The newly renamed municipally owned cable operation formerly known as Mi-Connection now doing business as Continuum faces a number of challenges.
The recently announced re-branding of the operation to the Continuum name and the new marketing campaign that doubles down on the hyper-local nature of the company won't immediately solve the revenue problems, and subsidies will continue to be needed for years to come. Competition will continue to grow as new players enter the market - including wireless providers who may eventually leapfrog the idea of even needing a wired connection to the home. The emerging idea of "cord cutting" will also become more and more of an issue as well.
This last one - "cord cutting" - made industry-wide news this week as powerhouse AT&T posted numbers saying it had lost 390,000 net subscribers in just the 3rd quarter with the losses ascribed to cord cutting, or the decision to forgo the traditional cable subscription in favor of so called Over the Top (OTT) services such as Netflix, Playstation Vue, or SlingTV. See this article from Hollywood Reporter for more on that announcement and how it affected stocks of the large competitors.
What started a few years ago as a bit of a novelty has now gone mainstream. This new article from CordCuttersNews.com shows that those ditching traditional cable may have reached 1 million in a single quarter in the 3rd quarter of 2017. aShortChronicle HQ ditched cable and phone a couple years ago and can confirm for you it is doable and certainly can be less expensive depending on your TV habits.
So, what does all this mean for a company like Mi-Connection/Continuum? Not much if you listen to the comments that have come from Town Hall in recent years. You'll likely hear something like "the company doesn't make much money on TV anyway. Data is where it's at in the future." While that may be true, it ignores the fact that pure data access is quickly becoming a commodity.
As data becomes a commodity with more providers able to provide a comparable service, subscribers will be able to switch from provider to provider based on who has the lowest price. If they get their content via OTT services they won't have to deal with new set-top boxes and user interfaces. This will increase what's called "churn" between providers. Churn is a costly thing for providers to deal with just to maintain revenue as is, much less grow it.
Mi-Connection's FY2017 numbers were flat compared to FY2016. If cord cutting and churn were factors in that, the company isn't saying in its press releases like AT&T. However, if this industry trend is impacting the biggest of players, it will very likely make its way into the equation in the long march towards profitability for Mi-Connection/Continuum.
Something to keep your eyes on in future information from Town Hall.
Showing posts with label Mi-Connection. Show all posts
Showing posts with label Mi-Connection. Show all posts
Sunday, October 15, 2017
Tuesday, September 19, 2017
Mi-Connection FY2017 numbers disappoint...subsidy needed until FY2024
Numbers were put out by the Town of Davidson in a press release last week on the municipally owned cable company's financial performance for FY2017. That was followed up by a presentation from Town Manager Jamie Justice at the Tuesday Board meeting.
The long and the short of it boils down to these bullet points.
The long and the short of it boils down to these bullet points.
- The company is still losing money and did not meet projected growth in FY2017.
- Subsidies will still be needed for years to come with FY2024 as the new subsidy-free target date.
- Competition is increasing with new players entering the municipally owned company's footprint making growth even more difficult.
- Davidson has little to no leverage in determining the company's future under the current inter-local agreement with Mooresville which pegs Davidson's ownership at 30%.
- All of the numbers are projections based on continued rapid growth in rooftops and businesses.
Here is the press release put out by the town. Emphasis added in bold.
DAVIDSON, N.C. – On Thursday, August 23, the MI-Connection Board of Directors met to review financial results for FY 2017, which ended June 30, and compare last quarter to the same quarter a year ago. Data has been externally audited, but are preliminary and still subject to external audit.
Quarter Comparison
Revenue is even when comparing Q4 2017 to Q4 2016 and total expenses are up by 3.02% in Q4 2017 compared to Q4 2016. EBIDA (Earnings before interest, depreciation and amortization, a key metric used by cable operators to measure performance) decreased by 7.64% from Q4 FY 2016 to Q4 FY 2017. Average revenue per customer is even.
“We didn’t meet our growth projections for this year, and recognize that we have had some tough competition in the marketplace,” said MI-Connection CEO David Auger. “We are confident that the services we offer and our superior customer will make us more competitive in the future.”
FY 2017 vs. FY 2016
Financially, year-over-year, FY 2017 revenue exceeded FY 2016 by 1.79%. EBIDA declined by 8.61% from FY 2016 to FY 2017. Average revenue per customer is up 1.88% from FY 2016 to FY 2017. The customer level stayed about the same year-over-year.
In the enterprise and small/medium business market in FY 2017, MI-Connection grew commercial customers by 10.9% and increased revenue by 10.2%. Commercial revenue as a percentage of overall revenue increased from 12% in FY 2016 to 13.7% in FY 2017.
MI-Connection made a contribution of $2.919 million in debt payment to the Town of Mooresville for FY 2017, and projected a payment of $3.45 million in the FY 2018 budget. The amount the Towns of Mooresville and Davidson made to the debt payment for FY 2017 was $3.44 million and the projected payment for the towns in FY 2018 is $2.93 million. MI-Connection’s contribution toward the debt is projected to exceed the towns’ contributions in FY 2018.
During his comments at the meeting Tuesday night, Justice did address the stall in the drop of the annual subsidy required by the towns for 2017. aShortChronicle pointed that out back in May. The explanation given by Justice was that there were some new developments scheduled to come on line that were delayed. That delayed the new revenue. Those developments are now coming online so 2018 should see a bump.
What's left unsaid here is that Mi-Connection future growth is essentially now wholly dependent on significant growth in rooftops and or businesses within its footprint. The operational and financial improvements over the past few years are now fully baked into the year over year performance expectations. There are no more big chunks of cost savings that can be wrung out of the financials.
Justice mentioned that RGUs or Revenue Generating Units actually dropped very slightly year over year in 2017. RGUs are individual services such as voice, data, and video. A single "triple play" household would count as 3 RGUs. If RGUs dropped and there certainly was some growth in rooftops/businesses in 2017, that logically means Mi-Connection lost some existing customers to other provider and got some new ones to nearly break-even, but the company didn't get the new ones it was expecting from the delayed developments Justice mentioned to show any growth. As competition increases and other providers build out their networks this industry "churn" among competing providers will only increase as well.
The current predictions in Justice's presentation say subsidies are needed through FY2023 - another 5 years. It also says, the company's debt to value trend likely makes the company saleable 2-4 years from now with another 5-6 years needed to get that ratio down to where the towns could recoup all the subsidies they had paid over the years. However, competition will only increase in coming years, and if the housing market or economy slows or stalls, then all these projections go out the window. In a high-tech industry such as telecommunications, keeping Mi-Connection for another decade just to attempt getting towns' their money back would be a high risk maneuver.
While Justice tried valiantly to put as good a face as possible on this situation, it's still an ugly situation the towns have in front of them.
Read the whole presentation here.
What's left unsaid here is that Mi-Connection future growth is essentially now wholly dependent on significant growth in rooftops and or businesses within its footprint. The operational and financial improvements over the past few years are now fully baked into the year over year performance expectations. There are no more big chunks of cost savings that can be wrung out of the financials.
Justice mentioned that RGUs or Revenue Generating Units actually dropped very slightly year over year in 2017. RGUs are individual services such as voice, data, and video. A single "triple play" household would count as 3 RGUs. If RGUs dropped and there certainly was some growth in rooftops/businesses in 2017, that logically means Mi-Connection lost some existing customers to other provider and got some new ones to nearly break-even, but the company didn't get the new ones it was expecting from the delayed developments Justice mentioned to show any growth. As competition increases and other providers build out their networks this industry "churn" among competing providers will only increase as well.
The current predictions in Justice's presentation say subsidies are needed through FY2023 - another 5 years. It also says, the company's debt to value trend likely makes the company saleable 2-4 years from now with another 5-6 years needed to get that ratio down to where the towns could recoup all the subsidies they had paid over the years. However, competition will only increase in coming years, and if the housing market or economy slows or stalls, then all these projections go out the window. In a high-tech industry such as telecommunications, keeping Mi-Connection for another decade just to attempt getting towns' their money back would be a high risk maneuver.
While Justice tried valiantly to put as good a face as possible on this situation, it's still an ugly situation the towns have in front of them.
Read the whole presentation here.
Monday, June 26, 2017
A bit of good Mi-Connection news...David Auger to stay on as CEO
The tenure of Mi-Connection CEO David Auger has been one of the few bright spots in the whole saga of the municipally owned cable company, so when Auger announced last year that he would be retiring, that was going to surely leave a big leadership gap in the company. Adding to the uncertainty, little to nothing had been said about the search for his replacement.
With the announced end date of June 30th rapidly approaching, last week aShortChronicle asked the public information officers for Davidson and Mooresville if there was any update. Monday, that update came in the form of a press release on the next Mi-Connection Board meeting later this week.
Here it is (emphasis added)...
The MI-Connection Board of Directors will hold a meeting on Wednesday, June 28 at 6:30 p.m. in the Davidson Town Hall board room to appoint and re-appoint board members, elect officers for FY 2017-2018, approve minutes from the April meeting, and approve the final recast of the FY 2017 budget. This meeting was originally scheduled for Thursday, June 29. This meeting is open to the public.
Additionally, the MI-Connection Board of Directors requested that David Auger continue in his CEO role for the foreseeable future and he agreed. Auger was originally scheduled to retire June 30.
The next quarterly meeting of the MI-Connection Board of Directors is scheduled for August 24 at 6:30 p.m. in the Davidson Town Hall board room. This meeting is open to the public.
While it is definitely good news that Auger will stay on for the time being, it also makes one wonder if the reasons why included not able to find a good replacement. Looking at the Mi-Connection overall situation it is not hard seeing that being the case.
If you just looked at the bottom line, the company looks like it's still in need of a turnaround specialist. However, that would be too much of a simplification. Under Auger's tenure the company has attained EBITDA percentages at or above industry averages. Earnings Before Interest Taxes Depreciation Amortization is a measure of operational performance. The Auger years have seen operations brought back in house from an outsourcing vendor. The outstanding debt has been refinanced. The company has also achieved high penetration rates in new developments like the one at Langtree. Effectively, David Auger has been the turnround specialist and operationally he has achieved a lot. At this point, the proactive steps to fundamentally improve the company that can be taken have been.
What is hammering the bottom line is servicing the outstanding debt. Other than selling the company, the only way out of that debt burden now is a risky, long hard slog of significant growth through competition in a marketplace growing more competitive by the day.
It is not hard to see it being difficult to find someone who wants that job.
With the announced end date of June 30th rapidly approaching, last week aShortChronicle asked the public information officers for Davidson and Mooresville if there was any update. Monday, that update came in the form of a press release on the next Mi-Connection Board meeting later this week.
Here it is (emphasis added)...
The MI-Connection Board of Directors will hold a meeting on Wednesday, June 28 at 6:30 p.m. in the Davidson Town Hall board room to appoint and re-appoint board members, elect officers for FY 2017-2018, approve minutes from the April meeting, and approve the final recast of the FY 2017 budget. This meeting was originally scheduled for Thursday, June 29. This meeting is open to the public.
Additionally, the MI-Connection Board of Directors requested that David Auger continue in his CEO role for the foreseeable future and he agreed. Auger was originally scheduled to retire June 30.
The next quarterly meeting of the MI-Connection Board of Directors is scheduled for August 24 at 6:30 p.m. in the Davidson Town Hall board room. This meeting is open to the public.
