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THE BEST LAID PLANS FOR FREE WI-FI (Part 3 of 3)

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THE ELECTRONS HIT THE FAN.

CityBridge amended its privacy policy to enable it to collect the MAI on a unilateral basis over 4th of July weekend of 2017. A bad move both politically and legally. A cease and desist letter was sent to CityBridge by the City and CityBridge reversed itself. If the relationship between the City and CityBridge had not already been sufficiently soured, the unilateral change in the privacy policy was something of a last straw. At that point, while CityBridge was not meeting its deployment targets, it had put out LinkNYC kiosks at most of the high value Manhattan locations. They had told me that there was no increased revenue to be gained for them by putting out more kiosks. The kiosks their advertisers required had been built. 

Coincidentally, CityBridge began to argue that, notwithstanding the Second Amendment, and the assurances of viability attached to it, that without the collection of the MAI there was no way the franchise could be financially successful. Without a further change in the structure of the program, they claimed, they would go out business.  In August of 2017 they stopped building new kiosks, in part blaming delays on Con Ed’s lack of responsiveness and arbitrary imposition of hundreds of thousands of dollars in additional charges (which were at least partially caused by CityBridge’s arrogance and high-handedness in dealing with Con Ed).  Later in the year, claiming financial disaster, they stopped paying the minimum monthly guaranteed payment. The City entered into a series of monthly “forbearance agreements” saying that it would not default CityBridge while negotiations took place to resolve the outstanding issues. But CityBridge was in an excellent position. They had the kiosks in the locations they needed and had stopped spending money installing additional ones, they had stopped paying rent, and they continued to sell ads on the kiosks. What could have been better for them? 

An incidental result of this delay was the failure to remove the payphone kiosks on the timeline set out in the franchise agreement, another default under the agreement. Not only were the payphones a technology that had been superseded by mobile phones, but they were also an unsupported technology. Replacement parts were impossible to source. The copper wire system that they relied on was entirely degraded and non-functioning. As a result, all were eventually converted to battery operated wireless service. The batteries frequently went dead. There were per diem liquated damage provisions for non-deployment of kiosks and penalties for the failure to maintain the phones. DoITT had a half dozen individuals who had been inspecting the phones and writing violations against them for decades. The liquidated damage amounts built up into the high six figures and became yet an additional issue in negotiations of the default and discussions of a possible third amendment (Ultimately, the City waived the accumulated liquidated damages in the third amendment).

In 2022 there was a blizzard of publicity about the removal of the “last phone booths” with panegyrics to a lost age. This was not entirely accurate. First, because none of the stories noted that CityBridge was supposed to have removed them all six years prior and second, because there were still plenty of phone kiosks around if you just looked. This is not to mention that there were hundreds of places where phones had been pulled and the sidewalks had not been properly restored, a not insignificant ongoing failure by CityBridge. 

With respect to CityBridge’s claims of financial distress, my view was that first, in my judgement CityBridge had done a poor job in selling the ad panels – and based on my twenty years of experience with the outdoor advertising industry (beginning with the very lucrative and novel sale of panels on the Bryant Park newsstands in the late 90’s), I couldn’t understand why they weren’t doing better. There was something wrong with their sales program, in my view, probably having to do with their attempting to sell only to national accounts. Just for example, I thought that if they made a deal with Miller Beer to blanket Manhattan with ads from four to six PM on weekdays that might say “It’s Miller Time” on the ad panels, it would be easy to determine how many additional six packs of beers were moved as a result of the campaign, and put a value on that (although this is a bad example because ads for alcohol were prohibited from the program).  But they weren’t doing anything creative like this (that were the signature of TDI, the out-of-home advertising firm which had the subway system franchise for many years – for example the wrapping of entire subway cars for single advertisers). 

Second, it wasn’t the City’s business to get involved int CityBridge/Intersection/Sidewalk Labs bottom line or their cost structure. The City and CityBridge had a franchise agreement that was hard negotiated over, and approved by the Law Department, OMB and the FCRC through a highly public and formal process. The franchise agreement had a complete panoply of potentially effective remedies in the event of default, including the $100 million in security. The City had the capacity to strictly enforce the provisions of the agreement; including, exercising the City’s rights to the $100 million dollars in security to pay outstanding franchise fees and build the required number of kiosks. It was our job under the City Charter to enforce the contract. We didn’t have the right to change terms and to do so wasn’t good public policy. In addition, the failed bidders for the original franchise, as well as the holder of the City’s other outdoor advertising franchise for bus shelters and newsstands (a competitor to the Link program, which also claimed to be losing money under its deal), would have a legal right to complain about any such changes. 

Finally, based on my thirty years of business experience, with particular involvement with out of home advertising and street furniture (which is why they recruited me for the job in the first place), I was sure that CityBridge, Intersection and Google were bluffing. They wanted to get a better deal, and because of the extensive knowledge within Sidewalk Labs of how the City operated, they knew that the City tended not to enforce the terms of its contracts, to fold in negotiations, and to lose in litigation. I argued internally that once the City exercised its right to cash the letter of credit (which involved faxing a letter to the bank issuing the letter), CityBridge would move quickly to pay its arrears and remedy its deployment breaches. The franchise was just too valuable to lose and consortium members would sacrifice a great deal of money in the event of a termination. I also came to understand that the letter of credit was personally guaranteed to the bank issuing it by the principal of the venture capital investor member of the consortium. He would have moved heaven and earth not to have the LC, which was essentially a cash deposit, drawn on. We transmit the fax, the City gets the money, the bank sucks the money out of the VC investor’s account. End of story. The unsigned letter drawing on the $25 million LC sat on the top of my desk for months, with CityBridge at one point in default to the City in an amount that was twice that. 

Another interesting aspect of the capital structure of CityBridge was that they had a line of credit with a bank, and a more than $150 million in a loan from what are called EB-5 investors. The EB-5 investors were a group of foreign nationals, recruited by local financial brokers, who were promised by the Federal government green cards in exchange for significant investments in US projects in distressed communities. If the City called a default under the franchise agreement, that would have also caused a default under the terms of the bank and the EB-5 loans. The EB-5 investors would lose their right to green cards. The bank lenders would likely lose their jobs (or at least their annual bonuses). Both groups would also be highly motivated to take over CityBridge (as they were entitled to do under the terms of the franchise agreement) and cure any default.

[It’s worth noting that there came a time when I enquired at the City’s Law Department about who was the City’s letter of credit law expert. I got a call back from someone senior at the Law Department asking me how much prior experience I had with letters of credit. I explained that I had routinely dealt with them in my law practice and real estate finance transactions, but that I was by no means an expert in this highly technical area of the law. The person on the phone said to me “Good, you are now the City’s LC expert.”]

But no one was interested in my opinion. It is interesting to note that between me and the Mayor, who was the ultimate decision maker on the issue, were at least four layers of bureaucracy – my boss the General Counsel of DoITT, the DoITT Commissioner, the Deputy Mayor for Operations, the First Deputy Mayor and the Mayor’s Chief of Staff. There is an argument to be made that given the relative lack of importance of the Link program in the grand scheme of city things, the issue shouldn’t even have risen to the Mayor’s level. But anything that had the potential for a bad story in the newspapers, was deemed worthy of Mayoral attention. Any information I was sending up the pike, was going through several layers of edits before it got to Mayor De Blasio. My staff and I, who had the firsthand sense of what was happening with the LinkNYC program, never met with anyone more senior than the General Counsel of DoITT to discuss strategy or our evaluation of the various probabilities of possible outcomes.

This is not to dismiss City Hall’s desire to negotiate with CityBridge out of hand. The Administration did not want to get involved in “protracted litigation with CityBridge” and most particularly did not want to take the risk of CityBridge’s shutting down this high-profile system. By coming to some kind of agreement with CityBridge City Hall could be certain that neither outcome would eventuate. This was their reasoning. The senior officials at Sidewalk Labs, who were now publicly saying that they had very little to do with the Link program, and were knowledgeable former senior city office holders, were lobbying City Hall hard to come to an accommodation. [This would be an appropriate place for me to point out that no one has ever elected me to anything, that no one would ever elect me to even the lowest elected office one might care to suggest, and that in an unlikely and bizarre set of circumstances were I to be elected to anything, it would be an impossibility that I might be reelected.] 

At the same time, the Franchise Administration Unit at DoITT was being audited by both the City and State Comptroller on the LinkNYC franchise. The City Comptroller was auditing the operation of the kiosks (which by any reasonable measure was excellent). The State Comptroller was auditing DoITT’s compliance management with the franchise agreement. The City Comptroller’s methodology was unsound. The State Comptroller’s staff were Javert like in their pursuit of what they thought was perfidy – particularly with respect to the alleged (mis)-calculation of a very small amount of owed franchise fees (about which they were incorrect). Neither, though, blew the whistle on CityBridge’s failure to make good on its financial or deployment obligations and the City’s failure to exercise its extensive set of rights in the event of defaults under the franchise agreement while they were performing their audits. The State audit went on for months and continued through the COVID pandemic via teleconference. Their not calling out the City’s failure to exercise its contractual remedies and more importantly, CityBridge’s material defaults, seemed to me evidence of the lack of efficacy of Comptroller audits. 

After almost two years (much of it during the pandemic) of negotiations, the City proposed a third amendment to the franchise agreement essentially releasing CityBridge from about $200 million of its minimum annual guaranteed payments, waiving the accrued liquated damages, lowering the minimum number of kiosks from 7,500 to 4,000, and most importantly essentially transforming the franchise from one focused on providing fee Wi-Fi service in public spaces, to one empowering CityBridge and a new partner, ZenFi, to turn the kiosks into 30 foot high hosts for multiple mobile telecommunications small cell transmitters. The City got no increased value from the contract in return. 

Another, better, kiosk solution. Look on the right.

During the pandemic, the Partnership for New York City, lobbied the De Blasio administration hard that New York City was falling behind in the deployment of 5G transmitters, something I discussed at length here: https://www.theplacemaster.com/2022/08/18/online-porn-gambling-and-5g/. The Administration put on a full court press to attempt to accelerate the deployment of small cells on light poles around the city, to remove obstacles to building macro transmitters on building roofs (created by Buildings Department and Fire Department safety regulations) and to convert the CityBridge Wi-Fi kiosks to mobile telecom transmitter stations. The amendment to the CityBridge franchise agreement to convert it to a mobile telecommunications station, and the approval for a design for a new Link kiosk design which could host the small cells of multiple companies became a high priority, rush project.

While at all times as a city employee I tried to be a loyal soldier, advancing the Administration’s goals and priorities to the best of my abilities, I regarded then and continue to regard the third amendment to the franchise agreement as a bad deal for the city, with particular respect to its financial terms, which was essentially a gift to a private entity of hundreds of millions of dollars to which it was contractually obligated. That being said, after lots of questions being asked and objections raised by the City’s Office of Management and Budget and the Law Department, both signed off on the substance and form of the amendment. The amendment then, as required, went to the Franchise and Concession Review Board for approval – which it duly received. Only the Staten Island Borough President identified the problems with the deal and voted against it at the FCRC. The New York City Comptroller and the four other Borough President, having been fully briefed and informed, all voted in favor of handing over hundreds of millions of dollars to CityBridge essentially because they claimed they were bad at their business. To give credit where it is due, the free public Wi-Fi system has continued to operate without interruption. After the approval of the amendment, CityBridge paid a portion of its arrears (as of March 2021) and resumed paying (reduced) minimum guaranteed monthly payments. 

The best telecommunications infrastructure solution.

Similarly, while raising a number of concerns, the New York City Public Design Commission approved the design of the ZenFi kiosk, which is industrial looking, utilitarian and unimaginative. Not at all the signature purpose built multi-use telecommunications street furniture about which I have previously written. But to reiterate – every aspect of this transformed telecommunications franchise has been properly approved by the requisite authorities. There is nothing illegal or untoward here – just, in my view, a bad policy outcome leaving the City hundreds of millions of dollars poorer, with a badly designed poorly located 32 foot high tower, that fails to address the needs of an equitable 21sttelecommunications system. I was recently told that CityBridge has missed the revised deployment targets of the third amendment. But, as I say, no one ever elected me to anything. 

THE BEST LAID PLANS FOR FREE WI-FI (Part 2 of 3)

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WI-FI FOR THE PEOPLE

Deployment of the kiosks wasn’t as straightforward as either the City or CityBridge had assumed. First, as it turned out the energy service and conduit for fiber optic cable to the payphone sites turned out to be degraded and entirely useless for purposes of the LinkNYC kiosks.  As a result, CityBridge would have to do more trenching than it anticipated and Con Ed would need to be called upon to provide electrical service to all of the Link sites. That became a pinch point in the speed of deployment because Con Ed had a lot of demands on the staff that provided new service to business sties (requiring street openings), and because of the swiftly developed bad blood between CityBridge and Con Ed staff, CityBridge requests for service went straight to the bottom of the request pile. 

