WiredWest, the municipal collaborative established to build and operate a regional fiber-optic broadband network for the unserved hilltowns, has dropped a business plan to own the fiber optic cable paid by member towns and by the state.
This week, the collaborative’s board of directors unanimously agreed to change its operating model, in response to concerns raised by some member towns and objections brought up by the Massachusetts Broadband Institute, which is to allocate about $40 million in state funding to towns without broadband access.
Plan A2, as it is now called, varies from WiredWest’s original business plan in three ways:
Under Plan A2, towns will own the broadband infrastructure that they have paid for within their town borders. A town that wishes to withdraw from the network could simply “unplug” from it and operate as a stand-alone network. In the earlier proposal, each town owned a share of the network; if a town wanted to leave the collaborative, WiredWest was to buy out that town’s share, keeping the infrastructure and still running it.
Second, towns would be able to withdraw from the regional network at any time, after the network has been operational for five years, without any penalty or necessary approval from the rest of the co-op. The original plan required towns to be WiredWest members for at least 10 years.
Third, under this plan, WiredWest would manage the utility on behalf of its member towns, but third-party vendors would be providing technical support, billing, call centers, ISP services, and round-the-clock maintenance.
In December, WiredWest’s business and operating plan came under fire by the former director of MBI, who said the fiber optic network, paid for with town taxes and state money should remain under individual town ownership. WiredWest’s leaders had argued in favor of collaborative ownership by all the member towns. The MBI also questioned whether the business model, to provide all the administrative, service and maintenance operations, would be doable.
Tim Newman, a spokesman for WiredWest, said WiredWest officials are meeting with MBI’s last mile broadband team next week to go over WiredWest’s revised business plan, “to see if we can get on the same page with the new (MBI) leadership.”
“Our hope is that, as the result of this meeting, there is some common ground,” Newman said. “Then the next step will be to go to the towns.”
“It’s very clear now that the state wants to speed up the (broadband) process, that the governor has lit a fire under everybody,” Newman continued. “We would like to better understand what’s going on and what our options are.”
On Friday, MBI sent an email about “Last Mile Town Readiness” to officials of unserved towns, asking them to submit “Readiness Request Forms,” so that the agency can begin 21-day readiness evaluations of each town’s broadband plan as soon as possible.
Currently, MBI leaders are working with Wendell, Ashfield, Shutesbury, Egremont, Otis and Alford in this process, but will move on to other groups of towns “on a rolling basis.”
“All other unserved towns pursuing broadband access projects should complete a readiness request form to confirm their interest,” says the letter. Once the MBI receives a town’s readiness request form, MBI staff will contact the town’s designee to schedule the 21-day evaluation. “Please submit this form as soon as you are able, but by July 29 at the latest,” says the letter.
According to WiredWest’s analysis, the benefits to regionalization include the following:
Better economies of scale, with the ability to negotiate more favorable contracts with key vendors, or get discounts on materials and equipment.
Cost-sharing will eliminate duplicate services needed for towns that follow a stand-alone model.
Network operating costs, calculated on a per-subscriber basis, go down in a regional network as more towns participate.
Seasonal and vacancy rates have been incorporated into WiredWest’s model, since there are many second-homes and “snow birds” living part-time in western Massachusetts.
Also, in MBI’s cost estimates for the towns, as single broadband providers, MBI recommended that the town aim for a $50,000 annual profit, to be used as a contingency fund for future maintenance emergencies, downed lines, repairs, etc. If WiredWest provided service to 30 member towns, the reserve fund would be $1.5 million; however, WiredWest believes a $500,000 contingency fund for the regional network would be reasonable.
Under the new WiredWest plan, when it comes to decision-making policies, each member town, regardless of size, would have one vote.