While it is definitely good news that Auger will stay on for the time being, it also makes one wonder if the reasons why included not able to find a good replacement. Looking at the Mi-Connection overall situation it is not hard seeing that being the case.
If you just looked at the bottom line, the company looks like it's still in need of a turnaround specialist. However, that would be too much of a simplification. Under Auger's tenure the company has attained EBITDA percentages at or above industry averages. Earnings Before Interest Taxes Depreciation Amortization is a measure of operational performance. The Auger years have seen operations brought back in house from an outsourcing vendor. The outstanding debt has been refinanced. The company has also achieved high penetration rates in new developments like the one at Langtree. Effectively, David Auger has been the turnround specialist and operationally he has achieved a lot. At this point, the proactive steps to fundamentally improve the company that can be taken have been.
What is hammering the bottom line is servicing the outstanding debt. Other than selling the company, the only way out of that debt burden now is a risky, long hard slog of significant growth through competition in a marketplace growing more competitive by the day.
It is not hard to see it being difficult to find someone who wants that job.
Wednesday, May 31, 2017
Mi-Connection subsidy drop stalls in new budget
The long march towards profitability for Mi-Connection appears to be stalling.
On Tuesday, the Town of Davidson sent out a release on the municipally owned cable company providing the latest numbers and projections for next year's budget. In FY2018 Mooresville and Davidson will have to pony up $2,931,038 to subsidize the company.
Under the current agreement with Mooresville, Davidson pays a maximum of $1,000,000 per year in subsidy and anything over that based on the Town's 30% ownership percentage accrues with Mooresville. If there is good news in the current numbers it's that the Davidson's share for just the current year is below the $1,000,000 mark. 30% of $2,931,038 equals $879,311. However, Davidson will still pay a $1,000,000 subsidy this year due to past accruals on its Mooresville credit card.
Even though it doesn't help Davidson's actual budget this year, that annual amount under $1,000,000 is the lowest since Mi-Connection first went into the red back in FY2010 when Davidson owed just $181,000. After that year the deficits and subsidies exploded. All told, including the upcoming FY2018 budget, Davidson will have subsidized Mi-Connection a total of over $11.5 million over the years.
That's the good news.
The bad news is that the a annual drop in overall subsidy appears to have stalled going into FY2018. aShortChronicle delved into its email archives for these annual budget announcements from the Town to compile the below chart.
Notice, the projected drop in overall subsidy of just $118,636. That's a significantly smaller drop than in recent years. The announcement from the Town did not offer a reason for this slowdown going into FY2018. aShortChronicle also noticed that previous announcements included the previous year numbers as well to highlight the significant year over year drops. The announcement for FY2018 did not, a possible sign this much smaller drop was not lost on the Town either.
If the pace of improvement had continued at the previous rate, Davidson was in for a bit of a "windfall" in coming years as the annual subsidies would have dropped well below the $1 million mark and the Mooresville credit card was paid off. That would start freeing up money for tax relief or other needs.
Now, it looks like that date is put off at least another year.
On Tuesday, the Town of Davidson sent out a release on the municipally owned cable company providing the latest numbers and projections for next year's budget. In FY2018 Mooresville and Davidson will have to pony up $2,931,038 to subsidize the company.
Under the current agreement with Mooresville, Davidson pays a maximum of $1,000,000 per year in subsidy and anything over that based on the Town's 30% ownership percentage accrues with Mooresville. If there is good news in the current numbers it's that the Davidson's share for just the current year is below the $1,000,000 mark. 30% of $2,931,038 equals $879,311. However, Davidson will still pay a $1,000,000 subsidy this year due to past accruals on its Mooresville credit card.
Even though it doesn't help Davidson's actual budget this year, that annual amount under $1,000,000 is the lowest since Mi-Connection first went into the red back in FY2010 when Davidson owed just $181,000. After that year the deficits and subsidies exploded. All told, including the upcoming FY2018 budget, Davidson will have subsidized Mi-Connection a total of over $11.5 million over the years.
That's the good news.
The bad news is that the a annual drop in overall subsidy appears to have stalled going into FY2018. aShortChronicle delved into its email archives for these annual budget announcements from the Town to compile the below chart.
Notice, the projected drop in overall subsidy of just $118,636. That's a significantly smaller drop than in recent years. The announcement from the Town did not offer a reason for this slowdown going into FY2018. aShortChronicle also noticed that previous announcements included the previous year numbers as well to highlight the significant year over year drops. The announcement for FY2018 did not, a possible sign this much smaller drop was not lost on the Town either.
If the pace of improvement had continued at the previous rate, Davidson was in for a bit of a "windfall" in coming years as the annual subsidies would have dropped well below the $1 million mark and the Mooresville credit card was paid off. That would start freeing up money for tax relief or other needs.
Now, it looks like that date is put off at least another year.
Thursday, August 25, 2016
Davidson announces Mi-Connection CEO leaving
On Wednesday, the Town of Davidson announced Mi-Connection CEO, David Auger, will be stepping down sometime before June 2017.
The town public information office called it a "retirement", but "moving on" may be a better description since he will be focusing on another business he owns - National Food Equipment Services with offices in Mooresville, Winston-Salem, and Raleigh.
Auger was brought in by former Mi-Connection Chairman John Venzon to help right what was then a fast sinking ship that was about to take the Town of Davidson with it.
In FY 2011 which ended 6-months before Auger's arrival, Davidson's subsidy to the cable company was over $2 million per year and approaching a quarter of its general fund budget.
Venzon and Auger formed something of a dynamic duo to help pull the town back from the abyss the town had been brought to by its elected officials who decided getting into the cable business was angood idea.
Political, financial, and operational moves all helped achieve this.
Six months after Auger arrived, Venzon helped orchestrate a restructuring of the agreement between Mooresville and Davidson that capped Davidson's annual payment at $1 million. That single-handedly cut the subsidy in half from its 2011 peak. It also bought Auger the time needed to implement operational reforms at the company to make it run better.
In 2015 Mooresville was also able to refinance a portion of the MI-Connection, debt saving the towns hundreds of thousands of dollars in interest payments that contributed to the reducing subsidies.
There is no doubt filling Auger's shoes will be a big task.
What may be the most interesting question is why get out now?
For years, citizens have been told that 2017 was the year the towns could first really start talking about selling Mi-Connection due to the structure of most of the debt. That's just next year.
After such hard work, it might seem curious why Auger wouldn't stick it out until the company is sold and off the backs of taxpayers. The answer likely lies in the fact that even with all the improvement over the past few years, the company is still deep in debt and requires millions in subsidies.
Auger's planned departure may be a sign that 2017 will come and go with Mi-Connection still on town books for the foreseeable future.
Whatever the reason though, the citizens of Davidson and Mooresville owe a big thank you to Auger for his efforts.
The town public information office called it a "retirement", but "moving on" may be a better description since he will be focusing on another business he owns - National Food Equipment Services with offices in Mooresville, Winston-Salem, and Raleigh.
Auger was brought in by former Mi-Connection Chairman John Venzon to help right what was then a fast sinking ship that was about to take the Town of Davidson with it.
In FY 2011 which ended 6-months before Auger's arrival, Davidson's subsidy to the cable company was over $2 million per year and approaching a quarter of its general fund budget.
Venzon and Auger formed something of a dynamic duo to help pull the town back from the abyss the town had been brought to by its elected officials who decided getting into the cable business was angood idea.
Political, financial, and operational moves all helped achieve this.
Six months after Auger arrived, Venzon helped orchestrate a restructuring of the agreement between Mooresville and Davidson that capped Davidson's annual payment at $1 million. That single-handedly cut the subsidy in half from its 2011 peak. It also bought Auger the time needed to implement operational reforms at the company to make it run better.
In 2015 Mooresville was also able to refinance a portion of the MI-Connection, debt saving the towns hundreds of thousands of dollars in interest payments that contributed to the reducing subsidies.
There is no doubt filling Auger's shoes will be a big task.
What may be the most interesting question is why get out now?
For years, citizens have been told that 2017 was the year the towns could first really start talking about selling Mi-Connection due to the structure of most of the debt. That's just next year.
After such hard work, it might seem curious why Auger wouldn't stick it out until the company is sold and off the backs of taxpayers. The answer likely lies in the fact that even with all the improvement over the past few years, the company is still deep in debt and requires millions in subsidies.
Auger's planned departure may be a sign that 2017 will come and go with Mi-Connection still on town books for the foreseeable future.
Whatever the reason though, the citizens of Davidson and Mooresville owe a big thank you to Auger for his efforts.
Monday, May 9, 2016
New MI-Connection Numbers
Update May 11th: The town public information officer reached out to aShortChronicle today to let us know the delay in posting this information was due to a lost email. Approval for distribution had been granted, but the information just had not gone out.
Begin original post...
aShortChronicle does not like making mistakes.
In fact, for a blog a significant amount of effort goes into ensuring mistakes don't occur. Town staff can attest to that based on the flurry of questions they regularly receive. However, every now and then they do happen, and when they do corrections need to be made.
A couple weeks ago we reported that Mi-Connection subsidies would total $3.5 million in FY2017. That was incorrect. The correct number is only $3.05 million.
The error occurred due to how a question asked to town staff was phrased. The question was answered, but should have been asked slightly differently.
The error was discovered when we came across the below figures in a stack of handouts on the information table in the entrance to Town Hall.
Begin original post...
aShortChronicle does not like making mistakes.
In fact, for a blog a significant amount of effort goes into ensuring mistakes don't occur. Town staff can attest to that based on the flurry of questions they regularly receive. However, every now and then they do happen, and when they do corrections need to be made.
A couple weeks ago we reported that Mi-Connection subsidies would total $3.5 million in FY2017. That was incorrect. The correct number is only $3.05 million.
The error occurred due to how a question asked to town staff was phrased. The question was answered, but should have been asked slightly differently.
The error was discovered when we came across the below figures in a stack of handouts on the information table in the entrance to Town Hall.
Notice the date. APRIL 8TH.
After looking back in the town press releases, Facebook postings, budget materials, and the most recent town newsletter since April 8th, it appeared this information has not been widely distributed. As far as we can tell, no media has reported on it.
When asked why this had not been distributed, the town Public Information Officer said she was waiting to hear back from MI-Connection CEO David Auger before distributing.
Yet, there it was in a stack of printouts for public consumption in the Town Hall lobby.
Overall, the new numbers don't impact the current budget discussions as Mi-Connection related expenses won't change for FY2017 from what was previously reported here. Davidson still pays $1 million this year, and very likely will in FY2018 as well. However, it does show that with the current rate of improvement Davidson could see a significant drop in that $1 million per year expense as soon as FY2019.
That would be important particularly if Davidson embarks on a large capital spending program for new facilities using millions in debt financing. The freed up cash could be used to prevent the town from having to raise taxes even higher than they already are.
Overall $3.05 million is still a lot of red ink, but things are moving in the right direction and moving a bit faster than previously reported. That's welcome news.
It should be noted that the numbers on the sheet say "proposed budget". Things of course could change again.
Update: At 3:28pm Monday within hours of this post going up, the Town put out the above numbers in a press release. Again, the same numbers dated April 8th - a full month ago.
Overall $3.05 million is still a lot of red ink, but things are moving in the right direction and moving a bit faster than previously reported. That's welcome news.
