In late February, private Internet service provider, Countrywide Broadband (CWB), announced that it and Seaport Capital together would acquire assets belonging to iTV-3, Inc. In addition to fiber networks developed in Peoria, Bartonville, and Bloomington, iTV-3 is deeply involved in bringing connectivity to the Urbana-Champaign community. The company leases fiber on the UC2B network, has expanded the network by deploying its own fiber off the UC2B fiber rings, and promised to expand the Fiber-to-the-Home (FTTH) network across the community.
In the agreement with iTV-3, the UC2B nonprofit has a right of first refusal to purchase any local iTV-3 assets deployed if iTV-3 is purchased by another company. In short, UC2B has 60 days from the date of the CWB and iTV-3 purchase agreement to decide if they want to purchase the iTV-3 fiber expansions. If the nonprofit decides not to purchase the fiber, it will continue to own the UC2B rings and CWB will own the expansion fiber.
It was only a few weeks ago that we wrote about the upcoming sale of Bristol's BVU Optinet. It is important for communities to recognize that as these networks are built, they are targets for purchase and consolidation. Fiber networks are a hot commodity and local governments may be tempted to plug short term financial problems with a sale that has implications for decades – long after those elected officials have left office.
They Chose iTV-3
The open access (FTTH) network, one of the few last-mile projects awarded funding during the first round of the American Recovery and Reinvestment Act (ARRA), cost $26 million to deploy. The network offered affordable access to residents - as low as $19.99 per month. At first, UC2B operated the network, but the organization later sought a private partner to manage and provide services. In 2014, UC2B chose iTV-3, Inc. as a partner to offer triple-play and to expand the network.
UC2B chose iTV-3 primarily because it was a local ISP; the Springfield company served other Illinois communities. iTV-3 was a subsidiary of Family Video which owns a number of video stores in the U.S. and Canada. For the past several years, the company has invested in the Internet service provider business, including purchasing smaller providers and deploying new fiber networks. The company appeared solid and had the expertise to manage the network. Under the terms of the UC2B partnership, iTV-3 agreed to lease the UC2B fiber to offer services, manage the network so other providers could offer services via the fiber, and continue to expand with its own fiber investments.
Since the start of the partnership, iTV-3 has expanded in at least one neighborhood and several others reached the qualifying threshold for pre-subscriptions. Before iTV-3 agreed to schedule fiber construction, Urbana-Champaign residents and businesses in a target neighborhood needed to reach at least a 50 percent subscription rate.
The Community Has Another Choice
In a recent Telecompetitor article, CWB President and CEO Grier Raclin said that the company is looking for more companies like iTV-3 to add to its collection:
“We’re looking for broadband [companies],” said Raclin. The company is looking primarily for companies that have deployed fiber-to-the-home or hybrid-fiber coax, he noted. But he added that “we will consider twisted pair if we have the opportunity to do a triple-play and a growth opportunity.”
“We have an opportunity to add value . . . and grow,” said Raclin.
Right now, UC2B is an asset that belongs to, and serves, the people of Urbana-Champaign. CWB appears to be a company looking to add profitable investments to its portfolio, rather than become invested in the community. The UC2B community needs to consider the long term value of controlling the network and what is at stake if CWB takes the helm.
We encourage the community to carefully consider their position within the terms of the agreement with iTV-3. We hope that the Urbana-Champaign community will consider the long term consequences if they decline to purchase the iTV-3 expansion fiber. The situation in Urbana-Champaign highlights one of the risks of public private partnerships. Once those fiber assets change hands to a company with no local stakes, Urbana-Champaign subscribers have lost some leverage; their future connectivity is in the hands of an outsider.
Listen to episode #160 of the Community Broadband Bits podcast, from July, 2015, in which Chris interviewed Brandon Bowersox Johnson from UC2B and Levi Dinkla, Vice President and CEO of iTV-3.