When the Waupaca Common Council meets Tuesday, Oct. 18, it will consider a recommendation for the phased wind down of Waupaca Online.
The city’s Finance Committee voted 5-0 on Oct. 11 to pursue such an option.
Tuesday’s council meeting begins at 6:30 p.m., following a 6:15 p.m. public hearing on the city’s 2012 budget. The public hearing and Common Council meeting will be held in the council chambers at City Hall.
At the Oct. 11 meeting, the Finance Committee examined four options in response to Waupaca Onlines’s ongoing financial problems and the loss of more than 50 customers over the past 12 months.
In addition to winding down operations of the city’s online service (the third option), the other three options included:
• Option 1: Discontinuing the service now. This would require a 30-day notice to the customers and to the city’s consultant, Ralph Schmal. The city would seek a buyer for Waupaca Online, and if there was no sale, the cost to the city over the two-year period would be about $100,000.
• Option 2: Going full steam ahead. This option targets getting more than 100 new customers by the end of 2012, with support for customer service and sales, $9,000 for an advertising budget and no rate increase. The full city subsidy of $36,000 would be funded.
• Option 4: Stablilizing and growing the customer base, keeping options open for the sale or continuation of the service, depending on its status. The city subsidy for 2012 and 2013 would be cut in half, to $18,000, for both years. There would be a $1 per month rate increase.
“If we do a phased wind down, we (Waupaca Online) run out of cash within 12 months. I’d like us to try to find a buyer. Option three makes the most sense, but I’d like us to see at the top of the list going after a buyer,” Ald. Paul Lehman said during the Oct. 11 Finance Committee meeting.
The motion he made includes the recommendation that the city “aggressively” seek a buyer for the online service and that if a buyer is not found by the end of this year, that there be a review of Waupaca Online in January to discuss its future.
All projections for the options were through December 2013.
When City Administrator Henry Veleker was asked about potential buyers, he said, “The city hasn’t been approached by anyone to buy it, but we haven’t reached out either, so I don’t know.”
He told the committee that Waupaca Online should have been dealt with earlier and that they have been in a “holding pattern.” Veleker said negative discussions about the communications utility have also hurt it.
Lehman said the problem is that there is more competition in the market today than there was when the utility was established about nine years ago.
“You have a bad, obsolete system. That’s why it’s failing,” he said. “We have given you advertising budgets before. You’ve never used it.”
Veleker said the advertising budget is $700.
Ald. Dave Shambeau said, “To me, it just seems like a tough business for the city to stay in.”
One member of the Finance Committee – Ald. Jim Boyer – said, “I think we should go with option one.”
Veleker said, “You’re willing to make taxpayers pay for a failed system, but you’re not willing to have them pay to make it better.”
Lehman said that without the city subsidizing the utility, there is no way to make it work.
He pays for his own Internet service and questioned why he should pay to subsidize a service for those in rural areas when there are now options for them. Waupaca Online customers are both in and outside of the city limits.
Ald. Paul Mayou, the chairman of the Finance Committee, said shutting down the service now is premature, “even though we may ultimately do it.”
He suggested tiered pricing for the service, saying he would be willing to pay more for more bandwith.
Lehman said to Veleker, “If we’re losing customers, why aren’t you doing something? Every year, you and Ralph (Schmal) do the same song and dance. It’s getting infuriating.”
The city should seek a buyer for Waupaca Online and “shut it down,” he said.