[The first in a series of three]
FROM TO THE 19TH TO THE 21ST CENTURY IN TELECOMMUNICATIONS
The idea of replacing the city’s sidewalk public pay telephones with Wi-Fi kiosks, providing free access to high-speed internet service was, and remains, an excellent one. The Wi-Fi kiosks that the City ended up deploying on its sidewalks in the 2010’s, LinkNYC, were spectacularly well designed for the task, and the financial deal the City arranged for itself with the CityBridge, the company contracted with to supply them, was a handsome one. I regarded the kiosks themselves as the street furniture analog of a Bentley – with more capacity than anyone could ever use. But in many, many respects, the franchise was poorly conceived, executed and managed. I was hired by the City in 2017 to manage it – so a good deal of this sticks to me. The program still has the capacity of being an asset for New York City.
In the mid-90’s, when I was working for business improvement districts to improve the midtown streetscape, upgrading the appearance of payphones were one of my assignments. At their peak, there were more than 35,000 public pay telephones on the New York City sidewalks at the curb, for which New York Telephone had a franchise from the City. The franchise did not include indoor phones (in restaurants, airports and transit centers) or phones built at the building line (like the ones in front of bodegas). For decades, public pay telephones were an embedded part of New York and American culture, frequently turning up in crucial dramatic scenes in film and other aspects of popular culture. Payphones were the way we communicated with each other away from home or office, particularly in emergencies – and, in fact, the New York City Police and Fire Department regarded payphones as an important supplement to their dedicated (red) call boxes (which are still around and equally obsolete. Another long story).
When I arrived at Bryant Park in 1991, as part of its deal with the Parks Department, Bryant Park Restoration Corporation was assigned the revenue from the pay phones on the block between 40th and 42nd Streets and 5th and 6th Avenues. My recollection is that the annual revenue was an important part of our then skimpy budget, in the tens of thousands of dollars a year.
At one point in the second half of the 20th Century, Verizon (or one of its predecessor entities) asked the City for permission to place advertisements on the phone kiosks, and the City granted Verizon a franchise for that, in consideration for a percentage of the income. By the 1990’s phone kiosk advertising had turned into a very big business. At the same time, mobile phones were beginning to develop a market, and as they proliferated, the need for stationary phones in public places became obsolete. As a result, the pay phone kiosks became more valuable as advertising vehicles than as telecommunications devices. With the breakup of AT&T, New York Telephone (whatever it was called at the time) deaccessioned its payphone business and sold pieces of its franchise to a number of independent companies, which had obtained their own telecommunications franchises from the City. Those companies and a number of other new entrants continued to deploy new phone/advertising kiosks. Ultimately, there were a couple of dozen independent “payphone” franchisees, which were principally in the outdoor advertising business – and a feisty, independent bunch they were. In the 90’s the “out-of-home” advertising business exploded, and the bigger of these small independents, found themselves to be worth hundreds of millions of dollars because of the valuable sidewalk real estate they controlled.
But at the same time phones without advertising, kiosks the locations of which weren’t terribly valuable for advertising purposes, and even some high-value location kiosks weren’t being well maintained. Verizon was particularly derelict in maintaining its remaining fleet. In order to make things better in mid-town, my talented colleague, Ignacio Ciocchini, who was on the staff of Bryant Park Restoration Corporation/Grand Central Partnership/34th Street Partnership, designed a really good looking new phone kiosk, which he and I took through the various approval processes at the City’s Department of Transportation (which regulated the sidewalks), Department of Information Technology and Telecommunications (which regulated pay phones) and Art Commission (which had to approve the aesthetics). We were able to garner all of those approvals, but we were unable to persuade Verizon or any of the independent companies to use the design (of which we had a prototype built and installed by a company called Telebeam on 34th Street near 5thAvenue,). Then, Verizon and a couple of the larger independent payphone companies did, however, knock off Ignacio’s design and widely deployed it, which we regarded as a major win.
