AN EAGLE EYE TEAM INVESTIGATION | BROADBAND IN THE BERKSHIRES

Inside the broadband meltdown: WiredWest retools after losing faceoff with MBI

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A broadband vision for the Berkshires crashed and burned one afternoon in December 2015.

A year later, people still poke through the wreckage. They want to understand why the Massachusetts Broadband Institute halted its long-running alliance with WiredWest, a nonprofit, grassroots cooperative that had signed up dozens of towns to build and operate a shared internet network.

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By linking through rings of fiber-optic cable, the thinking went, rural towns without broadband internet service could fashion an economical and reliable broadband network and join the 21st century.

Tech activists and town officials believed it. And so for a time did state employees assigned the task in early 2009 of closing the digital divide in 19 unserved towns in the Berkshires and 25 others throughout Western Massachusetts.

But then those holding the purse strings backed away. A MBI official used a single memo to shoot down a plan from WiredWest.

Attempts to bring the sides together failed.

In interviews with The Eagle, people on both sides of the breakup provided a first full public accounting of what went wrong, including admissions of mistakes they and their own allies made.

Eric Nakajima had been in his post as MBI’s executive director for less than a year when he recommended towns not sign agreements with WiredWest.

Nakajima acknowledges now he didn’t say enough publicly about his growing doubts regarding the WiredWest business model. And the agency as a whole hadn’t been forthright about its prospective partner’s plan.

“MBI had continually punted on the [big] question, and frankly, it’s not a question you can put off,” Nakajima told The Eagle.

Kimberly Longey of Plainfield, a veteran town official and one of the early backers of WiredWest, said her side should have pressed in 2014 to get a memorandum of agreement in place before Gov. Deval Patrick left office. “That should have been the priority,” she said. “Get that written down.”

But she also notes that as questions arose about the WiredWest plan, so did tempers.
WiredWest was “acting as a coalition of angry people. It started to undermine the credibility of WiredWest as an organization that could play in this space,” said Longey.

“People were naive. At MBI and in WiredWest,” she said.

PAYING PRICE

Some believe the outcome of the feud will shortchange rural broadband connectivity in the region for years to come.

Susan Crawford, a law professor at Harvard University who co-directs the Berkman Klein Center for Internet & Society, says a change from backing municipally owned broadband networks to preferring private-sector solutions is “killing” the communities of Western Massachusetts.

In a recent online commentary, Crawford came out swinging: “This is the story of a dramatic failure of imagination and vision at the state level: Governor Charlie Baker’s apparent insistence that Massachusetts relegate small towns to second-rate, high-priced, monopoly-controlled (and unregulated) communications capacity. It’s a slow-rolling tragedy that will blight Western Massachusetts for generations.”

For years, “regional” had been the watchword when it came to ushering internet connections into data-starved rural Massachusetts.

Today, partial regional broadband projects are still on the table, as the state accelerates its drive to wire unserved communities.

But in a series of policy changes, the MBI now expresses a preference for working with private companies that have track records of service and deep pockets — a shift that took WiredWest out of the running.

JOINED AT HIP?

In 2014 and 2015, MBI and leaders of WiredWest were traveling western and central Massachusetts giving tech briefings to town leaders. Their joint tour had the look of a victory lap.

A slide presentation dated Dec. 11, 2014, listed the MBI, WiredWest and the Franklin Regional Council of Governments as co-sponsors of a financial chalk talk on last-mile broadband service. WiredWest was depicted on another slide, with an arrow labeled “asset transfer” pointing to the group.

In a talk on financing last-mile connections — the final step of linking homes to the network — through a “cooperative regional model,” Greg Sandomirsky of the law firm Mintz Levin offered a five-step plan. It ended by stating that after MBI designed and built a last-mile network, it would fall to “WiredWest to assume Title and Overall Operating Responsibility upon Completion.”

While Sandomirsky cautioned that WiredWest’s operating results “are uncertain” and would depend on factors like customer use, expenses and technological change, towns could see money flowing back their way. “If WiredWest succeeds … towns may be able to rely on distributions from WiredWest to offset the [general obligation] bond debt service in whole or in significant part.”

Things seemed to be going well.

Another presentation, by Joe Markarian of the Franklin Regional COG, followed up on that point. “Once requisite subscription rates are reached and the regional network is in full operation, there is the potential for excess revenues, which would be distributed to the towns.”

But a year later, that plan was in tatters.

In a letter to town leaders Dec. 1, 2015, Nakajima recommended they not sign up with WiredWest.

MISSING GROUNDRULES

In a two-hour interview with The Eagle, Nakajima said he saw no alternative.

Nakajima had arrived at a pivotal time for the WiredWest drive.

He took his post as the MBI’s executive director in January 2015, a holdover from the last term of Gov. Patrick, a Democrat.

The incoming Republican administration led by Gov. Baker was just getting its footing.