It should be noted that the numbers on the sheet say "proposed budget". Things of course could change again.
Update: At 3:28pm Monday within hours of this post going up, the Town put out the above numbers in a press release. Again, the same numbers dated April 8th - a full month ago.
Monday, April 25, 2016
CORRECTION - MI-Connection Subsidy to be $3.0 million in FY2017
We originally incorrectly reported a deficit of $3.5 million. Accordingto new information provided by the town the correct number is $3.0 million. The below has been updated.
Based on numbers just confirmed from Town of Davidson Finance Director Pieter Swart, Davidson's total obligation to MI-Connection in the upcoming fiscal year starting July 1st will be $914, 902.
Under the current inter-local agreement with Mooresville, Davidson is responsible for 30% of the deficit. That brings the total amount of subsidy required to $3.05 million.
Davidson's annual cash payment is capped at $1 million with Mooresville covering the rest. Any amount not covered by Davidson accrues and the current amount owed Mooresville is $1.77 million. Davidson currently has $1 million set asside towards this debt.
Improvement is always good, but there is still a long way to go. At this rate of improvement, Davidson will owe the $1m per year for at least the next couple years (including FY2017) to cover current year debt each cycle and cover the unfunded $700k owed to Mooresville. After that, the annual amount could drop significantly below $1m per year.
As reported earlier, Davidson will be discussing its upcoming budget on Tuesday. Will be interesting to see how this plays into the discussion.
Based on numbers just confirmed from Town of Davidson Finance Director Pieter Swart, Davidson's total obligation to MI-Connection in the upcoming fiscal year starting July 1st will be $914, 902.
Under the current inter-local agreement with Mooresville, Davidson is responsible for 30% of the deficit. That brings the total amount of subsidy required to $3.05 million.
Davidson's annual cash payment is capped at $1 million with Mooresville covering the rest. Any amount not covered by Davidson accrues and the current amount owed Mooresville is $1.77 million. Davidson currently has $1 million set asside towards this debt.
Improvement is always good, but there is still a long way to go. At this rate of improvement, Davidson will owe the $1m per year for at least the next couple years (including FY2017) to cover current year debt each cycle and cover the unfunded $700k owed to Mooresville. After that, the annual amount could drop significantly below $1m per year.
As reported earlier, Davidson will be discussing its upcoming budget on Tuesday. Will be interesting to see how this plays into the discussion.
Thursday, April 14, 2016
Mi-Connection looms over Davidson capital spending discussion
Actually, no that’s not correct. The more appropriate metaphor is the 800lb gorilla.
An elephant in the room is something people avoid discussing even when it’s obvious. The 800lb gorilla is something that can’t be ignored. Mi-Connection and the 2007 decision to enter the cable business is definitely an 800lb gorilla when discussing major financial decisions in Davidson.
Early in the March 22nd discussion on the town possibly seeking voter approval to float general obligation bonds for several million dollars, it became clear that any proposal would likely require some future tax increase.
From the point Commissioner Jim Fuller asked how Davidson’s tax rate compared to its neighbors, one could sense a bit of Mi-Connection related tension in the air. Mayor John Woods attempted to blow off tax rate comparisons calling them “apples and oranges”. Fuller responded saying “if you are a citizen paying taxes it seems like a pretty fair question”. Woods, incidentally voted for the Mi-Connection deal when he was a commissioner back in 2007.
Mi-Connection came up several other times throughout the discussion.
It came up in questions about the financial model used to determine the town’s potential credit rating. Yes, the model included factoring in Mi-Connection, and Davidson still might receive the highest rating of Aaa from the ratings agencies. It came up when Commissioner Anderson through out the possibility of lower Mi-Connection subsidies in the future helping the town avoid tax increases to support bond payments. Yes, that could be possible, but the model assumed the current one million dollar annual subsidies would continue for another ten years.
This focus on Mi-Connection might seem overblown to some, but its impact is very real. Here are a few numbers to put things in perspective.
• Since 2010, Davidson has allocated $9 million in direct subsidies or in money set aside to pay Mooresville deferred obligations related to Mi-Connection. That’s spending capacity that could have gone to building things like a new fire station, new sidewalks, or new greenways.
• 6.1 cents of Davidson’s 35 cent tax rate in the current fiscal year is going to Mi-Connection. Everything else being equal, Davidson’s tax rate could be lower than Huntersville’s (30.5 cents) and much closer to Cornelius’s (24 cents) if it wasn’t for this added Mi-Connection “tax”.
• The current subsidy equals about 11% of the town’s general fund spending. While that sounds like a lot, its down from a crippling 23% back in 2011.
• Finally, there is a second hidden tax related to Mi-Connection subsidies - Davidson’s solid waste fee. Many towns include trash pickup as part of your property taxes, or they have modest additional fees. Davidson’s fee is a whopping $201 for a single family home. This high fee was implemented in Davidson at the peak of the subsidies freeing up cash to support the cable company.
If you put yourself in the shoes of a Davidson citizen who lived through those bullet points, it’s easy to see why people might be a little gun shy at proposals that talk about raising taxes. While wearing those shoes it’s also easy to overlook potentially good news like Davidson still possibly receiving high marks from credit ratings agencies. That’s a testament to the good work elected officials and staff have done managing this bad situation. At the same time, people also know in the back of their minds that much of the current talk about things like bonds and debt and even something like the controversial Catalyst Project which stands to bring in a good bit of money to the town, might not even be on the radar if it wasn’t for Mi-Connection and its wasted millions.
To resolve those types of trust issues, Davidson Town Hall may have to directly and fully deal with that 800lb gorilla before it finds town residents willing to extend their trust again.
This post originally appeared in the opinion section of this week's Herald Weekly at HuntersvilleHerald.com.
Thursday, December 3, 2015
As technology leaps ahead, towns need to focus on MI-Connection sale
The Board of MI-Connection, the cable company owned by the towns of Davidson and Mooresville met last week to hear the latest numbers on its operations . Fortunately, while the company is still a long way from being profitable, the numbers are at least headed in the right direction. A press release provided by Christina Shaul, Davidson’s Public Information Officer provided the following positive news.
“April Bell of auditing firm Dixon Hughes Goodman shared results for the fiscal year that ended June 30, 2015. She stated that MI-Connection is seeing a very positive trend in financial results.
During his review of the financials, MI-Connection CEO David Auger shared that revenue is up 3.74% in Q1 2016 versus Q1 2015. Expenses are favorable in Q1 FY 2016 versus Q1 FY 2015, by .62% . EBIDA (Earnings before interest, depreciation and amortization, a key metric used by cable operators to measure performance) grew by 17.41% from Q1 FY 2015 to Q1 FY 2016.”
That’s definitely what taxpayers who have been subsidizing the company want to hear, rather than things are headed in the opposite direction. It is validation that the operational improvements at the company over the past few years are paying off.
The release went on to say MI-Connection will soon offer whole-home DVR, the ability to stream content on any iOS or Android device, and the ability to remotely program your DVR.
Again, that's good to hear, but those are new services for the company, not new to the industry. As a small company, innovation will always be the company’s Achilles heal.
A recent telecom industry announcement exemplifies that and should hopefully ensure the political decision makers keep their eye on the ball and continue working to get the company ready for sale at some point in the relatively near future.
The impact of this recent announcement actually was foreshadowed here locally a few years ago.
Back in 2011, I remember sitting at a political event in Davidson just as election season was ramping up. Davidson Commissioner Rodney Graham, was making some comments about Mi-Connection. Graham had made an unsuccessful attempt at the Board in 2007 as one of the few candidates at the time to question the idea of the town getting to the cable business. He was getting ready to make what would be a successful run in 2011.
At that meeting I remember Graham holding his phone in the air and talking about some day being able to get internet speeds over wireless that rivaled what one could get from a cable company. That would be the day things started to look much more difficult for the municipally owned cable operation.
Well, that day may have quietly gotten a significant step closer with an announcement by T-Mobile three weeks ago for its new "Binge On" service.
While wireless phone carriers can't offer data speeds that match the newest offerings being rolled out traditional cable companies – including Mi-Connection’s, the newest 4G LTE wireless networks offer speeds sufficient for high quality video streaming as well as many other uses. The one drawback has been the cost of streaming lots of data over these wireless networks – until now.
T-Mobile’s “Binge On” product removes that barrier by allowing unlimited DVD quality video with the purchase of a minimum wireless data package. All of the top name streaming services such as Netflix, Amazon, and Hulu are available with “Binge On” as well as Sling TV which offers many of the top live TV channels including ESPN. Now, a customer can become truly mobile with their video, voice, and data all coming from a single provider, and that provider is not the traditional cable company.
Are there drawbacks and limitations to going fully wireless? Yes, there certainly are. If you are into lots of gaming or have other high-bandwidth needs for business uses, going completely wireless may not be for you – today. Long-term this type of continued change in technology could make it a different story.
Commissioner Graham was holding his phone at that meeting just four years ago. What will things look like four years from now. Hopefully, our current crop of political leaders won't make us find out.
Bonus Observation:
Ran out of room for this in the version for the Herald Weekly.
Not only will MI-Connection be facing more competition from new technologies in the future, but they will also have to go head-to-head against Time Warner. In a conversation with the developer of a large new neighborhood underway in the MI footprint, it was made clear that both MI and TWC have been offered the opportunity to supply service to the new neighborhood.
The developer wished to remain anonymous because details had not been finalized. However, it does show that competition is going to be growing particularly around the edges of the MI footprint.
How MI stands up to the challenge will be critical. New customers from new neighborhoods have been critical to the company's recent growth in subscribers. The Langtree development at Exit 31 would be the prime example.
Can the company continue attracting large numbers of new customers in these neighborhoods if it has to face real competition with relatively unlimited resources? That will be the big question going forward.
This post first appeRed in this week's Herald Weekly at HuntersvilleHerald.com
“April Bell of auditing firm Dixon Hughes Goodman shared results for the fiscal year that ended June 30, 2015. She stated that MI-Connection is seeing a very positive trend in financial results.
During his review of the financials, MI-Connection CEO David Auger shared that revenue is up 3.74% in Q1 2016 versus Q1 2015. Expenses are favorable in Q1 FY 2016 versus Q1 FY 2015, by .62% . EBIDA (Earnings before interest, depreciation and amortization, a key metric used by cable operators to measure performance) grew by 17.41% from Q1 FY 2015 to Q1 FY 2016.”
That’s definitely what taxpayers who have been subsidizing the company want to hear, rather than things are headed in the opposite direction. It is validation that the operational improvements at the company over the past few years are paying off.
The release went on to say MI-Connection will soon offer whole-home DVR, the ability to stream content on any iOS or Android device, and the ability to remotely program your DVR.
Again, that's good to hear, but those are new services for the company, not new to the industry. As a small company, innovation will always be the company’s Achilles heal.
A recent telecom industry announcement exemplifies that and should hopefully ensure the political decision makers keep their eye on the ball and continue working to get the company ready for sale at some point in the relatively near future.
The impact of this recent announcement actually was foreshadowed here locally a few years ago.
Back in 2011, I remember sitting at a political event in Davidson just as election season was ramping up. Davidson Commissioner Rodney Graham, was making some comments about Mi-Connection. Graham had made an unsuccessful attempt at the Board in 2007 as one of the few candidates at the time to question the idea of the town getting to the cable business. He was getting ready to make what would be a successful run in 2011.
