Ting

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Tucows Inc. is an Internet services and telecommunications company, headquartered in Toronto, Ontario. The company is one of the largest domain registrars and operates Hover, a webhosting service, and OpenSRS, a platform for domain resellers. The company was formed in Flint, Michigan, in 1993. The Tucows logo is two cow heads, a play on the homophone "two cows."
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Stock Price Chart for TCX from January 1, 2012 through August 8, 2017. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1822% since January 1, 2012. The S&P 500 has risen 93% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.

A Financial Model of Tucows (TCX) and Ting

by Hugh Pickens

Article begun November 13, 2014

I am long term investor who owns stock in Tucows. The purpose of this web site is to provide a comprehensive overview of Tucows (TCX) that documents and explains the company's business strategy and monitors the execution of that strategy with particular emphasis on Tucows' MVNO, Ting. Information about Tucows has been compiled in this report from news releases, earnings reports, earnings conferences calls, and independent reporting on Tucows and Ting.

A financial model shows Ting's past performance and predicts how Ting will perform in the future under different growth scenarios.

Contents of This Report


Contents

Overview of Tucows and Ting

Stock Price Chart for TCX from January 1, 2012 through May 10, 2017. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1799% since January 1, 2012. The S&P 500 has risen 87% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.

Financial Analysis of Tucows and a Financial Model of Ting

by Hugh Pickens

Article begun November 13, 2014

The purpose of this web site is to provide a comprehensive overview of Tucows (TCX) that documents and explains the company's business strategy and monitors the execution of that strategy with particular emphasis on Tucows' MVNO, Ting Mobile, and Tucows' fiber initiative, Ting Internet. Information about Tucows has been compiled in this report from news releases, earnings reports, earnings conferences calls, and independent reporting on Tucows and Ting.

A financial model shows Ting's past performance and predicts how Ting will perform in the future under different growth scenarios.

Contents of This Report

Original Article

The original article is available at: Ting Model and Tucows Analysis

Purpose of This Report

The purpose of this report is to:

  • Explain the rise in Tucows stock price and Ting's contribution to the increase
  • Model the contribution that Ting makes to Tucows bottom line

Disclaimer

I am long term investor who owns stock in Tucows. The purpose of this web site is to monitor Tucows so I can understand how my investment is performing. I compile information about Tucows from news releases, earnings reports, earnings conferences calls, press releases, and independent reporting on Tucows and Ting. I have built a financial earnings model to monitor Ting's past performance and to make predictions on how Ting will perform in the future under different growth scenarios. One of that attractions of reporting on Tucows is that Ting's business strategy is relatively straightforward and easy to model with a limited number of inputs. For another example of a company I own stock in and follow closely, go to my report on Phillips 66 (PSX), a much larger and more complex company.

There are three reasons I am making this information available publicly. First, I find I am more careful in my work and systematic in my approach to stock valuations when I know other people are looking at my work. Second, I would like readers of this article to send their comments, appraisals, and criticisms of my work to hughpickens at gmaildotcom so I can incorporate their ideas into my approach and improve my financial model. Third, Tucows is a small cap with a market cap of just over $300 million that is thinly traded and only being followed by three analysts. I would like the stock to become better known because I think Tucows' value will rise in a more efficient and liquid market.

This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in the company and uses this web site to follow the company. All information on this web site comes from publicly available sources. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.

Tucows Business Analysis

Other sections of this report on Tucows include:

Background

Tucows Inc. is an Internet services and telecommunications company, headquartered in Toronto, Ontario. The company is one of the largest domain registrars and operates Hover, a webhosting service, and OpenSRS, a platform for domain resellers. The company was formed in Flint, Michigan, in 1993 to provide users with downloads of freeware and trial versions of shareware. The name originally was an acronym for "The Ultimate Collection Of Winsock Software". The Tucows logo is two cow heads, a play on the homophone "two cows."

In February 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). An MVNO is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. The MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. In Tucows case, the wireless service provider is Sprint. While Sprint provides the wireless network, Ting provides customer service, billing support systems, marketing, and sales personnel. Consumer Reports reported in November, 2014 that Ting is the highest rated small mobile service provider with the best customer service of any MVNO. According to Glenn Derene, the Electronics Editor for Consumer Reports, “Smaller providers like Ting, Consumer Cellular, and Republic have excellent satisfaction ratings because they’re designing innovative strategies to keep plan costs down for their customers and simplify their service options.”[1]

Ting's launch coincided with a rise in Tucows (TCX) stock price and since Ting's launch, Tucows (TCX) stock price has more than quintupled.

Business Segments

The most important single fact about Tucows is that the company operates two different business segments:

  • A predictable, steady, low growth, low margin wholesale domain name registrar business (Tucows is the third largest ICANN-accredited registrar in the world and the company is the largest publicly traded registrar) and
  • A high margin, high growth mobile telco business that is attempting to disrupt a huge industry with large, entrenched incumbents.

The first business is as a wholesale reseller of domain names with over 8 million domain names under management. The domain service business segment of Tucows has a large volume but modest profit margins. The domain name business is a mature business with low margins, large cash flow, steady profits and slow growth.. The business is extraordinarily "sticky." Once someone buys a domain name from the retail side of Tucows or from one of Tucows' resellers, they almost never change providers because it is a lot of trouble to transfer a domain name to a new domain name company.

The MVNO side of the business is very different from the domain name side. The MVNO business generates high profits with gross margins of 45 percent. The MVNO business is also high growth with a customer base that increases by 10 to 15 percent every quarter. Although Tucows MVNO business is only in their third year of operation, it is already a significant contributor to the company's bottom line. There are many competitors but no single company dominates the MVNO business space. MVNOs are experimenting to find the best way to target customers, advertise their plans, acquire new business, provide customer service, and bill customers to become a profitable enterprise.

One thing that Ting has in common with Tucows' domain services business segment is that both segments provide world class telephone based customer service. Tucows has been able to transfer their experience in telephone based customer service from the domain name business segment to their MVNO business where customer service has become Tucows' prime differentiator from its competitors.

Consumer Reports reported in November, 2014 that Ting is the best small mobile service provider with the best customer service of any MVNO. According to Glenn Derene, the Electronics Editor for Consumer Reports, “Smaller providers like Ting, Consumer Cellular, and Republic have excellent satisfaction ratings because they’re designing innovative strategies to keep plan costs down for their customers and simplify their service options.”[2]

Incremental Contributions From Tucows Domain Services and Ting

The following is historical data taken from Tucows financial reports since Q1 in 2013 when Tucows began breaking out financial results from Ting. The spreadsheet shows the incremental contributions from Tucows' Domain Services and Ting.[3][4][5][6]

Spreadsheet 1: 08-08-2016 2013: Q1 2013: Q2 2013: Q3 2013:Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2
Net Revenue All Domain Services $27,637,000 $27,439,000 $30,919,000 $33,139,000 $27,690,000 $27,328,000 $29,125,000 $27,636,000 $27,541,000 $27,471,000 $28,011,000 $27,738,000 $27,771,000 $28,468,000
Cost of Revenue All Domain Services $19,968,000 $20,068,000 $20,672,000 $24,901,000 $20,035,000 $19,696,000 $20,192,000 $20,067,000 $19,464,000 $19,752,000 $19,569,000 $20,050,000 $19,861,000 $19,940,000
Incremental Contribution from Tucows Domain Services (Before Taxes and Other Expenses) $7,669,000 $7,371,000 $10,247,000 $8,238,000 $7,655,000 $7,632,000 $8,933,000 $7,569,000 $8,077,000 $7,719,000 $8,442,000 $7,688,000 $7,910,000 $8,528,000
Net Revenue Ting $2,348,000 $3,734,000 $4,718,000 $5,729,000 $6,712,000 $8,260,000 $9,749,000 $11,166,000 $12,927,000 $15,418,000 $16,541,000 $17,292,000 $17,839,000 $18,999,000
Cost of Revenue Ting $2,110,000 $2,940,000 $3,597,000 $3,975,000 $4,281,000 $5,040,000 $5,794,000 $6,755,000 $7,345,000 $8,499,000 $9,211,000 $9,188,000 $8,989,000 $9,910,000
Incremental Contribution from Ting (Before Taxes and Other Expenses) $238,000 $794,000 $1,121,000 $1,754,000 $2,431,000 $3,220,000 $3,955,000 $4,411,000 $5,582,000 $6,919,000 $7,330,000 $8,104,000 $8,850,000 $9,089,000
Incremental Contribution from Ting and Domain Services $7,907,000 $8,165,000 $11,368,000 $8,238,000 $10,086,000 $10,852,000 $12,888,000 $11,980,000 $13,659,000 $14,638,000 $15,772,000 $15,792,000 $16,760,000 $17,617,000
Adjusted EBITDA $3,314,000 $3,275,000 $4,920,000 $3,531,000 $6,873,000 $5,357,000 $7,030,000 $6,313,000 $6,313,000 $7,112,000
Net Income $477,000 $1,347,000 $2,691,000 $1,859,000 $2,834,000 $2,285,000 $3,159,000 $3,095,000 $4,438,000 $4,071,000
Net Income per Share 0.04 0.12 0.24 0.16 0.25 0.21 0.29 0.29 0.42 0.39
Closing Share Price the Day After Earnings Report 14.23 16.30 16.35 18.43 18.85 23.91 27.42 19.96 24.16 27.62
P/E 88.94 33.96 17.03 28.80 18.85 28.46 23.64 17.21 14.38 17.71

Notes

Note 1: Incremental earnings reflect the contribution of the business segment before taxes and other expenses.

Note 2: Tucows began using Adjusted EDITDA as a financial metric beginning Q1 2014. Tucows has not yet provided the Adjusted EDITDA figures for Q4 2014.

Note 3: All information in this table compiled from the following Tucows' earnings results:

Tucows Foreign Exchange Strategy

Five Year Chart of Canadian Dollars/ US Dollars Through February, 2016. Up until the end of 2014 the Canadian Dollar was strong against the US Dollar so the company engaged in foreign exchange hedging to provide certainty around future costs. Tucows CEO Elliot Noss said on November 20, 2014 during the 2014 Q3 conference call that with the strengthening of the US Dollar, Tucows foreign exchange strategy will change and Tucows will go unhedged starting in 2015 to take advantage of the favorable exchange rates. "If the foreign exchange rate stays more or less in its current range, EBITDA could benefit by as much as $1 million to $1.5 million in 2015 relative to this year," said Noss.

Tucows is a Canadian company that earns most of its revenue in U.S. dollars, while most of their operating expenses including labor costs, rent, and utilities are in Canadian dollars. Up until the end of 2014 the Canadian Dollar was strong against the US Dollar so the company engaged in foreign exchange hedging to provide certainty around future costs. Tucows CEO Elliot Noss said on November 20, 2014 during the 2014 Q3 conference call that with the strengthening of the US Dollar, Tucows foreign exchange strategy will change and Tucows will go unhedged starting in 2015 to take advantage of the favorable exchange rates. "The appreciation of the Canadian dollar has been a bit of a headwind really over the last decade or so, as our expenses were that much higher relative to our revenues. You see that reflective in our 2014 numbers and our guidance. However, with the recent weakening of the Canadian dollar, we now have a bit of a tailwind. We have typically hedged out 18 months or so, but are now only hedged through the end of 2014. Thus, if the foreign exchange rate stays more or less in its current range, EBITDA could benefit by as much as $1 million to $1.5 million in 2015 relative to this year."[7]

Max Lukenbach reported on January 18, 2015 in a comment to an article about Tucows in Seeking Alpha that since Noss' announcement, the Canadian Dollar has weakened further and that this will be even more beneficial for Tucows and could "add $2,000,000 to EBITDA" during 2015.[8]

Tony Redondo wrote in Exchange Rates' on January 3, 2015 that "the majority of analysts are predicting further US Dollar strength in 2015 on the back of the strong recovery in the US economy and the monetary tightening policy embarked upon by the US Federal Reserve.[9]

Ting Financial Model

Tucows Inc. is an Internet services and telecommunications company, headquartered in Toronto, Ontario. The company is one of the largest domain registrars and operates Hover, a webhosting service, and OpenSRS, a platform for domain resellers. The company was formed in Flint, Michigan, in 1993. The Tucows logo is two cow heads, a play on the homophone "two cows."
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.


Other sections of this report on Tucows include:




Example of Model of Tucows' Profitability

Following is an example of a model of Tucows' profitability through Q2:2016:

Spreadsheet 2: 08-08-2016 2013: Q1 2013: Q2 2013: Q3 2013:Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2
Number of Customers at End of This Quarter 12,000 24,000 36,000 48,000 61,000 73,000 82,000 94,000 103,000 113,000 122,000 128,000 140,000 144,000
Customers Net Additions This Quarter to Arrive at Total Customers (Net Adds) 10,000 13,000 12,000 11,000 12,000 11,000 10,000 9,000 6,000 12,000 4,000
Quarterly Churn Rate 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 8.20% 7.17% 7.20%
Churned Customers 3,600 4,575 5,475 6,150 7,050 7,725 8,475 9,150 10,496 10,038 10,368
Gross Adds 13,600 17,575 17,475 17,150 19,050 18,725 18,475 18,150 16,496 22,038 14,368
Average Customer Phone Bill per Quarter $105 $105 $105 $105 $105 $105 $105 $105 $105 $105 $105
Gross Margin 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45%
Acquisition Costs per New Customer (Gross Adds) $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Gross Income in This Quarter $5,040,000 $5,482,313 $6,747,563 $7,919,625 $8,869,875 $10,041,938 $10,895,063 $11,857,125 $12,573,960 $13,543,005 $14,365,680
Cost of Goods Sold in This Quarter $2,772,000 $3,015,272 $3,711,159 $4,355,794 $4,878,431 $5,523,066 $5,992,284 $6,521,419 $6,915,678 $7,448,653 $7,901,124
Cost to Acquire New Customers $1,360,000 $1,757,500 $1,747,500 $1,715,000 $1,905,000 $1,872,500 $1,847,500 $1,815,000 $1,649,600 $2,203,800 $1,436,800
Incremental Contribution from Ting (Before Taxes and Other Expenses) $908,000 $2,467,041 $3,036,403 $3,563,831 $3,991,444 $4,518,872 $4,902,778 $5,335,706 $5,658,282 $6,094,352 $6,464,556
Incremental Contribution from Ting per Share (Before Taxes and Other Expenses) $0.08 $0.22 $0.27 $0.31 $0.35 $0.40 $0.43 $0.47 $0.50 $0.54 $0.57
Delta in Incremental per share Contribution from Ting from Previous Quarter $0.14 $0.05 $0.05 $0.04 $0.05 $0.03 $0.04 $0.03 $0.04 $0.03

Notes and Assumptions

Note 1: Ting started in February 2012. The model goes back to Q3 in 2013. Prior to the earnings report Q3 in 2013 Tucows did not break out the number of customers or devices.[10]

Note 2: There is a discrepancy of 2,000 customers in the number of customers added for 2014:Q3 due to an new method that Ting used for counting customers. "This is the result of a one-time change in how we measure active accounts."[11]

Note 3: The number of churned customers is calculated by multiplying the monthly churn rate (2.5%) times three months per quarter times the number of customers at the end of the previous quarter. Noss said in the 2014:Q2 earnings conference that "It is also worth mentioning that after 30 days of service when customers tend to determine whether they are getting sufficient network coverage, our churn rate drops comfortably below 2% per month."

Note 4: Elliot Noss stated in the November, 2014 conference call that Ting had 82,000 customers at the end of Q3 and in the February, 2015 call that Ting had 94,000 customers at the end of Q4 for an increase of 12,000. Noss also stated they had added 11,000 net customers. The discrepancy is a rounding error.

Note 5: The "Gross Income" is calculated by multiplying the "Average Customer Phone per Quarter" times the number of customers in the previous quarter plus one half the new customers gained minus one half the lost (chruned) in the present quarter. The factor of one-half is used because it is assumed that customers are added in a steady stream so that on average the new customers added will contribute to the gross income only one half of the quarter.

