Fibrant turns small profit in first quarter, bumps up Internet speeds for free

  • Posted: Wednesday, October 16, 2013 12:22 a.m.
    UPDATED: Wednesday, October 16, 2013 12:23 a.m.

SALISBURY — Fibrant made money for the first time this year, officials say, and the city is rewarding customers by increasing their Internet speed for free starting next week.

Fibrant, the city’s new high-speed broadband utility, brought in $1,192,156 during the first quarter, about $7,700 more than the utility spent. Fibrant’s expenses during the first quarter — July through September — were $1,184,400.

“By about $8,000, we were in the black,” Mayor Pro Tem Maggie Blackwell said.

City staff reported the results Tuesday as part of a quarterly financial update to City Council. The update also showed the city’s overall fund balance more than doubled in two years, from $3.8 million in 2010-2011 to $8.4 million in 2012-2013.

Staff said the financial changes were spurred by a letter from the state’s Local Government Commission sent to the city in February 2012 warning that Salisbury’s fund balance “appears to be much lower” than comparable cities, and Fibrant “shows signs of financial stress.”

As part of a strategy to save Fibrant, the city saved millions of dollars by refinancing the utility’s 20-year debt, as well as renegotiating service contracts for phone, cable TV and Internet. Fibrant has increased its reliability to 99.99 percent, Assistant City Manager John Sofley said, and the service went down in the first quarter only during scheduled maintenance windows.

“We’ve come a long way in two and a half years,” Mayor Paul Woodson said.

Sofley said Fibrant has 2,607 customers and anticipates billing more than $4.2 million this year.

“It’s not time to celebrate,” City Manager Doug Paris said. “It’s time to double down and maintain our focus.”

Fibrant also cut costs by moving employees out of the department. In the current budget, there are only three people listed as Fibrant employees with total salaries of $172,383, according to records requested by the Post.

That’s down from 11 Fibrant employees in last year’s budget with total salaries of $447,236 and 10 Fibrant employees two years ago with salaries of $499,149.

Although they are not paid by Fibrant, four employees in Business Services work extensively with Fibrant, as well as four people — including Fibrant General Manager Mike Jury — in Infrastructure Services. Their eight salaries total $338,829.

The city this year launched the new Infrastructure Services, which Jury oversees, to operate more efficiently and eliminate duplication, Paris told City Council during a May budget workshop. Many employees in the department are cross-trained to do a variety of jobs from installing Fibrant to repairing traffic signals.

Infrastructure Services is the result of consolidating two information-technology groups and three infrastructure groups, Paris said.

At Tuesday’s City Council meeting, Sofley announced that existing Fibrant customers will see faster Internet speeds as a reward for their loyalty.

Residential service will go from 15 megabits per second download and upload speeds to 20 mbps. Residents who already have 25 mbps will go to 30 mbps.

Commercial customers with a non-dedicated Internet connection also will see faster speeds for free. Speeds will not change for commercial customers with a dedicated connection.

During the public comment Tuesday, resident Deedee Wright questioned why the city chose not to install Fibrant in apartment buildings.

“Now I fully understand why we were in the red,” Wright said.

Mayor Paul Woodson said installing Fibrant in large facilities like apartment complexes or the hospital would have cost too much, so the city decided to focus on houses and small businesses.

Now, the city is looking into wiring large commercial and residential buildings, Woodson said.

This year’s budget includes money to “develop that solution,” and Fibrant is testing the technology now, Paris said. The city needs to make sure Fibrant would not lose money on the expansion, he said.

“We don’t want to enter any market that does not produce a return,” Paris said.

Wright said the city should have been more transparent about why it was not serving apartment buildings and other decisions regarding Fibrant.

“If the citizens would know what we’re encouraging and what is happening, we could have been much more supportive of this venture called Fibrant,” she said.

Sofley and Paris reviewed new requirements that have improved the city’s overall financial picture, including quarterly financial reports, a financial impact statement for requested purchases and a return-on-investment analysis for major projects.

The efforts paid off with a ballooning fund balance and upgraded bond rating, they said.

Standard & Poor’s in August upgraded the city’s general obligation bond rating to AA- and certificates of participation rating to A+. A city’s bond rating is a key measure of financial health and influences the cost of borrowing money.

In its ratings report, S&P said, “In our opinion, financial position and performance have grown significantly stronger over the last two fiscal years due to management’s actions, including raising revenue and budgeting expenditures more conservatively.”

Councilman Brian Miller said he appreciates regular feedback about the city’s finances and encouraged staff to publish the quarterly financial updates in a news release, similar to a corporation.

“It’s so important to our citizens to know about how things are going,” Miller said.

Publishing financial information builds public trust and goes beyond a verbal presentation at a meeting, he said.

City spokeswoman Elaney Hasselmann said Sofley’s presentation has been posted to the city’s website, and Paris said staff are working on a release based on examples Miller provided.

Contact reporter Emily Ford at 704-797-4264.

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