At that meeting I remember Graham holding his phone in the air and talking about some day being able to get internet speeds over wireless that rivaled what one could get from a cable company. That would be the day things started to look much more difficult for the municipally owned cable operation.
Well, that day may have quietly gotten a significant step closer with an announcement by T-Mobile three weeks ago for its new "Binge On" service.
While wireless phone carriers can't offer data speeds that match the newest offerings being rolled out traditional cable companies – including Mi-Connection’s, the newest 4G LTE wireless networks offer speeds sufficient for high quality video streaming as well as many other uses. The one drawback has been the cost of streaming lots of data over these wireless networks – until now.
T-Mobile’s “Binge On” product removes that barrier by allowing unlimited DVD quality video with the purchase of a minimum wireless data package. All of the top name streaming services such as Netflix, Amazon, and Hulu are available with “Binge On” as well as Sling TV which offers many of the top live TV channels including ESPN. Now, a customer can become truly mobile with their video, voice, and data all coming from a single provider, and that provider is not the traditional cable company.
Are there drawbacks and limitations to going fully wireless? Yes, there certainly are. If you are into lots of gaming or have other high-bandwidth needs for business uses, going completely wireless may not be for you – today. Long-term this type of continued change in technology could make it a different story.
Commissioner Graham was holding his phone at that meeting just four years ago. What will things look like four years from now. Hopefully, our current crop of political leaders won't make us find out.
Bonus Observation:
Ran out of room for this in the version for the Herald Weekly.
Not only will MI-Connection be facing more competition from new technologies in the future, but they will also have to go head-to-head against Time Warner. In a conversation with the developer of a large new neighborhood underway in the MI footprint, it was made clear that both MI and TWC have been offered the opportunity to supply service to the new neighborhood.
The developer wished to remain anonymous because details had not been finalized. However, it does show that competition is going to be growing particularly around the edges of the MI footprint.
How MI stands up to the challenge will be critical. New customers from new neighborhoods have been critical to the company's recent growth in subscribers. The Langtree development at Exit 31 would be the prime example.
Can the company continue attracting large numbers of new customers in these neighborhoods if it has to face real competition with relatively unlimited resources? That will be the big question going forward.
This post first appeRed in this week's Herald Weekly at HuntersvilleHerald.com
Thursday, September 24, 2015
Update on Mi-Connection new internet speeds
Looks like the upgrade will be even more impressive than originally thought based on the company's earlier Facebook postings.
This upgrade is also definitely needed for the company to keep up with its competition.
We checked in with Standard Pacific, the developers of the new Davidson East neighborhood on NC73 that recently broke ground. That neighborhood will be one of the largest new developments in town in several years. It is a potential cash cow for new Mi-Connection customers.
The representative we spoke with said they will likely be making a decision on whether to go with Mi-C or Time Warner in the next 30 days. One thing for sure, without this upgrade announcement Mi-Connectiob would be at a disadvantage to Time Warner and its new TWC Maxx product.
Announcement below...
MI-Connection to Offer Faster Internet Speeds
Some customers will see an increase of up to 275%
Mooresville, N.C. – MI-Connection, the cable and telecommunications system owned by the towns of Mooresville and Davidson, will increase residential Internet speeds as much as 275% around the November 16th timeframe. Current Internet customers, with a speed of 10Mbps or higher, will experience the faster speeds automatically, and at no additional monthly charge. Please see the chart below:
“The recent investment we made to our network and infrastructure allows us to deliver these new speeds with even greater reliability,” said David Auger, CEO of MI-Connection. “We are thrilled we can do this for our customers.”
Saturday, September 19, 2015
Mi-Connection to increase speeds in Q4 of this year
Back on September 8th, the municipally owned cable company, Mi-Connection, quietly announced on its Facebook page that faster broadband speeds are on the way to subscribers in November.
According to a series of posts to its page over the past few days, subscribers will see speed increases from 233% to 275% depending on the tier they currently receive. The increases will be "free of charge".
Users who currently get 15Mbps download speeds will see their service bumped to 50Mbps. 20Mbps becomes 75Mbps and 30Mbps becomes 100Mbps. Upload speeds remain unchanged for each tier at 5, 10, and 10Mbps respectively.
Readers may remember back in May, we told you about MiC testing faster service in response to the rapidly changing competitive environment. It would appear that these service increases are part of that same response.
When asked about the speed upgrades, Mi-Connection CEO, David Auger, had this to say:
According to a series of posts to its page over the past few days, subscribers will see speed increases from 233% to 275% depending on the tier they currently receive. The increases will be "free of charge".
Users who currently get 15Mbps download speeds will see their service bumped to 50Mbps. 20Mbps becomes 75Mbps and 30Mbps becomes 100Mbps. Upload speeds remain unchanged for each tier at 5, 10, and 10Mbps respectively.
Readers may remember back in May, we told you about MiC testing faster service in response to the rapidly changing competitive environment. It would appear that these service increases are part of that same response.
When asked about the speed upgrades, Mi-Connection CEO, David Auger, had this to say:
"We periodically have increased internet speeds over the last few years. The decisions to do so, and the amount of each speed increase, are mostly driven by market demand and competitive activity. Technical considerations do play a role and that is primarily what we were testing some time ago. We are confident the speed increases that will be implemented this fall will allow us to grow broadband customers at the same rate as the previous five years."
Whether that is true or not remains to be seen.
When Time Warner began rolling out its upgraded service dubbed TWCMaxx its top speeds were considerably faster that what Mi-Connection customers will receive after the upgrade. While the lowest tiers will be the same for download speeds at 50Mbps. The TWCMaxx top speeds for its middle and upper tier services will offer speeds of 200Mbps and 300Mbps respectively - considerably faster than what Mi-Connection will offer.
Of course the argument can be made that few users actually need the TWCMaxx top speeds, but it will be interesting to see how this plays out with new developments in the Mi-Connection footprint - particularly around its edges.
A big chunk of Mi-Connection's growth in the past couple of years has been from exceptionally high penetration rates at the new Langtree development at Exit 31. If Mi-Connection loses out on some of the new developments in the area because it doesn't match the top speeds of its competitors, that certainly could impact growth projections.
Mooresville and Davidson taxpayers better hope that is not the case.
More information should be on the way soon. Auger said the company "will be sending out an additional press release early next week announcing the speed increase migration path for residential customer".
Be on the lookout for that.
Thursday, June 11, 2015
Davidson Town Hall gives itself big raise with new budget
Davidson's Town Board passed the FY2016 budget this past Tuesday which was 6.5% bigger than last year. I don't know about you, but I don't know too many people who get those types of raises these days.
John Deem point out a few "highlights" in the Observer today in an article titled "Davidson budget keeps taxes unchanged". From the Observer...
John Deem point out a few "highlights" in the Observer today in an article titled "Davidson budget keeps taxes unchanged". From the Observer...
- Funding that would allow for an average 4 percent, merit-based pay raise for town employees.
- The addition of a firefighter to staff the Odell Fire Department Station 2 on Shiloh Church Road.
- A pay classification and staffing-level study to ensure that the town is “able to retain employees and make the best use of employee skills and abilities.”
- Forensic and property management software for the Police Department, document management software for the town administration, a pickup truck for Public Works Department and public information software.
- Pedestrian walking lights on Main Street near the Flatiron Grill, and improvements to Roosevelt Wilson and other town parks
Those all sound like good things, but there are some other tidbits that are left out of this article which should give taxpayers pause.
The actual amount of money set aside for Mi-Connection fell $200,000 this year. Davidson continues to have the highest tax rate and by far the highest solid waste fees of the local towns. This is primarily due to the subsidies for the cable company. This budget seems to make it clear that as those subsidies fall, the taxpayer should not expect any relief from town hall.
Instead, money will continue to be spent on things like electronic information kiosks and something called a "solar and pedal powered vehicle" for Recreation Department staff.
The actual amount of money set aside for Mi-Connection fell $200,000 this year. Davidson continues to have the highest tax rate and by far the highest solid waste fees of the local towns. This is primarily due to the subsidies for the cable company. This budget seems to make it clear that as those subsidies fall, the taxpayer should not expect any relief from town hall.
Instead, money will continue to be spent on things like electronic information kiosks and something called a "solar and pedal powered vehicle" for Recreation Department staff.
Toys for town hall rather than figuring out how to give money back to taxpayers after years of over taxation seems like there are still some misplaced priorities that need to be fixed.
Sunday, May 10, 2015
Mi-Connection moving forward on refinancing - facing new challenges from competitors
Facing a rapidly changing competitive environment, Mi-Connection received some good news on the financing front this week when on Tuesday the Local Government Commission in the NC Department of the Treasurer approved refunding of the system’s originally issued debt.
In recent years the cable system owned by Mooresville and Davidson has made several operational improvements to reduce expenses. However, since it's inception the large debt used to purchase the system has been the major driving factor contributing to the company’s ongoing losses.
Restructuring the company’s debt will be another step in the right direction on the long road to break even financially.
New debt will be issued at more favorable terms – reducing interest payments and potentially reducing subsidies from the towns of Mooresville and Davidson. The exact amount of those savings will not be known until the final transaction closes – an event scheduled to occur before the end of June.
The annual savings could be substantial though. At the recent Davidson Board work session, Commissioners and Staff were using $500,000 as a working number for the saving when discussing Davidson’s next budget. Based on the ownership agreement between the two towns, that would reduce the subsidy from the towns by $150,000 for Davidson and $350,000 for Mooresville in FY2016 which starts July-1.
This is on top of about $300,000 in savings this coming fiscal year from refinancing another piece of the company’s debt.
Exactly how the towns could or should spend these savings is a topic for another day. The good news is that Commissioners will at least be able to have that discussion while putting together the next budgets.
The potentially bad news is that all of this is occurring in a rapidly changing business and technological environment which could eat up those savings as Mi-Connection is forced to keep up with its competitors.
At the system’s quarterly board meeting last week, Mi-Connection announced the region’s first gigabit data service available to its commercial customers. This is certainly good news, but it does nothing to help residential users who have been paying the subsidies to the company over the last several years.
It is in this area that Mi-Connection may soon be playing catch-up.
In early April, Time Warner Cable announced the rollout of its TWC Maxx service in the Charlotte region beginning this summer. This will include Huntersville and Mooresville, and other areas right on the doorstep of Mi-Connection’s current footprint.
When this conversion to an all digital network is complete, TWC will be able to offer customers much faster data service at the same cost. The top announced speed will be 300mb download. That’s 5 times faster than Mi-Connection’s current top residential offering.
In response, Mi-Connection is currently “testing” their ability to match these 300mb download speeds. This test is occurring in Mooresville’s Oaks on Main neighborhood. Per an email from Mi-Connection CEO, David Auger, it could be expanded to include other areas as well.
One of the purposes of the test is to determine the capital costs (if any) necessary to roll the service out to the entire Mi-Connection footprint. Depending on the results of these tests, those capital costs could eat into some of the operational and financing savings the company has recently achieved. That would also mean more subsidies.
And in that situation, there lies an unfortunate irony.
Readers may remember, that one of the justifications used by Mooresville and Davidson officials in buying the remnants of the old Adelphia cable system and creating Mi-Connection was that Time Warner, who was managing the operation in receivership at the time, was unlikely to upgrade the system.