As a side note, there was an interesting cast of characters involved in the payphone industry and in regulating pay phones and design at the City, many of whom I became friendly with over the years. A guy named Larry Allison was the Assistant Commissioner for Franchise Administration at DoITT. Larry was an old school pol and a great storyteller. He was succeeded by Stanley Shor, a dedicated long-time public servant, who after two decades preceded me in that job. The folks at Telebeam, who became a substantial irritant to the City (in a protraccted lawsuit over the termination of the payphone franchises), also became good friends and colleagues, particularly its entrepreneurial president, Ray Mastroianni. The then Executive Director of the Art Commission, Deborah Bershad, and her, now, husband, Frank Addeo, who represented DOT at the Art Commission, and I remain close to this day. Frank was doing pedestrianization at DOT before the term was even coined. He promoted public art on the sidewalks and plazas. He advocated for well-regulated sidewalks. Frank was decades ahead of the “open streets” curve, later promoted by Mayor Bloomberg’s DOT Commissioner, Janet Sadik-Kahn, who became internationally acclaimed for advancing the policies Frank was doing for decades under the radar at DOT.
But even with a large number of improved structures, with the turn of the millennium and the ubiquity of handheld devices, the presence of payphones on the sidewalks as telecommunication centers became obsolete. In the 00’s the Bloomberg Administration began to brainstorm as to what to do about them. City officials were wary about the litigiousness of the independent payphone operators, who had been vigorous in prosecuting their perceived rights in court under both their franchises and the Federal Telecommunications Act (which covered payphones as well as cable and broadband). The City decided that it wanted to replace the pay telephones with kiosks providing free Wi-Fi service in public spaces. It also decided to site them by replacing payphones with Wi-Fi kiosks at the same locations, with the costs for the program to be paid for by a franchise for electronic advertising on the kiosks. First, it was thought that the existing electrical and conduit to the payphones would make installing new infrastructure at those locations a breeze. Second, using payphone locations would make citing the kiosks easier, as the payphone sites had already been vetted under the City’s payphone streetscape regulations. And finally, and most importantly, using the payphone regulatory structure meant a new regulatory structure would not have to be adopted by the New York City Council – something that any administration regards as a major advantage. The City’s executive branch likes to control things. When the Council gets involved, politics and negotiation (horse-trading) become inevitable. That process does tend to be a break on unrestrained executive power (and a forum for the vetting of bad ideas). But the Mayor and his Commissioners bend over backward in avoiding having to negotiate with the Council over policy. The Administration was not entirely home free, as a new franchise would have to be created for the Wi-Fi program, which would require Council approval – but that was a well-trod and much narrower path, with the Council playing a much more limited role.
The City began the hunt for a program and a partner, which, with any new program, especially one involving a city franchise (permission for the private use of streets or sidewalks for profit) is a complex, multi-year affair.
THE FRANCHISE AGREEMENT WITH CITY BRIDGE
By the early teens, the City had selected a consortium called CityBridge to be awarded the public Wi-Fi franchise. CityBridge’s proposal was in every way superior to the other proposals the City received in response to a formal request for proposals (I had nothing to do with the evaluation of the proposals, as when I joined city government, the franchisee had already been selected and the franchise agreement was fully negotiated, approved and executed). It was financially generous, promising hundreds of millions of dollars to the City from the sale of kiosk advertising over the life of the contract. CityBridge promised the City to deploy a minimum of 7,500 of its highly designed, multiple use kiosks during the first six years of the franchise. It also promised speed and privacy protection for Wi-Fi users at a higher standard that was then being provided by the wired broadband providers to people’s homes. The franchise included a schedule of significant minimum annual guaranteed payments. The City also got 10% of the advertising for its own use, which it gave to the New York Convention & Visitors Bureau to program. CityBridge also agreed to remove all of the existing payphones on an accelerated schedule.
The LinkNYC kiosks provided free Wi-Fi service up to a couple of hundred yards from each structure. The plan was for them to be placed with sufficient consistency along pedestrian thoroughfares to provide continuous, uninterpreted service. In my field testing, I found the service to be steady, reliable and high speed. The kiosks also included tablets with access to the internet, free phone service for anywhere within the US, two charging stations and a sophisticated system for calling for emergency service. The emergency service functionality had to be multiply redundant and accessible to individuals with a range of disabilities. It was able to send exact locations to the 311 call centers. It worked off of a fiber optic network, a back-up fiber optic network, with a third level of wireless redundancy. It had access to sign language interpreters for the hearing impaired. It had features that made it easier to use for the visually impaired. It was a lot of firepower and cost for a service that mobile telephone service effectively made obsolete the moment it went live; but such was the influence of the Police, Fire Department and disability rights community, as well as the comprehensiveness of the Americans With Disabilities Act. At one point we did some research and found that prior to the Link program, payphones were almost never used to report legitimate emergencies (and were used quite a bit for false alarms).
