Editor’s note: The parent company of the Journal-World, The World Company, owns Sunflower Broadband, which is a competitor with Community Wireless Communications and Lawrence Freenet.

City commissioners Tuesday cleared the way for a new cable television provider to begin operating in Lawrence after the company voluntarily agreed to pay the city an increased fee for use of its rights-of-way.

Commissioners unanimously approved an agreement with Lawrence-based Community Wireless Communications that would allow the company to begin providing video television services to Lawrence residents through a planned network of fiber-optic cable buried in city rights-of-way.

The deal could allow Community Wireless to begin offering cable television services in the next 24 to 36 months, depending upon future funding for the multi-million-dollar project, company leader Joshua Montgomery has said.

The new agreement comes one week after concerns were raised by officials with competitor Sunflower Broadband and Mayor Rob Chestnut over whether Community Wireless and its nonprofit partner Lawrence Freenet were adequately compensating the city for use of rights-of-way and various city water towers, traffic lights and City Hall that currently house equipment that allows Community Wireless and Freenet to provide wireless Internet service in parts of the city.

5 percent fee

But late Tuesday afternoon Community Wireless offered to pay the city 5 percent of its broadband revenue to compensate the city for use of its rights-of-way, water towers and various other pieces of infrastructure that it proposes to use to provide service.

Montgomery said the company decided to make the offer largely in response to concerns expressed by officials with Sunflower Broadband’s parent company, who Montgomery believes unfairly accused his company of trying to shortchange the city.

“It is our goal to provide a community service, and when The World Company misrepresents our community service as some kind of shell game, it does a disservice to our low-income families, a disservice to our paid members, and I think a disservice to the community,” Montgomery said.

Montgomery said the 5 percent fee — which initially will produce about $20,000 per year but could grow to more than $100,000 annually, he said — clarifies that the company “pays its own way and provides a valuable service.”

Rod Kutemeier, general manager for Sunflower Broadband, told commissioners he believed the new proposal represented an “above-board approach” to adequately compensating the city for rights-of-way and infrastructure.

“This satisfies me that they’re paying for their right-of-way, with the concern that if this somehow is ruled illegal or they are unable to do this under the federal laws, what happens then?” Kutemeier said.

Questions of whether the payment to the city is legal have arisen because federal law makes it illegal for cities to require companies to pay a franchise fee to provide Internet service in a community. It is unclear, however, whether an Internet provider can voluntarily pay the city a fee.

Cities can charge companies a fee for using rights-of-way to provide cable television service in a community. The city already has asked Community Wireless to pay 5 percent of its revenue from video television revenues. Montgomery said Community Wireless will pay that fee in addition to the voluntary 5 percent fee on its Internet revenues.

Sunflower Broadband pays a 5 percent fee to the city on its video television revenues, but the company does not pay a 5 percent fee on its Internet or broadband revenues. Kutemeier, however, said Sunflower customers ultimately pay a fee to compensate the city for the use of its rights-of-way. Kutemeier said that 94 percent of Sunflower’s customers receive cable television service, which has the 5 percent fee attached to its rates. The remaining customers pay a $10-per-month cable transfer fee. Five percent of that $10 monthly charge is turned over to the city as a way to compensate for right-of way usage, Kutemeier said.

Sunflower had expressed concerns that Community Wireless would not adequately be paying the city for its rights-of-way if it only were required to pay 5 percent of its video services revenues. Kutemeier contends that Community Wireless’ proposed fiber optic network will be used to generate substantially more Internet revenue than video revenue.

Commissioners said they were pleased that the various parties were able to reach a new agreement.

“I think this will end up being a step forward for all of us,” said City Commissioner Mike Dever.