By DIANE BRONCACCIO
Daily Hampshire Gazette
GREENFIELD — Angry best describes most of the 200 or so hilltown residents who came to Monday’s broadband meeting — held in a room that only seats 100 at the John Olver Transit Center.
Due to fire codes, at least half the crowd was turned away from the meeting hosted by the Massachusetts Broadband Institute, the state agency assigned to oversee the “last mile” fiber-optic buildout. And those who RSVP’d and were seated angrily denounced the agency for an emailed announcement to town officials, saying that MBI would not spend state broadband dollars for the planned WiredWest fiber-optic network unless the regional plan is substantially revised.
The meeting began about 20 minutes late, with a woman calling for the public meeting to be adjourned until an adequate space was found to accommodate everyone.
Beyond the room-reservation issue, some town officials questioned the agency’s right to tell western Massachusetts towns how to spend their broadband money.
MBI Director Erik Nakajima explained that MBI asked experts to review WiredWest’s proposal elements for consistency with state guidelines, likelihood of success and financial risk to the towns. He said MBI and WiredWest representatives have met at least 22 times since November 2014, and that ownership of the regional network proposed by WiredWest had always been a contentious issue.
WiredWest’s plan calls for creating a regional broadband network, paid for through town spending and allocated state funding, with the WiredWest collaborative owning the network and towns owning a share of the company in proportion to how much money they invested in it.
WiredWest wants the towns to own the broadband infrastructure within their borders, since they are paying for it. Several town officials said their towns can’t afford to own and operate their own broadband network, and that collaboration has been a traditional way to work.
Consultant Greg Sandomirsky of Mintz Levin said the operating agreement drafted by WiredWest would base each town’s share of the network on how much money each puts into the capital assets, not on residents’ use of the network or the revenue each town generates for the network. He said the towns would owe the money to pay for the network, while the co-op would be free to lease, sell or encumber the assets if the broadband network didn’t make a profit.
If the network doesn’t turn a profit or needs more money to operate, “There’s no obligation for members to put up more money,” Sandomirsky said. “But the co-op is allowed to borrow.” He said it could mortgage its assets to do so.
Jim Drawe of WiredWest later challenged that, saying that WiredWest could not borrow more than $100,000 against its line of credit without a two-thirds majority vote of approval by WiredWest representatives from each member town.
Philip Holahan of the Massachusetts Technology Collaborative said the agency would prefer towns own their own broadband infrastructure, possibly leasing it. “We’re trying to ultimately protect the towns,” he said.
Michael Morgenstern, of IT consultant Wipro, said WiredWest’s business plan doesn’t give enough detail about start-up costs and town-by-town functions. “How do you sign up? How do you get service? How do you pay your bills?
“This is a very tough business,” he continued. “None of us would be here today if it was easy — because commercial businesses would be right at your homes.”
Morgenstern’s concerns included operating cost omissions, pricing based on competitive markets that’s too low to support a small scale build-out, and an overestimation of how many second-home or seasonal households will be broadband users. He said he thought WiredWest’s prices were 25 to 50 percent too low, and that some towns should consider wireless technology instead of going for the more costly fiber-optic network.
Morgenstern said WiredWest estimates it will have 15,000 broadband subscribers, which he contended was too high, given that some of the region’s roughly 20,000 homes may be unoccupied, seasonal or have residents who don’t want the service. Adjusting for “cost omissions,” Morgenstern said he believes the WiredWest network could lose $1 million a year, including debt service.
“Towns should expect you will have to cover full debt service to come out of the town operating budget,” he said.
Drawe said he caught math errors in earlier evaluations of WiredWest’s plan. “Consultants don’t know us, don’t know our region, and MBI doesn’t have technical expertise to challenge its consultants,” he said.
WiredWest’s Steve Nelson said he agreed with Sandomirsky on many issues but not on ownership. He said several lawyers for member towns have also reviewed WiredWest’s draft agreement.
Over the past two weeks, since MBI came out with its criticisms of WiredWest’s business plan and operating agreement, both agencies have been meeting and WiredWest has been working on a new version of its operating agreement. Nelson said WiredWest’s executive board will meet this Saturday and will distribute a new draft agreement to its member towns.
Dawn Scaparotti of Goshen said the state funding for broadband is too low.
“We need to go back to the Legislature and let them know we need more funds for critical services,” she said. “When the Big Dig was being done, we had it come out of our pockets. We’re still trying to figure out how to pay for the next pumper truck for our fire department.”
