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Back in Opelika, Alabama, with Mayor Gary Fuller - Community Broadband Bit Podcast 389
When Mayor Gary Fuller of Opelika, Alabama, was on the podcast back in 2013, the community was building their municipal Fiber-to-the-Home network. He's back this week to talk about all the events that have occurred in his community since then; Opelika has been a whirlwind of activity which has centered around the battle to expand their network, OPS One. Mayor Fuller is joined in the wings by Derek Lee, Director of Opelika Power Services, and Joey Motley, City Administrator, who are on hand to help him with some of the details.
Mayor Fuller and Christopher discuss the reasons why the community wanted to invest in a municipal fiber optic network. In addition to improving their electric utility service with smart grid applications, the community needed an option for better Internet access. Rates from the incumbent were high, services were poor, and folks had had enough. Once the network spanned the entire city, neighboring communities wanted OPS One, but state law prevented expansion.
Christopher and the Mayor talk about the legislative battle to expand the network that went on for several years and how Opelika finally realized that the big telecom and cable companies and their lobbyists were just too powerful to beat at the State Capitol. They talk about how, even though Opelika chose to privatize the network, the community feels better off today than they would have otherwise and would do it all again.
This show is 27 minutes long and can be played on this page or via Apple Podcasts or the tool of your choice using this feed.
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Opelika Opts to Privatize
Once again, restrictive state laws designed to help big ISPs maintain their monopolies have helped push a publicly owned network to privatization. Opelika, Alabama, recently announced that they will sell their OPS One fiber optic network to Point Broadband, headquartered in West Point, Georgia. They expect the deal to be finalized in early November.
The Road to Now
The city of Opelika installed the network to overcome poor services from Charter and to improve municipal electric services with smart grid applications. In 2010, Charter’s astroturf campaign to stop the network failed when local voters supported the ballot initiative to build the broadband infrastructure to allow the city to provide services. By 2014, Opelika Power Services (OPS) was making Fiber-to-the-Home (FTTH) available for residents and businesses; folks in the community were loving the service from Alabama’s “Gig City.”
Nearby communities still stuck with poor Internet access wanted OPS to serve them also and OPS wanted to add more subscribers, but state law prevents Opelika from expanding beyond their current coverage area. As in the case of Bristol, Virginia, when a state prevents a municipal network from growing and increasing revenue, the state makes it difficult for the network to remain sustainable.
Mayor Gary Fuller recently told WLTZ:
“We attempted on three occasions to get the legislature to [allow us to] expand beyond our city limits, into North Auburn and rural Lee County, Beauregard, and we could never do that because we couldn’t get the law changed.”
Burlingtonians Scrutinize Schurz Sale
Last week, Burlington’s City Council finally chose a buyer for Burlington Telecom (BT), their municipal network that began serving residents and businesses in the early 2000s. City Councilors and representatives from Schurz Communications and ZRF Partners hashed out the details of an agreement at the eleventh hour. The Letter of Intent (LOI) was released on December 6th; the public can now analyze the deal their elected officials chose for them.
On December 1st, editors at the Burlington Free Press published a piece highly critical of the process that occurred in the late night and early morning hours of November 27th and 28th. They wrote:
Burlington residents have every right to wonder what happened to the promise of an open and public process for picking a buyer for Burlington Telecom.
Many city residents woke up Wednesday morning to find that their elected representatives had chosen Schurz Communications as their preferred buyer for Burlington Telecom based on a bid significantly revised just hours before the vote.
Editors went on to state that the City Council had “negated the months-long public process for the sale” of BT by allowing Schurz and ZRF to alter their bid and accepting it without giving the community time to review it or weigh in. After so much time and effort invested in a process that was intended to be transparent and include the entire community, Burlington leaders seem to have dropped the ball at the five-yard line.
The Letter Of Intent
The Burlington Chronicles: Catching Up In Vermont
The people of Burlington have proven beyond a doubt that they believe in publicly owned Internet networks. They’ve fought harder than any other community we’ve seen to maintain a voice in the future of their much loved publicly owned fiber optic network, Burlington Telecom (BT). Now after months of ruminating, debating, and examining their options, the future of BT is still uncertain.
The Back Story
We’ve covered BT extensively and dived into both the numerous benefits the community has enjoyed as well as the problems caused by former Mayor Bob Kiss and his administration. Bad choices and a lack of transparency snowballed, leaving the city to contend with sizable debt. Through all the difficulties, residential and business subscribers have consistently praised their hometown publicly owned network and expressed an appreciation for accountability, good service, and BT’s local ownership.
