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Otis out of broadband co-op, preferring to go it alone

They are replacing a plan where the WiredWest co-op is saying there will be repayment, with a plan where there is absolutely not going to be a repayment. They will be stuck with the debt service for 20 years.’ -- Tim Newman of New Marlborough, WiredWest spokesman

Otis — This Berkshire hilltown, population 1,612, announced last month that it was leaving the WiredWest broadband cooperative, citing numerous reasons why it doesn’t need a “middleman” between itself and the Massachusetts Broadband Institute (MBI) to bring high-speed, high-capacity Internet service to the town. Instead, it will hold a special town meeting in October to get voter approval to borrow $3.7 million for the project.

In a press release the town ticked off seven reasons for dropping out of the telecommunications co-op, noting that Otis doesn’t have to be part of WiredWest to get its $1.8 million share of the state’s MBI funds. The total estimated cost to connect homes and businesses to the fiber-optic telecommunications network is $5.5 million.

The town of Otis intends to provide each household with a high-speed Internet connection, utilizing fiber optic cable strung from poles such as these on Route 8.
The town of Otis intends to provide each household with a high-speed Internet connection, utilizing fiber optic cable strung from poles such as these on Route 8.

Twenty-three towns in Western Massachusetts have now approved a total of $36 million in borrowing for broadband projects as part of MBI’s “last mile” push to get rural areas high-speed connectivity to stimulate and sustain economic activity. Like the Town of Leverett, the Town of Alford recently decided to work with MBI independently of WiredWest.

Otis says it wants its taxpayers to own and control its own network, calling WiredWest an “unnecessary” go-between. Otis says it can get fiber optic cables strung and go live faster if it works with MBI on its own.

The town also said that it wanted fiber optic cable “drops” to be available to all residents and business owners, rather than just those who pre-subscribe to Wired West, and that the town will see the same cost benefits by going it alone. Otis, said the statement, doesn’t need WiredWest to contract out services; it can do it itself. And furthermore, the town thinks WiredWest’s proposed payroll “in excess of $1.5 million per year is excessive,” since the co-op will contract out network and Internet services.

The town’s final shot at WiredWest was to say that the Board of Selectmen “does not expect” that WiredWest will make enough money to give the town back what it borrowed for the project.

The statement was followed by swift response from WiredWest, which e-mailed pre-subscribers with a subject heading: “Are you being heard in Otis?” and issued a statement refuting or disagreeing with all of the town’s reasons for withdrawal, and urging a no vote in October “unless you are convinced that the town is pursuing the right solution…”

“We believe that this decision will increase the cost of bringing fiber to Otis as well as the risks the Town will face by going it alone,” the e-mail stated. “Nor does it necessarily reflect the views or interests of the people of Otis…”

WiredWest said Otis town officials “rebuffed” efforts to meet before withdrawing.

The 425 households who have already signed up for WiredWest were told they could get their $49 pre-subscription fee back, and were urged to contact Otis’ Board of Selectman with concerns. Otis Town Administrator Chris Morris told The Edge that he thought WiredWest’s e-mail was “highly inappropriate.”

Town Hall in Otis.
Town Hall in Otis.

Yet apparently enough people contacted Town Hall to prompt the Otis Selectboard to fire off a prickly e-mailed statement that said the town “met with WW a few months ago and frankly, WW did not make a positive impression on any town officials.”

The Selectboard’s main gripe was that WiredWest representatives “…asserted repeatedly that we would lose our $1.8 million in aid if we were not part of their cooperative…”

And, “WW also greatly exaggerated its role in the design and construction processes.”

“The implication is that WiredWest is some foreign entity, and they have no voice in it,” said WiredWest board member Tim Newman, noting that Otis was one of the first to join WiredWest.

“As a municipal coop, WiredWest member towns control the governance of WW through the management of the MLP’s (municipal lighting plants) in each town,” he added. “I think Otis needs to reexamine their point about who owns and controls the network. As written, they imply WiredWest has no connection to the towns and that’s clearly just not true.”

Of all the town’s reasons, the most egregious, Newman says, is that the town doesn’t think WiredWest will repay the bond money. He says this is simply an “opinion” with nothing to back it up, and wanted to know their reasoning. Town officials, however, could not be reached and did not return calls for comment.

“They are replacing a plan where the co-op is saying there will be repayment, with a plan where there is absolutely not going to be a repayment,” he said. “They will be stuck with the debt service for 20 years and all the profits will go to Crocker or whoever they hire [for network management], and it’s going to cost more.”

While Newman said there was no “guarantee,” just as WiredWest’s “detailed financial model could not predict the meltdown of the Chinese economy or other things out of our control,” the co-op’s detailed model was honed to give participating towns the best shot of getting their money back.

Tim Newman of New Marlborough, a spokesperson for the WiredWest broadband cooperative.
Tim Newman of New Marlborough, a spokesperson for the WiredWest broadband cooperative.

And WiredWest’s official rebuttal goes one step farther: Profit margins required by private contractors will cut away at revenue the town needs to repay the debt.

WiredWest asserts that there might be higher per customer costs in Otis because about 60 percent of homes there are owned by second homeowners, affecting revenue that would spread the cost around. Otis, says WiredWest, would not be able to share expensive “equipment hut” or huts with several other WW towns. And there are other “redundancy” issues that the town will have to shell out for on its own, the co-op says.

As far as the “drops” to each residence are concerned, Newman says that while subscription is free when the trucks are out stringing cable, people can always sign up later for a fee.

Newman was puzzled by the town’s objection to salaried staff. “WiredWest will have somewhere between 15 and 20 thousand customers. This is a serious business. This is a big sprawling modern telecommunications network. The idea that you can run that without paying experts to do it is crazy. Of course there are costs like that.”

Newman said it was odd that in later communications, the town said it could go faster on its own, since the town was still 210 pre-subscribers away from the 40 percent needed to join WiredWest.

He wonders if the withdrawal is just plain old New England style “home-rule” passion.

“If they always knew they wanted to run everything their own way, then they should never have joined,” he said. “Who wants to have a member who doesn’t want to be there?

“I wish them the best and I think they’re wrong. On the face of it, it doesn’t seem like an entirely rational decision. It would be rational if all the things in their press release are true. Unfortunately, they are not.”


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