Con Ed then decided that CityBridge needed to pay its maximize charge for delivery of service because the LinkNYC kiosks were “permanent” (like buildings), and that each kiosks would have to be individually metered and billed (unlike street lights). This was a large unanticipated additional cost to CityBridge, which it challenged unsuccessfully at the State Public Service Commission (a decision incorrect on the legal merits, in my judgement).

Siting the kiosks also turned out to be more complicated than anyone expected – because the kiosks were larger and differently shaped from phone kiosks they couldn’t just be replaced one-for-one. Also, site conditions had changed from the time the phone kiosks were installed, and by the time CityBridge surveyed sites for Link kiosks. Plans for each site had to be review by DoITT staff, and then inspected by DoITT inspectors (who were retrained from having been payphone inspectors for decades) for compliance with various siting criteria – particularly clearances from other street furniture. Pre-COVID outdoor cafes proved to be a significant obstacle to Link kiosk siting. CityBridge never made the deployment targets (each Borough had its own targeted minimum number of kiosks to be deployed each year) required by its franchise agreement. 

Most of the publicity about the Link program during its yearly years arose out of concerns that they were a magnet for the homeless. There was widespread publicity that homeless individuals were watching porn on the internet tablets built into the kiosks. The charging ports were also seen as drawing folks looking to recharge their phones (although the question of how it was that apparently destitute people had handheld devices and monthly phone service plans was never raised or explained). In a number of places in midtown Manhattan, homeless people did congregate around the kiosks, it seemed to me for reasons unrelated to their functionality that I couldn’t figure out (we also found people sleeping under derelict telephone kiosks that had no functionality). For a while, we were reasonably successful in working with the outreach teams under contract to the City’s Department of Homeless Services to get services to people congregating around the kiosks. But, fundamentally, the situation wasn’t a problem generated by the LinkNYC program, but by the Administration’s failed multi-billion dollar strategy for dealing with street homelessness (but that is the subject for another long blog). The basic fact was that the LinkNYC kiosks did not cause homelessness.

I spent a fair amount of my time when working for DoITT trying to understand who was using the Wi-Fi and the other features of the kiosks and how they were using them. CityBridge provided data on usage (which is available on the City’s open data portal) which I reviewed monthly. I also tried to spend a couple days a month wandering around city neighborhoods, checking on their functionality (as did our terrific team of six inspectors), and observing, a al my guru, William H. Whyte, how people were using them in real time. I made sure my site visits were in neighborhoods far from the city’s center and were ones I hadn’t been to before. 

The system was highly utilized – with millions of users and millions of terabytes of annual downloads. I concluded that the bulk of the use in Manhattan was by tourists and other visitors. Most New Yorkers have data service. That’s not to say that making the service available to that user group isn’t of value – but it wasn’t exactly advancing the goal of closing the supposed digital divide. What was interesting was how the kiosks were being used outside Manhattan. They were becoming a kind of social center. I saw people setting up chairs near them, using the Wi-Fi or charging their phones. Businesses put out tables and chairs in front of their storefronts for Wi-Fi users. I observed people using the telephone functionality – making very long calls, much to my surprise. The data showed that the top websites accessed and phone numbers called had to do with contacting social services – finding out about missing SNAP and other transfer payments. Clearly, the Link kiosks were becoming an important resource in otherwise underserved communities and had a great deal of value there. They were enlivening the sidewalks in commercial corridors in Brooklyn and The Bronx. This is something that should continue to be a focus of the Link program.

At one point I recommended, following the Holly Whyte formula, that we work to place movable chairs and tables near the kiosks, since many of the complaints about their use were about people sitting near them on the ground. My thinking was that this would “normalize” this use and support the vitality of commercial corridors around the city. This suggestion was not well received, despite the near universal acknowledgement among urbanists of the utility of movable chairs to animate public space, as evidenced by their success in Bryant Park.  

MORE PROBLEMS ARISE

In 2017, CityBidge began to complain that it wasn’t making its advertising sales targets, in part because of deployment delays and in part because ad sales weren’t living up to expectations. As a result, the franchise agreement was being amended when I arrived at DoITT around that time, to provide a slower roll out of kiosk deployment and a deferment of payment of a portion of guaranteed minimum payments. A forensic audit of the financial records of CityBridge was performed for the City by a highly respected CPA firm to determine its financial condition. All were assured that the terms of the second amendment would solve CityBridge’s financial problems, based in part on representations made by CityBridge and Sidewalk Labs staff, and in part on the audit results. 

Immediately after the approval of the amendment to the franchise agreement (by City Hall, the Office of Management and Budget and the City’s Franchise and Concession Review Board, made up of representatives of the Administration, the Comptroller and the Borough Presidents. The FCRC is an interesting vestige of the City’s powerful Board of Estimate, made up of the Mayor and Borough Presidents and which once controlled the City’s zoning and franchising functions until it was found to be unconstitutional on the basis of being undemocratic – given that each Borough President had an equal vote), CityBridge requested of the City permission to amend its privacy policy to be able to collect the Mobile Advertising Identifier generated by peoples’ mobile phones and use it in order to increase the value of its ad panels (and by the way, you can turn off the generation of an MAI by an iPhone by going into its privacy settings). 

There was some degree of bad faith in this request, since the claim of CityBridge was that the ability to collect the MAI was essential to the economic successful of the franchise – a success that was supposedly assured by the adoption of the Second Amendment to the Franchise Agreement (the first amendment involved approval of a change in the members of the consortium making up CityBridge). The request caused tremendous ructions within the De Blasio administration which had privacy hard-liners in charge of its electronic privacy policy. The Administration had also gone through a laborious process of gaining the approval of the electronic privacy advocacy groups, like the New York Civil Liberties Union (also ardent privacy hawks) to not oppose the LinkNYC program. The reality of the privacy protections built into the franchise was that the Wi-Fi use of the LinkNYC signal was more secure and had higher standards of privacy than that provided by the any of the cable companies’ internet service to homes. The Link program collected the email addresses of the users in order for them to sign up for using the program, and nothing else about the users. Those email addresses were prohibited to be used for any other purpose or to be shared with any third party. The privacy protections were, as far as I could determine, rock solid. 

Much was made of the potential for privacy invasions from the kiosks. They had three cameras. One was for use with embedded tablet for telephonic and emergency communications, and two on either side of the kiosks were for the monitoring and prevention of vandalism of the kiosks. To the best of my knowledge those side cameras were used only occasionally, and the videos generated were kept for a maximum of seven days and then erased. The kiosks also had a range of sensors that, to my best knowledge, were never used. These sensors had the capacity to collect pedestrian traffic, vehicle traffic, weather and seismological data – all which might have been of great value to the city and none of which were ever used. My understanding was that since the data was found by Sidewalk Labs to have little economic value (nobody wanted to pay for it), the sensors were never turned on. There was nothing the slightest bit “big brotherish” about City use of LinkNYC as far as I could tell, and I would have known.

I am actually something of a privacy dove. The MAI had the potential for huge value for both CityBridge and the City. It was anonymized, so it had a very limited impact on user privacy, but it upped the efficacy of the value of the ad panels. Most interesting to me was that the MAI could enable the Link system to relate the passing of an ad by a pedestrian to a sale to that person minutes later through their mobile phone. Let’s say an ad for Brooks Brothers was shown on a panel and an individual walked by it. If within a short period of time that individual went into a Brooks store a purchased a shirt, the Link system could get a commission on the sale. This was the kind of effectiveness/outcome metric that is so difficult to determine in the out of home advertising market – and would have provided the system with a huge competitive advantage. It would also have allowed Intersection to precisely determine how many viewers each ad panel had, something of great interest to advertisers, and would enable a more precise value to be placed on each ad. 

Finally, much of the internet advertising sales world is driven by algorisms and a complex computerized marketplace by which ads are sold through instantaneous electronic auctions. Billboards, obviously, unlike internet banner ads, can’t participate in that electronic pricing system and as a result, are limited in their value. Tapping into the MAIs captured by the Link system would enable those ads to be sold through the electronic auction marketplace. The system would know how many people were seeing an ad at a particular location at a particular time and could auction off an ad at that time and place. Without the MAI data, the Link ads were not able to easily participate in this process (although I did argue internally that using data available from smartphones collected by Google without the MAI, such sales were possible, without success). 

The City’s Chief Privacy Officer and the DoITT General Counsel were adamant. No way was CityBridge was going to be able to amend its privacy policy to collect the MAI under this administration. This was communicated to CityBridge quite clearly in June of 2017.

THE BEST LAID PLANS FOR FREE WI-FI (Part 1 of 3)

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[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.  

The improved design

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 kiosk

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.