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.”