In order to fend off a lawsuit from Citibank, the city of Burlington had to agree to find a buyer for the network. To maximize the funds the city will receive from the transaction, a sale needs to be finalized by early January.
On November 6th, the City Council was scheduled to vote on which entity would be allowed to purchase the network, but that would have been a dull ending to a story filled with drama and, as the fates would have it, that isn’t what happened. At all.
The Kiss Of Debt
The Kiss administration’s choice to hide cost overruns from the public and the City Council led to a $33 million obligation to CitiBank. In 2014, the two reached a settlement after CitiBank decided to sue in 2011 and the parties had haggled in court for three years. As part of the settlement, the community committed to selling BT. In order to obtain the largest share possible of the proceeds from the sale - 50 percent - Burlington must reach an agreement with a buyer by January 2nd, 2018. The longer it takes to find a buyer, the less of the net proceeds the city will retain.
Sun Prairie To TDS Sale; Details Matter
Earlier this spring, Sun Prairie Utilities (SPU) and TDS Telecommunications Corp. signed a letter of intent to transfer ownership of the community’s Fiber-to-the-Home (FTTH) network to TDS. After weighing the pros and cons, the City Council approved the deal by a 4 - 2 vote at an April 11th meeting.
Conversation and Reservations
TDS will pay $2.88 million for the fiber-optic network. The asset has been valued at $2.7 - $2.8 million and the city owes $2.85 million on the network.
The company has agreed to expand the network over the next 30 months and will use customer demand to determine where to deploy new investment. If they don’t begin expansion within 30 months, TDS will pay a $25 per unit penalty to the city.
At least one Alderman felt the penalty was too lenient. “I want this contract to have real consequences if the buildout doesn’t happen like they say it will,” said Mike Jacobs at the April 11th meeting. Jacobs expressed his desire to allow SPU to continue efforts to develop the network, arguing that high-speed Internet access is an essential service like police, fire, and other services the city typically provides. He argued such an asset should not be sold to a company that needs to make profits.
Alder Maureen Crombie also wanted to hold off on approving the transaction. She stated that the Council should wait three weeks to hear residents concerns but other council members disagreed.
Incumbent Charter Communications also opposed the sale, stating that they face unfair competition now because the city will be helping TDS market the FTTH service. Alders responded to Charter’s government affairs manager by reminding him that Sun Prairie had approached the company asking for upgrades but were ignored. They also said that, had Charter offered to purchase the system, Sun Prairie officials would have considered their offer.
BVU OptiNet Update: Deal Coming Together
A little over a year ago, we first shared the news about Bristol’s decision to privatize its FTTH network, OptiNet. Virginia based Sunset Digital Communications offered to purchase the network for $50 million. The network has saved Bristol millions of dollars, stimulated economic development, and cut telecommunications costs for local residents and businesses. Nevertheless, after several corrupt officials drove the network into a dark period of scandal, all those advancements paled and Bristol was ready to sell the network.
After months of negotiations with BVU’s partner in the Cumberland Plateau area service area, the details for the sale are coming together.
When There's A Partner
One of the last steps to completing the sale required approval from the Cumberland Plateau Company (CPC), which operates as a partner with BVU to bring connectivity to four additional counties in Virginia. As a partner with OptiNet in those areas, CPC owns approximately 50 percent of the assets.
When Sunset Digital offered $50 million for the BVU assets, CPC obtained the right of first refusal for the assets in the four counties where BVU and CPC work together as partners according to their contract.
Back in the fall of 2016, CPC was concerned about the legality and the details of the proposed transaction; they decided to wait for federal and state review before granting approval. Because the NTIA, the Economic Development Administration (EDA), and the Virginia Tobacco Commission provided grant funding to the CPC region for the deployment, the agencies needed to review and approve the proposal. The agencies approved the sale, but required that a large amount of BVU debt be paid. One of the claims that they required be paid was a claim for $8 million from CPC.
Approving The Offer
As part of the offer, Sunset promises to invest $6.5 million to connect more homes and businesses in the CPC region. They estimate CPC will gain about $21 million in revenue over 13 years while Sunset operates the network. CPC will retain ownership of its assets in the CPC service area and Sunset will transfer ownership of equipment in the CPC area to CPC.
SPU FTTH To Join TDS
In Wisconsin, Sun Prairie Utilities (SPU) and TDS Telecommunications Corp. have signed a letter of intent (LOI) for the sale of the city’s municipal network to the Chicago-based telecommunications company. The parties plan on having a final deal hashed out and concluded by the end of March.
