City releases consultant’s Monticello FiberNet status report

City officials have finally released a draft copy of a consultant’s status report that provides analysis of FiberNet Monticello technology and operational improvements.

Near the end of a two-hour long FiberNet Advisory Board meeting April 15, the Monticello Times asked for a update regarding the report, which was completed by Florida consultant Doug Dawson.

The document prepared by Dawson had been authorized last November by the city council.

The Dawson report provides a review of FiberNet technology and operational improvements made during 2013 and 2014.

In mid-February, Monticello City Council members approved $11,036 in payments to Dawson’s company, CCG Consulting Inc. The city’s payments to Dawson appeared on the council’s Feb. 10 bill registers, which were approved as a consent agenda item without discussion.

In a prior email, City Administrator Jeff O’Neill stated a portion the payment to Dawson ($1,911) was for regulatory compliance services and the balance ($9,125) was payment for Dawson’s work to date on the study.

In mid-March, after a series of back-and-forth emails with O’Neill, the Monticello Times filed a Freedom of Information Act (FOIA) request with the city asking the Dawson FiberNet Monticello status report be released.

Last Tuesday, the newspaper asked for an update regarding its FOIA request. O’Neill said he would have to check once again before releasing the report. “It’s not final,” he said. “It’s never been final.”

Mayor Clint Herbst said part of the reason the report had not been released dealt with a review option that had been offered to Mark Pultusker, former FiberNet general manager.

“We gave it to Mark, and asked him if there was anything in the report that he refuted,” Herbst said. “We didn’t want to open ourselves up to a lawsuit. He [Pultusker] said the report was accurate.”

Herbst said he didn’t see any reason why Dawson’s FiberNet report could not be released. “We gave him [Pultusker] an opportunity to go through the report, so he could not come back and say the facts were not right.” Herbst said the Monticello Times would get the report.

O’Neill said once Pultusker quit, the report became somewhat of a moot point. “The report does not exist in a finalized form,” O’Neill said. Herbst said he participated in a telephone conversation with Dawson, and during the call, Dawson said Pultusker had done a very good job.

“Doug said Mark was a ‘turn-around’ guy who came in and did stuff, but he probably didn’t have the right skills for a general manager,” Herbst told the Monticello Times.

According to Herbst, Pultusker admitted he didn’t have the skills to be a general manager, and that’s why Pultusker would have agreed to bringing on another person to become FiberNet general manager if he stayed.

“When I talked to Mark, I said 90 percent of the report was good, and 10 percent was questionable,” Herbst said, adding: “For anyone, if you had that kind of job review, it would be great. But Mark was fixated on certain things, and he walked out the door.”

O’Neill emailed a draft copy of the Dawson report to the Monticello Times on Friday, April 18. O’Neill said the report was in draft form when Pultusker quit.

“The [report] was authorized to provide assistance in evaluating the merits of Mark’s contract proposal,” O’Neill stated via email. “Even though Mark provided his six-month termination notice in November 2013, we went through with the Dawson study to help us determine how hard we should work to win him back.”

O’Neill also stated information provided by Dawson was useful to the city’s negotiations team in understanding the value of Pultusker’s efforts relative to his requested FiberNet fee and terms.

The information in the report was a motivating factor in the city seeking capable and more reasonably priced alternatives, O’Neill added.

In a follow-up telephone interview, O’Neill said the Dawson report was delivered to Monticello City Council members the same day it was provided to the Monticello Times.

“It [the report] fully served its intended purpose,” O’Neill said. “The data in the draft report was still useful for us. And Mark had a chance to look at it,” he said.

In his 35-page report, Dawson stated the city hired his company, CCG Consulting, to get an independent opinion on a proposal made by Pultusker for extending his contract with the FiberNet Monticello as well as an outside look at the issues facing the company going into the future and how they might affect the decision to extend Pultusker’s management contract.

“If I had to summarize the reasons to not extend his contract it would be the city really can’t afford it,” Dawson wrote, adding: “Mark’s skill set was great for coming in as a turnaround consultant. But Mark should have brought in a team to get the turnaround done faster.”

Pultusker originally came into the FiberNet picture as part of a proposal that was accepted from Gigabit Squared that proposed to take over the management and operational functions performed previously by Hiawatha Broadband. HBC had notified the city they were planning on withdrawing as managers of the business.

Pultusker eventually made a proposal directly to the city to replace Gigabit and take over sole ongoing management of the business. The city council accepted this and a contract was put in place with Pultusker under the corporate name of FiberConnect Inc.

“Overall, he has been successful in having FiberNet Monticello take on the tasks that were formerly done by HBC,” Dawson wrote. “Mark got some outside consulting help and also instituted a rigorous review of every piece of hardware and software associated with cable TV and over a period of months the problems were identified and fixed. HBC spent too much money on some aspects of the system. Mark was able to cut other expenses from the HBC regime. The cost savings that Mark claims are all real savings.”

According to Dawson, the implementation of FiberNet Monticello 2.0 has taken longer than originally promised. While Pultusker reduced the broadband utility’s operating loss (revenues less expenses), he increased the outlay for capital as part of the conversion to FiberNet 2.0.

“When Mark came on board the business was losing over $700,000 per year,” Dawson wrote. “In 2013, that cash shortfall looked to be around $400,000. And so there has been an improvement.”

Dawson stated that Pultusker didn’t do a very good job of filling the general manager role. “He was hired as a turnaround specialist and that’s where his energy and his success has been concentrated,” Dawson’s report stated. “But as a manager, he set himself up as a bottleneck and he did not delegate very well.

According to Dawson, FiberNet Monticello is in a particularly vulnerable position. “There are five cable providers in your market including the satellite providers. There is no comparable situation to yours anywhere else in the country. But this means to me that you have to be even more cautious about making cable investments than most companies,” Dawson wrote. “You have a proposal from Mark that promises that FiberNet will do no better than to require an additional $400,000 subsidy per year for the next four years. Further, the city will be paying ongoing debt payments for the business of $500,000 per year. I have a hard time thinking this is what the city wants.”

Dawson added: “That is a total outlay of $3.6 million over four years, with no promise of a better result after that.”

According to Dawson, if FiberNet management pursues future investments, namely service opportunities in other towns, city leaders and staff will need to have a clear picture of how they will recover any initial investment and make a profit.

“FiberNet Monticello is in a financial hole and you don’t have the luxury of making investments for other purposes,” Dawson wrote, concluded his report by stating the proposal Pultusker had on the table would have rewarded him handsomely for four more years without having him meet financial goals.

“He proposed billing FiberNet Monticello $360,000 a year while promising performance no better than the business continuing to lose $400,000 per year,” Dawson wrote. Dawson was also critical of

Pultusker’s proposal to hire a general manager who would report to him. “That was one of the major problems with the HBC arrangement and it makes zero organizational sense to repeat that mistake again,” Dawson wrote.

Contact Tim Hennagir at tim.hennagir@ecm-inc.com

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