If the towns had not taken control to offer better service, then nobody would have is how the story goes.
In fact, during a discussion in recent weeks on Mi-Connection both Davidson Mayor John Woods and Town Manager Leamon Brice referenced this idea as if it still had merit.
That Mi-Connection is having to conduct tests and potentially spend more subsidized money in an effort to keep up with announced improvements from Time Warner belies that original justification.
To put it another way, if Time Warner had been allowed to buy the system back in 2007, the average citizens of Mooresville and Davidson would be about to get for free the same service they might be able to get from Mi-Connection in the future.
Along the way, they could have also avoided the tens of millions in subsidies.
This post originally appeared in the Herald Weekly @ huntersvilleherald.com
In recent years the cable system owned by Mooresville and Davidson has made several operational improvements to reduce expenses. However, since it's inception the large debt used to purchase the system has been the major driving factor contributing to the company’s ongoing losses.
Restructuring the company’s debt will be another step in the right direction on the long road to break even financially.
New debt will be issued at more favorable terms – reducing interest payments and potentially reducing subsidies from the towns of Mooresville and Davidson. The exact amount of those savings will not be known until the final transaction closes – an event scheduled to occur before the end of June.
The annual savings could be substantial though. At the recent Davidson Board work session, Commissioners and Staff were using $500,000 as a working number for the saving when discussing Davidson’s next budget. Based on the ownership agreement between the two towns, that would reduce the subsidy from the towns by $150,000 for Davidson and $350,000 for Mooresville in FY2016 which starts July-1.
This is on top of about $300,000 in savings this coming fiscal year from refinancing another piece of the company’s debt.
Exactly how the towns could or should spend these savings is a topic for another day. The good news is that Commissioners will at least be able to have that discussion while putting together the next budgets.
The potentially bad news is that all of this is occurring in a rapidly changing business and technological environment which could eat up those savings as Mi-Connection is forced to keep up with its competitors.
At the system’s quarterly board meeting last week, Mi-Connection announced the region’s first gigabit data service available to its commercial customers. This is certainly good news, but it does nothing to help residential users who have been paying the subsidies to the company over the last several years.
It is in this area that Mi-Connection may soon be playing catch-up.
In early April, Time Warner Cable announced the rollout of its TWC Maxx service in the Charlotte region beginning this summer. This will include Huntersville and Mooresville, and other areas right on the doorstep of Mi-Connection’s current footprint.
When this conversion to an all digital network is complete, TWC will be able to offer customers much faster data service at the same cost. The top announced speed will be 300mb download. That’s 5 times faster than Mi-Connection’s current top residential offering.
In response, Mi-Connection is currently “testing” their ability to match these 300mb download speeds. This test is occurring in Mooresville’s Oaks on Main neighborhood. Per an email from Mi-Connection CEO, David Auger, it could be expanded to include other areas as well.
One of the purposes of the test is to determine the capital costs (if any) necessary to roll the service out to the entire Mi-Connection footprint. Depending on the results of these tests, those capital costs could eat into some of the operational and financing savings the company has recently achieved. That would also mean more subsidies.
And in that situation, there lies an unfortunate irony.
Readers may remember, that one of the justifications used by Mooresville and Davidson officials in buying the remnants of the old Adelphia cable system and creating Mi-Connection was that Time Warner, who was managing the operation in receivership at the time, was unlikely to upgrade the system.
If the towns had not taken control to offer better service, then nobody would have is how the story goes.
In fact, during a discussion in recent weeks on Mi-Connection both Davidson Mayor John Woods and Town Manager Leamon Brice referenced this idea as if it still had merit.
That Mi-Connection is having to conduct tests and potentially spend more subsidized money in an effort to keep up with announced improvements from Time Warner belies that original justification.
To put it another way, if Time Warner had been allowed to buy the system back in 2007, the average citizens of Mooresville and Davidson would be about to get for free the same service they might be able to get from Mi-Connection in the future.
Along the way, they could have also avoided the tens of millions in subsidies.
This post originally appeared in the Herald Weekly @ huntersvilleherald.com
Friday, March 6, 2015
Possible good news on the horizon for Mi-Connection?
If you've been watching the news much lately, you are probably aware the Federal Communication Commission (FCC) has been looking for more ways to control the internet from the Federal level.
One of those moves came last week when the FCC granted a petition from Wilson, NC to preempt a North Carolina law that puts conditions on municipal ownership of broadband networks.
The state legislation, commonly called the Level playing Field Law, was passed in 2011 and does things like limit the footprints of publicly owned networks to municipal boundaries, require voter referendums before funding ventures into the highly competitive telecommunications industry, and limit the ability of a publicly subsidized networks from undercutting prices of private sector networks.
Even though Mi-Connection is the poster child for why a law like this is needed – its purchase was done without a referendum and minus the tens of millions in taxpayer funded subsidies the company surely would have gone under as a private sector operation – both Davidson and Mooresville supported the FCC action.
Last year, each town submitted official comments of support for Wilson’s petition.
In light of all the company’s challenges over the years, it is somewhat ironic that the towns supported the FCC action. That irony is made even more pointed because Mi-Connection is actually exempted from most provisions of the state law in question as a pre-existing network when the law was passed. Even the one provision that may have impacted the company – the limit on service boundaries - was irrelevant.
At the January 22nd Mi-Connection Board meeting company CEO, David Auger, was asked about the possible impact of any upcoming regulatory decisions that would “take the shackles off of municipal ownership.”
Mr Auger responded that it was“not really an issue for us”. He went on to say “our boundary is so large it would take us 20 years to get out of it.”
No, the FCC action is not why there is something positive on the horizon for Mi-Connection.
It really does nothing for the company one way or the other.
Instead, the potentially positive turn of events originates much closer to home with activity in the office of Mooresville’s finance director, Deborah Hockett. Ms Hockett has been looking at refinancing the outstanding debt for the company and has been making some real progress.
She has recently worked with Wells Fargo on a rate modification for the nearly $9 million outstanding balance of the installment loan the company took out for network upgrades after the 2007 purchase. The rate modification drops the interest rate from 6.24% down to 2.36% and saves nearly $1.6 million in interest by the loan payoff date of March 2023. In the upcoming fiscal year alone, it saves $322,428 in interest - which would be covered entirely by the towns’ annual subsidies if it had to be paid.o
However, as good as that news may be, it pales in comparison to what might be saved if an even bigger financial transaction occurs.
For years, the taxpayers who have been subsidizing the operation have always heard that “there’s nothing that can be done about Mi-Connection until 2017” because of the bonds that were used to buy the company. Well, it turns out, that is not entirely true.
Yes, much the bonds could not be refunded early without penalty because they have a 10-year call provision – meaning they can't be refunded within the first 10 years. However, now that we are much closer to the call date and interest rates have dropped enough it may be financially doable to refund a big chunk of the existing bonds and reissue new bonds at a lower rate.
About $61 million of the original $80 million in principal falls into this category with interest rates in the 4-5.1% range.
Mooresville has already begun the process to see if something can be worked out to refinance this portion of the debt. The town enlisted Southwest Financial Advisors on an RFP for underwriters to conduct the transaction. If that goes well, the town needs to get on the Local Government Commission’s schedule for approval to issue the new bonds. That could happen as quickly as April or May.
While there certainly are no guarantees and financial markets can change quickly, if all goes well, the towns could be seeing some significant savings as early as the next budget cycle scheduled to wrap up by the end of June.
Let’s all cross our fingers and wish Ms Hockett success in what she is trying to accomplish. That, more than anything done or not done in Washington or in Raleigh, will help Mi-Connection gain sounder financial footing.
One of those moves came last week when the FCC granted a petition from Wilson, NC to preempt a North Carolina law that puts conditions on municipal ownership of broadband networks.
The state legislation, commonly called the Level playing Field Law, was passed in 2011 and does things like limit the footprints of publicly owned networks to municipal boundaries, require voter referendums before funding ventures into the highly competitive telecommunications industry, and limit the ability of a publicly subsidized networks from undercutting prices of private sector networks.
Even though Mi-Connection is the poster child for why a law like this is needed – its purchase was done without a referendum and minus the tens of millions in taxpayer funded subsidies the company surely would have gone under as a private sector operation – both Davidson and Mooresville supported the FCC action.
Last year, each town submitted official comments of support for Wilson’s petition.
In light of all the company’s challenges over the years, it is somewhat ironic that the towns supported the FCC action. That irony is made even more pointed because Mi-Connection is actually exempted from most provisions of the state law in question as a pre-existing network when the law was passed. Even the one provision that may have impacted the company – the limit on service boundaries - was irrelevant.
At the January 22nd Mi-Connection Board meeting company CEO, David Auger, was asked about the possible impact of any upcoming regulatory decisions that would “take the shackles off of municipal ownership.”
Mr Auger responded that it was“not really an issue for us”. He went on to say “our boundary is so large it would take us 20 years to get out of it.”
No, the FCC action is not why there is something positive on the horizon for Mi-Connection.
It really does nothing for the company one way or the other.
Instead, the potentially positive turn of events originates much closer to home with activity in the office of Mooresville’s finance director, Deborah Hockett. Ms Hockett has been looking at refinancing the outstanding debt for the company and has been making some real progress.
She has recently worked with Wells Fargo on a rate modification for the nearly $9 million outstanding balance of the installment loan the company took out for network upgrades after the 2007 purchase. The rate modification drops the interest rate from 6.24% down to 2.36% and saves nearly $1.6 million in interest by the loan payoff date of March 2023. In the upcoming fiscal year alone, it saves $322,428 in interest - which would be covered entirely by the towns’ annual subsidies if it had to be paid.o
However, as good as that news may be, it pales in comparison to what might be saved if an even bigger financial transaction occurs.
For years, the taxpayers who have been subsidizing the operation have always heard that “there’s nothing that can be done about Mi-Connection until 2017” because of the bonds that were used to buy the company. Well, it turns out, that is not entirely true.
Yes, much the bonds could not be refunded early without penalty because they have a 10-year call provision – meaning they can't be refunded within the first 10 years. However, now that we are much closer to the call date and interest rates have dropped enough it may be financially doable to refund a big chunk of the existing bonds and reissue new bonds at a lower rate.
About $61 million of the original $80 million in principal falls into this category with interest rates in the 4-5.1% range.
Mooresville has already begun the process to see if something can be worked out to refinance this portion of the debt. The town enlisted Southwest Financial Advisors on an RFP for underwriters to conduct the transaction. If that goes well, the town needs to get on the Local Government Commission’s schedule for approval to issue the new bonds. That could happen as quickly as April or May.
While there certainly are no guarantees and financial markets can change quickly, if all goes well, the towns could be seeing some significant savings as early as the next budget cycle scheduled to wrap up by the end of June.
Let’s all cross our fingers and wish Ms Hockett success in what she is trying to accomplish. That, more than anything done or not done in Washington or in Raleigh, will help Mi-Connection gain sounder financial footing.
Tuesday, February 10, 2015
Sling TV Launches with Expanded Channel Offerings
We recently told you about Dish Network's new Sling TV OTT service, and its possibility to impact Mi-Connection.
Well, that day is finally here.
Sling TV opened to the public on Monday with an a few more offerings than originally announced. How much more space they have under their $20/month price tag to add additional channels will be something to watch closely.
