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Hotwire consistently late on rent payments for city’s fiber-optic network

By Liz Moomey
liz.moomey@salisburypost.com

SALISBURY — Hotwire Communications, which runs the city’s fiber-optic network, has not made its quarterly payments on time to the city of Salisbury since the contract began in April 2018.

The contract states, “Hotwire will pay rent … in consecutive quarterly installments on the 15th day after the end of each calendar quarter with respect to the preceding calendar quarter.” But the city has yet to receive anything for fiscal year 2019-20, despite the first quarter ending Sept. 30.

City Manager Lane Bailey said the city is working with Michael Grandizio, the general manager of Salisbury’s Hotwire, to streamline the process and extend deadline for the rent payment. Bailey said the 15-day time period for payment is unreasonable and that 45 days is more reasonable.

Hotwire’s rent payment is a percentage of its revenue generated on the city’s network. The city receives 30% of internet services revenues, 10% of video service revenue and 10% of voice services revenue. 

City Finance Director Wade Furches said this week that Hotwire has “to get their numbers true before they send some information or some money.”

He added Hotwire has paid everything they have owed for rent except for this quarter. Those payments just have not come on time.

Both Jonathan Bullock, the vice president of corporate development and government for Hotwire, and Bailey said they are still sorting out some of the transition woes.

Bullock said there were issues with both residential and commercial billing that were transferred to Hotwire.

“Hotwire has been working diligently, in conjunction with the city, to identify these inherited issues and correct them,” Bullock said in an email. “As the revenue share is fundamentally tied to billing, the cleanup has caused delays in the time frame Hotwire has been able to certify revenue.” 

Since the Hotwire lease went into affect July 1, 2018, the city has received $446,253.73 in revenue. That includes a trend of an increase in installations, which reduces the total amount Hotwire pays in rent. 

Bailey said the contract with Hotwire is a still a positive thing for the city. And Bullock agreed.

“We consider the partnership with the city an enormous success,” Bullock said. “The financial return to the city is greater than anticipated and Hotwire truly values being a part of the Salisbury community.”

The partnership between Hotwire and the city is different than what fiber optic companies’ operations are in other communities, Bailey said. Hotwire is leasing the city’s full Fibrant system. The city still owns the utility. Other Hotwire operations in different cities don’t have a lease agreement with the local government.

“This is a unique relationship compared to all their other customers,” Bailey said last week. “It’s the only one where they are running the system for someone else. It’s still our system.”

Bullock said Hotwire is confident they will resolve the issues and continue on a “normal path.” Bailey said they are working on a solution and a way to speed up the payments.

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