Commentary: East versus West...again


In August 2014, a state bond bill authorized $50 million to finance "last mile" broadband for homes and businesses through a fund controlled by MBI. Another bill required MBI's parent organization, the Massachusetts Technology Collaborative, to convene a working group of potential grant recipients to provide advice on the process of granting the money. It never happened.

Instead, MBI anointed itself as the recipient of the funds, and at several public meetings that fall announced that it would build a regional fiber network to be owned and operated by the municipal cooperative WiredWest. MBI would put up about one third of the money, participating towns almost two-thirds. Despite the unprecedented financial commitment required, Select Boards in 31 towns, all members of WiredWest, agreed to move forward.

As the result of a campaign by WiredWest and its members, 24 town meetings overwhelmingly approved borrowing a total of $38 million, with several more to vote next year. In response to the campaign 7,000 people signed up for Internet service from WiredWest and made a $49 refundable deposit, nearly 40 percent of all households in those towns.

As to ownership of the network, some towns wanted to own the infrastructure within their borders themselves. But fiber running through a town might only serve people in another town. Components of the network might be located in one town but serve two or more. Major central components, necessarily located somewhere, would serve all towns. So a consensus emerged that towns would jointly own the network through WiredWest, and that such a unified regional network was the most cost-effective and least risky use of their money.

However, while its member towns controlled WiredWest, they did not actually own it. So counsel retained by WiredWest recommended that the WiredWest corporation, which had no shares, be converted into a Limited Liability Company, with each town to get shares in the WiredWest LLC in proportion to the funds they commit to the project. They would own WiredWest, and WiredWest would own the network. By pooling their funds in their co-op, WiredWest would then channel them to MBI. Towns would be better able to oversee the design and construction of the network, and the use of town funds by MBI.

In January 2015 Eric Nakajima became director of MBI, although he is a Patrick Administration holdover. His personal view was that towns should own the network infrastructure separately, a divide-and-conquer strategy. Last summer he began drafting an MBI last-mile policy, and said WiredWest would have input into the draft.

WiredWest never had that opportunity. Nakajima got his board of directors to approve the policy on July 30 and only then presented it to WiredWest as a fait accompli. The policy required that the network be owned by its "respective municipalities". To WiredWest, ownership by the towns through a cooperative would comply with the policy. In a telephone conference on Aug. 5, Elizabeth Copeland, MBI's general counsel, agreed. Nakajima, who was not on the call, apparently did not.

During the fall, WiredWest worked through multiple drafts of an operating agreement that towns would sign and which would govern the LLC. This involved input from its town delegates, town officials and town counsels, town broadband committees and others. MBI was briefed by WiredWest and was well aware of the progress being made toward having a document ready to be signed on Jan. 9, 2016.

During that time, despite WiredWest's invitation to do so, MBI made almost no comment on the provisions of the agreement. As was soon to become all too clear, Nakajima was opposed to its implementation in any form involving ownership of the network by WiredWest. Yet, most towns had concluded, and in some cases told him directly, that they did not want to own the infrastructure on their own, but through shared ownership in WiredWest.

In a pre-emptive strike as Jan. 9 nears, MBI issued a statement on Dec. 1 saying that the operating agreement is not in "the best interest of the towns, or their residents," that "MBI will not authorize expenditure of state funds" for the WiredWest LLC, and "recommends towns not sign."

Once again, Eastern Mass. is telling Western Mass. what is in its best interest. Despite what the towns may think. Despite their providing two-thirds of the funds. Despite that their taxpayers, not MBI, will be on the hook for any cost overruns in building and operating the network. MBI simply does not want to be subject to any control by the towns.

As a result of MBI's statement, the project has been thrown into chaos, with further delay the certain outcome. Three things must happen quickly to resolve the impasse:

• The Western Mass. Legislative delegation must intervene on behalf of its constituents.

• Hearings should be held, in Western Mass., on MBI's operations, expenditures and arbitrary actions, including failure to convene the grant working group.

• Eric Nakajima must step up and respect the best interest of the towns as they see it, or step down, so that MBI and WiredWest may work together for the common good.

Steve Nelson is legal/governance chair of WiredWest. The opinions expressed are his own and not necessarily those of WiredWest.


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