Nakajima said that one of his first steps, as Baker’s office dealt with a blizzard and a crisis within the MBTA, was to dig through documents. He said he wanted to understand the state’s ground rules for the last-mile project.

To his shock, he concluded there weren’t any. The outgoing Patrick administration had been winding down other projects.

The year before, in Nakajima’s view, the MBI had only begun planning for the final link to homes and businesses — the task WiredWest had been mobilizing to solve since its founding in 2011.

“This was barely ramping up,” Nakajima said of the MBI’s last-mile work. “I thought the project was not as well organized as it could be and there was a lot of work that needed to be done.”

He said he arrived unaware of the tension between the two organizations. “But boy, was it there.”

Also missing, in his view, were key agreements.

“There wasn’t the political will at the [Massachusetts Technology Collaborative] and MBI to really establish a neutral and more transparent framework” of an agreement with WiredWest,

Nakajima said. Not doing that impeded progress, he said.

By the fall of 2015, he’d decided the solution WiredWest was offering communities contained a fatal flaw — one the organization itself disputes — and decided it could not be allowed to own a network purchased with public money.

Nakajima also worried that the WiredWest model was untested and unproven. “I came in very concerned that there wasn’t a process or clear standard.” Coming back to that question in 2015 caused friction.

“If you try to do it mid-course, it will inevitably lead to misunderstanding, which is exactly what happened,” he said.

THE ‘AMBUSH’


Nakajima’s decision stunned leaders of WiredWest, who marshaled research suggesting that its regional, cooperative solution, as Crawford and other broadband experts believe, would be cheaper, more democratic and more reliable.

To this day, top members of all-volunteer WiredWest team believe they were sandbagged by Nakajima. The gulf in trust opened throughout 2015, but came to a head Dec. 1, 2015.

“We were all totally in agreement at the end of 2014,” said Steve Nelson of Washington, a WiredWest executive committee member. That included the legal terms of the plan, in his view.

“We had lawyers up the wing-wang who approved it,” Nelson said.

Kopelman and Paige, the big municipal law firm, had run a pro bono review on behalf of towns. WiredWest says the firm upheld the validity of the ownership model that MBI called into question.

But the MBI hired a Mintz Levin lawyer to kick the tires — and he found problems. Another MBI consultant faulted the WiredWest operations and financial plan. Though WiredWest provided answers and explanations, the criticism stuck.

Nakajima gave WiredWest 15 minutes notice that he was sending his message to towns, according to members of the group.

“It was an ambush,” said Bob Labrie, an executive committee member from Goshen.

“And a hatchet job,” said Jim Drawe of Cummington, WiredWest’s chairman.

One concern the state raised about WiredWest was that it could mortgage the asset it held on a cooperative basis for member towns. While that was true, the group’s leaders argue that two-thirds of members would have had to vote to approve the step.

“MBI was able to use that as a wedge issue to get towns to worry about losing their assets,” said Dave Dvore, an executive committee member from Rowe.
Seeking to close the deal, Drawe, Nelson and fellow leader Monica Webb visited all member towns from January to May in 2015 to speak to the need to authorize borrowing.

In all, some two dozen towns did that, raising $38 million in funding for their portions of the network. Residents of the towns turned out in record numbers, which Drawe and others saw as testimony to the importance of the service — and faith in the WiredWest solution devised in part by their own towns’ delegates.

“We felt good because we had momentum,” said Labrie.

A previous interim director at MBI had told WiredWest that if it wasn’t standing by, ready to build and operate a regional network, the state agency would have had to create such a group.

“Everybody was totally clear on what the plan was,” said Nelson. “The solution that fits most is being kept off the table by MBI.”

But within months, the plan was halted amid the state’s objections.

Observers say the plan took too long to be firmed up and then fell victim to the change in the governor’s office.

“We were in the second tier of urgency,” said Longey, who is chief operating officer of Free Press, a Northampton and Washington, D.C., nonprofit. A project championed by the previous governor became temporarily orphaned, in her view.

SALVAGE EFFORT

Lawmakers, including Senate President Stanley C. Rosenberg of Amherst and state Rep. Stephen Kulik, D-Worthington, pressed MBI to continue talks with WiredWest after the December 2015 breakdown.

The talks lasted for several months, but went nowhere.

“We forced the issue, but things came to a head over the WiredWest business model,” Kulik said.

Longey served on that negotiating effort and had one-on-one meetings with Nakajima.

The WiredWest team, after rebutting the MBI critique of its business plan, looked for common ground, but couldn’t find it.

“After the first meeting, I realized there was no full intent to proceed on MBI’s part,” Longey said. “It was just a mess. It just really broke down.”

She accepts that aspects of the WiredWest plan needed to be fixed.

One challenge was the audacity of the project.

“There was no framework for 40 towns in a delegate structure to run a multimillion-dollar tech business,” Longey said. “What happens when Savoy has a whole new Select Board? There was no exit strategy. And that’s what held everybody up. WiredWest didn’t pay enough attention to that part.”

