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Clash over broadband; another board member steps down

Disagreement over strategies for deployment of broadband has prompted another resignation from the local power and light cooperative's board of directors.

When George Mulligan resigned from the Orcas Power and Light Cooperative's board in May, his resignation letter cited "very different perspectives on matters of governance, and management resources."

It did not specifically reference broadband deployment strategy. John Bogert's resignation letter does.

His letter was similar in its respectful, positive tone, but provided more details and was critical of the board's broadband direction.

Fiber optics deployment has been pursued by OPALCO since 2001, partly for use in controlling and managing its electrical grid, partly for possible resale to commercial broadband users. These ideas are not unique to OPALCO - virtually all utilities, including rural cooperatives, have been utilizing fiber-optic technology for many purposes.

OPALCO has studied consumer broadband deployment for several years, culminating in 2012, when the co-op's top executives made presentations on the four major islands asking members to sign up for future broadband services.

In August of that year, OPALCO announced it had landed a $34 million U.S. Department of Agriculture Rural Development loan to pay for infrastructure design and deployment, some for broadband deployment. The original plan envisioned repayment from a $15 per month co-op infrastructure fee and an internet service fee of $75 per month.

The approved business plan required that about 6,000 subscribers sign up to make the plan viable. By May of this year, 900 members had signed up.

After George Mulligan resigned from the OPALCO board on May 21, OPALCO announced a "new direction" for broadband deployment and said subscriber deposits would be credited to their electric bills. The new direction provided for a $3 million to $5 million OPALCO investment in infrastructure to be leased to internet service providers such as CenturyLink, who would provide broadband services to consumers.

OPALCO framed what happened differently: "That idea was shelved in mid-June 2013 when the plan gained the attention of the competition and an opportunity emerged to accomplish the improved broadband service in the county at a lower cost and lower risk to the co-op."

By October, negotiations with CenturyLink have apparently taken a turn, although OPALCO says negotiations continue and a draft contract has been prepared and is under review.

Bogert's letter suggests that OPALCO is returning to the idea of building-out the infrastructure itself. OPALCO says the buildout will be incremental over 10 years, with possible leasing to broadband providers, including CenturyLink. At the same time, Bogert, who earlier this year was re-elected for another term on the board, resigned from the board.

In his letter of resignation, Bogert said he had supported the board's effort to explore two alternative broadband deployment strategies - "OPALCO-only and a partnership with CenturyLink and/or other providers".

But more recent developments prompted a parting of the ways: "The board’s recent decision to unilaterally proceed with broadband build-out using membership funds is inconsistent with fiscal stewardship as I see it."

Bogert lamented in his letter that the board "failed to embrace" the opportunity presented by seven months of negotiations between the cooperative and CenturyLink. He wrote that the discussions with CenturyLink showed a collaboration would "significantly" improve broadband coverage at no cost to the membership, and would result in a "potentially ground-breaking agreement that could serve as a national model for other rural cooperatives."

Bogert concluded that he did not feel "the board's current direction is in the best interests of the membership and I cannot, in good conscience, support the decisions being made."

Recently, CenturyLink approached the San Juan County Council with a request to brief the council on their future plans, although details of that briefing remain unclear.

 

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