The most common criticism of Sling TV is the limited number of channels, but with the addition of channels like AMC, that criticism could diminish rapidly. AMC has the most popular show on cable - The Walking Dead. If channels like FX and Fox News are ever added, this new service could become truly transformative.
Below outlines what has been added for launch.
Well, that day is finally here.
Sling TV opened to the public on Monday with an a few more offerings than originally announced. How much more space they have under their $20/month price tag to add additional channels will be something to watch closely.
The most common criticism of Sling TV is the limited number of channels, but with the addition of channels like AMC, that criticism could diminish rapidly. AMC has the most popular show on cable - The Walking Dead. If channels like FX and Fox News are ever added, this new service could become truly transformative.
Below outlines what has been added for launch.
- AMC will be added to the $20 per month core. package.
- “Sports Extra” pack now available for $5 per month. This includes: the SEC Network, ESPNEWS, ESPNU, Universal Sports, Univision Deportes, beIN Sports, ESPN Buzzer Beater, ESPN Bases Loaded and ESPN Goal Line. These channels have been added to your reviewer account.
- WatchESPN now available at no additional cost to all Sling TV customers.
- Maker Studios’ Polaris+ channel coming soon.
- Supported devices at launch include: current-generation Roku players, Roku TV models, Android, iOS, Mac and PC, with support for Amazon Fire TV and Fire TV Stick in the coming days
Friday, January 23, 2015
Cord Cutting, Sling TV, and Mi-Connection
Tired of high-priced cable packages that force you to buy channels you don’t want? Do you keep your cable solely for ESPN? Have you already subscribed to Netflix, Amazon Prime, or Hulu Plus and realized streaming totally changes how you watch TV?
Maybe you’ve thought about joining the small but growing number of “cord cutters” – those people who have decided to cut their cable subscriptions.
If any of these sound familiar, then you will have a new choice in coming weeks. The 2015 Consumer Electronics Show (CES 2015) earlier this month gave the public a glimpse of the next big thing in a home entertainment – Sling TV – by DISH Network.
Sling TV will provide access to ESPN, ESPN II, Disney Channel, ABC Family, Food Network, HGTV, Travel Channel, TNT, CNN, TBS, Cartoon Network and Adult Swim – all for $20/month with no contract.
Yes, you read that right. ESPN will be available via streaming without a contract. Just care about college basketball? You can get the service for a few months then drop it. Just care about football, you can do the same.
There are downsides though. No DVR functionality with only limited playback options is one. It is single stream – meaning only one device can access an account at a time. Also, it doesn't provide access to local network broadcast TV. You still need a digital antenna and be in range of local broadcasters to get your local news.
DISH says the service will target millennials and cord cutters and is not designed to be a full replacement of your cable subscription. What remains to be seen is what impact it will have on increasing the number of households that decide to make the leap and cut the cord.
More importantly to Davidson and Mooresville taxpayers, what impact could this service have on Mi-Connection? The municipally owned cable provider recently had one of its best quarters ever even though it is still losing money.
With that in mind I asked the CEO of Mi-Connection, David Auger, what impact he thought Sling TV would have on the company’s growth. Here’s what he had to say…
“My personal opinion is as follows. I believe that the launch of Sling TV will not have a material impact on our growth. However, I believe this is a significant step forward in MI-Connections and the industry’s contractual relationships with the 6 giant conglomerates (Comcast, Time Warner Inc., News Corporation, Viacom, Scripps and Disney) regarding their program bundling demands. In order for this deal to get this far, a couple of these conglomerates have given ground which is historic. I and I would assume other independent operators look forward to competing in world of smaller bundles, or even a-la-carte that provides our customers with more choice. MI-Connection has the infrastructure and technology to do so and in my opinion, this is a step in the right direction.
I would also add that MI-Connection has the most robust data offering in the markets we serve with a tremendous amount of upside opportunity. Over-the-top offerings can only increase this demand.”
That certainly sounds good, but one also has to wonder if this might be a bit of “whistling past the graveyard”.
Sling TV, particularly with its groundbreaking inclusion of ESPN, could be a game changer. Nobody truly knows how many people that might attract or if it will catch fire outside of its target market segments. If it does, it could very well hit Mi-Connection in its main revenue source and stymie its progress towards profitability. According to FY2013 budget numbers on the Town of Davidson website, 58% of Mi-Connection’s revenue was expected to come from video that year with the rest split between voice and data.
As a bit of anecdotal evidence for why this could be an issue, my household “cut the cord” from Mi-Connection about three months ago. Two of my neighbors recently told me their main reason for not also doing so was access to ESPN.
None of us are millennials, but all of us were looking at it as a way to cut household costs.
My setup of Netflix, Amazon Prime, Hulu Plus along with an expected addition of Sling TV for College Basketball season will run about $850/year less than what I paid previously. That includes a comparable broadband connection on a promotional rate and purchase of a couple of digital antennas.
Is it for everybody? Absolutely not. There are definitely trade-offs.
However, after a three month experiment, I can also say I will probably never go back to a cable subscription again, and that’s the challenge Mi-Connection faces in the future.
If/when cord cutters do return to companies like Mi-Connection it will be for significantly less money as data-only subscribers.
Welcome to the brave new world out there in TV land.
This post first appeared in the Herald Weekly
Bonus Observation: After submitting this post for publication in the Herald Weekly, I received notice from Sling TV that I would be included in their reviewers program to test the product over the next year. Stay tuned for future reviews, but first impressions are definitely very positive.
Maybe you’ve thought about joining the small but growing number of “cord cutters” – those people who have decided to cut their cable subscriptions.
If any of these sound familiar, then you will have a new choice in coming weeks. The 2015 Consumer Electronics Show (CES 2015) earlier this month gave the public a glimpse of the next big thing in a home entertainment – Sling TV – by DISH Network.
Sling TV will provide access to ESPN, ESPN II, Disney Channel, ABC Family, Food Network, HGTV, Travel Channel, TNT, CNN, TBS, Cartoon Network and Adult Swim – all for $20/month with no contract.
Yes, you read that right. ESPN will be available via streaming without a contract. Just care about college basketball? You can get the service for a few months then drop it. Just care about football, you can do the same.
There are downsides though. No DVR functionality with only limited playback options is one. It is single stream – meaning only one device can access an account at a time. Also, it doesn't provide access to local network broadcast TV. You still need a digital antenna and be in range of local broadcasters to get your local news.
DISH says the service will target millennials and cord cutters and is not designed to be a full replacement of your cable subscription. What remains to be seen is what impact it will have on increasing the number of households that decide to make the leap and cut the cord.
More importantly to Davidson and Mooresville taxpayers, what impact could this service have on Mi-Connection? The municipally owned cable provider recently had one of its best quarters ever even though it is still losing money.
With that in mind I asked the CEO of Mi-Connection, David Auger, what impact he thought Sling TV would have on the company’s growth. Here’s what he had to say…
“My personal opinion is as follows. I believe that the launch of Sling TV will not have a material impact on our growth. However, I believe this is a significant step forward in MI-Connections and the industry’s contractual relationships with the 6 giant conglomerates (Comcast, Time Warner Inc., News Corporation, Viacom, Scripps and Disney) regarding their program bundling demands. In order for this deal to get this far, a couple of these conglomerates have given ground which is historic. I and I would assume other independent operators look forward to competing in world of smaller bundles, or even a-la-carte that provides our customers with more choice. MI-Connection has the infrastructure and technology to do so and in my opinion, this is a step in the right direction.
I would also add that MI-Connection has the most robust data offering in the markets we serve with a tremendous amount of upside opportunity. Over-the-top offerings can only increase this demand.”
That certainly sounds good, but one also has to wonder if this might be a bit of “whistling past the graveyard”.
Sling TV, particularly with its groundbreaking inclusion of ESPN, could be a game changer. Nobody truly knows how many people that might attract or if it will catch fire outside of its target market segments. If it does, it could very well hit Mi-Connection in its main revenue source and stymie its progress towards profitability. According to FY2013 budget numbers on the Town of Davidson website, 58% of Mi-Connection’s revenue was expected to come from video that year with the rest split between voice and data.
As a bit of anecdotal evidence for why this could be an issue, my household “cut the cord” from Mi-Connection about three months ago. Two of my neighbors recently told me their main reason for not also doing so was access to ESPN.
None of us are millennials, but all of us were looking at it as a way to cut household costs.
My setup of Netflix, Amazon Prime, Hulu Plus along with an expected addition of Sling TV for College Basketball season will run about $850/year less than what I paid previously. That includes a comparable broadband connection on a promotional rate and purchase of a couple of digital antennas.
Is it for everybody? Absolutely not. There are definitely trade-offs.
However, after a three month experiment, I can also say I will probably never go back to a cable subscription again, and that’s the challenge Mi-Connection faces in the future.
If/when cord cutters do return to companies like Mi-Connection it will be for significantly less money as data-only subscribers.
Welcome to the brave new world out there in TV land.
This post first appeared in the Herald Weekly
Bonus Observation: After submitting this post for publication in the Herald Weekly, I received notice from Sling TV that I would be included in their reviewers program to test the product over the next year. Stay tuned for future reviews, but first impressions are definitely very positive.
Tuesday, September 9, 2014
Towns Ask Feds at FCC to 'Preempt' NC State Law
In a case with potentially national repercussions, the Towns of Mooresville and Davidson have waded into the fray over municipal broadband network ownership.
On August 28th, both towns submitted comments supporting petitions to the Federal Communications Commission by Wilson, NC and Chattanooga, TN asking the FCC to 'preempt' North Carolina law governing municipal owned communications networks. This State legislation passed in 2011 as H129 with strong bi-partisan support and commonly goes by the name - the 'Level Playing Field' law. This law outlines the requirements municipalities must meet to operate their own retail communications networks. It does not strictly prohibit them from doing so, but it does ensure that public coffers are not a limitless backstop for any funding shortfall. Maybe most importantly for taxpayers it requires that any debt incurred for this type of operation be voter approved. (In a bit of irony, Mi-Connection is actually exempted from most provisions of this law because it was created before the law passed.)
In their comments, the towns that own the money losing Mi-Connection cable operation "strongly support and encourage" the Federal Government to invalidate this State legislation and force North Carolina to allow municipalities unfettered access to make the same mistake they have made by entering the competitive telecommunications marketplace. (See here and here for the Davidson and Mooresville submissions.)
Mi-Connection was formed without voter approval of the massive debt which now weighs down the operation. For residents of these two towns there can be little doubt that the decision to form Mi-Connection is the most damaging financial decision in their towns' histories. This is particularly true for tiny Davidson where at one point its annual subsidies to the cable company equaled nearly a quarter of the town's annual budget.
This damage was caused by a lack of due diligence prior to getting into the business, a poor initial management team that needed to be replaced, and operational decisions that took years to reverse - all examples of exactly why local government should not be involved in a private sector business. These are all examples of exactly why a law like H129 is needed. Mi-Connection is the poster child for the Level Playing Field. These things combined with a brutally competitive industry landscape have resulted in millions of dollars in annual subsidies from the towns. However, in the towns' submissions one gets the impression a large part of the failure of Mi-Connection is actually due to the Level Playing Field law - a law that would not pass until four years after Mi-Connection was formed in 2007 and began wracking up deficits.
