Steve Mensing, Editor
♦ Moody’s downgrading of Salisbury, N.C.’s bond rating due to its municipal utility Fibrant’s debt and risk is quite accurate. We’ve closely monitored Fibrant and its astoundingly poor performance since it staggered out of the gate in its “soft rollout” in the fall of 2010. Fibrant, from the outset was run by crony management with zero experience in broadband, squandered millions on recycled and mismatching equipment and lacked required redundancy (backup). By June of 2011 Fibrant burnt up its $33 million dollars in certificate of participation money. It had to parasite somewhere to keep on life supports. Fibrant likely holds the record in municipal broadband waste.
Immediately after its fiasco rollout Fibrant started to vampire from Salisbury’s water and sewer funds and the water and sewer funds of outlying municipalities. To date Fibrant guzzled $7.6 plus million dollars from its reserve funds tilting Salisbury, N.C. on its financial axis for years to come.
Anyone with a modicum observation ability will note the financial impact Fibrant has on our city and its inability to provide anything more than rudimentary services.
• Understaffed police and fire departments. Few patrol cars on the streets of crime ridden Salisbury.
• The Amazon like tall grass and weeds on city property during last summer and neglected city streets.
• Understaffed city service employees doing multiple jobs.
• The city claims Fibrant has only 3 employees.
• The disappearance of city employees let go through firings and wrongful terminations since 2012.
It’s easy to note the city’s non need for a municipal fiber optic network. Our “build it and they will come” debacle was launched in an overcrowded field of incumbents: Time Warner Cable, AT&T U-Verse, DirecTV, and Dish and dozens of inexpensive VOIP phone services. Somebody profited from this completely unrequired municipal broadband and it wasn’t citizens of Salisbury. They’ve been nailed by excessive water utility bills and storm water fees to provide slush for Fibrant’s survival.
According to Moody’s Fibrant underperformed since its rollout in 2010. I concur. Since day one the Fibrant was enabled by city hall’s bogus claims of Fibrant’s success and their “newsletter’s” puff pieces. Rotten beef was drenched in cheap cologne. Good luck if you trust city hall’s tales of Fibrant success. You are reaping the piper’s benefits in your utility bills and storm water fees for often non existent services. Welcome to the Bury!
According to Moody’s Fibrant lost $4.1 million dollars last year and siphoned $ 7.6 million dollars from the city’s water and sewer capital reserve fund since 2011. The city government claims it will pay back 1% of the interest on its immense debt. No principal has ever been paid on the internal loans.
City hall claimed they turned the corner and are making small profits. Never happened and extremely unlikely to happen in our lifetime. Unless you start believing in the “hidden salary” method of accounting and the arbitrary method of discounting enormous debt and interest. Salisbury N.C. is stuck with a grossly overpriced lemon squeezing our city with its immense debt. Still Fibrant is pitched at high prices with an onerous one year contract. You have no TV aps for internet enabled devices and Fibrant’s VOIP phone is far beyond the reach of most consumers.
If you need a large upload Fibrant’s internet is more stable than it once was, but its still pricier than the competition. You can renegotiate with the incumbants retention specialists. Fibrant still is weighed down by their non renegotiation policies. If you are being boinked by Fibrant’s Firstep Broadcast TV–drop it and purchase an inexpensive TV antenna. All of Fibrant’s airborne antenna channels can be had for FREE with an antenna and in full screen 1080P HD. No more paying Fibrant’s $30 plus bucks a month for Firstep TV.
Moody’s bond rating measures a city’s financial health and may influence the cost’s of Salisbury’s future ability to borrow money. The Moody’s downgrade will mean a higher interest rate.
Moody’s nailed it when they said Fibrant failed to live up to expectations to be self-supporting and will have a difficult time meeting subscriber and revenue projections. The city’s original call for a rate increase in 2013 was never adopted. If Fibrant dared to raise their rates they’d probably lose even more of their limited customer base.
Few cities across the United States take on the immense risk of starting a non essential municipal broadband service. Those that did mostly possess a horrendous record of hiding their failures and guzzling from enterprise funds following a similar pattern to the Fibrant Debacle.
Its a well-noted that deep-pocketed broadband services rule the roost in the free enterprise world. It’s certainly abundantly clear inside Salisbury’s city limits. Time Warner Cable, AT&T U-Verse, DirecTV, Dish, ROKU, MagicJack Plus,Google Voice, Vonage, smart phones and indoor TV antennas own the seas of broadband commerce. Fibrant’s claim of having 25% of the market is bogus. Think about it–they claim having 3,000 subscribers (Its not spelled out specifically what services they have). If they had 3,000 subscribers and that’s allegedly one quarter of the market, then they are saying only 12,000 people city-wide use some form of broadband service. Fibrant’s 25% claim of the Salisbury market is total hokum like just about every other claim they made since their debacle starting mushrooming in 2010.
Moody’s downgrades of the city’s various bonds don’t speak well of Salisbury’s future. Its said Moody’s downgraded more than $68 million of the city’s immense debt. Resident’s here best listen to the alarm bells.
From Moody’s we know that Salisbury has:
• Significant operating pressure from Fibrant risk
• Limited enterprise cash
• Fibrant is over-leveraged and non-essential
In the future Moody’s bond rating for Salisbury might be downgraded further if:
• The city’s general fund reserves deteriorate
• The water and sewer reserve continues to deteriorate or Fibrant continues to rely on other city funds to cover operations
According to Moody’s, Fibrant’s liabilities exceeded its assets by $12.5 million at the close of fiscal year 2013. Fibrant’s reliance on various city funds and debt service requirements may impose significant burden on Salisbury’s overall financial stability. Further Fibrant’s inability to make enough money to support its operations and debt service payments makes Moody’s concerned about the likelihood Fibrant will continue to borrow money from the water and sewer reserves or from the city’s general fund. Continued raiding of water and sewer funds could run the risk of falling to levels well below industry standards.
Will Fibrant raise property taxes? That might happen if water raiding is stopped.
In the meantime folks best pay attention to the very loud ALARM BELLS going off all over Salisbury. There’s good reason why many locals are pulling up stakes and heading to higher and safer ground elsewhere.
