Maine firm takes over ValleyNet operations

This article, written by John Lippman, first appeared in The Valley News on January 30th.

ROYALTON — Central-East Vermont Internet service currently operates from Southeast Maine.

A Maine company has taken over the contract to operate ValleyNet’s Internet service provider, ECFiber. Internet in the Upper Valley since the days of dial-up phones and “You’ve Got Mail”.

Biddeford Internet Corp., also known as GWI, has been assigned ValleyNet’s operating contract to manage ECFiber, making it responsible for ValleyNet’s duties and 27 employees based in its Royalton office, the parties announced. .

According to one of the main drivers of ValleyNet’s transformation into a mini-telecom, it’s time to hand over the operating contract to a larger organization with the resources to keep ECFiber running smoothly.

“We were a small, crappy, non-profit ISP[Internet Service Provider]that had a big impact on telecoms in Vermont, but we also had challenges in terms of scaling enough to recruit and be efficient. There is,” said Stan Williams. He is CFO of ValleyNet and co-founder of ECFiber. “But ECFiber is much more financially stable than it was in the early days, and it takes a different level of expertise to be able to function like a utility. It’s like how they see us.”

ValleyNet, a registered non-profit organization in Vermont, operates ECFiber. ECFiber is a designated municipality known as the Communications Union District (CUD) and provides high-speed Internet and landline telephone services to his over 8,000 customers in 31 towns belonging to the East Central VT Telecommunications District.

Known primarily as ECFiber among customers, all employees technically work for ValleyNet, which also operates LymeFiber, which provides internet service to approximately 500 households in Lyme.

Founded in 1994 and formerly based at White River Junction, ValleyNet initially used phone modems donated by Dartmouth College to allow users to dial AOL and Compuserve for online access. It was intended to introduce Upper Valley households to what was then a novelty called the Web. Community bulletin board.

Then, with the advent of broadband networks and cell phones, dial-up took off like a dodo, ValleyNet sold its dial-up service and Vital Communities took over control of the town’s listserve. Seeing an opportunity to provide high-speed Internet service to underserved rural homes over fiber optic lines, ValleyNet pivoted and transformed into a broadband ISP.

Initial attempts to raise debt from the capital markets fell through after the Great Recession of 2007-2009, but ValleyNet was able to rake in $7 million from 450 local investors. Many of them lived in Norwich and wanted high speed internet on the street.

By 2016, with over 1,500 customers signed up, ValleyNet turned to the municipal bond market through its recently created East Central VT Telecommunications District, raising $14.5 million and adding several more. It was able to deploy an expansion to ten towns.

Since then, the telecommunications district has returned to the municipal bond market multiple times, borrowing a total of about $63 million to date and likely looking to raise at least another $8 million this year, Williams said. said in an interview on Friday.

ValleyNet couldn’t pay typical telco salaries — “Until the last two years, no one here made more than six figures,” Williams said — the nonprofit The organization had fewer than 30 employees and lacked the staff and resources. FX Flinn, chairman of the East Central VT Telecommunications District, a committee of his 31 delegates appointed by member town selection committees to oversee ECFiber, lags behind its rapid growth. You have to keep up.

“GWI is a big organization. said Flinn, who pointed out that

ValleyNet’s trouser-like style became painfully and embarrassingly obvious last summer when the company revealed that a former contract accountant embezzled $561,000 from ValleyNet’s bank account. abuse.

Vermont Court Judge Last Week ValleyNet was awarded a total of $2 million in damages suffered from the loss.However, ValleyNet’s attorneys say it’s unclear how much money can be recovered from the perpetrator’s assets.

GWI’s ownership of ValleyNet’s ECFiber operating contract is the result of a relationship that began two years ago when GWI became ECFiber’s fixed-line service vendor. This relationship deepened when ValleyNet announced a “rebuild” last June. GWI, locally known as GWI Vermont, will take over the day-to-day direction of ValleyNet’s operations, including the design and construction of ECFiber’s network.

Both ValleyNet and GWI market the combination as uniting two organizations with similar mindsets and principles. That philosophy, they say, reflects the community in which they operate.

GWI prides itself on its status as a “Certified B Corp.” It is a voluntary initiative to a set of business guidelines promoted as aligning positive social welfare with corporate interests (other Upper Valley B Corp. signatories include Mascoma Bank, King Arthur Baking Co., and Boloco). ).

GWI Founder and CEO Fletcher Kittredge said he first met Williams at a conference more than a decade ago, building a relationship of trust and sharing a shared vision of how to develop rural Internet services. Told. Kittredge also served on ValleyNet’s board for several years before stepping down prior to last year’s partnership agreement.

“Nothing will change. GWI will be ECFiber’s agent just as ValleyNet was ECFiber’s agent,” Kittredge said Friday.

GWI serves about 6,000 customers, employs 54 people, and generates about $14 million in revenue, Kittredge said.

The company recently entered into a similar operating agreement with the Deerfield Valley Communications Union, District or DVFiber to build a residential fiber network in the Brattleboro area.

With 27 employees, ECFiber will have revenue of $8.8 million in 2021 and is approaching $10 million this year, Williams said.

Kittredge said that ECFiber’s name will not change, employees will remain in Vermont, and customers will still be able to hear the company identified as “ECFiber” when they call the office to pay their monthly bills. increase. In 2021, Tom Cecere, who was named Chief Executive Officer of ValleyNet, will become General Manager of GWI Vermont.

“Maine isn’t that different from Vermont,” said Kittredge. “The employees are the same. The buildings are the same. “

It is unclear whether all of the 31 town selectboards that have chosen to join the East Central VT Telecommunications District will be happy with ECFiber under the control of an out-of-state entity.

The fact that ECFiber was a locally started and grown initiative to address the lack of internet service in rural Vermont is central to its identity and initial pitch to investors. . Large telecommunications companies are not profitable.

However, Mr. Flynn, chairman of the CUD board, said that representatives appointed by the election committee are under a fiduciary duty to the organizations they serve, and that their votes are used to elect the member cities they represent. – Appoint delegates and vote to secede from the district.

Flinn confirmed that the board gave “strong endorsement” behind the agreement to transfer ValleyNet’s ECFiber operating contract to GWI and “worked really hard on this.”

Asked if the vote was unanimous, Flynn replied, “Yes, as far as I can remember,” and the reason he was hedging his answer was, “There were a few different votes along the way, and the first There may have been a few,” he explained. But in the end it was unanimous. “