Note 6: The "Cost of Goods Sold" is calculated by taking the "Gross Income" and subtracting from it the "Gross Income" times the "Gross Margin".

Note 7: The "Cost to Acquire New Customers" is calculated by mulitplying the "New Customers Added During This Quarter to Arrive at Total Customers" plus the "Churned Customers" and multiplying this times the "Acquisition Costs per New Customer".

Note 8: The "Incremental Contribution from Ting (Before Taxes and Other Expenses)" is calculated from the "Gross Income in This Quarter" and subtracting both the "Cost of Goods Sold in This Quarter" and the "Cost to Acquire New Customers".

Note 9: The "Incremental Contribution from Ting (Before Taxes and Other Expenses)" does not include taxes and other expenses which are spread over both the domain services portion to Tucows and the Ting portion of Tucows. This will be factored in at the last step of the process.

Note 10: The "Incremental Contribution from Ting per Share (Before Taxes and Other Expenses)" is calculated by dividing the "Net Income for This Quarter (before Taxes and Other Expenses)" by the 11,321,175 outstanding shares of Tucows.

Note 11: In late January, 2016 PlatinumTel Wireless, also known as PTel, alerted its customers that it will be shutting down the service and included Ting among a few recommended mobile providers. Ting welcomed roughly 7,000 of these customers in Q1 of 2016 as a one-time influx of customers, migrating from another MVNO that closed its doors.


Latest News about Tucows and Ting

Tucows Inc. is an Internet services and telecommunications company, headquartered in Toronto, Ontario. The company is one of the largest domain registrars and operates Hover, a webhosting service, and OpenSRS, a platform for domain resellers. The company was formed in Flint, Michigan, in 1993. The Tucows logo is two cow heads, a play on the homophone "two cows." In 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting provides its own customer service, billing support systems, marketing, and sales personnel.
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.

Other sections of this report on Tucows include:

October 17, 2017: Burlington City Council Narrows Sale of Burlington Telecom to Ting/Tucows and KBTL

Burlington City Councils Narrows Sale of Burlington Telecom to Ting/Tucows and KBTL. The Burlington City Council voted to advance the bids of Ting/Tucows and KBTL in the process to buy Burlington Telecom with six of councilors voting for KBTL, five voting for Ting/Tucows and one voting for Schurz which has now been eliminated from the sale process. City Council President Jane Knodell (right in photo) led the Progressive Caucus in voting for KBTL. However Knodell signaled that Ting may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. "I will vote for it tonight, but I don't think it's there yet," said Knodell. “Please don’t rest on your laurels. Keep working hard.”

The Burlington Free Press, Sevens Days, VT Digger, Vermont Public Radio, WAMC, and My Champagne Valley reported on October 17, 2017 that the Burlington City Council voted to advance the bids of Ting/Tucows and KBTL in the process to buy Burlington Telecom with six of councilors voting for KBTL, five voting for Ting/Tucows and one voting for Schurz which has now been eliminated from the sale process.

City Council Hears Supporters of KBTL

The city released more than 200 pages of emails from residents sent to btfeedback@burlingtonvt.gov, the dedicated email address set up for residents to share Burlington Telecom input. People who chose to weigh in overwhelmingly — though not unanimously — expressed a preference for local ownership. The public comment period was dominated by people speaking in support of Keep BT Local’s bid to buy Burlington Telecom. Many of those speaking in support of Keep BT Local spoke passionately about the benefits of having Burlington Telecom run by a local company and criticized Mayor Miro Weinberger and some city councilors for not supporting the co-op’s bid. “When [Weinberger] said that the offer of Keep BT Local was not viable I felt really sad,” said Diane Pearson. “I came tonight to to ask each of you one question before you vote tonight: how can our community not be viable and what can be more viable than our community?

About 150 residents crowded into Contois Auditorium to voice their support for the co-op's bid. They stood along the walls and sat on the floor, bearing signs with slogans in favor of Keep BT Local. "How about we keep our internet & just sell Miro instead?" read one, taking a shot at Mayor Miro Weinberger. Read another, "Hands off our internet." "This is probably the biggest issue you've ever voted on," former Progressive state legislator Dean Corren told the council. "Decades from now, it will seem silly that we considered having something other than local control over the telecom." Others urged the council to consider the extensive public support for the co-op. Among the lawn signs placed in yards around the city, "You've never seen a sign saying, 'Give it to Tucows,'" said Charles Simpson, referring to Ting's parent company. People applauded and laughed.

A few people spoke in favor of the other bids, arguing that Burlington has an obligation to all its taxpayers in the sale — not just the Burlington Telecom subscribers who would become co-op members. Others questioned whether the debt-financing is workable. John Callow said that the prior mismanagement of Burlington Telecom needed to be considered and the council should consider the proposals from Schurz and Ting/Tucows. “They both offer tremendous amount professional experience and have demonstrated they can compete in a marketplace around the country,” Callow said. “Contrast that with the local option which is somewhat undervalued.

Taxpayers Speak at Public Forum

The public forum prior to the city council’s deliberation was dominated by residents pleading with leaders to keep the local bid in the running.

  • Dave Mahr: "I live in the new North End. You will hear a number of emotional pleas in support of Keep Burlington Telecom Local. But I urge you to take the advice of a Nobel Prize winning economist, Richard Thaler, and base your decision on the facts and figures versus your emotions.”
  • Dean Corren: “Not only is the coop a very viable offer but it is the only one that meets the key criterion of keeping control local.”
  • John Caulo: “I wanted to speak in favor of the Schurtz and Ting proposals. We’ve got two proposals that are fairly equally valued. Contrast that with the local option which is somewhat undervalued. This transaction and whom you select will have a bearing on the future vitality of our community.”
  • Tom Hyde: "I’m from Ward 6 and I think it’s really important that the reason that we’ve been told that City Bank would sue the city if the Keep BT Local bid is accepted, that should be disclosed.”

Mayor's Recommendation Disregarded

Mayor Miro Weinberger had urged councilors to block the advancement of the co-op in the bidding process, arguing that KBTL isn’t financially viable, lacks managerial experience and would face legal and regulatory hurdles. At a news conference last week he said a lawsuit from Citibank is a “near certainty” should Burlington accept the co-op’s low offer.

Dean Corren, a former Progressive state representative, gave remarks that typified those of co-op supporters. He referred to Ting and Schurz as “Comcast by any other name,” highlighting a major concern among advocates for local ownership who fear no deal with a corporate buyer would bind a telecom giant should it purchase them in the future. “You cannot run a city based on threats of corporate litigation,” Corren said. Corren was not the only Keep BT Local supporter who took aim at the mayor. Ward 8 Independent Adam Roof addressed the emotion that has been swirling over the deliberations. “I am not fearful or scared or intimidated by the CitiBank potential lawsuit. Nor am I intimidated or fearful or directed by the mayor and his opinions. I do think that KBTL for me has a long way to go to mitigate the concerns that I have especially around the financial dynamics.”

Weinberger defended himself against criticism. The settlement, he said gave the city control over the future of Burlington Telecom. Citibank had initially sought to force the fiber network into receivership. “We heard frequently tonight that it’s important to fight the banks and not be afraid of litigation. I just hope we all remember the history. We did fight. I did fight,” Weinberger said.

Progressive Caucus Voted Unanimously to Support KBTL

The Burlington Progressive Party voted unanimously Sunday to support the Keep Burlington Telecom Local bid, saying it offers "the greatest long term value to Burlington residents." The party cited the success of other cooperatives, including City Market, in Burlington.

Some of the councilors who cast their votes for the co-op warned the supporters who packed Contois Auditorium that they still had some concerns. City Council President Jane Knodell, despite her vote for the co-op, said it was a "reasonable" position to be worried about the risks facing the co-op's bid and said that Monday's vote might not translate into continued support when the council picks a winner at the next City Council meeting on October 30. "I will vote for it tonight, but I don't think it's there yet," said Knodell, adding that she had started out as a skeptic toward the co-op, but it was growing on her.

Concerns About KBTL Continue

Ralphine O'Rourke, a private attorney hired by the city to assist with the sale of Burlington Telecom, told Weinberger and the council that she and Eileen Blackwood, the city attorney, had spoken with Citibank's lawyer. O'Rourke wrote that the lawyer, Kevin Fitzgerald, told them the co-op's offer would "not meet the City's obligations to Citibank." She added that the bank was uninterested in equity in the co-op-run company. "In terms of our providing you with a risk assessment regarding the possibility of whether Citibank would bring a claim, it has moved from quite possibly to definitely," she wrote.

The co-op addressed the question of Citibank's potential legal challenge on its website. "It is our position that the potential problem with Citibank can be cured, but it requires cooperation with City Council and the Mayor," the co-op wrote. "We are fully prepared to respond to this concern and are confident that with the City’s help we can clear these hurdles." The co-op’s board has said it believes it has a financially sound proposal that will pass regulatory muster. On Monday, KBTL announced an “Executive Transition Advisory Board” to help guide it through the next phase of the bidding process. Among those on the executive transition team are Avram Patt, a former Washington Electric Co-op general manager, and Carina Driscoll, a former state representative, city councilor and Sen. Bernie Sanders’ stepdaughter.

Councilors also expressed concerns about the financial viability of Keep BT Local's bid. The co-op's $12 million offer would be financed by a $10 million loan with a 14 percent interest rate. "It’s not about fear [of litigation against the city], it's whether there’s legitimate concerns about whether Keep BT Local can pull it off," said Kurt Wright (R- Ward 4) as he explained his unwillingness to support the co-op. "I don’t take those considerations lightly."

Councilors May Change Their Votes in Final Vote on October 30

Councilors said that their votes Monday night weren't necessarily an indication of their final choice. The two finalists will continue to refine their offers before the council selects the winning bid on October 30. While half of the City Council voted for Keep BT Local, some of them made it clear that their vote to move the co-op into the next stage of the sales process didn’t guarantee they’d support the bid in the final vote. Several councilors who voted for Ting said they appreciate the benefits of local ownership that the co-op offers, but those benefits won’t be realized if Keep BT Local can’t survive the in the short term. City Councilor Karen Paul, D-Ward 5, said the co-op’s pro-formas pencil out, but they include no cushion for the unexpected. A recession or other economic disruption could tank a co-op owned Burlington Telecom, she said.

East District Democrat Richard Deane emphasized that this is not the final vote the council will make regarding the sale of Burlington Telecom. “I think we need to be certain of four critical points. That those two candidates that we choose are financially stable, that the chosen firm must have proven managerial and technical expertise. Third they have to have the best chance to be favorably evaluated by the Public Utility Commission. Finally they must offer the best assurance the $16.9 million of taxpayer funds that were inappropriately allocated by a previous administration are returned.”

City Council President Jane Knodell said even though she started out a skeptic of the bid from Keep BT Local, it was growing on her. But Knodell also was clear to point out she still thought the proposal needed work. “I’m here tonight to support Keep BT Local but also to say keep working because there will be hurtles and … I think the people that are saying we are very worried about the financing that is legitimate,” Knodell said. Knodell reviewed the bidders’ pro-formas, or 10-year projections. The information is not public, because it includes proprietary information about the bidders. Currently, Burlington Telecom is paying for growth out of profits. Keep BT Local would have a difficult time keeping up with debt payments under that scenario, Knodell said. “It can be done, but it has to be flawless,” she said of the co-op’s plans for Burlington Telecom. Her message to the co-op board: “Please don’t rest on your laurels. Keep working hard.”

Though Knodell didn’t vote for Ting, her comments signaled that it may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. The council president said she thinks Burlington should choose a buyer who can help the local tech economy flourish, something Ting has made the greatest commitment to thus far, pledging $250,000 to specific local efforts including BTV Ignite. “The next Skype could come out of Burlington. I think we need to be thinking quite big when it comes to this sale,” Knodell said.[12][13][14][15][16][17]

October 16, 2017: City Council to Decide on Burlington Telecom Finalists at October 16 Meeting

'City Council to Decide on Burlington Telecom Finalists at October 16 Meeting. The Burlington City Council will meet at 7 pm EST on October 16, 2017 to select two finalists to buy Burlington Telecom. A final decision will be made by the Council October 30. Two out-of-state bidders, Ting and Schurz, and one local bidder, KBTL, are the finalists.

Vermont Biz reported on October 16, 2017 that the Burlington City Council will meet at 7 pm EST on October 16, 2017 to select two finalists to buy Burlington Telecom. A final decision will be made by the Council October 30. Two out-of-state bidders and one local bidder are the finalists. Last week, Mayor Miro Weinberger urged the City Council to advance to the final round the bids from Ting/Tucows and Schurz Communications. This was expected as they were the high bidders. The third bidder, Keep Burlington Telecom Local (KBTL), presented a bid that would provide less than half the cash and a high debt load. The chairman of the BT advisory council already had advised against the KBTL bid because of that. The bid from the Canadian company Ting was $27.5 million; Schurz from Indiana was $30.8 million; and KBTL was $12 million, with $10.5 million in cash, including $10 million financed at 14 percent interest. All the bidders offered a way for the city to retain a minority stake in the "new" BT. KBTL would run the fiber-based telecom as a for-profit co-op, which would include current subscribers. BT provides Internet, phone and television service.[18]

City Council President Jane Knodell said on October 12, 2017 that it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[19] The Burlington Free Press reported on October 16, 2017 that the Burlington Progressive Party voted unanimously to support the Keep Burlington Telecom Local bid on Sunday, saying it offers "the greatest long term value to Burlington residents." The party cited the success of other cooperatives, including City Market, in Burlington.[20]

According to a story on Vermont Public Radio, each councilor will get one vote Monday night and the two proposals with the most votes will advance to the final stage of the sale process.[21]

October 13, 2017: 'Keep Burlington Telecom Local' Pushes Its Case on the Steps of City Hall

'Keep Burlington Telecom Local' Pushes Its Case on the Steps of City Hall. Chairman Alan Matson called the 14% interest rate KBTL will be paying on its $10 million loan from Maine Fiber “no doubt higher than what we’d like” but said the loan was structured with lower payments in the first years and higher as time went on.

VT Digger reported on October 13, 2017 that supporters of 'Keep Burlington Telecom Local' rebutted arguments against their bid on October 13, 2017 at a press conference held outside City Hall, and reiterated they were “very actively pursuing” a purchase of the city’s internet, cable and telephone service provider. KBTL Chairman Alan Matson called the 14% interest rate KBTL will be paying on its $10 million loan from Maine Fiber “no doubt higher than what we’d like” but said the loan was structured with lower payments in the first years and higher as time went on. Matson said the co-op could buy out the loan after three years and negotiate with a new lender. Matson also cited co-op board members and supporters with managerial and legal skills, including appearing before the Public Utility Commission, which must approve any sale.

City Council will narrow the three bidders down to two finalists on Monday night. City Council President Jane Knodell on October 12, 2017 said it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[22]

October 12, 2017: 'Keep Burlington Telecom Local' responds to Questions on Reddit AMA

on October 12, 2017, Alan Matson, Chairman of 'Keep Burlington Telecom Local' board, responded to questions on KBTL's Reddit AMA.

Question: People have stated that KBTL lacks expertise in the ISP business, how would you refute that?

Alan Matson: Several things...but the key is that KBTL's being led by a Board of Directors. If we are successful, the Board will hire a general manager who actually runs the telecom. This hire is truly what should be looked to for the expertise. Second...on our board are three business folk who have all started up successful businesses plus a lawyer who has a practice that includes telecom and has submitted CPGs for telecom companies in Vermont. As for the point of who would we hire for a manager.....our intent has always been to keep the existing management in place...if at all possible...and that continues to be our plan.



Questions: What challenges to would you anticipate in gaining PSB approval if selected?

