City officials sealed the deal Wednesday for the sale of Shawano Municipal Utilities’ cable TV and high-speed Internet services.
Local wireless service provider Cellcom will pay $1.25 million for the retail fiber optic system.
A purchase agreement was approved Wednesday by the Shawano Common Council.
SMU will keep its phone service for the time being in compliance with a Wisconsin Public Service Commission ruling that states the city can sell most of the utility’s assets without a referendum.
State law requires a public referendum when a municipality sells a “complete public utility plant,” but the referendum is not triggered if the utility is selling only some of its assets and retaining some, according to the PSC decision.
That decision was issued last year when SMU was in negotiations with Bertram Communication for the sale. After frequent delays and a failure to come to terms, SMU went shopping for another buyer.
The transfer of ownership to Cellcom is scheduled to occur in December.
“The goal in selling to Cellcom is to ensure that Shawano residents will have access to high-quality, competitive services,” said Brian Knapp, general manager at SMU and city administrator.
“The city believes that Cellcom will be able to take the products and services to a level far beyond what the city could ever do in the future,” he said. “In the hands of an experienced telecommunications operator, the network that was built can be used to meet or exceed the community’s expectations.”
Patrick D. Riordan, president and CEO of Cellcom and Nsight, said the purchase made sense for the company.
“We’ve been in the telecommunications industry for over 100 years, and bringing together the success we’ve had with our wireless services with our vast experience in providing landline, Internet and digital TV makes perfect sense,” he said.
“Shawano is part of our backyard, a community we consider home turf and we feel very connected with the community,” Riordan added. “With our expertise we will be able to leverage the extensive, robust fiber infrastructure that was created by SMU to deliver unmatched Internet speed, exceptional TV service and multiple home phone options to Shawano residents. We will be able to offer an incredible customer experience with all aspects of their home and business technology services.”
Shawano residents approved borrowing $4 million for the infrastructure needed to create a telecommunication utility in a 2006 referendum. The utility’s intention was to have customer revenue pay for the network and the service, including the repayment of the $4 million in borrowing.
But over the next two years, the utility shifted to a more ambitious and expensive business model, fell months behind in its promised roll-out of services, and ran into a number of glitches delaying digital cable service.
The utility’s telecom services have continually run deficits since going into operation.
SMU began looking for a sale, lease or partnership to relieve itself of the telecom services in 2011.
In addition to the original $4 million debt, a $1.5 million line of credit was taken out to cover operating costs. The utility has used $1.2 million of that line of credit, Knapp said, which will be covered by the sale to Cellcom.
Customers will continue to contact SMU for billing, technical issues and installation during the transition period. Cellcom said new customers are being accepted and the company will provide additional details to existing customers in the coming weeks.
Cellcom is a subsidiary of Nsight, a family of companies offering complete telecommunications services, including wireless, digital and cable TV, fiber-based Internet and voice service. The company has been serving northeast Wisconsin since 1910.
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