After Failed Low-Cost Internet Pilot, Madison, Wis., Pulls Plug

The city terminated the $512,000 contract after only 19 customers were signed up for service.

by Dean Mosiman, The Wisconsin State Journal / December 14, 2017

(TNS) — Madison has terminated a $512,000 contract with a local company implementing a troubled pilot program to deliver low-cost internet service to four low-income neighborhoods.

In a letter dated Nov. 20, the city ordered ResTech Services to “immediately cease and desist” work under the contract to build a fiber-optic broadband network to residents in the Darbo-Worthington, Brentwood, Allied Drive and Kennedy Heights neighborhoods.

The pilot is part of a larger initiative still being studied to expand the city’s limited internet network to every resident and business, called Fiber To Premises, which could take more than $200 million in public and private investment.

ResTech was supposed to provide services for residential subscribers in the neighborhoods for $9.99 a month with unlimited data and a minimum speed of 25 MBps, plus a call center, 24-hour support, infrastructure maintenance and network monitoring. Despite completing the backbone of a system intended to bring service to more than 1,000 apartments in the neighborhoods, ResTech had managed to sign up just 19 customers.

The city’s letter provided a 45-day notice to terminate the contract effective at midnight, Jan. 4.

“We terminated the digital divide contract under a clause that allows us to do so,” said assistant city attorney Roger Allen, who offered only limited comment. “We’re still investigating matters we find concerning. Until the investigation is completed, I don’t want to disparage anyone.

“We’re looking at other avenues with which we can accomplish our (pilot program) objectives,” Allen said.

The city’s letter does not spell out the reason for terminating the contract.

But it says the city will not make any further payments to ResTech until the city has determined the full scope of its liability for “damages incurred by the city from unlawful access, splicing, connecting, relocation of city-owned fiber, lack of labeling/mislabeling of fiber and the unlawful/unauthorized occupation of city of Madison conduit, and any other unauthorized/unlawful uses of city infrastructure done by, on behalf and/or to the benefit of ResTech.”

Under the contract termination clause, “the city will pay for all work and network infrastructure completed by the contractor to the city’s satisfaction,” the letter says. But the city said it may withhold whatever amount it determines the company owes the city.

Paul Kronberger, the city’s chief information officer, declined to go into detail on the cancellation but suggested that the issues go beyond ResTech’s failure to get subscribers. Kronberger, referring to language in the letter, said, “a reasonable person would conclude there’s more to it.”

Asked if the issues involved potential criminal activity, Kronberger said, “I can’t answer that.”

ResTech president Bryan Schenker could not be reached for comment.

The city has already paid for most of the contract and it’s unclear if it will seek to recover money from ResTech, Kronberger said. The network has been installed and could be used for the larger Fiber To Premises initiative if it moves forward, he said.

The city’s Digital Technology Committee is set to get an update on the initiative and discuss the contract termination at its regularly scheduled meeting on Thursday. Some of the meeting may be in closed session.

After two years and spending more than $500,000, Madison is well short of goals for the pilot program. ResTech had delays in extending fiber cable to the neighborhoods, and once there, found unexpected barriers in getting permission from property owners to connect to buildings and so far has signed up few customers.

Those problems were outlined in a story in the Wisconsin State Journal on Nov. 20, the same day the termination letter was sent.

The “Connecting Madison” pilot program has potential to bring service to 161 buildings with 1,083 apartments in the neighborhoods with connections projected by the end of 2016.

But as of Nov. 17, ResTech had made broadband service available to just 86 buildings and had only 19 customers.

Program’s future seems unclear

The termination letter allows ResTech to continue service to the 19 subscribers for 30 days as the city pursues another vendor, Kronberger said.

It’s unclear, however, if the city will be able to continue marketing and other efforts to secure more subscribers and further develop the pilot program, he said, adding, “It would be our preference if we could continue the program. We have not gotten very far in discussions to see if we’re able to do that, or if it’s even practical.

“For my staff, we’re disappointed,” Kronberger said. “This is something we felt strongly about. We wanted this to be a successful project. I’m sure there will be people who question it.”

In March 2016, after a competitive process, the city and ResTech signed the $512,000 contract to build a fiber-optic broadband network to residents in the four neighborhoods.

ResTech was to expand the city’s Metropolitan United Fiber Network, which serves schools, libraries, police and fire stations and other public buildings, to the target neighborhoods. Nonprofit DANEnet, which helps Dane County nonprofits find and use quality information technology, would provide digital literacy training and distribute free donated computers.

Closing the digital divide — the disparity between people with access to modern information and communications technology and those without — has been a priority for city leaders for years.

The city continues to pursue the broader Fiber To Premises initiative with goals of connecting those with low incomes to the internet so they can compete in school and for jobs, providing service to the entire city, increasing market competition and consumer choice, and leaving the city with a long-term say in the system.

The city spent $107,500 on a feasibility analysis from Columbia Telecommunications Corp. of Kensington, Maryland, that provided initial estimated costs, and is now funding a $189,000 implementation plan by the same company that should be completed in late 2017 or early 2018.

©2017 The Wisconsin State Journal (Madison, Wis.) Distributed by Tribune Content Agency, LLC.

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