The kiosks also included two electronic ad panels, one on either side, that could broadcast changing electronic messages. The panels were a non-standard size for outdoor advertising but could be targeted to be programed down to the individual panel. So, for example, ads for Broadway shows could be sent only to kiosks in the theater district. But it quickly became clear that Intersection, the national advertising member of the consortium was looking to do the easy work of including the Link network into its national advertising sales program and wasn’t at all interested in selling the ads to local users, which was a much more labor-intensive process. The non-standard ad panel size was also probably a serious obstacle to the success of such a strategy.
The kiosks were well hardened to withstand the abuse they were likely to take on New York City sidewalks and performed remarkably well. They included a number of fans to keep their operations cool in the summer (and in my field testing, the surface of the kiosks got really hot on hot New York summer days). Of course, they also had to function in snow and ice. They had three cameras and a battery of sensors for a range of environmental factors. The design was elegant, and I regarded them as a positive addition to the city’s streetscape.
The public face of CityBridge, at least at the outset, was former Bloomberg economic development Deputy Mayor, Daniel Doctoroff, who was the CEO of a Google subsidiary called Sidewalk Labs. LinkNYC, as the program was called, was to be the signature initiative of Sidewalk Labs. Sidewalk Labs had an outdoor advertising subsidiary called Intersection, which was to be a partner in the CityBridge consortium. The members of the consortium shifted over time but included at one time or another the manufacturer of the kiosk, a private equity investor, a fiber optic infrastructure provider, a silicon chip manufacturer and an outdoor advertising company. CityBridge was to be the franchisee and was essentially a shell company. None of the consortium members were willing to provide a financial guarantee of CityBridge’s substantial obligations under the agreement – so instead the City agreed to sizeable financial security – a $25 million letter of credit (essentially a cash deposit) and $75 million performance bond (an agreement by an insurance company to complete construction of the project up to the bond amount in the event of a default by CityBridge).
In certain essential aspects, the program was a tremendous success. The kiosks provided high quality free Wi-Fi service and CityBridge was making its minimum guaranteed monthly payments. I was particularly interested in the communications capacity of the screens on the kiosks – they were capable of transmitting block by block targeted messages, either as advertisements for local businesses, or information the City wanted to communicate to local communities. Such was not to be.
Commencement of the franchise was delayed by lawsuits from the independent pay phone operators who were as mad as hornets that they weren’t awarded pieces of the franchise and that CityBridge was given a city-wide (if non-exclusive) franchise. With the end of their franchises, payphone operators weren’t too thrilled about the decimation of their businesses (which they had milked for high profits for a couple of decades). Finally, they wanted to be paid for their worthless physical payphone inventory, which they claimed had residual value. The enjoining of the implementation of the franchise was resolved relatively quickly, but the lawsuits, particularly one involving my old friends at Telebeam (with whom I hadn’t been in touch for at least ten years), went on for years more.
A key component of the agreement was that CityBridge was to remove all of the remaining payphone kiosks by the fourth year of the agreement and either replace them with a Link kiosk or restore the sidewalk.
There was one glaring exception. A guy named Allen Flax, who was something of a village character on the Upper West Side in the 100’s, in fact my very neighborhood, had an obsession with the several remaining “Superman” style payphones, ones with doors and little roofs. Flax had that special UWS ability of drawing attention to himself with the media, and to local elected officials, which regarded his ideocracies as endearing. He was a particular favorite of the local electeds because of his prodigious capacity for collecting signatures on nominating petitions, an essential, and arcane, requirement to get on the ballot in New York State. Flax is the champion signature collector for the Three Parks Independent Democratic Club. He has the ear of once Borough President and once again City Council Member Gale Brewer. CM Brewer championed the requirement in the agreement that the franchisee renovate and maintain four phone traditional booths on West End Avenue during the term of the contract. As the booths are obsolete and no longer manufactured, the franchisee had to have four new booths custom fabricated. Flax checks the dial tone on the phones in the booths on a regular basis and calls the City (me, at the time), and then the media to complain when they weren’t functioning. After a few of these calls, I got in touch with then Borough President Brewer, whom I consider a friend, to beg her to let us get rid of the booths. She made clear she thought they were charming and that they were going to stay. And there they stay, but thank goodness are now someone else’s problem.