Here's what the towns told the FCC:
"Numerous plans that were in the works by various local North Carolina communities to build fiber networks for retail business and residential use ground to a halt with the passage of Section 160A-340 (known as “H129”). The uncertainty caused by the proposed legislation was a major reason a collaborative effort by the towns of Cornelius, Davidson, Huntersville, Mooresville and Troutman and Mecklenburg County ended with 3 of the entities dropping out."
Really??? An unpassed law was the reason for these town's dropping out and that's why Mooresville and Davidson were left holding the bag when a risky decision went south? That seems a bit unlikely, so we checked with a couple of elected officials from towns that dropped out who were involved with this decision back in 2007.
When asked if the threat of Level Playing Field legislation impacted the decision-making process to join Mi-Connection here's what State Legislator Charles Jeter had to say.
"I was a member of the Huntersville Town Board at that time. I was also one of the two Huntersville Commissioners to be assigned to the working group committee of the parties that met often on behalf of the Town of Huntersville.
As to your question regarding the level playing field law… I don’t remember it being discussed. In fairness it was some eight years ago and there were a great number of moving parts that were discussed."
Cornelius Commissioner David Gilroy was more direct.
"Absolutely no role whatsoever. We pulled out because it was stupid in countless ways frankly."
So, there you have it. The failure of Mi-Connection lies at the feet of the politicians who supported it and not with some blocking state legislation.
There are also other issues with these submissions...
Documents obtained by aShortChronicle show that the towns' comments were hardly more than canned copy provided to Mi-Connection by the local government telecom lobbying group SEATOA with instructions to customize the letter as needed. (If you look at the two links above, you will notice that the two documents are identical except for the names of the towns.) It appears the towns did hardly any customization of this lobbyist content and where they did update this copy it was more of an attempt to rewrite the history of Mi-Connection as described above than to provide any real justification for why the Level Playing Field law should be preempted.
Making matters worse, it appears the decision to submit these comments to the FCC was not fully discussed by the town Boards before these supporting comments were submitted by staff on the towns behalf. This created a somewhat uncomfortable moment in Davidson when Commissioner Beth Cashion brought the issue up at the town's September 9th monthly meeting expecting to engage in further discussion on the subject only to be told by Town Manager Leamon Brice that the comments had already been submitted - a decision that was clearly made by staff on its own.
So, here you have our towns asking for the Federal Government to overturn a state law - a law that has bi-partisan support. They are using canned lobbyist content modified in a way that is factually incorrect. And the effort appears to driven more by staff than our elected officials.
Wonderful!
Action Opportunity: If you want to submit your own comment to the FCC telling them how bad an idea it is to overturn this type of state law, they are taking comments until September 29th. Here's the link. It's for proceeding 14-115.
Correction: Commissioner Cashion brought up this issue at the September monthly meeting for further discussion - not August as was incorrectly reported earlier.
On August 28th, both towns submitted comments supporting petitions to the Federal Communications Commission by Wilson, NC and Chattanooga, TN asking the FCC to 'preempt' North Carolina law governing municipal owned communications networks. This State legislation passed in 2011 as H129 with strong bi-partisan support and commonly goes by the name - the 'Level Playing Field' law. This law outlines the requirements municipalities must meet to operate their own retail communications networks. It does not strictly prohibit them from doing so, but it does ensure that public coffers are not a limitless backstop for any funding shortfall. Maybe most importantly for taxpayers it requires that any debt incurred for this type of operation be voter approved. (In a bit of irony, Mi-Connection is actually exempted from most provisions of this law because it was created before the law passed.)
In their comments, the towns that own the money losing Mi-Connection cable operation "strongly support and encourage" the Federal Government to invalidate this State legislation and force North Carolina to allow municipalities unfettered access to make the same mistake they have made by entering the competitive telecommunications marketplace. (See here and here for the Davidson and Mooresville submissions.)
Mi-Connection was formed without voter approval of the massive debt which now weighs down the operation. For residents of these two towns there can be little doubt that the decision to form Mi-Connection is the most damaging financial decision in their towns' histories. This is particularly true for tiny Davidson where at one point its annual subsidies to the cable company equaled nearly a quarter of the town's annual budget.
This damage was caused by a lack of due diligence prior to getting into the business, a poor initial management team that needed to be replaced, and operational decisions that took years to reverse - all examples of exactly why local government should not be involved in a private sector business. These are all examples of exactly why a law like H129 is needed. Mi-Connection is the poster child for the Level Playing Field. These things combined with a brutally competitive industry landscape have resulted in millions of dollars in annual subsidies from the towns. However, in the towns' submissions one gets the impression a large part of the failure of Mi-Connection is actually due to the Level Playing Field law - a law that would not pass until four years after Mi-Connection was formed in 2007 and began wracking up deficits.
Here's what the towns told the FCC:
"Numerous plans that were in the works by various local North Carolina communities to build fiber networks for retail business and residential use ground to a halt with the passage of Section 160A-340 (known as “H129”). The uncertainty caused by the proposed legislation was a major reason a collaborative effort by the towns of Cornelius, Davidson, Huntersville, Mooresville and Troutman and Mecklenburg County ended with 3 of the entities dropping out."
Really??? An unpassed law was the reason for these town's dropping out and that's why Mooresville and Davidson were left holding the bag when a risky decision went south? That seems a bit unlikely, so we checked with a couple of elected officials from towns that dropped out who were involved with this decision back in 2007.
When asked if the threat of Level Playing Field legislation impacted the decision-making process to join Mi-Connection here's what State Legislator Charles Jeter had to say.
"I was a member of the Huntersville Town Board at that time. I was also one of the two Huntersville Commissioners to be assigned to the working group committee of the parties that met often on behalf of the Town of Huntersville.
As to your question regarding the level playing field law… I don’t remember it being discussed. In fairness it was some eight years ago and there were a great number of moving parts that were discussed."
Cornelius Commissioner David Gilroy was more direct.
"Absolutely no role whatsoever. We pulled out because it was stupid in countless ways frankly."
So, there you have it. The failure of Mi-Connection lies at the feet of the politicians who supported it and not with some blocking state legislation.
There are also other issues with these submissions...
Documents obtained by aShortChronicle show that the towns' comments were hardly more than canned copy provided to Mi-Connection by the local government telecom lobbying group SEATOA with instructions to customize the letter as needed. (If you look at the two links above, you will notice that the two documents are identical except for the names of the towns.) It appears the towns did hardly any customization of this lobbyist content and where they did update this copy it was more of an attempt to rewrite the history of Mi-Connection as described above than to provide any real justification for why the Level Playing Field law should be preempted.
Making matters worse, it appears the decision to submit these comments to the FCC was not fully discussed by the town Boards before these supporting comments were submitted by staff on the towns behalf. This created a somewhat uncomfortable moment in Davidson when Commissioner Beth Cashion brought the issue up at the town's September 9th monthly meeting expecting to engage in further discussion on the subject only to be told by Town Manager Leamon Brice that the comments had already been submitted - a decision that was clearly made by staff on its own.
So, here you have our towns asking for the Federal Government to overturn a state law - a law that has bi-partisan support. They are using canned lobbyist content modified in a way that is factually incorrect. And the effort appears to driven more by staff than our elected officials.
Wonderful!
Action Opportunity: If you want to submit your own comment to the FCC telling them how bad an idea it is to overturn this type of state law, they are taking comments until September 29th. Here's the link. It's for proceeding 14-115.
Correction: Commissioner Cashion brought up this issue at the September monthly meeting for further discussion - not August as was incorrectly reported earlier.
Tuesday, July 22, 2014
HOT Lanes: Disagree with Davidson Mayor John Woods? You are a liar or a scaredy cat!
We've recently been pretty rough on Davidson Mayor John Woods. But with all his recent squashing of debate at Davidson Town Hall and colluding with the other North Mecklenburg Mayors to push the much maligned HOT Lanes project forward, it's criticism well earned.
However, his most recent quote in the Lake Norman Citizen takes the cake. It shows an utter disdain for anyone who disagrees with him whether they be a citizen or a fellow elected official. Referring to those who oppose the HOT Lanes plan for I77 Mayor Woods says...
If you ever disagree with Mayor Woods, you can be sure that he'll toss out the "misinformation" accusation at the earliest opportunity. Tellingly, this accusation is never accompanied by exactly what the misinformation was or what the correct information should be. He sort of just throws it out there and lets it hang in the air to color the debate. It's nothing but a polite way to call someone a liar without using the word.
Ironically, he has a long history of using this divisive tactic on major local issues where he's the one who turned out to be wrong.
In 2012 regarding the now sidetracked Red Line commuter rail project, John Woods had this to say in DavdisonNews.net ...
While John Woods may think the debate is over regarding commuter rail, the actual owners of the track, Norfolk Southern, obviously would disagree. The rail road company recently put the kibosh on track sharing in the corridor which effectively kills the project unless hundreds of millions in new funding appears, or the State gives them a sweetheart deal on their permanent use of alternative track currently owned by the North Carolina Rail Road. Additionally, Mayor Woods himself recently said at a Community Chat in Davidson that the current financing plan for the Red Line - the financing plan he was defending in the above quoted article - is "dead"
Were those opposing the Red Line in 2012 spreading misinformation? Or were they right?
Let's go even further back in time to 2007 and we'll find, John Woods saying this to DavdisonNews.net about the oh so successful Mi-Connection deal he helped push through.
For those in Davidson who have had to suffer with the fallout of the terrible decision to enter the cable business, this one should be particularly bile inducing. This decision pushed and supported by John Woods nearly bankrupted the town. It has cost the town dearly in lost opportunities as millions upon millions are poured into the operation to bail out the politicians who foisted it on the citizens.
Some of the Davidson locals who opposed this disaster had experience in high finance, technology, and telecommunications. One such person, former Mi-Connection Chairman, John Venzon, opposed the decision to create the company, but he then had the courage to step in and spend years cleaning up the mess John Woods helped create.
Again, were those opposed to this decision spreading misinformation, or were they right?
So, back to the widening of I77...
Mayor Woods has recently become the face of the HOT Lanes project among local elected officials. He is the project's most vocal champion, and so the "misinformation" accusations start flying. This time however, he's taking the rhetoric one step further claiming other leaders have somehow become "scared" by HOT Lanes opponents - by people who are simply asking questions and demanding information about a project that will impact their lives for decades.
Let's be clear. The other elected officials who are questioning the project aren't scared. They are doing their jobs to protect the citizens who elected them - a job that Mayor Woods has failed at repeatedly in the past.
However, his most recent quote in the Lake Norman Citizen takes the cake. It shows an utter disdain for anyone who disagrees with him whether they be a citizen or a fellow elected official. Referring to those who oppose the HOT Lanes plan for I77 Mayor Woods says...
Ironically, he has a long history of using this divisive tactic on major local issues where he's the one who turned out to be wrong.
In 2012 regarding the now sidetracked Red Line commuter rail project, John Woods had this to say in DavdisonNews.net ...
Were those opposing the Red Line in 2012 spreading misinformation? Or were they right?
Let's go even further back in time to 2007 and we'll find, John Woods saying this to DavdisonNews.net about the oh so successful Mi-Connection deal he helped push through.
Some of the Davidson locals who opposed this disaster had experience in high finance, technology, and telecommunications. One such person, former Mi-Connection Chairman, John Venzon, opposed the decision to create the company, but he then had the courage to step in and spend years cleaning up the mess John Woods helped create.
Again, were those opposed to this decision spreading misinformation, or were they right?
