Internet retailers object to AFN contract

The businesses that retail Ashland Fiber Network Internet services have balked at a new contract that would allow AFN to disconnect them from the network if they don't meet financial targets.

Since the city of Ashland first began building AFN in the late 1990s, it has wholesaled Internet service to businesses &

known as Internet Service Providers, or ISPs &

that then retail the service and provide customer support. The goal was to foster the local high-tech industry.

But some Ashland City Councilors and Citizens' Budget Committee members have voiced concerns that the ISPs are not doing enough to market Internet services.

Information Technology Director Joe Franell, who heads AFN, told budget committee members earlier this year that the ISPs would develop a joint list of customers and the services each customer buys. That will allow the companies to target new customers and try to get existing customers to buy higher levels of service.

Franell said in the spring that he would become a retailer if he didn't see results from marketing efforts by September.

But efforts to get the ISPs to sign a new contract that lays out consequences for not meeting targets ran aground this summer.

The City Council was scheduled to review the proposed contract in June. Franell pulled the item from the council agenda.

He said he had not held a final meeting with the ISPs to discuss their concerns before the council meeting.

Among other terms, the contract would have allowed AFN to terminate the contract if an ISP did not meet financial targets for two consecutive quarters. In return, AFN would agree not to retail Internet service if targets were met.

Franell said he is responsible for meeting AFN's budget goals. If enough ISPs have two consecutive bad quarters, that would jeopardize his ability to meet those goals.

"I wanted the citizens to be assured that the ISPs are being held accountable so they can help pay the debt in return for using the network the citizens own," he said.

AFN is $15.5 million in debt. During the fiscal year that ended June 30, AFN operated in the black for the first time.

Franell said he is trying to find a balance between the interests of the ISPs and citizens. He plans to have further meetings with the ISPs about the proposed contract. The issue could return to the City Council in mid-August or September.

Gary Nelson, president of the ISP Ashland Home Net, said the ISPs want to work with Franell to develop a contract that is more acceptable to them.

"It got a little too lop-sided on the city's side for some partners to deal with. You can put quotas and goals in, but don't threaten people with a loss of livelihood if they don't meet those," he said.

Nelson said he believes he could meet the financial targets, especially since Ashland Home Net took over AFN's money-losing cable television service in 2006 and can bundle Internet and television service.

But he said several of the ISPs are not actively trying to get new customers.

The ISPs also took issue with another contract provision that requires them to turn over customer lists to AFN. There is no central database that lets ISPs or the city of Ashland know who has AFN Internet service.

Some ISPs have told customers their information would not be released, Nelson said.

"A lot of people don't want their Internet usage public," he said.

But not having an overall list has crippled the marketing capabilities of the ISPs and AFN, Franell said.

"They can't do intelligent marketing just to the houses that don't have AFN service or to homes with a lower level of service to try and get them to upgrade.

They can only do mass marketing or unintelligently going door to door. They may be cannibalizing each other's customers," he said.

The ISPs also objected to a contract term that would allow AFN to take over an ISP's customers or sell the customer list to another business if the ISP terminated the contract without cause.

Nelson said customers want to stay with the same provider so they can keep their e-mail addresses.

"If the city pulled an ISP, all of the people would have to obtain a new e-mail address," he said.

Franell said that contract term was for the protection of customers. In the past when businesses have defaulted, customers were left without service and the city did not have the customer lists it needed to help them, he said.

Staff writer can be reached at 479-8199 or To post a comment, visit .

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