Alan Matson: While I'm not the lawyer on the Board, I understand that there are two issues that have been raised about PSB (Now Public Utilities Commission "PUC") approval. They are management and financial stability. Additionally...there are two CPGs in play here....phone and cable. I'll start with phone...this CPG should not be an issue. Phone CPGs pretty much ask some simple questions about prior bankruptcies. The cable CPG will be the tougher one...on the management front, we are quite confident that our bid is successful that the PUC will have no issues with our management. It's tough to say more at this point. On the financial front....we have submitted Pro-forma financial info to the City as regards our bid, and right now nobody is saying that it doesn't work or that the assumptions are wrong. Also...the PUC tends to encourage competitive providers which BT is in this situation.



Question: As I understand it (and I am not paying much attention) your bid is much less than the others. Why should you get the franchise?

Alan Matson: Key is the value to the City as a whole and not just the headline bid number (of which the City only gets 25% over $6 million). Also, the total $$ value of the bid is only one of the criteria listed in the sale criteria.



Question: Why is the mayor being such a dick to you guys?

Alan Matson: I can't speak to motives, but the mayor is only one part of the decision process here, and our offer continues to provide for the City benefits that don't exist in the other bids. We're continuing to highlight those benefits, as well as highlighting what we think are misrepresentations about all three bids. Basically, we think the risks of our bid are being exaggerated, whereas the risks of Tucows and Schurz are being overlooked. For example, Tucows does not currently manage any cable companies, nor do they have the cash on the balance sheet to purchase BT which makes debt issuance likely. Schurz, on the other hand, has a recent history of buying and selling media properties (including a cable company in Florida last year) and uses data caps in their pricing model for at least one of the cable companies.



Question: I've been a supporter of KBTL for quite a long time, if you'd asked me as recently as a month ago I'd have said that you guys should win the bidding process with no doubts in my mind. Between the several events of the past month I have to say that you are now my last choice. I've read the proposals. I've examined the available financials. I've listened to what the Mayor has to say and taken the time to understand why he said it. Most importantly I've read the Ting/Tucows and KBTL AMAs.

People have been up in arms about the Mayor saying that the city should reject your offer. If that was all he said I would agree, however, he clearly stated that his reason for wanting to reject your bid is that accepting it would open the city to additional legal risk. That means that KBTL is effectively asking the city and it's tax payers to not only accept significantly less money ($7.5 million allocated to the city from your bid vs approximately $11 million from Ting and $11.5 million from Schurz) but to accept significant legal risk on your behalf. It's quite possible that legal fees and an eventual settlement with Citibank could exceed the $7.5 million paid to the city from your bid. This would effectively mean having the tax payers pay you for the honor of giving you a profitable business with significant valuable assets.

Alan, you and the other directors should be ashamed of your AMA. This AMA represented a significant chance to engage with the community you seek to serve, and you failed to do so in any meaningful way. In your AMA you also went out of the way to disparage your competition, something I have not seen from either Ting or Schurz, and something that I find highly unprofessional.

First, you state that Ting (Tucows) has no experience managing a cable company, while failing to mention that you and your board also have no experience managing such a company. In fact you have no experience managing a telecom company of any kind. In the quoted sentence you also mention that Ting doesn't have sufficient assets on hand to purchase Burlington Telecom for cash, and that they would very likely issue debt to do so. You're a business person, so you know that large asset purchases are almost always debt financed, it is absolutely the normal course of business. In fact it would be much more remarkable if Ting were to make this purchase entirely with cash. What you're doing is attempting to frighten people who are less business savvy than yourself. Shame on you!

When asked an incredibly important question about your total lack of expertise or any experience at all in running a telecom company you fail to provide a concrete plan. Instead what your prospective customers get is a vague answer of "Our current plan is to probably keep existing management... maybe." Given this answer I have way less faith in your ability to manage Burlington Telecom than I already had.[23]

October 10, 2017: Burlington Mayor Miro Weinberger Recommends City Council Choose Ting/Tucows or Schurz Communications

Burlington Mayor Miro Weinberger Recommends City Council Choose Ting/Tucows or Schurz Communications. Burlington Mayor Miro Weinberger (left) and David Provost, chairman of the Burlington Telecom Advisory Board, held a news conference on October 10, 2017 to recommend that the City Council move forward with Ting/Tucows and Schurz Communications excluding the effort known as Keep Burlington Telecom Local (KBTL).

The Burlington Free Press, VT Digger, Seven Days, and Vermont Biz reported on October 10 and 11, 2017 on Burlington Mayor Miro Weinberger's public announcement at a press conference on October 10, 2017 that he recommends the City Council move forward with Ting/Tucows and Schurz Communications excluding the effort known as Keep Burlington Telecom Local (KBTL). Weinberger did not endorse either of the proposals by Ting/Tucows and Schurz, but said both should remain when the City Council winnows the finalists down to two choices Monday night. The financial offers by those two companies are substantially higher than that made by the Keep Burlington Telecom Local co-operative, according to Weinberger.

A 2014 settlement with Citibank, the network’s main creditor, requires the city to sell Burlington Telecom. A separate agreement with a holding company that bought Burlington Telecom’s assets, and is leasing them back to the city, allows Burlington to direct the sale. For the city to keep the largest possible share of the proceeds, it must select a buyer by the end of the year. KBTL is offering $12 million; the fiber company Ting is offering $27.5 million; and broadcaster Schurz Communications is offering $30.8 million.[24][25][26][27]

Mayor Says "The KBTL Proposal is Not Viable"

According to Mayor Weinberger, KBTL's $12 million bid is doomed by legal, financial and regulatory concerns, and is inferior to the $27.5 million offer from Ting and the $30.8 million put up by Schurz Communications. "Fundamentally, at this point, the KBTL proposal is not viable," Weinberger said. David Provost, who has spent the last eight years as the volunteer chair of the Burlington Telecom Advisory Board, went further adding that the KBTL bid was “the weakest” of the eight received and was forwarded to the City Council only because “we thought it was important to keep a local option available.”

Mayor Praises KBTL's Role in the Process

However Mayor Weinberger repeatedly thanked the co-op group for its involvement and said it made the bidding process better, saying KBTL's involvement — dating back to before the sale process began, when the group was just advocating local control — improved community engagement and forced other companies to make offers that reflect the city’s values. “In part because of the KBTL-inspired community engagement, both the Schurz Communication and Ting proposals are very strong, and ultimately accepting either will result in big wins for Burlington Telecom customers, taxpayers and the city itself,” Weinberger said.

Mayor Weinberger's Complete Statement

“I appreciate the hard work of the KBTL Board and other volunteer supporters to present the City with an option for local ownership,” said Mayor Miro Weinberger. “KBTL’s focus on local issues throughout this process has helped shape the City’s goals and will positively impact BT’s future no matter which bid the City selects. Regrettably, however, the KBTL offer is simply not a viable option for the City to pursue. Selecting it would result in legal action and substantial taxpayer financial exposure, threaten to undo years of BT progress and put Burlington Telecom’s future on very uncertain footing. The KBTL focus on securing local benefits has improved the two very strong proposals from Ting and Schurz. These proposals would secure a bright future for BT, put the days of broadband monopoly behind us for good, lead to substantial reinvestment in our community, return millions of taxpayer dollars, and create the possibility of meaningful City ownership in the future company.”

City Bank Will Almost Certainly Sue the City of Burlington if the City Council Chooses KBTL

Mayor Weinberger said he has strong legal concerns if the KBTL proposal moves forward. Weinberger said Citibank, which is set to receive a portion of proceeds from the purchase of Burlington Telecom, has told city attorneys that the potential risk for legal action has increased to “near certainty” if the city accepts a bid that’s less than 50 percent of the other two bids, as is the case with KBTL's proposal. Some co-op supporters acknowledge that risk, Weinberger said, but want the city to be part of the solution in overcoming potential financial problems as it did with the development of City Market. The difference, Weinberger said, is that state law prohibits the city from subsidizing telecom operations.

Weinberger added that even though the co-op bid meets a minimum threshold dollar figure included in the agreement with the holding company, that doesn’t mean the city can accept a low offer without consequence. “Citibank is saying the gap between the proposals is too great and does not satisfy a commercial reasonableness test that all contracts (to buy Burlington Telecom) must abide by,” Weinberger said. “We are now advised by our attorneys that what was characterized as a risk of legal action by Citibank at the last City Council meeting has now become the near certainty of legal action, and real legal exposure to the city, should we attempt to move forward with a bid that’s less than 50 percent of the two other bids."

Weinberger added that not only would the City of Burlington face the high probability of a lawsuit from Citibank if the City Council chooses KBTL, but that the city could be sued by residents of Burlington who do not believe that choosing KBTL protects the city's interests.

The City also has financial concerns with KBTL's proposal, with KBTL relying on a $10 million loan at 14% interest. Questions also exist as to whether the KBTL board can put together an experienced and competent management team, something the mayor said is already included in the other offers.

Ting/Tucows and Schurz Communications Have Strong Proposals That Will Benefit the City

Mayor Weinberger emphasized the positives found in the proposals from Ting/Tucows and Schurz Communications. According to Weinberger, both proposals include a pledge to build out the system so that it can reach portions of the city where service is not now available and both Ting/Tucows and Schurz Communications are committed to strong privacy policies, net neutrality and to having an office and "major staff presence" in Burlington. "Ultimately, accepting either will result in big wins for Burlington Telecom customers, taxpayers and the city itself," Weinberger said.

Weinberger added that selling to Ting/Tucows or Schurz Communications could also head off potential lawsuits from taxpayers who are out $17 million after the previous administration improperly plowed money into a then-struggling Burlington Telecom. The mayor could veto the Council's decision, but would have no authority in the decision other than that selling to Ting/Tucows or Schurz Communications would allow the city to recoup roughly $6 million of that money while ensuring Burlington Telecom continues to offer fast, affordable internet service.

Both Ting/Tucows and Schurz Communications Need to be Chosen So the City Has Leverage to Negotiate With Them

Mayor Weinberger urged members of the Burlington City Council to accept both the Ting/Tucows bid and the Schurz Communications bid so that city officials can do a final blitz of negotiations with the two companies. If the City Council chooses KBTL as one of the two companies to go forward in final negotiations, then the city will have little leverage to get a higher "best and final" offer from the remaining out-of-state company said Hugh Pickens, an industry analyst who owns stock in Tucows and has been following the Burlington Telecom bid process closely.

Alan Matson Says Weinberger's Recommendation is Not the Death Knell for KBTL's Proposal

Alan Matson, chairman of the Keep Burlington Telecom Local board, said after Weinberger’s news conference that the mayor’s position “makes it tougher” for his group to move its plan forward. “I don’t necessarily see it as a death blow. It sure doesn’t help us," said Matson. According to Matson, KBTL has a strong proposal in place despite a lack of experience in running a telecom company. “I couldn’t be more confident of our management plan, that our management plan will be as strong as anything put forward,” Matson said. According to Matson, Weinberger's recommendation is not necessarily the death knell of KBTL's proposal. "He's one voice in this process," Matson said of Weinberger. While it certainly doesn’t help the co-op’s cause to have the mayor oppose its bid, “The death blow will be a full City Council vote,” Matson said.

Matson added that the idea that Citibank can take this type of action to influence the sale at the last minute is further evidence of the need for local control, so Burlington Telecom will not continue to be at the mercy of outside entities. “There will be pressures on any company that has multiple locations and multiple lines of business that may or may not favor Burlington at some point or another," said Matson.

October 10, 2017: What Members of the Burlington City Council Think About the Burlington Telecom Bidding Process

What Members of the Burlington City Council Think About the Burlington Telecom Bidding Process. The Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

The Burlington Free Press reported on October 10,2017 that the Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

Alan Matson of KBTL said he is still working to win councilors’ support ahead of next week’s vote but doesn’t have a count for how he expects that to play out. If Democrats line up behind Weinberger — a fellow party member — that leaves enough votes unaccounted for to swing the process in either direction, he said.

City Council President Jane Knodell has already said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed." Another Councilor, Max Tracy, said he had some unanswered questions, though his top choice was also the co-op. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process. Councilor Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.[28]

Following are the members of the Burlington City Council sorted by party affiliation with any public information on their background and the way they may be planning to vote.[29]

Democrats - 4 Members

  • Joan Shannon - South District - Member of Burlington Telecom Advisory Board (BTAB) - Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.
  • Karen Paul - Ward 6 - Member of Burlington Telecom Advisory Board (BTAB) - According to a profile in the Burlington Free Press in 2014, Paul is a CPA who ran for office in 2008 to contribute her financial skills to the Council and has worked to address challenges including uncovering the city's audit and working to put into place more transparent budgeting procedures. "I am inspired to run to continue working to address our pension underfunding and restoring our City’s credit rating." To our knowledge, Paul has not expressed an opinion of the Burlington Telecom bid process or how she will vote.[30]
  • William "Chip" Mason - Ward 5 - Mason has been supportive of Mayor Weinberger's approach to the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had asked to be removed from the process, "the Democratic mayor stood flanked by Chip Mason (D-Ward 5) and Richard Deane (D-East District), who said they'd stay focused on the remaining bids," according to an article in Seven Days that appeared on September 26, 2017.
  • Richard Deane - East District - Dean has been supportive of Mayor Weinberger's approach to the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had asked to be removed from the process, "the Democratic mayor stood flanked by Chip Mason (D-Ward 5) and Richard Deane (D-East District), who said they'd stay focused on the remaining bids," according to an article in Seven Days that appeared on September 26, 2017.

Progressive Party - 3 Members

  • Jane Knodell - Central District (City Council President) - Member of Burlington Telecom Advisory Board (BTAB) - City Council President Jane Knodell has already said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed." Knodell said on October 12, 2017 it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[31] Knodell is the longest-serving Progressive councilor serving her 19th nonconsecutive year on Burlington's governing body. The Stanford-educated economist has taught at the University of Vermont since 1986, during which time she's also authored papers such as "Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking." She stepped down from the city council after she was appointed UVM's provost in 2010 but returned in 2013, shortly after resigning from that position. "She's less loquacious than your average politician, but when Knodell does talk — in a slightly gravelly voice and at a professor's measured pace — councilors listen," writes Alicia Freese. "She's probably the smartest person at the table," said Progressive Councilor Max Tracy. According to Freese, Knodell can be blunt during policy debates. Drawing on her fiscal acumen, she's challenged Mayor Weinberger on subjects ranging from the fate of Burlington Telecom to the future of the Burlington Town Center mall. But her opposition generally takes the form of probing for answers rather than waging personal attacks. She's been especially vocal about the city-run Burlington Telecom, insisting that it remain locally owned and that city officials try to recoup the $17 million still owed to taxpayers.[32] According to the Burlington Free Press, Knodell, a Progressive, had the endorsement of the Democratic Party in the 2017 election. The cross-party endorsement came at the urging of Mayor Miro Weinberger, who also criticized the "hijacking" of the Progressive Party by what he called a reactionary fringe. Knodell said she believes in marrying the economic development agenda espoused by the mayor with the Progressives' equity agenda.[33]
  • Max Tracy - Ward 2 - Max Tracy says he has some unanswered questions, though his top choice is KBTL. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process. Tracy Wright has been highly critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process, according to a story in Seven Days, Tracy compared Weinberger to former mayor Bob Kiss, who secretly propped up the telecom with $17 million in city funds. Like Kiss, Weinberger was "making decisions in secret without council or public consultation as well as ... not taking personal responsibility for mistakes that were made with regard to BT," Tracy wrote in a message to Seven Days that day. "He is, simply put, a hypocrite." According to an article in Seven Days published on October 11, 2017, the thirty year old Tracy is know as "the council's most combative Progressive." According to Seven Days, "even though his activist efforts have been largely unsuccessful, Tracy sees himself as more than a gadfly. He's looking long-term to win policy changes that benefit working-class Burlingtonians and to shift the conversation in the direction of Progressive values."[34]
  • Sara Moore - Ward 3 - Moore has been critical of certain aspects of the way Mayor Weinberger has handled the Burlington Telecom negotiations. After Weinberger asked the fourth bidder to withdraw without input from the council, Moore said "It's hard not to consider that maybe he's trying to limit what people know about the way that this is playing out."[35]

Independent - 3 Members

  • Sharon Foley Bushor - Ward 1 - Bushor is the longest serving member of the Burlington City Council having served 30 years. According to a profile in Seven Days in 2012, Bushor is Burlington's hardest-working City Councilor and no one carries out a councilor’s duties more conscientiously than Bushor. “She immerses herself in details,” says Bill Keogh, who served alongside Bushor for 16 years. “She studies all the documents and brings up items the council might otherwise miss.” To our knowledge, Bushor has expressed no position on the current bidding process for Burlington Telecom or how she may vote.[36]
  • Adam Roof - Ward 8 - Roof has been somewhat skeptical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process, according to a story in the Burlington Free Press, Roof, who attended the announcement and met with the mayor afterwards, said he was reserving judgment on the situation until he had more clarity on what exactly had happened. "If the mayor made a unilateral decision instructing a bidder to be removed, I would have a problem," he said. "It’s a worthwhile question to ask."[37]
  • David Hartnett - North District - Member of Burlington Telecom Advisory Board (BTAB) - According to an article in the Burlington Free Press on July 31, 2017, Hartnett said that the City Council is trying to come up with the best deal for the taxpayers of Burlington with regard to the bid process for Burlington Telecom, as well as not interfere with the ongoing operations of the company. "We’re really pushing hard to stay on this timeline," Hartnett said. He was optimistic about the city's ability to meet the deadline.[38]

Democrat/Progressive - 1 Member

  • Ali Dieng - Ward 7 - Dieng has been critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process on September 26, according to a story in Seven Days, Dieng cast blame for keeping the sales process under wraps and not listening to public feedback — most of which has been in favor of the co-op . Dieng said that the fourth bid from Nizar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center.

