Last week we reported that RS Fiber in Renville and Sibley Counties is holding off any decisions on a community fiber to the premise network. The New Ulm Journal posted more details…
Minneapolis attorney Robert J.V. Vose of Kennedy & Grave, representing RS Fiber – the project designed to provide phone, cable and broadband internet service in Sibley and Renville counties – said Oppenheimer, the project’s bond underwriter, requires legal opinions from local counsel for the RS Fiber Joint Powers Agreement and a project Debt Service Shortfall Agreement.
That’s where the rub comes. No legal opinions on those two agreements have been received. …
According to an Oct. 2, letter to the Sibley County Board and County Attorney David Schauer, Verlane L. Endorf of Dorsey & Whitney wrote that the law firm is unable to reach the certainty necessary to express an opinion that the JPA and SA would, if challenged, be upheld in the courts.
The letter further stated that the lack of an opinion does not mean that the law firm believes that the County is legally prohibited from project participation.
Endorf wrote that one possibility to resolve the issue would be to seek special legislation to clarify transaction authorization.
On the same day the New Ulm Journal also posted a letter to the editor from Brent Christensen from Minnesota Telecom Alliance. He had serious about the viability of the community fiber plan. The following day, Mark Erickson Winthrop City Administrator/EDA Director posted a rebuttal to the concerns. I thought I’d try to post the points and counter points below…
The consulting team responsible for the Monticello, Minnesota fiber project is working on the Sibley County project. The same financial advisor, the same telecommunications consultant, the company that ran the Monticello network and walked away around the time the city decided to stop making bond payments. In Monticello, the news media has reported that the city has stopped making payments on its bond and the municipal liquor operation is using its profits to help cover operating expenses.
Yes, we have the same consultant and company that ran the Monticello network and we’re not only excited to have them working for us we’re proud to have them on board. Both are recognized as the best in their fields. If Mr. Christensen had done the homework we did, he would have learned the problems Monticello experienced had nothing to do with their consultant and operator. And the operator didn’t “walk away” from the Monticello project. In fact they are still providing some services to Monticello.
An attorney retained by the city of Gaylord prepared a legal memorandum that stated, “I believe the financing involves substantial risks which should be considered.” …
Gaylord’s legal advisor also disagreed with legal advice previously given to the project that a referendum is not needed before constructing the network. Even though state law requires a referendum, project leaders do not want voters to have a say in the matter and have ignored that requirement. Given the size of the bonding, voters deserve a say on the matter.
In fact, their bond attorney did say that. However he was not asked and is not qualified to give an opinion on the risk involved in the project. Why? Because he is a specialized bond attorney not a telecommunications consultant. The cities and counties have discussed the risk involved for almost two years and feel the rewards greatly outweigh the risk. …
Again, Gaylord’s bond attorney is not qualified to answer that question. It’s not a bonding question it’s a telecommunications law question. The current law on phone authority was written about 80 years ago. Technology has evolved in the last eight decades and we have been advised by our project attorney, who specializes in telecommunications law that our fiber network is not subject to the outdated law.
According to the Gaylord Hub, Sibley County’s bond counsel provided legal advice to the county that it was not authorized under state law to participate in a project of this type. Unfortunately, county residents can’t be sure what is in the document because the county’s attorney claims the document is “privileged information” which means it is not publicly available for viewing.
That is simply not true. Sibley County’s bond counsel said they wouldn’t offer an opinion on the matter. That’s a far cry from not authorized. In fact, one of the legal points that is generally not in dispute is that cities and counties have authority to work together to construct a fiber network.
The business model suggests 70 percent of all households will subscribe to two services. This number is not achievable. The trend in Minnesota is toward wireless.
Again, that is not a true statement. The business model says that 59 percent of the home and businesses in the county need to take phone service to make it cash flow. We are aware of the trend toward wireless, that’s why our business model predicts a steady drop in wire line phone revenues in the years ahead. Already about 55 percent of the households and small businesses in the project have sent in pledge cards. The project only needs about 300 more customers in the first three years to break even. That’s achievable.
RS Fiber plans to price 10 percent below existing providers according to the information on their website. Check with Monticello to see how pricing works in a competitive market.
We did and the residents and businesses in Monticello are saving several million dollars a year in lower fees from the providers. The fact is the phone company in Monticello sued the city and then built out a fiber network while the lawsuit was settled in the city’s favor. If one of the phone companies in Sibley County wants to build a fiber to the home/farm network in our project area, please do so. We think that would be great.