So, back to the widening of I77...
Mayor Woods has recently become the face of the HOT Lanes project among local elected officials. He is the project's most vocal champion, and so the "misinformation" accusations start flying. This time however, he's taking the rhetoric one step further claiming other leaders have somehow become "scared" by HOT Lanes opponents - by people who are simply asking questions and demanding information about a project that will impact their lives for decades.
Let's be clear. The other elected officials who are questioning the project aren't scared. They are doing their jobs to protect the citizens who elected them - a job that Mayor Woods has failed at repeatedly in the past.
Tuesday, April 1, 2014
Town of Davidson Plans to Lower Taxes Next Budget Cycle Due to Improved Mi-Connection Financial Situation
In light of the recent volatile negotiations between Viacom and local cable operators like Mi-Connection, town officials have decided to let Viacom channels be removed from the cable system altogether while keeping rates unchanged. Acknowledging that negotiating with those nasty private sector companies is HARD, town officials did point out an upside to this plan.
This plan will dramatically improve EBITDA for MiC by lowering costs while keeping revenue unchanged. The net result will reduce the subsidies required from the town going forward to prop up the local cable operation. This will allow the Town of Davidson to lower taxes with the "windfall of new revenue" from not having to pay as much subsidy.
As the only comment regarding the negative impact to Davidson families for losing channels like Nickelodeon and Nick Jr one official who wished to remain anonymous said "Can't the kids all watch Disney or something?
In light of all the local April Fools stories about draining LKN, a parking deck on the Town Green, and Commissioner Graham building a 12 story appartment tower, we wanted to get in on the act. As tense negotiations with content providers become the norm for MiC, hopefully, we don't all wake up one day with this scenario and logic being actual reality.
This plan will dramatically improve EBITDA for MiC by lowering costs while keeping revenue unchanged. The net result will reduce the subsidies required from the town going forward to prop up the local cable operation. This will allow the Town of Davidson to lower taxes with the "windfall of new revenue" from not having to pay as much subsidy.
As the only comment regarding the negative impact to Davidson families for losing channels like Nickelodeon and Nick Jr one official who wished to remain anonymous said "Can't the kids all watch Disney or something?
In light of all the local April Fools stories about draining LKN, a parking deck on the Town Green, and Commissioner Graham building a 12 story appartment tower, we wanted to get in on the act. As tense negotiations with content providers become the norm for MiC, hopefully, we don't all wake up one day with this scenario and logic being actual reality.
Sunday, March 3, 2013
Big Shoes to Fill in Davidson
With the news that the Venzon family of River Run will be moving out of the area, Davidson has big shoes to fill - not just one pair, but two.
Losing John Venzon as Chairman of the Mi-Connection Board of Directors and Laurie Venzon on the Davidson Town Board removes the two people who have done more than any others to stabilize Davidson's financial situation and repair the damage done by the creation of the locally owned cable company. It is hard to overstate the potential impact of this dual loss.
While neither of them has given an exact date for their departures from their respective boards, those dates are surely coming. Davidson needs to prepare.
On the Mi-Connection side of the equation, John Venzon's eventual departure as Chairman of the Board removes a significant amount of big business experience from an organization competing in on of the biggest and most cutthroat of big business industries. It comes at a time where Mi-Connection appears to be turning the corner or at least no longer sliding backwards. His leadership directly helped push through the interlocal agreement renegotiation which encourages Mooresville to more aggressively promote the company, and he deserves credit for bringing in more experienced executives to run the company's day-to-day operations.
It's safe to say that without John Venzon's leadership, Mi-Connection would be in a much worse situation than it is today.
If you ever attended a Mi-Connection Board meeting you would immediately recognize that the questions John Venzon asks helped guide the company in the right direction. You would also recognize in years past that the answers received were often not complete or were along the lines of "we'll get back to you". The changes implemented in the past year should remedy that, and John deserves the credit for making it happen.
A similar loss will be felt by the Town of Davidson.
In recent years Laurie Venzon worked diligently with Town staff to transform the Town budgeting process into something more transparent and organized - making it possible to compare year to year numbers. Whenever asked she provides citizens clarifications and detailed explanations around where the money comes from and where it goes. If you are interested in "numbers" Laurie is the person to speak with on the Board. She played a leading role in last year's renegotiation of the interlocal agreement with Mooresville on Mi-Connection - greatly improving Davidson's cash-flow situation. She is often the lone voice on the Board expressing the financially conservative position on any given subject.
In fact, as recently as this past Tuesday she played that role.
During the budget discussion at the Tuesday work session, the idea was floated that Davidson might consider issuing some bonds to speed along some additional spending projects. Commissioner Venzon immediately spoke up that the State's Local Government Commission (LGC) would likely frown on that - in light of the Town's debt burden due to Mi-Connection.
Commissioner Venzon understands that tax dollars are your dollars. Losing that "voice of reason" on the Davidson Board will have an impact.
So how should Davidson proceed?
The decision to select a new Chairman for Mi-Connection requires agreement from Mooresville on the replacement of John Venzon in his at-large seat on the board if and when that becomes vacant. The rules are set out in this amendment to the interlocal agreement. Davidson was fortunate to have a town resident fill that position. However, going forward what the company needs most is solid business experience and a tremendous amount of dedication. Finding someone with strong industry experience would also be a big plus. Chief executive David Augur brings that to the table, but it would be great to have a second industry expert on the Mi-Connection Board in addition to Steven Miller
Regardless of who is selected, whether the person comes from Davidson, Mooresville or from somewhere else, the replacement needs to be committed to the goal of getting Mi-Connection to the point where it can be sold. John Venzon stated this goal very clearly last year.
"This is our singular focus," Venzon says. "To grow the system and prepare for an exit that protects the towns and the citizens."
A change in leadership here should not result in a change in direction.
As for filling the vacancy on the Davidson Town Board...
The need to replace a member of the Town Board makes last year's decision to abandon efforts to create 4-year terms seem almost prescient. If the Town had moved to 4-year terms, it is highly likely that Laurie Venzon would have been one of the two Board members receiving those longer terms. Since joining the Board she has always been one of the top two vote getters. In a way, her leaving the Board validates that decision and proves the point that longer terms does not ensure less turnover.
See here for the General Statute governing the subject of vacancies on municipal governing boards. The Town Board could appoint a successor. However, just like during the 4-year terms debate, just because the Board can do something unilaterally, does not mean they should do something unilaterally.
With filing for the 2013 elections taking place in July, the appropriate decision is to leave the seat unfilled until this year's vote. The voters should be allowed to decide without the existing Board handing someone de facto incumbency by appointing a replacement mere months before the scheduled election.
Doing otherwise could and should be seen by voters as an effort by the Town to stack the deck in favor of one candidate over any potential others. It would discourage qualified individuals from filing if they believed the "fix is in" prior to the campaign season even starting.
As the next few months unfold, there will be much discussion on how these two vacancies will affect the town. Who the replacements are and how they are chosen will set the tone for Davidson's immediate future. Let's hope our leaders choose wisely.
Losing John Venzon as Chairman of the Mi-Connection Board of Directors and Laurie Venzon on the Davidson Town Board removes the two people who have done more than any others to stabilize Davidson's financial situation and repair the damage done by the creation of the locally owned cable company. It is hard to overstate the potential impact of this dual loss.
While neither of them has given an exact date for their departures from their respective boards, those dates are surely coming. Davidson needs to prepare.
On the Mi-Connection side of the equation, John Venzon's eventual departure as Chairman of the Board removes a significant amount of big business experience from an organization competing in on of the biggest and most cutthroat of big business industries. It comes at a time where Mi-Connection appears to be turning the corner or at least no longer sliding backwards. His leadership directly helped push through the interlocal agreement renegotiation which encourages Mooresville to more aggressively promote the company, and he deserves credit for bringing in more experienced executives to run the company's day-to-day operations.
It's safe to say that without John Venzon's leadership, Mi-Connection would be in a much worse situation than it is today.
If you ever attended a Mi-Connection Board meeting you would immediately recognize that the questions John Venzon asks helped guide the company in the right direction. You would also recognize in years past that the answers received were often not complete or were along the lines of "we'll get back to you". The changes implemented in the past year should remedy that, and John deserves the credit for making it happen.
A similar loss will be felt by the Town of Davidson.
In recent years Laurie Venzon worked diligently with Town staff to transform the Town budgeting process into something more transparent and organized - making it possible to compare year to year numbers. Whenever asked she provides citizens clarifications and detailed explanations around where the money comes from and where it goes. If you are interested in "numbers" Laurie is the person to speak with on the Board. She played a leading role in last year's renegotiation of the interlocal agreement with Mooresville on Mi-Connection - greatly improving Davidson's cash-flow situation. She is often the lone voice on the Board expressing the financially conservative position on any given subject.
In fact, as recently as this past Tuesday she played that role.
During the budget discussion at the Tuesday work session, the idea was floated that Davidson might consider issuing some bonds to speed along some additional spending projects. Commissioner Venzon immediately spoke up that the State's Local Government Commission (LGC) would likely frown on that - in light of the Town's debt burden due to Mi-Connection.
Commissioner Venzon understands that tax dollars are your dollars. Losing that "voice of reason" on the Davidson Board will have an impact.
So how should Davidson proceed?
The decision to select a new Chairman for Mi-Connection requires agreement from Mooresville on the replacement of John Venzon in his at-large seat on the board if and when that becomes vacant. The rules are set out in this amendment to the interlocal agreement. Davidson was fortunate to have a town resident fill that position. However, going forward what the company needs most is solid business experience and a tremendous amount of dedication. Finding someone with strong industry experience would also be a big plus. Chief executive David Augur brings that to the table, but it would be great to have a second industry expert on the Mi-Connection Board in addition to Steven Miller
Regardless of who is selected, whether the person comes from Davidson, Mooresville or from somewhere else, the replacement needs to be committed to the goal of getting Mi-Connection to the point where it can be sold. John Venzon stated this goal very clearly last year.
"This is our singular focus," Venzon says. "To grow the system and prepare for an exit that protects the towns and the citizens."
A change in leadership here should not result in a change in direction.
As for filling the vacancy on the Davidson Town Board...
The need to replace a member of the Town Board makes last year's decision to abandon efforts to create 4-year terms seem almost prescient. If the Town had moved to 4-year terms, it is highly likely that Laurie Venzon would have been one of the two Board members receiving those longer terms. Since joining the Board she has always been one of the top two vote getters. In a way, her leaving the Board validates that decision and proves the point that longer terms does not ensure less turnover.
See here for the General Statute governing the subject of vacancies on municipal governing boards. The Town Board could appoint a successor. However, just like during the 4-year terms debate, just because the Board can do something unilaterally, does not mean they should do something unilaterally.
With filing for the 2013 elections taking place in July, the appropriate decision is to leave the seat unfilled until this year's vote. The voters should be allowed to decide without the existing Board handing someone de facto incumbency by appointing a replacement mere months before the scheduled election.
Doing otherwise could and should be seen by voters as an effort by the Town to stack the deck in favor of one candidate over any potential others. It would discourage qualified individuals from filing if they believed the "fix is in" prior to the campaign season even starting.
As the next few months unfold, there will be much discussion on how these two vacancies will affect the town. Who the replacements are and how they are chosen will set the tone for Davidson's immediate future. Let's hope our leaders choose wisely.
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