VIB-TV shutting down services Wednesday

PUD vote to discontinue fiber build-out was 'final straw'

EPHRATA — Tomorrow will be the last day that VIB-TV provides service on the Grant County Public Utility District's fiber optic Zipp network.

In a letter sent to customers, VIB said that the company has been operating under the premise "that we would be treated fairly and that our business model to provide services through Zipp fiber would prove successful. While we have developed a valuable working relationship with the PUD utility staff, the agenda of certain members of this PUD Commission appear to us to be to kill the fiber project and that has left us no alternative."

The letter goes on to say that the recent 3-2 vote by the commissioners to discontinue the fiber build-out and the vote to surplus the video head end that services all the video for Grant County PUD customers, "was the last straw."

The PUD commission voted earlier this month to "stand pat" the fiber system for 2005, meaning that no new construction will happen on the Zipp system but customers can still connect if they live or work in an area where fiber is available. The stand pat vote passed by a 3-2 vote March 7 with commissioners Bill Bjork, Randy Allred and Greg Hansen voting in favor and commissioners Tom Flint and Vera Claussen opposed to the model.

According to the letter, VIB believes the fiber network currently does not reach enough homes to support a viable open access business model, and believes its business model will no longer prove profitable.

"We have attempted to discuss this matter with the Commission, but to no avail," the letter said. "Just as importantly, we believe that the network will be left without a video provider and it is difficult to imagine that ZIPP will survive as an Internet infrastructure alone. It appears to us that over ($100 million) of investment is being put at risk."

VIB provides fiber optic video and Internet service to a total of 1,147 customers in Grant County, according to the PUD.

Of those customers, 1,091 subscribe to Internet and 457 to video service.

The PUD commission itself has taken no specific action regarding VIB, but Commission President Bjork said PUD staff members have been following the PUD's telecommunications customer service policies that were enacted by the commission last year.

PUD telecommunications director Larry Jones said Monday that VIB currently has until 5 p.m. on Wednesday to pay a deposit or submit a letter of credit of approximately $130,000, or be disconnected from the network. The deposit requirement is triggered when a service provider's credit rating drops below an accepted level as per the policy. Jones said telecommunications staff will continue to follow its policies unless told otherwise by the commission.

"As of now the direction of the commission is the deposit needs to be paid or their terminated from the network," Jones said.

A second fiber service provider filed suit earlier this year to stay connected to the Zipp network after a deposit request was triggered. Service will remain for Donobi as long as it remains current on its bills, following a judge's order. When reached for comment Monday, Donobi Chief Executive Officer Bill Wright said VIB's decision was an unfortunate one.

"I think there needs to be stability with that network," Wright said of Zipp.

Donobi will be the sole remaining provider of fiber television on the network, and Wright said he was disappointed. He said competition is a good thing and he feels sorry for the rate payers who are part of the situation.

"I feel bad for the people of Grant County that are being had to walk through this," Wright said.

Bjork said Monday that the PUD will continue to work with the State Auditor's Office to find out if any current or former PUD employees had any interest in VIB that violated any laws. The PUD asked for the SAO's help in response to audit findings that were critical of the PUD's relationship with VIB.

Service Provider Craig Jungers with Network Essentials said other service providers do stand to pickup some Internet subscribers as a result of the disconnect. Steve Castillo of Basin Networking said he hasn't received any calls from VIB subscribers, but said the shutoff was unfortunate.

"It's kind of unfortunate," Castillo said of the VIB disconnect, "But these things happen sometimes."

In a "helpful hints" addendum to the letter to customers, VIB said Internet service will be transferred to a new local provider. For TV

customers with Internet, only the video portion will be discontinued. There should be no interruption of Internet service; customers will need to find a new company to provide TV service. Customers will be able to keep existing e-mail addresses.

The new local provider will offer the same Internet service at the same price as VIB, the letter said. Commissioners have instructed PUD management to turn off video at midnight Wednesday.

"It's unfortunate that that business model didn't work," said Nathan Clark, marketing manager of Northland Cable Television and Internet. "It's unfortunate that couldn't have worked out for them. To blame the commissioners I thought was underhanded, seeing that there hasn't been a build out in the last two years. I think VIB realizes their business model didn't work."

Clark said any VIB customers that call before Friday night, Northland Cable will hook them up with free installation and before they go home Friday.

"It's unfortunate, but we would like to give them an out," Clark said.