But she regrets the lost option of a regionally owned network. “I think it’s going to further hurt already hurting communities.”

Linda Dunlavy, a member of the MBI board, said the WiredWest plan hit turbulence in part because of its scope.

“It was trying to do one big design project with one operating model,” said Dunlavy, executive director of the Franklin Regional COG.

While that may be an ideal approach, she was concerned about its sustainability. Efforts to find agreement were foiled, in her view, by deep suspicion.

“I think WiredWest didn’t trust MBI and MBI didn’t totally trust WiredWest. My fantasy — which I don’t think needs to be a fantasy — is that we have eliminated the chasm that is felt between the state and towns right now,” she said.

While WiredWest’s proposed big fix raised hackles, MBI now faces a more complex picture in many ways, Dunlavy said.

“The idea of 24 different solutions is pretty overwhelming, too,” she said.

Even if the negotiations had revived a WiredWest involvement, several participants, on both sides, expressed doubt Baker would have allowed it to move forward.

Within months, his team swung to the option of tapping help from private, for-profit companies.

“We weren’t sure where the Baker administration would be on this,” Kulik said, referring to the pause the governor ordered early last year on MBI planning.

But that turned into a new approach that Kulik generally supports.

“They really did commit to it,” he said of the Baker administration.

Even so, he understands the disappointment felt by town officials in the wake of the WiredWest rejection.

“They’ve had a hard time figuring out how to get traction on this,” he said of MBI. “They’ve always had a hard time communicating with the towns.”

Kulik added, “I think there have been too many lawyers in this. You need lawyers, but you also need an appreciation of how small towns work. It’s been harder than it should be.”

Donald Dubendorf, a Williamstown lawyer who serves on the MBI board and has been active in Berkshires internet issues for two decades, said he is convinced Baker is focused on how to get broadband into the region.

“This guy goes where angels fear to tread,” Dubendorf said.

MUTUAL BENEFITS

Nakajima, the former MBI executive director, said the initial WiredWest plan did possess an element of “genius.” That lay, he said, in its hope to support the well-being of the whole network, melding more affluent towns in with communities that face financial hardships, all for mutual advantage.

That’s the same view taken by some who study broadband networks nationally.

By shifting to an emphasis on private, for-profit providers, the MBI puts consumers at a disadvantage, said Christopher Mitchell, director of the Community Broadband Networks Initiative with the Institute for Local Self-Reliance in Minnesota.

“I think that is a recipe for these communities being poorly served,” said Mitchell, who said he has followed the Massachusetts project.

“The MBI folks decided that they knew better,” he said. “I think MBI put way too much on what high-priced consultants said.”

But he concedes that aspects of the MBI criticism of the WiredWest plan were on target, while others were overstated.

David Talbot, a fellow with the Berkman Klein Center for Internet & Society, said regional broadband networks are best able to lower costs for consumers.

“You’d get better pricing because you have economies of scale and you’re spreading risk across towns by having a larger regional network,” he said in an interview with The Eagle. “Right now, WiredWest is the closest to achieving those things, but may not be the only way to do so.”

REGIONAL GAINS

Kulik, the Worthington lawmaker, said people in Western Massachusetts understand and embrace regional solutions — even if such approaches aren’t as well regarded in Boston.

He acknowledges that while WiredWest was faulted for planning to own a shared asset paid for with public money, the new MBI approach is to award taxpayer dollars to private companies.

“That’s the glaring contradiction,” he said. “They won’t own it and yet public dollars will go toward it.”

State Rep. William “Smitty” Pignatelli of Lenox, who represents the 4th Berkshire District, had been a supporter of WiredWest, but feels MBI is now back on track and making good decisions.

That’s important, because time is of the essence, he said. He quoted Microsoft co-founder Bill Gates’ prediction, back at the turn of the last century, that America was entering the “decade of velocity.”

“We already missed the first decade,” Pignatelli said.

He believes a clash of egos on both sides complicated WiredWest’s advance, but he respects how far it got.

“I have never experienced an organization that brought 44 towns together for a common purpose,” he said. “It was beyond belief what they were able to accomplish.”

WiredWest regrouped last year and is now actively pursuing contracts with communities to manage clusters of semi-regional broadband networks — but no longer as builder and cooperative owner.

It pitched its plan to a crowd of nearly 100 in Northampton two Saturdays ago. All of its work remains the gift of volunteers determined to get broadband to rural homes and businesses.

“WiredWest still has a huge, invaluable role. Even now, it’s hanging together,” Longey said. “Just really good people who are close enough to the problem to retain the urgency of the solution.”

This story was reported by The Eagle Eye Team Investigations Editor Larry Parnass at 413-496-6214, lparnass@berkshireeagle.com or @larryparnass on Twitter. Eagle Editor Kevin Moran also welcomes your feedback on this story at kmoran@berkshireeagle.com.


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