Our lives begin to end the day we become silent about things that matter.” - Martin Luther King, Jr.

Friday, December 3, 2010

MI-Connection ends management relationship with Bristol Virginia Utilities

Bristol Virginia Utilities' “sweetheart deal” with MI-Connection is over.

On Wednesday, officials of MI-Connection, the town's cable system, and representatives of Bristol Virginia Utilities (BVU), the system's operator, signed a Memorandum of Understanding (MOU), ending BVU's operation of the cable company – and the $1.5 million management fee that MI-Connection pays BVU every year.

MI-Connection will now pay BVU $300,000 a year to be a “service vendor,” working under contract to continue providing customer service, billing and technical support for the cable company, according to a press statement issued Thursday afternoon. Meanwhile, employees in the Mooresville MI-Connection office – currently employed by BVU – will become MI-Connection employees, and several departments and responsibilities, including human resources and finance, will transition from BVU to MI-Connection, the release states.

Some town leaders have agreed that changing the relationship with BVU – with MI-Connection assuming more self-sufficiency and day-to-day control over its own operations – is a step in the right direction. They also say that having a system that is not only locally-owned but locally-operated will allow the company to respond faster and grow to meet the needs of the marketplace. The MOU “is an important and necessary step to form a common line of action,” said Mooresville Mayor Chris Montgomery. “A focus on managing costs and building on community spirit provides an exciting opportunity citizens should support.”

The MOU is a non-binding agreement that represents MI-Connection's and BVU's intentions on how to proceed with the negotiation of an eventual binding contract that will detail the two companies' new relationship. The transition is expected to be complete by the second half of 2011.

The new arrangement with BVU is not expected to increase costs. In fact, the $1.2 million recouped from the management-fee reduction will be used to pay the new employees and support the departments that the system will acquire, the press release states. MI-Connection customers are not expected to see changes in service during the transition. Customer-service phone numbers should remain the same.

After three years of significant improvements to the system we inherited, an almost double-digit growth in our customer base in the past 12 months and a 7 percent revenue gain in 2010, we feel it’s time to forge a bridge of independence from BVU,” said MI-Connection Chairman John Kasberger. “While we have benefitted greatly from BVU’s guidance and expertise over the past three years, we feel the need to move toward becoming self-sufficient in our operations.”

This month marks MI-Connection's third-year anniversary, and all three years have been marked by controversy and citizen unrest over the town's purchase of the system and the financial consequences. Despite the dark clouds, Mooresville and Davidson government leaders have maintained a positive public attitude. But outside of press releases and public meetings, a different story has been told the past three years.

In a conversation last year, a clearly frustrated town leader called BVU “a third-party spender that's running the show.”

They manage and operate the company with no accountability for its performance.”

He said BVU “is not connected to Mooresville” and had little to no experience managing, operating or marketing a cable system before landing the “sweetheart deal” with MI-Connection. “We are their guinea pigs,” he said.

Mooresville Commissioner Mac Herring – in an email obtained in a public records request last summer – seemed to back up that sentiment. “There's a storm brewing,” he wrote. “The financial model is flawed, … and the confidence in BVU at running the system is faltering. Their operations seem to be sound, but there has been little success at marketing the business applications.”

An e-mail Thursday afternoon to BVU President/CEO Wes Rosenbalm and Vice President/CFO Stacey Bright, asking who initiated the end of the management relationship, was not answered.

MI-Connection's move toward more independence is a hopeful sign of good things to come, said Davidson Mayor John Woods. “Like its subscriber growth, MI-Connection’s willingness to take on more responsibility for its employees and operations is a sign of its growing maturity as a company and a sign of its tremendous potential,” said Davidson Mayor John Woods.

Kasberger said that the MI-Connection board is aware of its challenges but that the system is well-prepared for what lies ahead: “We are gaining confidence every day, and we look forward to assuming some of the responsibilities that BVU has so capably carried for us since 2007.”

12 comments:

Anonymous said...

They are still spinning it. What a mess that Rader.Dumberg,and Herring and the others created for our children,grandchildren and most likely their kids to take care because of their being so stupid to believe in what Rader said.
The others that come up for election when they have opposition they need to go also.

Jim said...

It's interesting that the vast majority of the employees of this "local company" are actually employed by a Virginia company. What is the percentage of the employees that actually live here in Mooresville?

Jaime....any idea how they are doing on their goal of 15,000 new "RGU's" (cable+internet+phone units) this fiscal year?

They announced this big new plan to get new customers but don't want to let us see a scorecard. I hope they can keep their hand out of our pockets this year.

Jim

Anonymous said...

Jim,

From the Davidson News...

"In the 2009-10 fiscal year, Davidson and Mooresville paid $546,000 to cover a budget deficit at MI-Connection. This fiscal year, which ends June 30, they’re expected to provide another subsidy of $6.46 million – $2.02 million from Davidson and $4.44 million from Mooresville."

Expect at least that much! The loans are coming due!

larry gregrory said...

First good move made since this major burden was inflicted on the town. People responsible are Thunberg, Carney, Rader and Herring. We should have not gone down this road from the beginning and this opinion is not based on hindsight. Government is supposed to be limited and not involved in businesses best handled in the free enterprise system.

Jim said...

I knew about the $6 million....I was wondering if that was going to be enough for this year or will they be back for more...

Jim

Anonymous said...

Jim,
They will be back for more...year after year...
BVU, although a contributor to this debacle, is not the main cause of the running deficit.

MIC was an overpriced cable system. 96 million was a ridiculous price to pay for 15000 subscribers in a very confined footprint. Most of this was borrowed money and the loans are coming due. The revenues are not enough to cover the loans and operating costs.

This burden will be carried for many years.

Anonymous said...

Can we end our managememnt relationship with our town board -- all of them? Including Miles, Chris, and Chris?

Anonymous said...

hell one chris is bad enough but for Gods sake we don't need two

Anonymous said...

It's amazing to me that the town is angry with Rader and Thunberg but Carney and Herring also voted for this....it would not have happened if just one of them said "NO". It seems people have selected memory in their case....but not too long ago we threw the other two out.

Anonymous said...

I know that Bill Thunberg most likely reads this or has someone read and tell him. I would like to know how he can lay is head down at night knowing that his deciding vote most likely has ruined this town. I would like for him just to come out and say that he was wrong but he doesn't have the balls to do this. He is so conceited in his way he cannot do this.
He always like to be in charge in anything that he does..he is not very well liked in town not only for his vote but his term in office in general and the way he treats people if you are well to do and have money you are his friend if not you are nothing. I have heard that he is the same way at his church.

Anonymous said...

I loved the editorial in the Tribune that said MIC is going to save $1.5 million a year on this deal. I guess the BVU employees that will now become MIC employees will be working for free!

Anonymous said...

Kinda' what is amazing to me is that this mess will drain our Town's treasury for tens of millions of dollars and no one hears about it. Or cares! I guess apathy will prevail until our tax rate goes up or we have to lay off some policemen.