David Post: Forcing an apology on Fibrant
Published 10:36 pm Saturday, January 21, 2017
When my sister, Phyllis, and I were children, we had a routine.
She’d pinch me. I’d hit her. She’d scream, “Mommy, David hit me.”
My mother would fuss at me and force me to apologize. I’d hiss, “I’m sorry,” but that wasn’t good enough for Mom. She made me explain in excruciating detail what I had done wrong and that I’d stop. Phyllis, of course, reveled in my humiliation. Then pinch me the next day.
Mom’s lesson was a good one. Companies that successfully emerge from crises apologize, admit their mistakes, and fix the problem.
Almost 35 years ago, a lunatic coated Tylenol capsules with cyanide. Seven innocent customers died. Even though Tylenol had done nothing to cause the tragedy, it apologized, retrieved over 30 million bottles from the market, created tamper-proof lids, and changed the way food and drugs are delivered to the public.
Fibrant has never apologized for its missteps and is just beginning to search for realistic solutions. The city just announced that it is seeking a private sector partner to lease, manage, partner with, or possibly buy Fibrant.
Twenty years ago, federal law encouraged the development of municipal broadband to avoid creating a “digitally divided” country, or of internet haves and have-nots. Mere feet beyond Salisbury city limits, some areas have internet access only with landline telephone dial-up connections. Fibrant’s slower speeds are 500 times faster. We have a digital divide right here right now.
Ten years ago, responding to the economic distress caused by the collapse of the textile industry, Salisbury City Council decided that municipal broadband was the cure.
Fibrant was not a cure, but was not ill-conceived. So what went wrong?
Poor planning and execution.
Fibrant was a field of dreams. Build it and they will come. That didn’t happen. High speed internet is not an economic savior. It is only one tool, admittedly a very important one, in the economic development toolbox.
Before construction, successful municipal broadband systems contract with schools, government, healthcare facilities, multi-unit developments such as hotels and apartment complexes, and major employers. Instead, Fibrant went retail, relying on projections of ever-increasing (low profit) home-based cable TV growth.
Successful cities install commercial partnerships first, then build retail, one mile at a time, only building the next mile after achieving break-even market share, usually about 35 percent. Financing is borrowed gradually, incurring debt only when customers are in place.
Internet competition is brutal. Few municipalities have the business mentality to compete with the private sector.
Salisbury did none of that. Fibrant sought no pre-construction commitments from the government and commercial communities. It borrowed $33 million in one bite and connected all 350 miles of Salisbury’s street before signing a single customer. Thinking that cable TV was the engine of economic growth was erroneous. Today, consumers are cutting the cord on both cable TV and telephones.
Even worse, two years after Fibrant lit up (!), the North Carolina legislature cozied up with Time-Warner to assure Fibrant’s failure by prohibiting growth. Poor Time Warner with its billions in sales and millions of customers didn’t want to spend the money — and hasn’t — to provide broadband in Salisbury. (Time Warner also cozied up to the school system so that it, not Fibrant, got the schools’ million-dollar contract.)
Eight years since going live, Fibrant has minimal big business or government contracts, approximately 20 percent of the hone market, and is still losing $3 million per year. However, the city is finally moving forward, producing honest numbers, seeking alternative solutions and now seeking a private sector partner.
Turn it off? No. The City would still have to repay about $40 million in debt.
Sell it? No. The city would likely still owe some $30 million and would lose control of the infrastructure with no leverage to make a buyer act in Salisbury’s best interest. (Imagine selling all the city streets and relying upon the buyer to fix potholes and remove snow.)
Operate profitably? Unlikely. However, improved financial performance is likely.
Within a couple months, the city should better understand what “success” could look like. Davidson and Mooresville subsidize their broadband systems. Realistically, so will Salisbury.
City council owes the public the duty of transparency. We need to admit our mistakes, promise to mend our ways and explain our corrective actions.
My mother would expect nothing less.
David Post is a member of Salisbury City Council.