Republican - 1 Member

  • Kurt Wright - Ward 4 - Wright has been critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process on September 26, according to a story in Seven Days, Wright alleged that Weinberger had asked the fourth bidder to withdraw without input from the council. "There was a breach of trust," Wright asserted.

October 6, 2017: VT Digger Writes: 'Parent Company of Burlington Telecom Bidder Registers neo-Nazi Site,' Tucows Responds

VT Digger published a story on October 6, 2017 that a domain name reseller WSMDomains registered a domain name to a neo-Nazi website Stormfront. WSMDomains is one of the 40,000 third party-resellers to domain name wholesaler Tucows, the parent company of Ting, a mobile phone and fiber internet service provider, which is among three finalists looking to purchase Burlington Telecom.

According to VT Digger Internet companies are under increasing public pressure to deny service to groups that promote hate speech but are under no legal obligation to do so.Tucows CEO Elliot Noss says domain registration is a “fundamental protocol” on the internet, part of its basic infrastructure, and website content issues should be addressed by the hosting company or the reseller before a registrar considers taking action. “I’m comfortable saying we object to the content more than most. That makes these issues even more difficult,” said Noss. To deny Stormfront access to Tucows’ domain registration services would be the equivalent of a phone company cutting its service, or a municipality telling them they can’t use public roadways, said Noss. “The great irony, in the Burlington context, is this is a net neutrality issue."[39]

In August, Tucows announced it would stop providing domain privacy protection services to the Daily Stormer, another neo-Nazi website. "Tucows was never the webhost nor the registrar for the domain. Tucows provides a domain privacy service for millions of domains belonging to our wholesale domain resellers and to other registrars. The domain in question was transferred to one of our registrar partners and the privacy service was automatically applied," said Tucows in a press release on August 15, 2017. "The process of balancing free speech and the ugly opinions that people share is neither easy nor pleasant. Every day we receive many, many complaints about the content on any number of the 24 million domains on our platform. Let us be exceptionally clear: we find the content of many of these pages patently abhorrent and evidence of the worst that humanity can stoop to. Nevertheless, there are legal mechanisms and processes in place for dealing with issues of free speech and we consider it our responsibility to follow them. We have and will act in what we call “exigent circumstances” where there is an imminent threat of violence or crime. GoDaddy responded to the Daily Stormer appropriately under these circumstances. However, these circumstances aside, we have found that the clearest path forward, to protect freedom of speech and expression, is to act where we have evidence that due-process has been observed. When such is provided to us, we act on it."

October 5, 2017: 'Keep Burlington Telecom Local' Unable to Hold Planned Reddit AMA, Postpones One Week

'Keep Burlington Telecom Local' announced on October 5, 2017 that they would be unable to hold their scheduled Reddit AMA (Ask Me Anything) that they had planned for October 5, 2017 and had postponed it for one week because something unexpected had come up for Board Chair Alan Matson. "We were planning on doing the AMA today, but board chair Alan Matson had something unexpected come up and can't make it, so we're rescheduling the AMA for next week, same time and place (Thursday, 10/12 from 3-4pm). Apologies for the inconvenience, and looking forward to your questions and discussion then!'[40]

Ting/Tucows previously held an AMA on September 21, 2017 to address the community's concerns and respond to issues raised by citizens of Burlington and current customers of Burlington Telecom. There were 92 questions and answers on Ting/Tucows' AMA and another 32 on their pre-AMA.

Schurz Communications, the third bidder for Burlington Telecom, has not made any announcement on whether they plan to hold an AMA to address issues raised by the community and respond to concerns from Burlington citizens.

The Burlington City Council will select two finalists to go forward in the selection process at their meeting on October 16, 2017.

October 4, 2017: Burlington City Council President Jane Knodell is Undecided but Leaning Towards Voting For 'Keep Burlington Telecom Local'

The Burlington Free Press reported on October 4, 2017 that City Council President Jane Knodell said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed. "If you think that's so important, then you're going to be willing to take a chance," said Knodell. Knodell said she was still raising concerns about the financing model the co-op has proposed. Knodell said if KBTL could lower the 14% interest rate on the $10 million in debt that 'Keep Burlington Telecom Local' will be taking on, she believed the path forward would become much more viable.

Another Councilor, Max Tracy, said he had some unanswered questions, though his top choice was also the co-op. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process.

According to the Burlington Free Press, Councilor Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.[41]

About City Council President Jane Knodell

According to a profile of Knodell in 'Seven Days' written in 2015 Knodell is the longest-serving Progressive councilor serving her 19th nonconsecutive year on Burlington's governing body. The Stanford-educated economist has taught at the University of Vermont since 1986, during which time she's also authored papers such as "Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking." She stepped down from the city council after she was appointed UVM's provost in 2010 but returned in 2013, shortly after resigning from that position. "She's less loquacious than your average politician, but when Knodell does talk — in a slightly gravelly voice and at a professor's measured pace — councilors listen," writes Alicia Freese. "She's probably the smartest person at the table," said Progressive Councilor Max Tracy. According to Freese, Knodell can be blunt during policy debates. Drawing on her fiscal acumen, she's challenged Mayor Weinberger on subjects ranging from the fate of Burlington Telecom to the future of the Burlington Town Center mall. But her opposition generally takes the form of probing for answers rather than waging personal attacks. She's been especially vocal about the city-run Burlington Telecom, insisting that it remain locally owned and that city officials try to recoup the $17 million still owed to taxpayers.[42]

According to the Burlington Free Press, Knodell, a Progressive, had the endorsement of the Democratic Party in the 2017 election. The cross-party endorsement came at the urging of Mayor Miro Weinberger, who also criticized the "hijacking" of the Progressive Party by what he called a reactionary fringe. Knodell said she believes in marrying the economic development agenda espoused by the mayor with the Progressives' equity agenda.[43]

October 4, 2017: City of Burlington Releases Report from Burlington Telecom Advisory Board (BTAB)

On October 4, 2017 the city of Burlington released a report from the Burlington Telecom Advisory Board (BTAB) on the three bidders. The original report was written in July in order to give the full City Council the consensus view of BTAB members on the slate of bidders proposing to purchase Burlington Telecom (BT). The BTAB is made up of four City Councilors and four community members with relevant experience and has advised the City Council for many years on the decisions related to the future of Burlington Telecom.[44]

Members of BTAB include:

  • David J. Provost – Board Chair, Executive Vice President, Middlebury College
  • Clem Nilan - Board member, Former General Manager, City Market
  • Theresa Alberghini DiPalma - Board Member, Network SVP Marketing and External Relations, UVM Medical Network
  • Tim Halverson – Board Member, Owner EB Strong’s, Halverson Street Café
  • Joan Shannon – Board Member, (City Councilor, South District)
  • Karen Paul – Board Member, (City Councilor, Ward 6)
  • Jane Knodell – Board Member, (City Council President)
  • Dave Hartnett – Board Member, (City Councilor, North District)

Reference:

BTAB Evaluation of 'Keep BT Local Co-Op'

The KBTL proposal to date has been the weakest of the 8 respondents. The proposal submitted on 5th June was incomplete and a further update due on 30 June was also incomplete. The proposal relies very heavily on expensive debt and this weak capital structure has the BTAB very concerned about the risk of losing the asset again to the lender. We are also concerned that there is no management depth beyond the existing team. The BTAB is pessimistic that the PSB would ever approve this structure given the debt, lack of capital and lack of management experience in the industry. The BTAB has moved this proposal forward to the Council due to the significant public interest in the offer. However, unless KBTL can address the concerns of the BTAB we do not believe this to be a viable offer.

Strengths
  • Member owned local co-operative – local solution
  • Long standing interest in acquiring BT assets
  • Removes uncertainty of future sale, if remains viable
  • Would seek to keep BT Management Team and Operations, if not possible, they have a contingency plan.
Weaknesses
  • Vision for BT beyond local ownership unclear
  • Financial offer at low end of valuation range
  • Funded with $10M of debt at 14% interest rate
  • Limited capital to grow BT’s operations
  • Currently the Maine Fiber investment is not finalized
  • Weak capital structure unlikely to obtain State approval
  • Assets exposed in event of financial challenges, exposed to losing the asset to Maine Fiber Company and BT failing.
  • LOI failed to capitalize on the coop model.
  • Consumer orientation could stifle business development
  • Liquidity challenge for City of Burlington if the City leaves its money in.
  • Only members benefit, not all taxpayers
Update From the July Report
  • The Maine Fiber investment is characterized as “not finalized” in the July BTAB Report, but KBTL has now received a commitment from Maine Fiber.

BTAB Evaluation of Tucows

A strong offer and proposal for the council to consider. One of the strongest offers in terms of price, customer service and capital. Name would likely change to Ting, and real control of operations would move from Burlington. No new debt, but it is a publicly held company and risk of a future sale would always be a possibility. BTAB offers Ting/Tucows as a finalist to the City Council with one reservation about its publically held status and a desire to continue to work with them to strengthen their proposal and minimize the risk to the City in the event of a sale of the Company.

Strengths
  • Highly profitable, high multiple, domain name business
  • Now focused on fiber as their next growth segment
  • Strong focus on customer service
  • Relatively new entrant in several muni fiber markets
  • Local presence and customer facing operations
  • Strategic investor offering second highest price
  • No new debt used for BT purchase
Weaknesses
  • Based in Toronto, publicly traded on NASDAQ
  • Fiber is relatively new and unproven future growth play
  • Control would be centralized outside of Burlington
  • No interest shown in meeting BT management team
  • Core business highly cash positive, but declining margin
  • Less control over sale, as a public company
  • Will change the name from Burlington Telecom to Ting
Update From the July Report
  • Ting has decided to keep the name BT and add a slogan to the brand symbol so that it reads “BT” with small text noting “Powered by Ting.”

BTAB Evaluation of Schurz Communications

An extremely strong offer and proposal for the council to consider. The strongest offer in terms of price, experience and track record of holding onto investment. Current operations would remain in Burlington. BTAB offers Schurz as a finalist to the City Council, with further parameters needed on the options for the unlikely event of sale in the future, to protect the City’s interest.

Strengths
  • 5th Generation, 150-year-old family investment fund
  • Strategic investor already in the fiber & cable business
  • No debt used for BT purchase
  • BT name, management team, staff and operations would remain, GM tbd
  • Strong commitment to and focus on customer service
  • Strongly decentralized local management approach
  • Culturally good fit, and a team that works well together
  • Highest financial bidder and likely long-term holder
  • Focused on continuing to grow BT – product/geography
  • Track record of investing/holding for the long term
  • Would be a good local corporate citizen, track record of giving back to community
Weaknesses
  • Other holdings include newspapers - challenging sector
  • Local ownership only through any City carried interest
  • Local control ceded
  • Inside family members control the board and the company
Update From the July Report
  • Schurz has now committed to devolving decision-making about BT to the Burlington management team wherever possible, in recognition of the community’s strong desire for local control.

October 4, 2017: City of Burlington Releases Letter from City Attorney Eileen Blackwood Regarding Concerns with Bidders for Burlington Telecom

On October 4, 2017 the city of Burlington released a letter to the Mayor and City Council from City Attorney Eileen Blackwood dated September 7, 2017 and updated October Z 2017 regarding Legal Issues involved in the sale of Burlington Telecom. According to the letter as the various proposals to purchase BT have been being reviewed, some legal issues have arisen that should be taken into account as the Mayor and Council consider the potential purchasers. One issue involves the role of the Public Utility Commission; the second involves the role of Blue Water, and the third concerns the role of Dorman & Fawcett. The first issue came up in the context of evaluating the various proposals for the City's carried interest I then asked our outside counsel Ralphine O'Rourke at Primmer, Piper for an independent opinion, particularly focusing on what risks would arise from a Council decision to roll over some or all of the City's net sales proceeds. Her legal memo is attached but is summarized below.[45]

Regulatory Concerns for Public Utilities Commission Approval and Carried Interest Investment

The purchase and sale agreement for this transaction will ultimately be subject to the review and approval of the Vermont Public Utilities Commission (PUC) (formerly known as the Public Service Board), which must grant the buyer a Certificate of Public Good (CPG) before the sale can close. In its process, the commission will give great weight to the opinion of the Department of Public Service (DPS), particularly in relation to the statutory and so-called EMCO criteria that the PUC will ultimately evaluate. Those PUC criteria are set forth in the criteria for sale of Burlington Telecom, adopted by the Council April 25, 2016, and in Attorney O'Rourke's attached memo.

Rejection of the sale by the PUC would put the City in a very difficult position, as by the time that decision is made, the City will have missed important deadlines in the agreement with Blue Water, and will be in a substantially weaker negotiating position with future prospective partners than it is in today. Given the regulator's criteria and role, the City must consider how the PUC will view this transaction. • Both the DPS and the PUC are likely to more easily approve an entity with a demonstrable track record of success in managing a municipal telecom and demonstrable access to capital, rather than a first-time cable operator, as they are charged with considering both the financial stability and operational experience of the proposed company. The regulators are likely to subject to greater scrutiny an entity formed solely to purchase BT, which has no experience actually operating a telecom business, than they would more established and better capitalized companies.

  • The regulators are likely to look favorably upon the return on the City's existing investment into BT that will flow from a higher sales price and may not support a City decision to accept a lower valuation without strong justification, as returning less benefit to the taxpayers.
  • Two of the finalist bids currently before the Council would allow the City to opt to reinvest its "net sales proceeds" in a carried City interest in the future BT entity and one requires that reinvestment. However, in considering that carried interest, the PUC will still have to evaluate the existing charter provisions about our telecom authority, as Attorney O'Rourke describes in her attached memo. If the PUC believes the City investment is speculative and could result in losses, it may hesitate to agree to a carried interest Even if the PUC allows some carried interest, it may require the City to take some of the net sales proceeds in cash in order to ensure that the taxpayers have seen some return and may require certain legal protections against losses (more fully described in Attorney O'Rourke's memo). The legal team recommends that whatever proposal is taken to the PUC should include the option to take the entire net sales proceeds in cash if the PUC requires that[46]

Blue Water Approval

An additional challenge to be considered is that Blue Water has an interest if the sale is to a first-time operator.

In the BT Management and Sale Agreement with Blue Water that was approved by the Council in 2014 (and called out again specifically in the criteria for sale of Burlington Telecom adopted by the Council on April 25, 2016) is the City's right to direct the sale of BT to a "Qualified Purchaser" that has the "capability of operating a telecommunications company of size and service similar" to BT and is "reasonably expected to satisfy any statutory criteria in order to obtain a certificate of public good from the PSB. Such a purchaser "may be a first time operator if [Blue Water] reasonably determines such first-time operator to be able to timely obtain a certificate of public good from the PSB."

An option that involves a first-time operator (that is, an entity that has never operated a telecom), therefore, faces the added risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[47]

Potential for Perceived Conflict of Interest

Dorman & Fawcett (D&F) has been wearing many hats over the past few years, and from time to time the issue of conflict of interest has arisen. D&F agreed to defer its fees during these past several years, allowing them to accumulate and be paid at the sale, in return for receiving 10% of Blue Water's interest in the net sales proceeds. From the City's perspective, this arrangement seemed to give D&F an incentive to find a purchaser, at a good price, who could receive a CPG in a timely manner; their interest therefore seems aligned with the City's interests. However, the Council's April 2016 Resolution on the BT Sale Criteria specifically acknowledges that others may perceive D&F's financial interest as creating a conflict of interest, or the perception of such a conflict, such as an interest in accepting the highest offer. That is a perception the City has kept in mind throughout this process.

Initially, some of the bidders had included a continuing role for D&F after the sale, either as operator or with the option to roll over its sale proceeds into an equity stake in the future entity. Because of concerns that this continuing role could be perceived as a potential conflict of interest, D&F has informed all the finalists that none of the bids should be based on D&F's having a continuing role in the new entity beyond a transition period.[48]

Other Legal Interests

In 2014, the City entered into a settlement agreement with Citibank that was "predicated on the assumption that the [financing with Blue Water] is intended as a bridge to the eventual arm's-length sale of the System to a private entity." After the closing of that sale, the City is to share 50% of its portion of the net proceeds of the sale with Citibank Citibank, therefore, has an interest in what the net proceeds consist of, and the City must evaluate in good faith how the finalist's proposals will address Citibank's interest A proposal that fails to treat Citibank's interests equivalently to the City's so that it realizes its 50% share is likely to face legal challenges.

In 2009, Burlington taxpayers sued the City and its former CAO Jonathan Leopold for having spent $17 million of taxpayer money on BT, despite the charter provisions requiring that taxpayers not suffer from BT's losses. The claims against the City were ultimately dismissed, but some taxpayers may raise new claims if the City chooses a bid that they believe is not as beneficial to the taxpayers (as opposed to the subscribers of BT) as another option. Thus, the interests of taxpayers, as well as those of BT subscribers must be considered. When BT is sold, the employees of BT will end their employment with the City. Currently, the City's pension plan has an unfunded liability, a portion of which is attributable to those BT employees. For the year ending June 30, 2016, that amount was $1.lmillion, but it fluctuates from year to year depending on market conditions and other factors. When BT is sold, the City will need to contribute to its pension plan from the net sales proceeds some amount to cover that liability, and as soon as the City's new actuaries are on board, there will be a better estimate of what that amount will be. However, it is likely that the City will need to take at least some portion of its net sales proceeds in cash.[49]

Summary

From a legal perspective, the state regulatory agencies are more likely to approve a proposal that involves an established, independent company with experience in telecom operations and a significantly higher valuation and access to capital and would look less favorably on one that involves a new company with a much lower valuation. . The state regulators may hesitate to allow the City to roll its entire net sales proceeds into the new entity, and if rollover is allowed, will likely require protections against losses. Blue Water, Citibank, and non-subscriber taxpayers all have interests that must be considered to avoid legal challenges.[50]

Reference

October 4, 2017: City of Burlington Releases Independent Financial Analysis of Bidders for Burlington Telecom

On October 4, 2017 Burlington Telecom released the independent financial analysis of the three bidders for Burlington Telecom performed by Jeffrey Small CPA which is contained in a letter dated September 25, 2017. Small was engaged to review the financial status of the above three named companies in regards to their financial stability and how that then integrates with their letters of intent to purchase Burlington Telecom. Following are the conclusions of the report:

  • If we assume a EBITDA of 3.5 million then an enterprise valuation of Burlington Telecom using the Industry average multiples of 8.1 it would compute to a market value of 28.35 million. If we use the enterprise valuation EV/Sales ratio and the 2018 budgeted sales of 10 million, we would come up with a valuation of 25 million for the enterprise value.
  • If we assume a FMV (fair market value) of between 25 and 30 million, then the Keep BT Local proposal would pass this equity interest to the Burlington subscribers of BT as owners/members. As stated in the Keep BT Local LOl "In recognition of the fact Burlington residents/taxpayers have already paid nearly $17 million dollars toward the development and operations of BT, there would be no additional cost for Burlington subscribers to become member/owners of KBTL." This means Burlington residents that are non BT subscribers will not get any benefit from any equity or value transfer.
  • In analysis these three companies from purely a financial strength standpoint, the strongest company is Schurz Communications, Inc. with Tucows, Inc. also being a strong company while Keep BT Local has weaknesses with various financial benchmarks. [redacted]
  • The cost of debt for Tucows, Inc. and Schurz Communications is well below the industry standard while Keep BT Local cost of debt is substantially higher than the Industry standard. [redacted]
  • Cash balance to be left at closing in the company would be zero in Keep BT Local and Schurz Communications. [redacted] Tucows, Inc. is silent on amount.[51]

Reference:

October 4, 2017: City of Burlington Releases Independent Legal Analysis of Bidders for Burlington Telecom

On October 4, 2017 the City of Burlington released an Independent Legal Analysis of the bidding process for Burlington Telecom performed by Ralphine O'Rourke, Esq. of the law firm Primmer Piper Eggleston & Cramer PC (PPEC) and documented in a letter to the city dated October 2, 2017 regarding the "Carried Equity Interest in New Burlington Telecom Enterprise and Blue Water Approval Rights." O'Rourke was asked to provide her thoughts with respect to the City of Burlington's allocation of all, or a portion of, the net sale proceeds from the sale of Burlington Telecom to acquire an equity interest in the new BT enterprise upon the sale of the assets of BT by Blue Water Holdings, LLC and the City to a third party and also asked to consider what approval rights Blue Water has in connection with the sale of BT. Following is a summary of the report:

  • The City Charter expressly allows the City to establish a joint venture or other business relationship to provide telecommunications services;
  • Upon the City's exercising its authority to establish such a venture, it must be approved by the Vermont Public Utility Commission ("PUC");
  • The PUC, in issuing a certificate of public good ("CPG") for such a joint venture, must ensure that any losses from the business are not borne by the City's taxpayers, and in the event of complete abandonment or curtailment, that the costs associated with investment in the telecommunication network are not borne by the City's taxpayers;
  • In order to obtain a CPG to that effect, the City (and the other owner of New BT) will need to be able to demonstrate that no losses will be borne by City taxpayers as a result of the joint venture;
  • The PUC has numerous and substantial other standards that it considers in connection with issuing a CPG, which include considerations relating to the management experience and financial stability of the petitioner and
  • If the petitioner for the CPG is a first-time operator, Blue Water has the right to "reasonably determine" if such first-time operator would be able to timely obtain a CPG from PUC.[52]

Reference:

October 3, 2017: Ting Video: How Does Ting Decide What Optical Network Terminal to Use?

How Does Ting Decide What Optical Network Terminal to Use?. An ONT (Optical Network Terminal) is your home’s main connection back to the fiber network. In most cases, it’s a gray box attached to the side of your home with a fiber line plugged in. note: This is a photo of a generic ONT for illustrative purposes only and is not necessarily the unit Ting uses for its installations. Photo: Wikimedia Commons

An ONT (Optical Network Terminal) is your home’s main connection back to the fiber network. In most cases, it’s a gray box attached to the side of your home with a fiber line plugged in. ONTs come in a number of configurations. “When we first launched Ting Internet, we used (what we could call) an all-in-one gateway,” says Eisner. “The fiber terminated into the box and that box was also responsible for broadcasting wireless Internet throughout a home of business.”

So why did we replace our original ONT? “We eventually moved away from that model, really because we found it wasn’t flexible enough for what people wanted to do with their Internet service.” Ting wants you to be able to use your Internet however you want. It’s yours, after all. “We view ourselves as a fat pipe of internet that doesn’t really want to get in the way of the king of things the customer wants to use the Internet for.”

October 3, 2017: Emtelle Says They Are Supplying Complete, Cost-Effective Blown Fiber Solutions that Allow Ting to Pass 1,000 homes per month in Holly Springs

Emtelle, a global leader in the manufacturing of blown fiber and ducted solutions, issued a press release on October 3, 2017 that says that de-skilling of installation staff throughout the US is absolutely critical if targets for mass deployment of optical fiber are to be achieved without unacceptable disruption in towns and cities as street-works are carried out. " For Ting Fiber in Holly Springs, NC, for example, Emtelle is supplying complete, cost-effective blown fiber solutions that allow the company to pass 1,000 homes per month."[53]

October 2, 2017: 'Keep Burlington Telecom Local' to do Reddit AMA

'Keep Burlington Telecom Local' announced on October 3, 2017 that Keep BT Local co-op board president Alan Matson is game to do an AMA Thursday, October 5, 2017 from 3-4pm. "It also sounds like at least a few of the other board members and other key volunteers will be available at that time to chime in about our bid to make BT subscriber-owned, so bring your questions, and hopefully it will be a good conversation!"[54]

October 2, 2017: Burlington City Council Discusses Burlington Telecom at Public Forum

Dorman & Fawcett Won't Operate Burlington Telecom After Sale

Seven Days reported on October 3, 2017 that during a public forum at City Hall on October 2, 2017 to discuss the sale of Burlington Telecom, Terry Dorman told the Burlington City Council that his law firm Dorman & Fawcett, hired in 2009 to help resuscitate the failing telecom and to facilitate a sale, will not continue to operate Burlington Telecom once the utility is sold. Dorman did not elaborate on the decision, which he announced as councilors questioned him and BT general manager Stephen Barraclough about the remaining three bidders. City council originally had planned to use Monday's meeting to select the top two bidders but that decision has been put off for October 16. The city must complete the sale by the end of the year to maximize its share of the profits.[55]

Attendees Offered Strong Words of Support to 'Keep Burlington Telecom Local'

Much of the forum centered on 'Keep Burlington Telecom Local' as attendees offered strong words of support for the co-op during public comment; some held signs saying "Hands Off Our Internet, Keep BT Local." The council also accepted a host of letters — almost all of which were in support of keeping the telecom locally owned. "We are now at a civilizational turning point, especially as regards war and climate change. The question is whether our operations will continue to be dominated by profit and bottom-line thinking, or whether we can reconceive our footings, and turn toward cooperative and community-based structures," wrote Marc Estrin as a comment to the story in 'Seven Days'. "Burlington Telecom's offer, though smaller, quantitatively, than that of the others, is far larger in its meaning and effect. I hope that the Burlington City Council will have the values and the vision to look past the bottom line to the real horizon."[56]

Burlington Could Face Possible Legal Risk with Selection of 'Keep Burlington Telecom Local'

But Burlington could face legal risk if it selects the $12 million bid proffered by KBTL, according to city attorney Eileen Blackwood. "We are definitely confirming that there is risk" that the city's creditor, Citibank, could take legal action if Burlington doesn't select a bid that would allow the bank to maximize its share of the sales profit, according to Blackwood. The co-op's bid is the lowest of the three remaining potential buyers. The council must choose between a $12 million offer from the Keep BT Local co-op, a $30.8 million offer from Schurz Communications and a $27.5 million bid from Ting. Blackwood said she could not specify how risky it might be. Councilors also had questions for Dorman about selling BT to the other, higher bidders. Of particular interest: Would the profit interests of Schurz and Ting trump the needs and desires of Burlington taxpayers? Dorman assured councilors that they can control the terms of the sale and write those terms into the contract. "I think the city has the opportunity to get whatever is important to the city in writing," said Dorman.[57]

According to VT Digger there are also questions as to whether Keep BT Local would be able to get regulatory approval from the Public Utility Commission, which must issue a certificate of public good to the eventual buyer.

The PUC must consider the purchasing company’s financial stability, management and technical expertise. The co-op purchase price relies on the city retaining a $1.5 million stake in Burlington Telecom. Burlington’s charter allows the city to enter a joint-venture to operate a telecommunications company, but the Public Utility Commission must determine that in such an arrangement, the risk is borne by other investors, not city taxpayers, the state or ratepayers. Making that determination is complicated because the $17 million the city improperly plowed into Burlington Telecom nearly a decade ago was a combination of taxpayer dollars and money loaned by Citibank, Blackwood said. In the intervening years, ratepayer money was invested in Burlington Telecom as well.
Were the city to invest in the new owner of Burlington Telecom, it would be difficult for regulators to parse whether Burlington’s investment would place taxpayer or ratepayer money at risk of future losses, Blackwood said. Both Ting/Tucows and Schurz would allow Burlington to purchase a stake in the new Burlington Telecom, but their offers don’t rely on the city retaining partial ownership. The settlement allows Bluewater to reject a buyer if it determines that a first-time operator does not have a “reasonable likelihood” of getting PUC approval, said Ralphine O’Rourke, an attorney with Primmer, Piper, Eggleston & Cramer whom the city has hired to help navigate the sale process. Blackwood said officials have not asked Bluewater whether it would make that finding for Keep BT Local, because they want to leave room to negotiate with the company should the city decide it wants to sell to the co-op. The regulatory uncertainty is a cloud over the sale process, because Burlington plans to pick a buyer by year’s end to maximize its return on the sale, while the PUC could take more than a year to issue a certificate of public good, Blackwood has said.[58]

October 2, 2017: Study Says Spending on Fiber to the Home Will Total ~$175 Billion Over the Next Ten Years

Study Says Spending on Fiber to the Home Will Total ~$175 Billion Over the Next Ten Years. "The US fiber penetration rate is 20% vs. 75% for leading OECD countries, which suggests a large gap needs to be closed.” Deutsche Bank said in order achieve these goals, its “proprietary top-down fiber model suggests spending on fiber to the home will total ~$175B over the next decade (an additional $25-30B will likely go towards 5G).” Photo: Wikimedia Commons

Fierce Telecom reported on October 2, 2017 that Deutsche Bank Markets Research said in a research note that AT&T and Verizon are setting the pace for fiber network spending in the United States with wide-ranging plans to satisfy a broad set of consumer and business wireline and wireless needs. “Telecoms have become much more public signaling their intent to increase fiber investment, with AT&T and Verizon leading the spending ramp,” says the study. "To support the upcoming innovations such as autonomous driving, IoT, smart cities, the US needs to densify its fiber network. The US fiber penetration rate is 20% vs. 75% for leading OECD countries, which suggests a large gap needs to be closed.” Deutsche Bank said in order achieve these goals, its “proprietary top-down fiber model suggests spending on fiber to the home will total ~$175B over the next decade (an additional $25-30B will likely go towards 5G).”

After establishing its “One Fiber” initiative, Verizon signed two key fiber supply deals: it will spend $1 billion with Corning to buy 1.5 million miles of fiber over three years and a $300 million deal with Prysmian to buy 1 million miles of fiber over 3 years. As part of a deal with the FCC for AT&T to acquire DirecTV, AT&T committed it would connect 12.5 million homes with 1 Gbps-capable FTTH network services by 2019. The service provider has connected over 5.5 million homes with hopes to connect a total of 7 million by the end of this year. Interestingly, AT&T said it might reach close to 14 million by 2019. CenturyLink has set a 3-year spending plan, committing to rolling out 100 Mbps and higher speed broadband services from 2 million homes passed in 2016 to over 10 million homes passed by 2019.

