Without Open Access PB "Possibly Lost out on" $318k...So Far
The City’s 2012 audited financial statements were finally approved earlier this month which allows us to look at how City Cable performed in 2012 without the “subsidizing” of Open Access. The financials show that the city would have made $317,756 more over the past two years had they not closed down Open Access to the citizen owned network.
City Cable has lost money four of the last five years. But that really isn’t a bad thing. After all, the city loses money on our street department. If run efficiently, I would never oppose the city losing money on (ie, investing in) our telecommunications infrastructure.
But let’s look at the numbers for City Cable department:
One metric used by businesses to analyze a company’s financials is called “EBITDA” which stands for Earnings Before Interest, Taxes, Depreciation and Amortization and pronounced phonetically as EH-BIT-DAH. If you look at City Cables EBITDA over the past five years you notice a significatn drop over last two years:
In 2012, even though their overall income increased $550k, their expenses went up even more and generated a drop of 20 percent in EBITDA in relation to Total Revenue.
In other words, City Cable’s expenses have grown at a much faster rate than their income these past two years.
Now let’s just evaluate the Internet service portion of City Cable. I’ve been tracking this information since day one. As one would expect, City Cable’s income goes up in 2011 & 2012 since they no longer have any competition, but their profitability doesn’t go up nearly as much.
That’s because their expenses for bandwidth, staffing, servers and tech support have to go up somewhat proportionately. The two easiest expenses to track for our calculations are Internet bandwidth costs and the outsourced technical support costs paid to ZCorum in Atlanta for the additional MyCityCable customers. For our analysis, we’ll limit their expenses to just these two.
|Internet Only Figures|
Look at the growth during the four years of open access: City Cable grew an average 17% every year. Compare that to the 2.7% and 8.7% growth of the past two years and it is evident that Open Access was NOT a drain on City Cable’s books. And if we calculate the average growth for the entire 9 year history of Open Access, it soars to over 25% per year.
With an average growth rate with Open Access at 17%, we can compare it to the actual City Cable Internet profit.
$2,344,920 – Actual Internet Profits WITHOUT Open Access for 2011-2012
$2,589,743 – Projected Internet Profits IF Open Access Existed for 2011-2012
Because the City ended Open Access, it can be projected that they lost $244,823 in revenue over the past two years. Add to that their legal fees in fighting Poplar Bluff Internet of nearly $73,000, and it’s clear:
Strictly speaking financially:
$317,756 more in revenue over the past two years.
2012 Unaudited City Cable Financials
MU and City Cable Audited Financials 2008-2012
Ok… Brian, I am new to the area… I moved here at the end of July, and when I entered the city I found out that there are no ISPs that offer higher than a 6MB connection. Which to me, is -ENTIRELY- outrageous considering that in Doniphan you can get more than 3 times that speed. Everything I’ve read/heard about this, is that the City Council//City Cable is actually limiting bandwidth. Everything I’ve read on the internet that I can find, has lead to you. So seeing that you are likely the most knowledgeable person on this subject, can you please inform me as to why I can go 3 miles outside town and get an internet connection 4x faster than the highest rate here in town. What draconic policies are controlling my internet to the point that I can’t play my video games? And also, who do I need to complain to//petition so that these policies are lifted? I find it utterly inexcusable that I came from a city where I paid $10 less to my previous ISP, and got 10x the speed than I do here. Especially so, when I know that surrounding po-dunk towns, of which don’t even amount to 10% of the population of Poplar Bluff, are getting speeds 10x faster than me. WHO DO I NEED TO SLAP INTO THE 21ST CENTURY!?!?
First, I change your name to P.C. on your post because you might not be aware that people who post their full name have been targeted by community leaders. It’s sad but true.
Here’s as short of a version as I can put down. In 2000, our city leaders were forward thinkers who gave voters the ability to vote to bring a cutting-edge technology network to our city that would not get here at that time, any other way. We voted to spend $9M on this network which would first bring us digital TV and compete against the incumbent cable company. But as they started to build the network, the competition started building too and the city got scared and browbeat the competition into selling their network to us. rather than competing against them. VERY SAD DAY FOR OUR COMMUNITY.
In 2002, when broadband was being designed for this network, I helped lead the city to doing Open Access. Open Access means the city’s network could be used by any company who wanted to pay for the use of the network. What that did was provide the citizens instant choice of provider. We were really the first in the nation to do this type of Open Access across a Fiber-Coax network.
