Lt. Gov. Polito listens as Monterey officials accuse MBI of ‘big-business bias’ toward rural broadband initiatives

Monterey — In Stockbridge, residents were concerned about invasive weeds in the Stockbridge Bowl, but it’s fair to say that technology and broadband dominated much of Lt. Gov. Karyn Polito’s recent charm offensive into the far southern end of Berkshire County.

Needless to say, small towns in the Berkshires have plenty of concerns but some officials are concerned about not only the pace of the arrival of broadband, but about the way the Massachusetts Broadband Institute operates.

Polito, whom Republican Gov. Charlie Baker had previously appointed the point person for municipal issues in his administration, is fairly well known in the area. She is good friends with state Rep. William “Smitty” Pignatelli, D-Lenox, whom she met when both served in the legislature.

In the last couple of years, she has traveled to Great Barrington and Lee to celebrate the Community Compact between 17 towns in Berkshire County to share services.

But she received a different kind of reception this time around. Officials were polite but many wanted to press her on the urgency their towns feel in connecting residents and businesses with broadband because of its impact on public safety, education and economic development.

On Thursday, officials in Monterey confronted MBI Chairman Peter Larkin with his organization’s preference in giving state grants to larger established corporations over smaller start-ups such as Fiber Connect of the Berkshires, which is based in Monterey and is currently wiring that town and Egremont, where Polito visited Tuesday.

See video below of Polito’s session with Monterey officials Thursday: 

Clifford Weiss, who chairs the Monterey Broadband Committee, had prepared a memorandum and handed it Polito and her small entourage upon their arrival. Click here to view it.

Much to its frustration, the town of Monterey has already been notified of the receipt of a $1.2 million grant from MBI as part of the institute’s so-called Last Mile broadband initiative to help communities and companies wire towns, especially in rural areas where low density makes for high upfront costs.

But the town cannot access the funds because they were contingent on Charter-Spectrum being the provider. But Charter and other potential companies, including Matrix, have formally withdrawn from providing service to Monterey because Fiber Connect has started and, so far, has been using its own funds.

“Our build-out is well under way and yet we cannot access our state-approved funding to complete the job,” Weiss said. “Our town no longer has a choice. We need MBI to acknowledge this and to authorize release of broadband funds to the town.” 

Weiss repeated a common refrain among MBI critics: In deciding which companies to give money to, “MBI favors large corporate internet providers with dramatic and unfair advantages by awarding grant monies up front — under the guise of Charter’s financial viability.”

Larkin characterized Monterey being left with one provider as “an unfortunate circumstance … a circumstance of nature.”

“You were given opportunities,” Larkin said to Monterey Selectman Kenn Basler. “You’ve chosen to go with a local firm. Fine.” 

“Give me a break,” Basler replied, referring to Charter, the cable television behemoth. “The offer was for coaxial in a fiber world.”

“Listen, I know you had a problem with the technology,” Larkin said. “We’re agnostic about that.”

“You shouldn’t be agnostic,” Basler shot back.

The problem with Fiber Connect, Larkin said, is “they had no finances that we could verify … we have a responsibility with public money and public accountability. That’s a baseline expectation.”

And so it went.

Weiss said Fiber Connect managing director Adam Chait is in the process of providing this financial information via a third-party audit, but MBI has “deemed this approach unacceptable for its release of funds.” Chait was present at today’s meeting at Monterey Town Hall but did not address the issue. 

There were also some questions from the selectmen on cell phone service and Chapter 90 funds, which is state aid to towns for roads and bridges. Polito answered most of those questions and deferred to Larkin on the subject of broadband. Selectman Carol Edelman recused herself from the broadband discussion, she said, because her daughter works for one of the providers.

In a follow-up interview, Basler said the broadband committee met briefly after Polito’s departure to discuss next steps. He said the panel is “trying to find a middle ground” with MBI.

MBI might be willing to release the $1.2 million after Fiber Connect has finished wiring the town because, at that point, the risk to state taxpayers is minimal. But that might be financially stressful for the company.

Basler said in order to get the money sooner, there is the possibility of the town requiring a performance bond from Fiber Connect to minimize risk, placing a lien on the company until the project is completed. The other possibility is the town could simply borrow the money and get reimbursed when MBI finally releases the funds.

Basler said Fiber Connect’s business model in Monterey is a “take rate” of 70 percent. A take rate is the percentage of potential subscribers who are offered the service that actually subscribe.

“If they try for more of that, then the profitability goes down,” Basler explained. “That last 30 percent is the hard part.”

Basler said the town is crafting a letter to MBI explaining these ideas. It should be completed in the next couple of days.

Meanwhile, back in Egremont, Polito held forth Tuesday in Town Hall with members of the public. Broadband was the main topic of conversation there as well, along with the progress—or lack thereof—being made by Charter, which has agreed to wire the town for broadband and cable television. Fiber Connect is wiring that town as well. Sen. Adam Hinds was also there. 

See video below of Polito’s visit Tuesday to Egremont Town Hall: