Digital Divide | Broadband in the Berkshires

Middle-mile users will not lose Internet: Judge orders operator to continue operations

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Operation of the state's "middle-mile" fiber-optic network is assured for another two weeks, amid a month-old bankruptcy filing and a legal battle as old as the $90 million system itself.

For the second time in three years, the Massachusetts Technology Collaborative has won a judge's backing to compel the network's operator to fulfill its contract.

The move safeguards a service that connects hundreds of community institutions like schools and police stations to the internet, including dozens in the Berkshires.

Meantime, filings in two federal courts in Worcester continue to detail financial losses incurred by the network operator.

The network operator — known as KCST USA Inc., but formerly Axia NG Networks USA Inc. — reported in a U.S. Bankruptcy Court filing April 20 that while it has $1.1 million worth of assets, it is saddled with more than $19 million in liabilities.

The action comes as the Massachusetts Broadband Institute and MassTech await proposals from other companies interested in running the middle mile network. Responses are due by 3 p.m. Monday.

The state chose Axia NG Networks USA Inc. in 2011 to run the MassBroadband 123 network, which serves 120 cities and towns. But relations bottomed out quickly, with Axia claiming the state failed to build the system it promised and missed completion deadlines.

Axia claims to have lost around $10 million as operator and faced a $2.8 million loss this year.

In 2014, the year the network debuted, MassTech won a restraining order and preliminary injunction in a Massachusetts Superior Court venue after Axia signaled it would withhold payments because of a dispute over the new system's condition.

Under the bankruptcy proceeding, the company could drop its role with the network in June, according to one legal timeline.

RESTRAINING ORDER

In a ruling Monday, U.S. District Court Judge Timothy S. Hillman granted MassTech's request that the network be protected through a temporary restraining order.

It compels Axia, as the company is still widely known, to pay outstanding bills to vendors and provide broadband connections on the 1,200-mile publicly owned network.

"MTC has shown a presently existing, clear threat of injury, as it has received notices of default from at least two key vendors," Hillman wrote. "Such a shutdown would cut off internet to significant areas of Central and Western Massachusetts ...."

In a teleconference with Hillman April 18, MassTech attorney Robert J. Kaler argued in support of his request for a restraining order or permanent injunction. Kaler said the network was in jeopardy due in part to unpaid bills.

"The network support structure is beginning to fall apart," he said. "It presents an immediate threat."

Not so, an attorney for Axia has said repeatedly in U.S. District Court in Worcester. The attorney, Brian Voke, has argued both that MassTech has access to other protections and that worries about the network's viability were overblown.

As of Monday's order, the docket for the case had accumulated more than 75 filings and orders in a month of litigation. Axia is the plaintiff and MassTech the defendant.

In a filing Tuesday, Axia attorney Brian Voke continued to press for Hillman to reject MassTech's call for a temporary restraining order.

"MTC [MassTech] is not under any circumstances going to let the Massachusetts middle mile network go down and, rather, will, to the extent necessary, negotiate contracts to keep the network operating ...." Voke wrote.

Then he suggested that a temporary restraining order removes pressure on the state entity to work out new terms with Axia's network operator.

MassTech and Massachusetts Broadband Institute officials have said that even as they clash in court with the middle-mile operator, they are open to working out new terms with the company.

"MTC can simply pay money and work with KCST to maintain the operation of the network to prevent any disruption in service to users of the network," Voke wrote.

In explaining his decision, the judge said the prospect of later monetary damages would not remedy damage to the network's reputation, saying a shutdown would "threaten the viability and existence" of the network.

The order compels Axia to pay all invoices sent to MassTech from network vendors. Verizon has said this month it is owed $225,000 for pole license fees. And another vendor, Level 3 Communications, notified MassTech that due to a lack of payment of $27,707, it could stop providing its services as of Thursday.

The judge cited those potential defaults in his order. It expires at 11:59 p.m. May 8, though it "may be extended by the Court for good cause shown."

Reach staff writer Larry Parnass at 413-496-6214 or @larryparnass.


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