On July 25, 2000, despite active opposition by the California Payphone Association, Pacific Bell, and other Payphone Service Pro-viders (PSPs), the City of Oakland adopted an ordinance purporting to regulate the installation and maintenance of payphones in most outdoor locations in the City. The ordinance addressed the regulation of payphones in three basic ways:
- it imposed a complex and burdensome permitting requirement for maintaining or installing an outdoor payphone on private property;
- it required a space use agreement with the City for installing and maintaining a payphone on public rights of way and imposed strict rules against encroachments on such rights of way; and
- it outright prohibited payphones in certain specified locations, especially at most locations where alcoholic beverages are sold.
Early in November, 2000, PSPs with Oakland payphones received letters from the City stating that all pay telephone providers with outdoor phones at non-exempt locations in Oakland must apply for a pay telephone permit. Along with the letter came an application form requiring submission of architectural quality site drawings and color photographs of each phone location, notice to neighboring property owners and other specified persons and organizations, a certified list of all addresses for property owners within 300 feet of the site certified by a title company or similar firm, pre-printed mailing labels, and payment of the initial permit fee of $265.00 per phone.
A group of PSPs, some with payphones in Oakland and others just concerned about the precedential impact of the Oakland ordinance, joined together late in November to initiate work on a lawsuit challenging the ordinance as drafted and as being applied. When ready to file suit in mid-December, counsel for these PSPs contacted the Oakland City Attorney, and explained the basis for the intended suit – primarily that the onerous permit fee and procedures amounted to a taking of property and a denial of equal protection in violation of PSPs’ constitutional rights and further conflicted with and were preempted by provisions of the Federal Telecommunications Act of 1996. The City responded by suspending enforcement of the permit requirements of the new ordinance, promising to consider revisions to the ordinance and to provide the PSPs at least 30 days notice before undertaking to enforce the permit requirements at a later date.
In the course of the present year, the City went ahead with enforcement of the ordinance as applied to payphones in or encroaching on public rights of way. In some cases, payphones were removed without notice and/or without justification, but the City admitted error in several such cases and invited applications for reparations. Meanwhile, the City withheld enforcement of the ordinance's permit requirements.
Early in July, the City circulated a set of proposed amendments to the payphone permitting ordinance and a draft resolution appropriating funds for its enforcement. The amendments provided for a limited grandfathering of "existing" payphones, permitting such payphones to remain in operation at otherwise prohibited locations such as liquor stores and simplifying the permit application process for "existing" phones – especially by eliminating the requirements that property owners co-sign all permit applications, that public notice be given to all owners of property within 300 feet of the location and that public hearings be held on all such applications. Under the proposed amendments, the $265.00 permit application fee still would apply for each "existing" payphone, and a permit could be denied even for an "existing" phone if there were any complaints on file about the phone or its location. In addition, the burdensome rules the ordinance applies to permitted payphones would still apply to "existing" phones, and could result in revocation of permits and loss of "grandfathered" status. "Grandfathered" status might also be lost by replacement or relocation of an "existing" payphone, even if necessary to maintain compliance with other City requirements.
While these changes promised to alleviate some major concerns about the ordinance, there were still serious problems. PSPs complained to the City that the cost of applying for the permit remained excessive and confiscatory, that PSPs would be at risk that any changes to their "existing" payphones would cause them to lose their "grandfathered" status, and that the ordinance continued to present essentially insurmountable barriers to the placement of any new payphones in Oakland, except in locations exempt from the ordinance's purview. They also noted that retaining the $265.00 application fee despite the simplified procedure for "existing" payphones meant that the fee would overrecover the cost of program administration, and so would be unlawful.
The City Council heard the PSPs' concerns about the proposed changes in the ordinance, but proceeded to enact the amendments into law in late July, 2001. Implementing the amended permit requirements remains suspended, while the City Attorney's office evaluates the PSPs' claims that federal law preempts the sorts of barriers to provision of telecommunications services that the ordinance still creates, even with the recent amendments. As of this writing, counsel for the PSPs are updating the pleadings originally prepared in December of last year, with plans to file suit in federal court, seeking injunctive relief against enforcement of the permit requirements on Constitutional and statutory grounds.
The Oakland ordinance has presented a major challenge to PSPs. For over two years, they have had to evaluate developments at City agencies and at the City Council, to formulate and present objections and alternatives, and to try to garner support for more moderate solutions to the City's concerns. Their effort has produced results. After all this time, the City has removed only a handful of phones, acknowledging in several cases that they did so in error. The permit requirements still have not been implemented, and PSPs have been able to continue business as usual in the interim. Some of the most burdensome and impractical aspects of the mandated permitting procedures have been eliminated. It would not take many more changes to make the ordinance tolerable for Oakland's PSPs.
All in all, the results to date demonstrate that the payphone industry can protect its interests effectively by mounting prompt and determined resistance to burdensome local regulations. These issues sometimes require a long-term commitment, and that certainly has been the case in Oakland. Clearly, though, the effort has been worthwhile. Oakland's PSPs – with support from other PSPs throughout California – have defended their right to provide an essential public service, and have proven themselves willing to continue defending that right until they achieve success.