Matt Ellis, CFO of Verizon, told investors during the Bank of America Merrill Lynch Media, Communications & Entertainment Conference that the service provider will consider whether to lease, buy or build, dictated by the business case it’s trying to prove out. “As we add fiber—and I think we’ve been pretty consistent in this—we can buy existing fiber, we can build fiber, or we can lease existing fiber,” Ellis said. “I think it is going to be geography by geography will determine what the best and cost-effective approach will be to add the capacity and generate the returns off of.”[59]

September 29, 2017: Burlington Free Press Says City Hall Stumbled during Burlington Telecom Bid Process

The Burlington Free Press published an editorial on September 29, 2017 saying that the bidding process for Burlington Telecom lacked sufficient transparency. "When dealing with Burlington Telecom, City Hall has no room for missteps that even hints at anything less than a full effort toward absolute transparency," wrote Engagement Editor Aki Soga. "When dealing with Burlington Telecom, city residents have every right to demand that the people they elected to represent their interests conduct themselves with the utmost scruples."[60]

September 29, 2017: Domain Name Server OpenSRS Suffers Network Outage After DNS Attack

The Register reported on September 29, 2017 that Tucows' domain name server "OpenSRS" had a network failure, taking down scores of customers' portals with it during a DNS attack followed by an unrelated equipment failure. "At 1AM UTC we were the target of a sophisticated DNS attack that was followed by an unrelated double failure of core network equipment at our main Canadian data center, caused by an undocumented software limitation," said Tucows Executive Vice President Dave Woroch. "We were able to quickly recover from the equipment failure but continued to experience the DNS attack until 13:10 UTC, when the attack was stopped and systems started responding reliably again. The network equipment failure made it more difficult for us to identify that we were under a DNS attack and impacted our response time. "The Incident Report for the event noted that OpenSRS is now working on creating more separation between components of their DNS infrastructure that will improve resilience to similar attacks in the future.[61][62][63]

September 28, 2017: Ed Adrian Says Local Sounds Awesome and It Is, Until It Isn’t

Former Burlington City Council member Ed Adrian published an op-ed on Vermont Public Radio on September 28, 2017 that "an advocacy group called Keep Burlington Telecom Local, is once again promoting community ownership of BT. Local sounds awesome and it is, until it isn’t. We can’t afford to celebrate idealistic aspirations, no matter how lofty or pure, at the expense of taxpayers. My view is that we’re lucky to have excellent out-of-state bidders offering to buy and take over BT operations – because while our little City on the lake is capable of doing amazing things, I don’t believe we can compete in the telecom industry without help from the outside."[64]

September 28, 2017: Fourth Bidder on Burlington Telecom Has Chosen to Remain Stay Out of the Bidding Process

Fourth Bidder on Burlington Telecom Sales Process Has Chosen to Remain Withdrawn From the Process. "For now, we have withdrawn our bid," said Faisal Nisar of ZRF Partners adding that he was concerned that anything he said would complicate the city's sale process going forward. "They're going through an important process," he said. "I wish them well." Photo: Google Street View

Burlington Mayor Miro Weinberger and City Council President Jane Knodell made the following public announcement on the Burlington Telecom website on September 28, 2017: “Since Tuesday we have spent hours together and with other parties exploring whether there is a way in which the fourth bidder could re-enter the BT sales process. The bidder has chosen to remain withdrawn from the process. The City greatly appreciates the interest the bidder had in Burlington and the ideas and energy they brought to the process. Resolving this matter has delayed focus on the bids that are before the City Council for consideration. Instead of voting to narrow the field to two bids on October 2, as planned, the Council will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids. The Council will then vote to select two final bidders to conduct legal due diligence with on October 16.”[65]

Identity of the Fourth Bidder Revealed to be Faisal Nisar of ZRF Partners

City officials would not name the bidder or release more information, citing a nondisclosure agreement signed by all parties but according to Seven Days, the fourth bidder is Faisal Nisar, a 42-year-old investor who operates his own private equity business, ZRF Partners. Reached by phone last week at his New Jersey home, Nisar confirmed his involvement. He declined to speak further, citing concerns about the nondisclosure agreement he had signed with the city. Nisar's name has not previously been made public. Nisar and Dorman have ties. The two once served together on the board of a Massachusetts-based technology firm, Custom One Design. Dorman said he's known Nisar for 12-plus years in a professional capacity. The two also shared a friendship with Gary Evans, who consulted with BT from 2009 to 2013 and was key to its survival, according to Councilor Joan Shannon (D-South District).[66]

"For now, we have withdrawn our bid," Nisar said around 9 p.m. Wednesday. He declined to speak further citing both his non-disclosure agreement and his respect for the city and the Burlington Telecom sale process. Nisar, who lives in New Jersey, said he was concerned that anything he said would complicate the city's sale process going forward. "They're going through an important process," he said. "I wish them well."[67]

Nisar Submitted Bid for $17 million

Nisar had submitted a bid for $17 million, according to Kurt Wright (R-Ward 4). Ting is offering $27.5 million, while Schurz is offering $30.8 million.[68] Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership.

Appeal of the Fourth Bidder's Approach

According to some city councilors, Nisar's proposal had appeal. Nisar earned an MBA from Columbia Business School and then spent three years working at Merrill Lynch in New York City. Starting in 1999, he spent 17 years "managing investments in technology and media companies" at Baker Capital, a private equity firm in New York City, according to his LinkedIn profile. Nisar launched ZRF, the entity he used to submit a proposal for BT, in April 2016. Nisar's bid wasn't the highest, but it attracted "significant interest" from some councilors, according to Wright. "They had an aggressive plan in regard to economic development and small business development in the community," Wright said, noting that the company had also planned to expand beyond city limits. "Many of us were very interested in them as our No. 1 or No. 2 choice." According to Councilor Ali Dieng (D/P-Ward 7), Nisar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center, Dieng recalled.

The loss of the fourth bidder was "somewhat unfortunate," said Councilor Joan Shannon (D-South District). "I don't think they're nefarious actions." Instead, the controversy has made Nisar's bid "this kind of forbidden fruit, which makes it much more appealing than it would have been," Shannon said.[69] "I'm extremely disappointed; I was a huge supporter of ZRF," said Dave Hartnett (D-North District). "I'm not really quite sure where this leaves us." Wright said, it was clear that the damage had been done. ZRF wanted to hear from the mayor that he no longer had conflict of interest concerns, Wright said — and Weinberger couldn't give that assurance. "[ZRF] didn’t want to be dragged back in there under that cloud," Wright said. "They've already been jerked around a little bit here."[70]

Dorman & Fawcett Deny that Any Conflict of Interest Exists

At the heart of the questions about a potential conflict, according to councilors, is Dorman & Fawcett's involvement. But councilors were not specific. Dorman denied to Seven Days that any conflict exists. "There isn't one based on everything I know. We stand behind the work we've done," he said. The firm is dedicated to getting the city the best possible result, he said. The company's employee, Stephen Barraclough, has been running BT since 2010. All bidders expressed interest in retaining Dorman & Fawcett to manage BT, said city attorney Eileen Blackwood. Dorman has been entertaining offers for BT since he took the job, he said, and, when the city was ready to sell this year, he reached out to those who had previously expressed interest or seemed like a good fit.[71] Each of the four finalists had expressed interest in retaining the firm, city attorney Eileen Blackwood said at a September 20 press conference. Knodell said the decision is ultimately up to Dorman & Fawcett. "In many ways it'd be great if they would stay in, but I don't know the status of that conversation," she said.[72]

Ting/Tucows, Schurz, and Keep Burlington Telecom Local Are the Remaining Three Bidders

According to the Seven Days both Ting/Tucows and Schurz are offering cash. Ting is offering $27.5 million, while Schurz is offering $30.8 million. Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership. Elliot Noss, the CEO of Ting, said he had been following the Burlington Telecom story for years. He said he first reached out to the mayor's office in 2014 about the possibility of purchasing the utility and was put in touch with Terry Dorman, who he said has been his main point of contact and has "run the process." Noss said the signals he has received from Dorman, the mayor and other Burlington officials "struck a balance between being encouraging and noncommittal." Schurz's CEO, Todd Schurz, said he was approached by a "third party that knows BT and knows us." He declined to say who the person was, but a Schurz spokesperson, Brian Lynch, said it was not Dorman or anyone associated with their firm. They only met Dorman and other parties of the city after the formal sale process began, he said.

Katie Vane, a spokeswoman from Weinberger's office, said equivalent site visits were not made to ZRF or Keep BT Local because they were not operating telecom companies, and the point of the visits was to get a grasp of how their operations worked.[73]

Independent Financial Report Not Yet Released

On September 25, 2017 an independent financial analysis of the four bids was presented to city officials. Knodell said earlier this month, while announcing a new timeline that promised more transparency and a robust public process, that the analysis would be made public. However, it has yet to be released.[74]

The Selection Process Has Been Delayed Two Weeks

The controversy has once again delayed the selection process, which must be made by the end of the year for the city to maximize its share of profits from the sale. The city council originally planned to narrow the field to two on October 2 and pick a winner on October 16. Now, the council "will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids," officials said in a statement. The two finalists will then be chosen on October 16, the statement said.[75]

September 28, 2017: Mayor Miro Weinberger and City Councilor Joan Shannon Discuss the Bidding Process on 'The Mayor's Show'

Burlington, VT Mayor Miro Weinberger hosts his monthly show and discusses the upcoming sale of the city-owned Burlington Telecom internet, phone and television service provider with Burlington City Councilor Joan Shannon.

September 27, 2017: Tucows Acquires Roam Mobility from Otono Networks

Tucows Acquires Roam Mobility. Tucows has acquired Roam Mobility, a Mobile Virtual Network Operator (MVNO) operating on the same nationwide GSM network as Ting Mobile.

Street Insider reported on September 27, 2017 that Tucows has acquired Roam Mobility from Otono Networks. Roam is a Mobile Virtual Network Operator (MVNO) operating on the same nationwide GSM network as Ting Mobile. “When we look at other services in this space, we tend to admire the ones that have solved a specific problem for a specific target. Roam has done a beautiful job for Canadians who travel to the United States,” explained Elliot Noss, President and Chief Executive Officer of Tucows. “With their rate plans, user experience, messaging and even SIM card distribution, they have established themselves as the obvious choice there.”

The acquisition includes three Roam brands that will each continue to operate independently alongside Ting within Tucows’ mobile network access group. There will be no changes for either Roam or Ting customers. The three brands and their specific focus areas are:

  • Roam Mobility, offering prepaid roaming replacement plans to travellers visiting the United States for a few days or a few weeks, as well as Snowbird plans for Canadians spending the winter in the United States.
  • ZIP SIM, backed by a quick, automatic activation process and straightforward rates, helping international business travelers get quickly connected when visiting the United States.
  • AlwaysOnline Wireless, powering short-term, on-demand LTE data plans for hotspots, tablets, and iPad with Apple SIM. As one of the first consumer eSIM-enabled providers on the planet, AOW has had innovation at its core from the beginning and its global roaming footprint has helped it connect customers in over 90 countries including the United States, Canada and the U.K.

Noss added, “We get well-positioned brands, smart product features and a lot of knowledge and skill. Meanwhile, these brands join a business that is investing every day in growth.”

Tucows also adds two new international wireless carrier partners to its existing relationships in the United States, enabling support for global data on iPad with Apple SIM. Revenue from the Roam businesses will start contributing to Tucows financials toward the end of September. However, it is not expected to have a material impact on overall company performance.

“We are thrilled to have found a home for our consumer brands that shares our commitment to customer experience and our passion for building great products,” said Emir Aboulhosn, Chief Executive Officer of Otono. “As we now accelerate our shift and increase our focus towards innovation for eSIM enablement and orchestration, we are also excited to begin building new capabilities for Tucows and Ting.”

Tucows will also be partnering with Otono for eSIM enablement and will utilize the Otono Platform in the near future to bring greater device support to Ting. eSIM allows mobile users to more easily choose mobile networks and switch between networks on their tablets and wearables. Otono is at the leading edge of this shift from traditional SIM cards to eSIM. Ting expects to announce more details on eSIM support in the coming months.[76]

September 26, 2017: Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids

Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids. The Lake Champlain Regional Chamber of Commerce held a news conference urging the city council to consider the two out-of-state bids, Tucows/Ting or Schurz Communication, over the Vermont-based co-op bid, Keep Burlington Telecom Local. "I've taken the time to review each (bid) and have come to the conclusion that the co-op proposal does not compare equally and favorably to the others and doesn't offer the citizens and its residents the protections, financial and otherwise, that are guaranteed by the other finalists," said Tom Torti (photo above left), President of the Lake Champlain Regional Chamber of Commerce since 2006.[77]

VT Digger reported on September 26, 2017 that the Lake Champlain Regional Chamber of Commerce held a news conference urging the city council to consider the two out-of-state bids, Tucows/Ting or Schurz Communication, over the Vermont-based co-op bid, Keep Burlington Telecom Local. "I've taken the time to review each (bid) and have come to the conclusion that the co-op proposal does not compare equally and favorably to the others and doesn't offer the citizens and its residents the protections, financial and otherwise, that are guaranteed by the other finalists," said Tom Torti, President of the Lake Champlain Regional Chamber of Commerce since 2006. Torti said he is a supporter of the co-op ownership generally, but KBTL’s offer relies on a $10 million loan with a 14 percent interest rate, which would leave the telecom “too highly leveraged” to be successful going forward. "It has nothing to do with the model and everything to do with financing."

Andy Montroll, a board member of Keep Burlington Telecom Local, said that if Burlington Telecom is sold to one of the telcos with offers on the table, decisions about its future will be left to out-of-state executives. Torti countered that Burlington Telecom required the clandestine bailout of $17 million in taxpayer money that the city spent improperly to prop up Burlington Telecom nearly a decade ago precisely because it was strapped with debt and didn’t have experienced managers, something he said is also lacking in the co-op’s bid.[78][79]

September 26, 2017: Elliot Noss Speaks to MOI Global community at the Latticework 2017 Summit on "Disrupting the Communications Industry — Implications for Investors"

MOI Global reported on September 26, 2017 that Elliot Noss spoke at the MOI Global community at the Latticework 2017 summit, held at the Yale Club of New York City in September, 2017.

Excerpt:
We are the largest wholesalers of domain registration in the world. GoDaddy is the largest domain name registrar. We made up this creature, “wholesale domain registration” nearly twenty years ago. That is essentially a platform business, a relatively low-growth business — if you want to talk about mid-single digits as a growth business. It’s a platform business that spin off loads of cash.

We’re an MVNO, which means we buy capacity from — we’re not legally allowed to say it, but if you go and search the coverage map, you’ll see the magenta map and you can figure it out. The MVNO business is great because U.S. mobile phone service is the second-most expensive in the world (second only to Canada, which is where I’m from). We have been able to build a business making north of 50% contribution margins, where our customers are paying $23 a device and they are measured (by net promoter score) as the happiest, most satisfied mobile-phone customers in the world. That’s a scrappy business from a customer acquisition standpoint, where you have essentially no industry growth; everybody who’s going to get a mobile phone already has one. That is a tough business route — taking share — but [we are] less than one-tenth of 1% of the market. We’re a termite eating a tree: there is a lot of room and the tree doesn’t notice.

