you are going to allow them (private wireless providers) the privilege of using that (a city’s right of way) then you ought to be able to say they have to have the obligations.”
Darling added: “The money is important but really, for me, it is about making sure there is a level playing field for everyone in our community. Making sure they (the wireless companies) put wifi in the neighborhoods that do not have it. There is no incentive for them to do that if the customer base is not there. But I think there is an obligation. If you want to use all our right of way in the City of McAllen, we have a right to have service requirements and you provide them.”
In his remarks, Darling gave a lot of background on how the lawsuit came about and what he hopes the Legislature will do about it.
“Last session, they (legislators) allowed wireless companies to use right to way as they want. For 5G you need wireless. You need relatively small nodes. For regular cell phone you need big towers. But for 5G you need nodes because 5G will not go through trees very well, etc. So, you need to put them all over the place,” Darling explained.
“They (the wireless companies) did not want to deal with 1,200 cities so they went to the Legislature and said, give us, for all practical purposes, a statewide franchise agreement instead of individual franchise agreements with the cities.”
Darling explained that franchise agreements are paid by public utilities, such as electric companies, gas companies and telephone companies.
“The privilege they get is they can use right of way to put their lines in. And historically they have paid five percent of their gross receipts. That was kind of the statewide standard and they negotiated individual franchise agreements with the cities,” Darling said. “We expected that to happen with them (the wireless companies).”
Darling pointed out that cities have some control over the operations of a public utility in consideration of the use of right of way.
“We get to charge a franchise fee and we also get to regulate rates. So, we have been involved in really big rate cases over the years with them. CP&L Retail, for instance, with the nuclear plant. That, probably saved a couple of billion dollars in expenses because of our ability to regulate rates. We get to regulate service requirements. We get to regulate where service is provided for traditional public utilities.”
But, Darling said, the wireless companies did not want to have to go through that.
“So, they went to the state and said all we are going to agree to is some basic design but we are going to put a node pretty well where we want. You have seen them around town. There are two kinds. One that looks like a tube and one that looks like a refrigerator,” Darling said.
“Wherever we have right of way, they get to stick a node on, without permission from the city. And then they came in and said what they are going to pay. They did not want to pay gross receipts so we had agreed in the legislative session on $1,500 a node. Through the compromise committee they said they are going to pay $200 a node. That is what the Legislature passed.”
Darling said the ironic thing is that the State of Texas did an appraisal for what a node would cost to put on a state road, and the appraisal came back at $2,800. The Legislature ignored this and stayed with $200 a node.
“We could not take that in McAllen so there was a coalition of cities and we sued the State of Texas and we are involved in litigation right now. We are trying to settle the case and there will be legislation to settle that case. We have to go back to the Legislature and get that agreement. By the way, they needed a plaintiff so it says, Jim Darling vs The State of Texas. That is probably not the best thing for me to do when I go to Austin, but they needed a plaintiff and I did that.”
Darling said a city such as McAllen does not just try to get legislation passed during a legislative session. Sometimes, it is all about killing bad legislation or fixing legislation from the last session. The dispute over wifi nodes and how much wireless companies have to pay for the right of way is an example of the latter, Darling said.
“CP&L pays five percent gross receipts (for their franchise fee),” Darling said. “They will say, how did these wireless guys get such a good break, we want the same break. In most cities, franchise fees are the third largest source of revenue. After sales tax and property tax. In McAllen it is fourth because we have a bridge.”
Editor’s Notes: Rio Grande Guardian sales manager Shon Gonzalez assisted with this story from McAllen, Texas.