Early on we found that the city didn’t want to grow their network at the rate of consumer demand, but we pushed and pulled as best we could. We got them to introduce 3Meg then we pushed them to 5Meg and were asking them to move to 10Meg and 20Meg. But then they realized that all the bigger bandwidth customers were using our service (bigger bandwidth customer meant bigger profit margin). And, rather than competing against us and the other two ISPs on the network, the city leaders started lying to the city council, the local paper and the citizens saying that the ISPs were costing the city money. Within months, city council voted to kick all ISPs off the network. My company filed a lawsuit and three years later it is now in the court of appeals.
The problem really isn’t the network, it can be massaged into the exact same network used by Comcast and Charter to provide 100Meg service. The problem is the utilities manager and the city manager who see the network as a profit center rather than an economic development tool. They are blinded by their own greed and their stupidity.
In April of this year, three more City Council seats are up for grabs. The City and the Good Old Boys behind them are hoping that Robert Smith and Susan McVery keep their seats and Good Old Boy Ron Black gets the third seat.
But if we keep that from happening by electing Jack Rushin, David Johnson and Peter Tinsley, a new day will finally dawn in our city. I’m not sure what they will do with the our cable telecom network, but I can assure you that their decisions will be based on the citizens and not the coffers, on economic development and quality of life rather than profits.
I’m excited about the upcoming election and we need everyone who wants Poplar Bluff to be a forward-thinking community to help us sweep the April polls. So P.C. can I count on you come March when it’s time to walk the streets, shake hands and encourage the people of Poplar Bluff to vote for these candidates on election day?
Yes I have, running one right now. And if you run your business based solely on your “models”, then you might end up…well, where you are now. They ARE “mere speculation”, as you only take into account two expense categories (you even state this yourself, see above). Since you don’t take into account the actual expenses incurred during that time frame, all you are doing is “speculating”. Now, if you had actually audited their books and taken into account all expenses, then your “model” would be fact, not speculation. All you are doing is taking what you THINK expenses should have been and backed into a calculation that makes your argument look good. I agree with your numbers, but don’t confuse actual with speculation. As far as your title goes, “lost out on” still runs on the implication that it is fact, not “speculation”. How about “possibly lost out on”, or “could have lost out on”??? Don’t play their game, be better than that.
Title Changed, again. Happy Now? <grin> But now lets focus on your expenses issue. I only used two expenses, actual expenses from their actual books. If I were to have used more expenses, it would push the model even further in my theory’s favor. So, by using only two expenses for my model I’m actually doing them a favor. Now, the reason for those two expenses is because it doesn’t have to be extrapolated out of the overall City Cable budget….they are line items. During those two years, IT Salaries went up about $40k. It could be argued that expense was because Open Access ended, but with no proof I chose not to. But the increased bandwidth costs and increased Outsourced Internet Tech Support costs are specifically because they had 1200 more customers in 2011-12 than they did in 2010. Please go back and read my story one more time, I think my numbers are solid and model sound.
Have to agree with Junior on this one. Your headline clearly states that PB lost 318k, while your argument clearly states that 244k of that is mere speculation on your part, or “projected”. “Lost” does not = “Projected loss”, Good try though! Plus, add back the legal fees they were out just trying to get what you owe them, and they could be “projected” to break even last year. :)
Point taken. Title changed. As for the legal fees, that doesn’t change since they are solely there because of the end of Open Access. You call projections with an 8-year established model and calculated with a 4-year average as “mere speculation”, ever run a business?
“Loses Out On” versus “Loses” ==> Not sure that qualifies as “misleading” or “modus operandi”
Good try though!
Except we don’t have it. When the city ended open access they ceased to have “it”, you cant say they lost if if they never had it to begin with. If you would have said “missed out on..” or something similar I might be inclined to agree.
As it stands your title of “PB loses $318K…” makes it sound like the city is operating in the red, is undoubtedly intentionally misleading, but that’s your modus operandi. Weren’t you complaining about misleading headlines the other day?
Just maybe after the city ends up screwing over Whelen out of His corner property at Oak Grove and Westwood, they can make up that lost money
How does one lose something one has never had?
The point is we did have it and they took it away saying it will save the city money, but it cost us instead. Sorry the article didn’t get that across to you.
Just to be fair, shouldn’t you deduct the legal expenses they have been out fighting you, AND add back what you didn’t pay them (hence the reason for the lawsuit) during that same time period???
Not really. Only $20k was unpaid in 2010 and, therefore, part of the lawsuit. The other $155k is on their 2011 books. So that shows up as income and actually “helps” their bottom line rather than hurts it. To my knowledge they have not “written it off” so if we did as you say it would increase the overall numbers in my argument’s favor by $155k and push the total over the past two years to just under half a million. :)