TDS Plans For Growth
According to Sun Prairie Mayor Paul Esser, approximately 700 homes are connected to the SPU network, leaving 12,000 households left to be hooked up. TDS has expressed a desire to accelerate the Fiber-to-the-Home (FTTH) expansion, in keeping with its recent growth strategy.
“We plan to expand the network to launch 1 Gigabit broadband speeds, as well as phone service, and our industry leading IPTV solution, TDS TV, to residents,” [Drew Petersen, vice president of external affairs and communications at TDS] said. “For businesses, we would look at providing dedicated fiber connections and our hosted VoIP phone solution, TDS managed IP Hosted.”
TDS has also recently acquired Interlinx Communications and its subsidiary Tonaquint Networks in southern Utah.
Sun Prairie Residents, Businesses Not Happy With Incumbents
About a year ago, we learned that an FTTH pilot project had experienced incredibly high demand: 54 percent of households in the pilot area requested the service. It was a good problem to have, but perhaps the community's leaders got cold feet. The demand for high-quality Internet access is strong in Sun Prairie where residents are fed up with poor service from Charter and Frontier. Enter TDS.
What The Future Holds
Will TDS be able to do a better job? Will TDS maintain the assets or sell out to some other behemoth like Comcast? Time will tell. Whether or not TDS will encourage the current providers to improve services or just offer another poor option to the people of Sun Prairie remains to be seen.
BT Advisory Board Preps For Sale, Local Co-op Is Ready
Last spring, the BT Advisory Board (BTAB) released a report that recommended the city of Burlington, Vermont, try to find a buyer with local ties to purchase its network with the troubled past. As the deadline draws near and the city seeks out the right entity to take the reigns, the community holds on to that goal. Keep BT Local!, the local organization that has been working since 2012 to turn the network into a cooperative, has announced that it will make an offer on the network.
Alan Matson, vice chair of Keep BT Local, said the local co-op will put forward an offer for the utility. The member-funded effort likely won’t put forward as substantial an offer as a private tech company would, Matson acknowledged. Still, he said, “We hope to be one of the finalists in July.”
Matt Cropp, a member of Keep BT Local, said the co-op model would “build broad-based community wealth” and urged Burlingtonians to pitch in. He said he was willing to commit a portion of his retirement savings to the cause.
Matson and Cropp were among a group of citizens who attended a public meeting with Advisory Board members to discuss options and offer advice on choosing a buyer. As expected, many of the attendees described the network as a valuable public asset and expressed concern that it not fall into the hands of a large, absentee telecommunications conglomerate such as Comcast.
Discussing (Ranting) Consolidation - Community Broadband Bits Episode 209
Read the transcript from this show here.
We want your feedback and suggestions for the show-please e-mail us or leave a comment below.
This show is 18 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.
You can download this mp3 file directly from here. Listen to other episodes here or view all episodes in our index.
Thanks to Fifes and Drums of the Old Barracks for the music, licensed using Creative Commons. The song is "Cork Hornpipe."
BT Advisory Board and Community Agree: Local Is Best
As Burlington, Vermont, searches for a buyer for Burlington Telecom, the local residents and business owners continue to remain engaged in the future of their beloved Fiber-to-the-Home (FTTH) network. Most recently, they made it clear that their first priority is finding a local company to own and operate the fiber network.
VT Digger reported that, according to a survey conducted by the BT Board of Advisors:
Several residents have said they would like to see Burlington Telecom sold to a locally owned co-operative and that their greatest concern is the utility being sold to one of its larger competitors such as Comcast, AT&T or FairPoint.
Though the City is precluded by the terms of its settlement Agreement with Citibank from continuing to own the Asset, a carried equity interest is permitted. It is important that all ownership options be explored and considered in light of the legal requirements and the City’s goals for BT. However, the BTAB [Burlington Telecom Advisory Board] agrees with the vast majority of interested participants in this process that the sale of BT to one of its existing, national competitors would likely not be in the overall best interests of the City.
At a recent meeting, David Provost, chair of the advisory board said, “The best option from our perspective is finding a buyer with ties to the local community that will allow the city to have a minority stake in Burlington Telecom."
A Troubled Past, An Uncertain Future
After years of cover-ups by the city's past leadership, CitiBank eventually sued Burlington for $33 million. The parties settled and, as part of the settlement, Burlington transferred ownership to Blue Water LLC, a company formed by Burlington businessman Trey Pecor. In exchange, Blue Water provided $6 million in bridge financing to allow the city to settle the lawsuit with Citibank. The city is still leasing the network temporarily but the ultimate goal is to find a partner to purchase the network.