In a news release issued Tuesday afternoon, Consolidated Telecommunications Co. said it was pulling out of the project, citing financial considerations.
In the months since a state grant was awarded to help with construction of a fiber line, the project incurred $1.2 million of additional costs due to higher interest rates and construction costs, the company said in its statement.
“After months of working on gathering interest on the project, CTC was only able to obtain a financial commitment from 41 percent of the homes and businesses in the area and will not be able to proceed with the fiber build,” the statement said.
“We did have interest from the community. However, not everyone expressing interest was willing to make a financial commitment to take services,” Kevin Larson, the company’s chief executive, said in a statement.
“Without the needed financial commitment from customers and overall funding not covering the $1.2 million in increased costs, CTC and our board of directors need to be financially responsible to all entities involved and not proceed with the fiber build,” Larson said.
Customers who have paid their $25 deposit will receive a refund later this week, the company said.
It was disappointing news for Kandiyohi County officials but not unexpected.
As recently as Tuesday morning, the parties were still talking about what they could do to salvage the project.
“Even to the 12th hour we were trying to make things work,” said Larry Kleindl, county administrator.
He and the County Commissioners conceded, however, that the prospects were bleak. By then, Kandiyohi County had nothing further to offer that might have put the project back on track.
“There’s no way” the county could come up with $1.2 million to cover increased costs, Kleindl said. “We have to be financially responsible to our citizens as well.”
The project collapsed late last week after Consolidated Telecommunications Co. notified the county that its board of directors had voted to decline a $4.94 million state grant from the Minnesota Office of Broadband Technology. The grant was to have helped fund construction of a fiber line to serve some 1,600 homes and businesses in rural northern Kandiyohi County.
The prospect of high-speed internet to a rural, unserved neighborhood had been welcomed with great anticipation. County officials have long seen rural broadband as an unmet need, and a survey by the Kandiyohi County and City of Willmar Economic Development Commission found clear support from the public for making the service available.
County Commissioners supported the project so strongly that they were willing to issue $5 million in bonds, to be repaid by Consolidated Telecommunications Co., as the local match for the project.
But the pieces never came together.
Customers were slow to sign up and even slower to pay a $25 deposit that committed them to the service.
A last-minute push in July succeeded in reaching the company’s goal of 810 sign-ups. Deposits also had come in from more than 700 future customers, and the county and the company had agreed on a one-week extension to allow the final checks to arrive in the mail.
Then came the word late Thursday afternoon that Consolidated Telecommunications Co. wanted to pull the plug.
Lessons learned
Kleindl and the County Commissioners think there were probably multiple factors that made the project an uphill battle.
The company’s rollout of the sign-up campaign was confusing, they said. Roger Imdieke, chairman of the County Board, called it “poorly designed and poorly executed.”
The slow pace of sign-ups and payments became especially frustrating, Kleindl said. “As gut-wrenching as this has been, the reality is this: We needed people to sign up and they did not sign up.”
CTC was so cautious in moving forward that it cost them time, which in turn led to higher interest rates, he said.
The County Commissioners also believe the project was seriously hampered by a new grant requirement that gave existing internet providers the right of first refusal. This was the first time that applicants to the state’s border-to-border program dealt with this provision, and it left Consolidated Telecommunications Co. with limited options for choosing a project area that would be both cost-effective and contain an adequate customer base. The majority of other grant-funded projects either were not in areas with an incumbent provider or consisted of upgrading an already existing service.
It’s an issue the county wants to share with the Minnesota Office of Broadband Technology during future discussions about lessons learned from the failure of the project.
The state also needs to take a look at budget expectations that can leave grant recipients vulnerable to changing conditions, Kleindl said.
“They can’t have their margins so thin that they can’t adjust,” he said.
The need remains
Despite the setback, Kandiyohi County officials said Tuesday that they won’t give up on efforts to expand rural broadband.
The need is still there, Kleindl said. “We’ll be looking for other ways to get this done.”
The County Board, the broadband committee of the Economic Development Commission and local volunteers all spent countless hours going door to door to get people signed up for the project, said Connie Schmoll, business development specialist with the EDC.
The EDC’s broadband and advanced technology issued a statement Tuesday afternoon thanking everyone who helped and reiterating their mission to expand rural broadband.
The commitment is still there to bring high-speed internet to neighborhoods that remain unserved and underserved, Schmoll said.
“We’re going to keep working on this,” she said.
©2017 West Central Tribune (Willmar, Minn.) Distributed by Tribune Content Agency, LLC.