Now you have these two good businesses, both of which spin off cash and require virtually no capital. We bought back our stock for as long as we could, then the telecom world presented itself again to us, and for the last 2.5-3 years we’ve been going hard fiber to the home. We fundamentally believe that we’re at the beginning of a 15-20-year cycle, where infrastructure built for telephone or television has been retrofitted essentially to deliver the internet. It’s a simple thesis to say that at the end of a 15-20-year cycle, the vast majority of connections in the U.S. will be end-to-end fiber with a bit of Wi-Fi hanging off the edge. Two years ago I would have said that at this point there would be 50 or 100 companies copying us, but I’ve come to appreciate that there’s an intersection around operating capabilities — we’re a bunch of old ISP guys at heart — capital, and the ability to manage a construction project, which might be a bit rarer than I first thought, and so the window stays open.[80]

September 26, 2017: City of Burlington Considers Inviting Telecom Bidder Who Withdrew His Proposal Back to the Table

Burlington Mayor Weinberger and City Council President Knodell issued a statement on September 26, 2017 regarding the potential fourth Burlington Telecom bidder who made withdrew his proposal from consideration. “After extended consultation with the City’s attorneys and Council discussion, there was a strong Council consensus that the City should explore whether the possible conflict of interest with the fourth bid could be resolved. If so, the fourth bidder will be encouraged to promptly submit a final LOI. Together we will be pursuing this outcome immediately.”[81]

The Bidder that Dropped Out May Be Back in the Running if a Possible Conflict of Interest Can Be Resolved

According to the Burlington Free Press, the drop-out bidder may be back in the running to buy Burlington Telecom following a rift between the mayor and some councilors over the circumstances leading to the bidder's withdrawal — if a possible conflict of interest can be resolved. If the conflict of interest is resolved, the fourth bidder will be encouraged to submit a final letter of intent promptly. Knodell said they are hoping to connect with the fourth bidder Tuesday. The council is set to narrow the field to two finalists next Monday. Mayor Weinberger said the bidder made an "independent decision" to withdraw, but that some communications from him may have prompted the decision. "I, as mayor, had some concerns about the fourth bidder and conveyed them to the bidder," he said last week. The potential conflict of interest was a concern raised by the mayor. Weinberger said the non-disclosure agreements prevented him from discussing the details of his communications but confirmed that he had "directly" communicated with the bidder.

The withdrawn finalist had been described by Burlington Telecom Advisory Board Chairman David Provost as "a private equity investor with valuable local relationships and extensive telecom experience and a vision for aggressive BT regional growth."[82] Knodell says 8 of the 12 councilors felt the bidder that pulled out was their first or second choice. "Someone should care as a citizen of Burlington because what if it was the best proposal? What if it was the proposal that worked best for the citizens of Burlington and gave us the best return? They have so much to offer the city in the way of new business formation, building a strong tech economy, and creating good jobs for young people coming out of our school system," Knodell said.[83]

City Councilors Knew who the Fourth Bidder Was

According to Vermont Biz, because of non-disclosure agreements, city councilors knew who the fourth bidder was and were able to review its proposal, but neither they nor the mayor could disclose who it was or what terms they were going to propose. Weinberger said in announcing the three bids that he had presented his concerns to the bidder and to the Council and that the bidder independently decided to withdraw. Weinberger said he could not disclose what his concerns were. "Many city councilors were concerned about how this company disappeared from the mix," said Councilor Kurt Wright. He and Knodell both felt the mayor had a hand in its withdrawal. "There was great, significant support for this company." "In my evaluation, they were the strongest from the point of view of business formation, business services, creating good jobs, building the tech economy," Knodell said. The company had been described as a local, "private equity" firm.

However, neither Wright nor Knodell described it as such or in any other way provided who was behind it or what its bid might have looked like. Wright, a Republican, ran for mayor against Weinberger, but lost by a comfortable margin (58 percent-37 percent in March 2012). Knodell is a Progressive. The mayor's office has been dominated by Progressives or Progressive leaning Independents for more than three decades (Bernie Sanders, Peter Clavelle, Bob Kiss) with a short interlude for one Republican Mayor (Peter Brownell, 1993-1995). Weinberger is the first Democrat since 1981. Wright is currently the only GOP member on the Council.

Possible Conflict of Interest for the Law Firm of Dorman & Fawcett

The mayor and city attorney have still not said publicly why the bid was withdrawn, but according to VT Digger an email from the mayor to city councilors, obtained by Seven Days, provides some insight. “You will see that, in the wake of the legal, regulatory and conflict of interest concerns that have arisen, Terry [Dorman] requested that [the bidder] withdraw its proposal. I support Terry’s decision and expect there will be further conversation about it in our session this evening.”

Terry Dorman, referred to in the email, is a member of the law firm Dorman and Fawcett that the city hired a few years ago to manage Burlington Telecom. Dorman and Fawcett have provided feedback to the city throughout the sale process and will keep 10 percent of the proceeds when Burlington Telecom is sold. The mayor has acknowledged that this is a potential conflict of interest — one that he said the city has managed carefully as it looks to find a buyer. Asked during a news conference announcing that the final bids would be made public, city councilors did not respond directly to a reporter’s question as to whether Dorman and Fawcett had connections to any of the bidders.[84]

One Local Bid Remains From 'Keep Burlington Telecom Local'

Knodell also discussed the one remaining local bid from Keep Burlington Telecom Local (KBTL). "The advantage by going with Schurz or Ting," Knodell said, "is they're well capitalized. They have resources." They are cash bids, Knodell said, "That's pretty attractive, in many ways," but BT would no longer be Burlington-based and their ultimate interests are related to their shareholders. "The relative weakness in [KBTL's] bid is, compared to Schurz and Ting, is that they are thinly capitalized."[85]

September 25, 2017: Tucows Responds to NameCheap Lawsuit

Tucows Responds to NameCheap Lawsuit. Tucows has filed their first response to a lawsuit brought by Namecheap to transfer four million domain names registered to Namecheap customers that use the Enom platform using the “Bulk Transfer After Partial Portfolio Acquisition” or BTAPPA. According to Tucows response, Tucows says it is not opposed to transferring the domains but suggests that a BTAPPA would be an “extraordinary and resource-intensive process”. Photo: Wikimedia Commons

Domain Name Wire reported on September 25, 2017 that Tucows has filed their first response to a lawsuit brought by Namecheap to transfer four million domain names registered to Namecheap customers that use the Enom platform using the “Bulk Transfer After Partial Portfolio Acquisition” or BTAPPA. According to Tucows response, Tucows says it is not opposed to transferring the domains but suggests that a BTAPPA would be an “extraordinary and resource-intensive process”. Tucows suggests a different transfer method, such as providing EPP codes or transferring them to Namecheap’s accreditation but hosting them on the Enom platform.[86]

According to Tucows' response, "The Master Agreement, which is never characterized as an asset purchase, explicitly references “EPP transfer codes” (that are only applicable to standard ICANN transfers) and makes no mention of BTAPPA. On July 27, 2017, Namecheap for the first time contended to Tucows that BTAPPA was a requirement of the Master Agreement. See Rome Decl. (ECF No. 10) at Ex. A. In a letter to Tucows, Namecheap’s counsel for the first time characterized the Master Agreement as an “asset purchase” that “closed” when Namecheap’s exclusivity obligations under Section 3 of the Master Agreement concluded. Id. Namecheap’s counsel further contended that the “asset purchase” meant that the Namecheap-managed .COM and .NET domain names qualified for BTAPPA under unidentified Verisign “guidelines,” and that Verisign had in fact approved the transfer via BTAPPA of the Namecheap-managed .COM and .NET domain names. Id. Namecheap’s counsel did not (and has yet to) identify the referenced Verisign “guidelines” or produce Verisign’s supposed approval of the BTAPPA."[87]

Namecheap responded that "Absent a bulk transfer, Namecheap customers are likely to face a high degree of confusion by suddenly and involuntarily finding themselves dealing with eNom/Tucows (with whom they have had no relationship) at the time of renewal rather than Namecheap (the service provider with whom they contracted), and being told to perform several tasks in order to be moved from eNom to Namecheap. Pursuant to ICANN’s transfer policy, they will also be required to extend the domain registrations for an additional one-year term (at an additional cost) in order to move to Namecheap’s platform. Some of those customers are also likely to encounter situations where the domain name expires before the transfer is completed, which may lead some domains to end-up being stuck in mandatory “grace periods” (with large fees for reinstatement), or even being deleted and thus available for someone else to register. Finally, recurring issues of instability and insecurity associated with the eNom platform pose a separate and ongoing risk of harm to the actual registrants of the VeriSign Domains (all of them Namecheap customers) for so long as they remain under eNom’s sponsorship."[88]

Reference:

History of the Enom Acquisition by Tucows

Read more about the history of the sale of Enom to Tucows at:

September 21, 2017: Ting Hosts Reddit AMA to Discuss Burlington Offer

Ting Bids on Burlington Telecon Fiber Network. Ting would host an AMA (Ask Me Anything) on Reddit from 3 to 4pm on September 21, 2017 to hear and respond to questions about their BT offer, business or "anything else you want to know."

The Ting Blog reported on September 21, 2017 that Ting will host an AMA (Ask Me Anything) from 3 to 4pm on September 21, 2017 to hear and respond to questions about their BT offer, business or "anything else you want to know."


Some of the most interesting questions and answers include the following:

Question:
Assuming you win the bid...
1. Burlington Telecom's prices right now are significantly lower than what you offer in your other locations. Currently, I am also aware of programs that subsidize access for low income families, as well as discounts for college students. Do you plan on raising prices in the area and getting rid of these programs?
2. Will you continue to maintain, upgrade, and expand the network in the years to come? Since Burlington will be just one of many cities (and probably your smallest) will we get as much attention from you as your other locations? Do you plan on expanding the network to neighboring areas like Winooski, South Burlington, Essex, Williston, Colchester, etc?
3. How many new jobs will be created in the Burlington area? Will anyone currently employed by Burlington Telecom be laid off? Will support be "centralized" to either your own call center at your headquarters or a call center in another country like India, or will we still be able to talk to someone from Burlington?
4. Will the people of the Burlington area have any say in decisions made about the network in the future? Will the people most "in charge" be residents of the Burlington area (people from here employed by you), or executives in an office hundreds of miles away in another country?
5. Will there be any possibility of you selling the network to another telco, possibly Comcast or Fairpoint? shudder
6. Had any of you heard of Burlington or been to Burlington or Vermont before the bidding talks started happening? If so, what were your impressions of us?

Answer from Elliot Noss
1. In our current FTTH markets we charge $89 for a gig. In Burlington it is $70 with contract and $83 without. So there is not really a significant difference. There are a bunch of things as follows:
  • We have committed to maintaining prices for 30 months. this does NOT mean in month 31 we will be raising prices. what is true is that there are currently tons of SKUs and we greatly prefer simplicity. we will be looking for some ("gamers package" I am talking to you!).
  • We believe that prices for telecom are too high in general and are likely to fall in the longer term, not rise. the inputs for these services are all essentially subject to moore's law so they should. and we are used to living in markets (like domain names) where falling prices are the expectation. television content is an (UGH) exception.
  • We are strong supporters of addressing digital divide issues and will be looking to implement specific programs to address these issues. we have started to do so in Charlottesville and expect to do so in every market we are in including (hopefully) Burlington. these programs need be developed for and with each community individually.
2. I think this was answered somewhere else and will look for a link. Basically, build baby build!
3. The best way to answer this is to say we are growing and need more good people. The best place to get a sense of this is to look at the slides in our presentation talking about our history with companies we have acquired and the people from those businesses. If we are really lucky, my successor will be a Burlingtonian!
4. We delegate a lot of authority to people on the ground, who will be people of Burlington! More importantly, we really try and make an effort to engage with the local community. Community leaders, groups and organizations, neighbourhoods and just people, to learn about what is important to them and what can most help. We believe that FTTH can be transformative and we want to be part of that.
5. No one here has any intention of selling to any of those large incumbents. shudder
6. I have been following the Burlington Telecom story for many years now and of course was familiar with the city otherwise. I have been three times now and love it!

Answer from Ross Rader
Regarding #3, Our plan is to keep customer service in Burlington and grow that operation to also help us in other cities. We run a distributed operation already - we have customer service staff in Charlottesville VA, Toronto ON, Starkville MS, St. Catharines ON, Nelson BC, and just outside of Chicago IL - a Burlington team will be a great complement to that.
I started in the customer service business in the 90's as a technical support rep for an early ISP, I'm really excited by the prospect of being able to sit down with everyone at BT so I can learn more about why the people of Burlington love BT so much already, what their magic service formula looks like and share as much as I can about what we've learned over the years. Everything I've heard about the Burlington team has been very positive and I think we'll learn a lot from them.
We believe that we can do a better job of servicing our customers than any one else - we don't outsource Ting Internet CS today and we've made an explicit decision not to go that route in the future. We've experimented with it elsewhere in the business and it really requires a different discipline and skills and even if you nail it, the results are just kind of meh. By focusing on delivering great service through our own staff, we can really get into the details of providing great service - and our track record shows it. Ting Mobile consistently ranks at levels consistent with the service delivered by Apple, Nordstroms and Zappos and Ting Internet tracks even higher than that. Working together, I think the two teams have a great opportunity to build on the already excellent results that we see from BT customer service.

Answer from Adam Eisner
I'll comment on 2. One of the commitments we've made is to continue to expand the network, both inside and outside Burlington. So we would certainly continue to expand inside the city, yeah. BT has also identified many of the areas you mention as possible expansion targets, and we've reviewed the initial plans and really like what we see. It's early, and we'd finish Burlington work first, but we'd get into surrounding areas as well.


Question:
This issue with 5, though, is if one of those incumbents decides they want to acquire you, as a publicly traded company your board has the legal obligation to accept the offer if it is sweet enough. As someone who follows business ownership and acquisition patterns quite closely, it's a real and significant risk that recalls the classic scene from Silicon Valley.
So, even if your as good as your earnest PR voices claim at the moment, your ownership structure leaves our community vulnerable. The co-op, on the other hand, would require a vote of all subscribers, which is a far more powerful structural firewall.

Answer from Elliot Noss
This is true about any ownership structure other than municipal ownership. Sadly, that is now precluded because history. We (Ting) can't change that, only try and make it the best it can be from here.
We have agreed to sale restrictions with respect to existing Burlington incumbents.
We cannot guarantee the future. What we do believe is that running an ISP is a challenging business and that we might be among the best in the world at it. We also aspire to learning (from you) all about what is best for Burlington. We aspire to combine the best of an amazing operation and customer service infrastructure (your customer service experience will get even better!) with a deep respect for the local nature and needs of the community.!


Question:
1. Do you feel having a headquarters outside of the country will hinder your ability to maintain the high levels of customer service and same day responsiveness that BT is known for?
2. Considering BT also does cable and phone service, are you going to support those customers or focus strictly on internet and fiber business?
And local staffing is a huge plus. If you win the bidding, what elements of the business will continue to be staffed locally? I assume you'll outsource call center type positions to your existing facilities.

Answer from Adam Eisner
1. We've got a long track record of working on a distributed basis - we're an "internet first" company, so it really is in our genes. For example, we have customer service staff in Charlottesville VA, Toronto ON, Starkville MS, St. Catharines ON, Nelson BC, Kirkland WA and Chicago IL - it will be real work, but we know what it will take to bring a Burlington team into that organization and foster its growth in positive ways. You point out that BT is already known for providing great customer service which is really exciting for me. I don't think for a second that we know everything about providing great customer service - there are always things we can improve - I'm really looking forward to the prospect of working with the BT team to see how they are achieving those great results, comparing that to what we are doing and sharing best practices in both directions.
2. And to your question about local staffing - I think it is important to point out that we wouldn't just be talking about entry level positions. We take great pride in our corporate values, one of which being that leadership and innovation can happen anywhere in the organization - that extends to all of the towns we work in - we're definitely not a "all the good stuff happens at HQ" kind of company. If our bid is successful, I can definitely see lots of opportunity for Burlingtonians to tackle other aspects of Ting's work, not just BT. (our proposal laid out a lot of this and underlined our track record in this area so I won't rehash it here...)


Question:
Being from waaay out of town, what do you know about the Burlington, VT, USA market and why should we trust such a fast-expanding shop to operate in our small sandbox?

