Regulatory changes and the collapse of another telecommunications company led to NC Telecom filing for bankruptcy last week, an official said Wednesday.
Rick Heming, NC Telecom general manager, said that in the company's original business plan, the company hoped to sell voice service as well as high-speed Internet. The company also planned to swap line usage with Adesta Communications to run service to towns along Interstate 70.
But between 1999 and 2002, both those elements of the business plan fell through.
Regulatory changes by the Federal Communication Com-mission meant the company couldn't sell voice services the way they had hoped, he said.
Heming said the Meeker-based company expected to make "a lot of money" from voice services.
Plus, Adesta Com-muni-cations pulled out of the deal and later filed for bankruptcy, leaving NC Telecom without access to markets including Grand Junction and Glenwood Springs.
"Our network was supposed to be a lot bigger than it is," he said.
Based on the business plan, the company took out a loan for about $12 million from the Rural Utility Service, a federal agency dedicated to expanding communications in rural areas.
Heming said the company used about $11 million of the loan to start its business, money that it still owes.
Without two major sources of income, Heming said the company can't pay back the loan based on the original terms.
The company tried to renegotiate, but it became clear the two sides couldn't reach an agreement, he said.
As a result, NC Telecom filed for Chapter 11 on Friday.
Chapter 11 will allow the company to continue operating while it restructures its finances.
Since the company's bankruptcy became public Tuesday, Heming said he has spoken with some of the company's customers, including Moffat County.
Questions remain about what the bankruptcy means for Moffat County government entities.
Moffat County has $230,000 in prepaid services with NC Telecom, and the Colorado State Patrol has $277,000 in prepaid services for their offices in Craig.
Filing for bankruptcy means NC Telecom can restructure some of its debts, but the prepaid services are a contract for service, not a debt, Heming said.
NC Telecom's lawyer will meet with Moffat County officials in the coming weeks to determine what the future of the county's prepaid services will be.
"The attorney is going to try to educate us all at those meetings," Heming said.
Moffat County Commissioner Darryl Steele said the county will "work very, very hard at saving all of those two accounts."
Steele said county Attorney Kathleen Taylor will meet with NC Telecom's attorney before the commissioners do.
Taylor said she isn't sure what the bankruptcy means for the county's prepaid services.
"I don't know what it means," she said. "I don't think anybody knows what it means at this point."