County Internet contract unfulfilled after three years
Steele says taxpayers owed more than $466,000 from contract with NC Telecom
Three years ago Sunday, Moffat County inked a $1.2 million contract with the Meeker-based start-up firm NC Telecom for high-speed Internet access.
Miles of fiber, frustrations and missed deadlines later, NC Telecom says it is weeks away from being able to service the Craig area with all the capability described in its deal.
But as Moffat County looks to slash its budget, critics of the contract call it too expensive, promising the availability of services that NC Telecom itself says it hasn’t received orders for.
Darryl Steele who’ll be sworn in Jan. 14 as Moffat County commissioner says he’ll call for a “unilateral change order” to the contract. Some $466,666 in payment due to NC Telecom, which Moffat County has kept in an interest-bearing escrow account, should be refunded to the taxpayers, Steele argues.
“At least that portion which can’t be spent by the end of the contract should be returned,” Steele said.
Steele said he would expect his soon-to-be colleagues to follow his action on the contract if “the commissioners would want to do what’s right for Moffat County.”
The escrow account was set up as per a Nov. 30, 2001, amendment to the original contract.
“In order to induce NCT to build the System, County will appropriate in the year 2000 and prepay to NCT the sum of $700,000 as prepayment for the use of the second DS3 service,” according to the contract.
Some $600,000 of the total $1.2 million project would be covered by a state Energy Impact Assistance grant, commissioners pledged.
Moffat County bought two DS3 lines from NC Telecom Dec. 8, 1999. The first was earmarked for the Moffat County Public Safety Center at a cost of $500,000.
DS3 technology offers faster, expanded services such as video conferencing and enhanced data transfer capabilities on bundled fiber-optic lines less prone to interruption. Lines contracted by the county “with 45 megabits of bandwidth capacity” have the ability to carry some 672 simultaneous voice conversations, according to industry experts.
The first line, contracted to be operational by April 1, 2001, wasn’t ready for use until late November that year.
A second DS3, for use “only by county offices, libraries, municipalities, hospitals, and public schools located within Moffat County,” was also due to connect by April 1, 2001, according to the deal. NC Telecom officials said earlier this year that they hoped to have that line up and running by Dec. 20 of this year.
Rick Heming, sales engineer and marketing coordinator who started at NC Telecom earlier this year, admits forecasts prior to his arrival for the work were off.
“I think we underestimated the physical process of being in the ground, connecting our wires to theirs (Qwest),” Heming said.
Nonetheless, the system should be operational toward the end of the month, or early January, he said.
But Heming said getting the various municipalities and public facilities hooked-up under the Bean Pole project is the top priority.
The $1.37 million Bean Pole undertaking connects the last miles between Colorado’s multi-use network and eligible public agencies.
Moffat County Commissioner Marianna Raftopoulos, who voted in favor of the county’s $1.2 million deal with NC Telecom, notes that Bean Pole dollars will eventually run out.
For hospitals, various schools and other public entities, the county’s pre-paid $700,000 in services then kicks in, she said.
“They can continue it from the pre-paid services of Moffat County,” Raftopoulos said. “Our next step (upon completion of Bean Pole) is to see how many services we can offer.”
The county’s 1999 contract with NC Telecom does not mention the Bean Pole program.
To date, Moffat County has spent $233,334 toward its pre-paid “phone card” account.
Once depleted, NC Telecom is to bill Moffat County on a monthly basis for all services “provided to Moffat on the second DS3,” according to the Nov. 30, 2001 amendment to the original deal.
The remaining $466,666 held in Moffat County’s escrow account would cover such expenditures.
Steele and other critics of the deal wonder how those monies can be spent, citing the contract’s own language.
Use of the second DS3 would be billed against the county’s pre-paid account “at the lowest of either U.S. West (now Qwest) or UBTA communications current tariff rate for the portion of the bandwidth that was used,” according to the 1999 deal.
To compare service prices, use of one DS3, depending on various specifications with the line, running between Qwest’s Craig central office and 466 Yampa Avenue, Craig Daily Press’ office, can run between $1,211 and $1,800 per-month over the length of a five-year deal, according to Able Chavez, Qwest public relations officer for southern and western Colorado.
Today’s available rates run between $145,320 to $216,000 over 10 years the county has earmarked a $700,000 pre-paid account for NC Telecom.
Raftopoulos, in an interview Friday, said services would be offered “10 percent below Qwest.”
This is not addressed in the 1999 contract.
“I don’t know what other options were available (when the deal was signed),” Steele said. “But we’re sitting here with money we can’t possibly spend.”
Steele’s concerns echo those of Jeff Taylor, former Craig resident and long-time critic of the deal.
“The entire NC Telecom contract should be canceled or renegotiated, even if it were in legal dispute for some time,” said Taylor, who insists he does not have financial interests with any of NC Telecom’s potential competitors.
“I don’t believe a court in the land would penalize the taxpayers of Moffat County when you can buy products for one-tenth of the cost,” Taylor said.
The county, according to its Nov. 30, 2001, amendment to the deal, placed its remaining $466,666 in pre-paid services for the second DS3 line in escrow for additional security against a failure by NC Telecom to continue to serve the Moffat County Public Safety Center.
The county and NC Telecom must service the facility through Dec. 31, 2011, said Kathleen Taylor, Moffat County attorney.
The amendment states that Moffat County will first tap its $233,334 in existing pre-payment to NC Telecom whenever services are received on the second DS3 line.
Once used, the $466,666 held in escrow would then be spent.
Funds remaining at the end of the 10-year deal would then be released to NC Telecom, but remain at the county’s disposal, the county attorney said.
This isn’t explicitly stated in either the 1999 contract, or the Nov. 30, 2001, amendment.
“You have to read the two together,” Taylor said.
Paul Shockley can be reached at 824-7031 to at pshockley@craigdailypress.
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