On April 22, 2025, City Council adopted legislation governing Fiber Optic Communications Systems and the provision of Fiber Optic Communications Services in the public rights-of-way and easements. This new legislation adopted a fee methodology that incorporated an initial Annual Minimum Fee (“AMF”) based on the number of subdivisions in the Licensee’s Use Area, which said fee would eventually transition to a license fee based on a percentage of Licensee’s gross revenues earned from the provision of Fiber Optic Communications Services, if those gross revenues exceed the AMF.  The percentage of gross revenues fee methodology is as follows:

1. Internet Service Providers (“ISP’s”) providing Internet Access Services to Subscribers – 3% of gross revenues.
2. Providers that lease, license, or contract out the use of their Facilities to third parties (“dark fiber” services) – 6% of gross revenues.

When the original legislation was developed the above-mentioned percentages were similar to those adopted by other municipalities, such as the City of Phoenix.  However, staff has been involved in discussions with multiple “dark fiber” providers to assess whether or not the higher 6% of gross revenues rate for that type of Fiber Optic Communications Service, given the current market conditions, was conducive to (1) encouraging competition in the marketplace; and (2) reducing barriers to market entry. 

As a result of these discussions and analysis, Staff has determined that lowering the fee for “dark fiber” service providers to match the 3% of gross revenues license fee assessed to ISP’s would (1) eliminate barriers to market entry; (2) entice more of these providers to do business within the City; and (3) spur market competition. Therefore, this proposed ordinance will lower the fee for “dark fiber” providers from 6% of gross revenues to 3% of gross revenues. Staff informed Council at the August 5, 2025, meeting, that they planned on bringing forth this Ordinance to lower the annual license fee for dark fiber services.  

• March 5, 2024 - Council Study Session presentation on contemplated legislation, fee ordinance and form of license for Fiber Optic Broadband Facilities.
• March 2024 through November 2024 - Staff met with other municipalities and broadband fiber providers and took feedback into consideration when drafting the legislation and form of license.
• May 2024 - FCC released its Decision No. FCC-24-52A1 wherein it classified broadband fiber internet as Telecommunications.
• July 2024 - FCC’s decision became effective.
• December 17, 2024 - Council Study Session presentation updating on the status of Broadband Fiber Optics.
• April 22, 2025 - Council adopted Ordinance No. 2025-09, the Fiber Optic Communications Systems Legislation.
• August 5, 2025 - Council adopted the related Fee Ordinance No.2025-20 which updated Fee Table 27-7 of the City Code to incorporate the new fees for Fiber Optic Communications Systems. 

Staff recommends adoption of the Ordinance amending Chapter 23 of the City Code (1992), entitled Streets, Sidewalks and Public Improvements by amending Sections 23-114, pertaining to Fiber Optic Communications Systems; License Fee.  

Adopting this Ordinance will not result in any additional costs to the City.