Lancaster city’s plans for a municipal broadband network have foundered over the last several years as the private company hired to build it got bogged down with legal issues.
Now, seven years after the city partnered with Reading-based MAW Communications to install the fiber optic system, city officials are making plans to move forward without the company.
A tentative settlement agreement between Lancaster city and MAW Communications would give the city full control of the 16 miles of fiber optic cable, existing infrastructure and the accounts of roughly 200 residential customers who get internet services through LanCity Connect. In exchange, the city will make a $1.2 million payment to MAW and forgive the balance of the $1.5 million loan it made to the company. MAW previously paid off about $180,000 of the loan.
If the settlement agreement is approved, city officials say they plan to run the system “as is” until they can find a different private company to fulfill a long-held vision for a high-speed, low-cost internet service that also streamlines city services such as meter readings, traffic lights and security cameras.
“We had the right concept, what we didn’t have was the right partner,” Lancaster city solicitor Barry Handwerger told city council last week.
The proposed settlement agreement, which was discussed during a city finance committee meeting Monday, will be reviewed by city council Tuesday, before expected action at the Feb. 23 council meeting. If approved, city officials say they will only then begin to study what to do next.
“There’s not even a thought about who the partner or partners in this effort could be moving forward,” Mayor Danane Sorace said. “We have to own it before we can move anything further.”
MAW Communications declined to comment on the proposed settlement.
A plan unravels
In February 2015, the city hired Reading-based MAW Communications to install a municipal fiber-optic network for the city, culminating discussions with the company that began around 2006. Half the bandwidth for the new system was reserved for city functions such as remote water readings and traffic signals. The rest was to be used for a consumer broadband offering called LanCity Connect.
Infrastructure work began in 2017, followed by residential customer sign-ups, a residential rollout plan and the start of customer hookups. But in late 2017, the project stalled when workers from electricity provider PPL saw MAW contractors installing equipment on PPL utility poles.
That December, PPL sued MAW in Lehigh County court, claiming MAW had made unauthorized and unsafe attachments to its poles. That put a halt to new customer hookups or an expansion of the network. The legal issues were settled in June 2020 with MAW agreeing to pay $370,000 to PPL and bring its use of poles into compliance.
During that lawsuit, the city says it learned MAW may have violated its original agreement with the city by not getting proper approvals. MAW had also stopped paying back its loan from the city, which triggered another legal battle. The tentative settlement reviewed by city council on Monday would end all outstanding disputes between MAW and the city. The tentative settlement was reached in late November, just before binding arbitration was scheduled. Monday’s meeting was the first time the tentative settlement was made public.
Currently, the most basic service for LanCity Connect is $48 a month, including fees, for a service that offers 50 Mbps of speed. A plan with 100 Mbps of speed costs $125 a month. The city says it will maintain pricing and service arrangements if it takes over. The proposed settlement agreement gives the city the option to contract with MAW to maintain LanCity Connect for 90 days.
A good deal for the city?
If the settlement is approved, the city will have spent $4.3 million for the system, a cost that includes professional services, legal bills and other expenses incurred during the past five years.
City officials say that cost is reasonable given the potential for such a broadband network.
“The value of the fiber really is significantly more than the cost we’ve incurred for the fiber,” said Patrick Hopkins, city business administrator.
Christopher Mitchell, director of community broadband networks at the nonprofit Institute for Local Self-Reliance, said the amount the city has paid is “within the ballpark of reasonable.”
“It’s not what I would call a bargain,” he said. “But if it results in finding a partnership that in two years has a lot of the city connected, it will have been worth it.”
Mitchell, who has followed the Lancaster city broadband project and did a 2017 podcast segment on it, said running into problems with making pole connections is not unusual when municipalities try to build a new network from the ground up.
“The fact that this happened is not an anomaly, and it’s part of the reason we don’t have more competition for broadband in this country,” said Mitchell, who is based in Minnesota but has worked on projects in southcentral Pennsylvania.
“I can’t fault the city for how it moved forward. It seemed like a series of reasonable decisions, and now it’s doing the best it can with where it is,” he said.
And Mitchell thinks the city should be able to find a new company with interest and capability to replace MAW as the city’s new broadband partner.
“I don’t’ think there’s a lot of (possible companies), but I think there are enough that the city will be able to find someone,” he said.