Answer from Trish McLean
Hi - It's true that we're not local and we would never be able to be local on our own. But how we've approached it in our other markets is to get involved and do the work. While we have a small national team - I'm in marketing for example, most of what we do is driven by our local teams. We would never assume to simply know what's right for a community. We'll always listen. We've always done community meetings where people have a chance to get to know us and for us to understand their concerns. And then we do the best job we can delivering a great product and great customer service.
In terms of growth, we are expanding but not in my opinion too fast. As you know it takes a while to build a fiber network and there's many steps to setting up a market, lighting customers and then operating. I feel pretty confident in our ability to scale because so much of what we do is done by the local teams. Hope this helps -


Question:
I'm curious how exactly you will keep profits and ownership local. According to surveys in the city done last year, the #1 issue that was most important to this sale was keeping the Telecom local. As a publicly traded company, how can you give residents the service and local commitment we have come to expect, especially when your #1 responsibility is to your shareholders first and foremost?

Answer from Elliot Noss
The best way we can answer is to suggest you check out all our public facing customer feedback (reddit/facebook/twitter, etc.). We deeply believe that happy customers = good business and our shareholders have come to believe us. They didn't always, as you can see by our stock chart for many years. Eventually results win out.
It is worth noting that despite being public for over 17 years, we have never sold a share and never raised money. We are not a conventional public company. But our shareholders are as happy as our customers. And many people start in one of those groups and end up in the other!


Question:
Up 'til now I've only heard of Ting/Tucows in the mobile/cell service and the domain name industries. Moving into a traditional ISP role seems like a new venture. Has Ting/Tucows operated any residential or commercial ISP's before? What does Ting/Tucows seek to gain by purchasing Burlington Telecom? And why here, why now?

Answer from Elliot Noss
We have been doing this for a while. You can see the front door here.
Burlington is a more mature fiber market and it is once a market is penetrated that the REALLY interesting benefits can start to accrue. If we are lucky enough to be successful here, we can start to learn things about the benefits that fiber provides together, and we can spread those learnings to help make positive change in other communities.
Burlington is a natural to lead the nation in something like this!

Follow up Question:
I mean, from a business perspective, what does Ting seek to gain by purchasing Burlington Telecom? What's the bottom line?

Answer from Elliot Noss
The most important thing about it for us is operating a FTTH at scale (>50%). We believe that is where the magic happens. The opportunity to really take the impact of ambient connectivity to the next level and for what we learn together in Burlington to be a model for the rest of the country.!


Question:
It sounds like you're expanding rapidly. How can we be sure your corporate growing pains won't affect us? How will you be able to focus on our local needs and engage our rabidly interactive and opinionated citizens/subscribers/businesses on a regular basis?

Answer from Trish McLean
Burlington would definitely be a big deal to us, as you can probably tell, we're excited at the idea of getting involved.
Keep in mind with the local team we'll be accessible and engaged with the whole community. By that I mean, having community meetings, getting feedback, talking with partners and being available to respond via phone/email/social.

Answer from Adam Eisner
Fair question. It's not untrue to say we've been expanding quickly, for sure. That said, we've been scaling the business for quite some time. For example: we are actively building right now in Holly Springs and Charlottesville. We aren't building in Westminster because the City manages the build, but we're operating there. We are also building in Sandpoint, ID and Centennial, CO concurrently. So all of that is a long way of saying: we are comfortably building and selling in several markets at once right now, and it's going really well. All the systems, structures and plans we've put in place are designed to let us operate in multiple markets at once.
Now for the citizens part. ;) We do interact a lot with each municipal government, businesses and citizens. We're involved in multiple public private partnerships, and get that it's important a) that the partnerships successful for both municipality and Ting and that b) everyone is heard. I certainly see that as incredibly important here. To be honest, we manage that by getting out and being everywhere as much as possible with our local teams (which are led by a local city manager who knows the area inside out), holding events, communicating the heck out of build plans, and so on. We really do think constant communication is key.


Question:
Just wondering How vast your resources are in order to keep the kind of eye on BT that a local co-op with a singular focus can, especially when you have a number of other projects ramping up across the country?

Answer from Adam Eisner
This is a really good question. I think the answer is: each one of our operations are incredibly local. We're incredibly aware that you can't manage a local fiber operation remote. As a result, we have deep and expansive local operations in every market, including field ops/installations, city managers, marketing and support. They are local Ting employees, working out of local warehouses/operations centers and experience spaces we have built. They drive trucks we have procured locally. And so on.
Where we CAN add additional help and value from a remote/centralized operation is in operational muscle. For example: can use our experience managing multiple construction projects to build more, faster. (That's what we meant by "building footprints" in our presentation: we can cover large areas quickly and effectively because we have the experience and resources to do so). We can use the platforms we have to extend tools to customers, quickly. Those kinds of things.

Question:
As a supporter of Keep BT Local co-op's bid and how it'll keep OUR money circulating in OUR community rather than paying off your lenders, I was a little dismayed to see you co-opt their slogan on your slide decks for the PowerPoint. Not a great way to start your introduction to the community by usurping a truly local bid's own name and slogan. I sense you see the opportunity many of us saw years ago when we pushed to create BT, and now is being sold off by short-sighted politicians to out-of-state/out-of-country profiteers who see us as a long term Tucow cash cow. What's the expected return on your investment of $27M - 15%? 20%? 25%? What jacked up rates are you going to charge us after the 30 month "grace period" for Internet VOIP only?

Answer from Michael Goldstein
Hi Shay. I work for Ting.
I am going to try to address your comments and questions. If your intention is more to rant or campaign than to get to know us, that’s cool too. This is Reddit after all. Both the history and fate of BT are disappointing. Skepticism toward politicians and telcos is pretty fair. And doubts that anyone non-local will be quite as accountable to maintain jobs, offer great service at reasonable prices and generally play nice are completely understandable. We get it.
All I will say about us is this. We compete with multi-billion dollar telcos and cable companies in each of our Internet markets and in our national mobile business. We can’t outspend them. We can’t outscale them. In fact, they can pretty much copy anything we do on product or price. Our only competitive hope is to care more, to try harder, to be more honest and fair and to be more responsive. It’s all we got.
Please ask Charlottesville, Virginia, Holly Springs, North Carolina and Westminster, Maryland and ask any of our cellphone customers. You will find them all here.
Regarding your comments:
The choice to keep the bidding process secret was not ours. (As you’ll see, we prefer to engage early and often.) Here is the Mayor talking about why the City made that choice: http://www.burlingtonfreepress.com/story/news/2017/07/31/city-council-hears-burlington-telecom-bids-secret/520827001/
Those slides in the deck were a response to an explicit question from the City. How will you commit to keeping BT local? It’s not a slogan, we were repeating the question! ☺ The City is pushing every bidder to do just that in all the ways that really matter (jobs, accountability, community participation and contribution). We are thrilled to do it. Again, it’s what we are doing in the other towns and nobody asked us to.
You ask if we’ll jack up prices. Look at our business in other cities. Look at our mobile business. Look at how we have passed along rate cuts when we have reduced our own costs. Look at what I wrote about the pricing bullshit that goes on every day in our industry: https://ting.com/blog/ting-pricing-promise/
Again, I am not claiming that we don’t ultimately want to grow our business. I am not claiming that we are headquartered in Burlington. But if we don’t do right by the people of Burlington and any other town we service, they will go elsewhere and we won’t grow anything.

Follow up Question
Thanks for the reply and it was part rant part question. I have a lot of concerns a publicly traded company that is heavily invested in by some of the largest hedge funds taking control of our public utility. And, I don't see how you make a return on $30M without raising prices or cutting services or siphoning off money that would otherwise stay here if you were truly local. I say that not in hostility, but just as an observation of what's happened in Vermont with small telcos that come in with big promises to stay local and just get swallowed up in five to 10 years. You wouldn't be the first if/when it happens to you. The top criteria from residents in any sale was that BT remain under local control. Not just who's employed by it, but who's earning the profits. I wish you luck but I'll be sticking with the coop model, which has proven to be an extremely successful business model in Burlington - from housing to supermarkets to some of our biggest employers. Cheers.

Answer from Michael Goldstein
Shay, this is a great conversation. Thanks. I will tell you that our current bid for this size customer base at these current prices and levels of service is actually a perfectly good investment. As long as we treat customers well and they stick around for a while, there is nothing wrong with this breakeven analysis that would cause me to think that we need to charge more or spend less. Anyone who thinks differently is either doing different math or is less patient than we are.


Question:
What makes you guys the best candidate for buying BT? Or more specifically, what is unique that only you can bring in this offering?

Answer from Monica Webb
We’ve spent time in Burlington and engaged with the City at length. We’ve done a video about why we think Burlington and Ting would be great partners. In large part, it comes down to a fit of values between Burlington and Ting. We both feel passionately about strong local presence, outstanding customer service, the fastest, most reliable and most affordable Internet we can offer, and the myriad of issues that impact Internet users, including digital divide, net neutrality and consumer privacy.
But we admit that talk is cheap. Companies will say a lot of things to put themselves in the best light. So never mind what I’ve just said. Look at our track record. Look at the comments on https://reddit.com/r/ting. Look at our ratings on Consumer Reports, where Ting mobile has been rated #1 or #2 of all mobile companies the last three years running. Check out our Net Promoter Score (NPS), which is the percentage of our customers that would recommend us. Our NPS for Ting mobile is 70+, which is the top score in the world, and our NPS for Internet is >90, though it’s early days for measuring that. And look at our website (www.tucows.com/aboutus) and see what we have always stood for. We lobby, we agitate, we support and we actively engage on issues of concern to Internet users, beyond our customers.
We really think we would make a great steward for the amazing network and legacy of BT. But I would encourage everyone here to do their research. Kick the tires. And the only thing we can ask is that you evaluate all of your options in an informed way.


September 20, 2017: Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network

Ting Bids on Burlington Telecon Fiber Network. Tucows is one of three finalists bidding to become the steward of the Burlington fiber network. Under a plan developed by the Burlington Telecom Advisory Board, potential buyers must meet certain criteria and qualified buyers would make presentations to the Burlington City Council, which would then approve one buyer. Read Ting's entire presentation to the City of Burlington Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.
Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network. Three of the most important criteria the Burlington Telecom Advisory Board is looking for in a service provider are: affordable service, a local presence, and a long-term strategic vision for the future. Other criteria set out by the board include a commitment to net neutrality, the principle that internet service providers should not favor or block particular websites, a commitment to BTV Ignite, and a management team that will support expansion to underserved communities in Burlington. "We're not necessarily looking for the highest bidder," says City Councilor Dave Hartnett. Photo: Church Street Marketplace by Don Shull Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

The Ting Blog reported on September 20, 2017 that Tucows is one of three finalists bidding to become the steward of the Burlington, Vermont fiber network. Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.[89]

Ting's Bid

Ting welcomed the opportunity to bid on the contract. "We think that our community involvement, our customer-first approach and our commitment to the open Internet and net neutrality make Ting the right choice to work with BT to maintain the fiber network and continue to grow its footprint," writes Andrew Moore-Crispin in the blog post. "Ting is admittedly not a small local service provider. We could also never possibly be mistaken for a national conglomerate. We have the benefit of some scale in our business, with lots of lessons learned and efficiencies gained across our handful of markets. We also consider each market its own opportunity, with its own culture, needs, challenges and preferences. We are not looking to make Burlington work for our business. We want to make our business work for Burlington."

"If our bid is successful and we take responsibility for the BT network, you’ll find us an active community partner here in Burlington. Local events, cornerstone buildings, libraries, shared spaces, festivals and the like are what make a geography a community. We support these things and more in the Ting towns we serve. Whether it’s working with a local art space and providing gigabit fiber Internet at no charge or sponsoring a keystone community event, we don’t just think about marketing impact when we decide where to put our advertising and sponsorship dollars. We come out for things like farmer’s markets, community movie nights, festivals and things that defy simple categorization. We support and even create Makerspaces in the towns and cities we serve. We’re looking forward to talking to Generator Makerspace now that our bid is public information to see if we might work together, like we do with other Makerspaces in Ting communities."

"More than being a part of the communities we serve, we believe strongly in the open Internet and in net neutrality. We protect the open Internet in both word and deed. Tucows, Ting’s parent company, is run with the belief that the Internet is the greatest agent for positive change the world has ever known. We believe that better Internet infrastructure is what will help to keep North America at the fore. We believe that this national issue can only really be solved at the local level."[90]

Criteria

According to an article in the Burlington Free Press on March 14, 2017, three of the most important criteria the Burlington Telecom Advisory Board is looking for in a service provider are: affordable service, a local presence, and a long-term strategic vision for the future. Other criteria set out by the board include a commitment to net neutrality, the principle that internet service providers should not favor or block particular websites, a commitment to BTV Ignite, and a management team that will support expansion to underserved communities in Burlington.

"I think it's the right process," said City Councilor Dave Hartnett, D-North District, who sits on the advisory board. The process will allow the board to reach out to potential buyers who will match the values held by Burlingtonians, rather than hold an auction process. "We're not necessarily looking for the highest bidder," said Hartnett.[91]

Background

Burlington Telecom is for sale following a scandal involving the administration of former Mayor Bob Kiss, which secretly diverted $17 million from the city's general fund to the city-owned provider of internet, television and phone service. Mayor Miro Weinberger settled a $33 million lawsuit brought by Burlington Telecom’s main creditor, Citibank, in 2014, which requires the utility be sold after four years. “The city was in a very deep hole. In 2012, when it was being sued by Citibank for $33.5, plus penalties and interest in addition the $17 million of tax payer funds we didn't have access to, and we had our credit rating downgraded to junk bond status,” said Mayor Miro Weinberger. “Because we have fixed BT, we have restored the city's financial credit rating. That is something that saves us millions of dollars a year."[92]

Under the settlement, the city was allowed to pick the buyer as long as an undisclosed financial threshold is met. Settlement money came from Blue Water Holdings LLC, an entity backed by the Merchants Bank and created by Burlington businessman Trey Pecor. Blue Water bought the company and leased it back to the City of Burlington, which continued to operate it as a municipal utility. The sale must be finalized by January 2019, or Blue Water can pick the buyer.[93]

VT Digger previously reported on February 1, 2017 that under a plan developed by the Burlington Telecom Advisory Board, potential buyers must meet certain criteria and qualified buyers would make presentations to the Burlington City Council, which would then approve one buyer. The board planned to launch the sale process in March and select a buyer by July. “An alternative process would be like a ‘for sale’ sign,” Advisory Board Chair David Provost said. “We’re not looking for a buyer with the most money, or a big national and international footprint. There’s (public) fear of selling to a huge conglomerate, but I don’t think the criteria will allow that to happen.” The sale criteria was developed by the board with public comment, and approved by the City Council in April 2016. The purchaser must be financially sound and have experience running a broadband company and the buyer must go through a certificate of public good process to operate as a cable provider.[94]

Three Finalists

The Burlington Free Press reported on September 20, 2017 that City Attorney Eileen Blackwood had announced three finalists to buy Burlington Telecom: Ting or Tucows Inc., Schurz Communications Inc. — and Keep BT Local. Eight entities submitted bids to buy the telecom. The City Council chose four as finalists but one of the finalists has dropped out.. One finalist, Keep BT Local, has been public about their desire to buy the utility throughout the process. The cooperative, which is made up of local residents and business owners, has been passing out leaflets throughout the city and gathering signatures on a petition. At a late August council meeting, David Provost, the chairman of the Burlington Telecom Advisory Board, said the board had "serious concerns" about the co-op's financing model and lack of operating experience.[95]

Final letters of intent from the three finalists were made public on September 20. Now a public comment period will begin between until an October 2 special City Council meeting that the mayor plans to call. At that special meeting, the council is expected to take a vote further winnowing the field to two final bids. Then at a regularly scheduled October 16 meeting, the council is expected to select a buyer for the fiber network. Any sale of Burlington Telecom must be approved by the Public Utility Commission — formerly the Public Service Board — but city officials say that the commission doesn’t need to sign off on the deal before January for the city to retain a larger share of the sale proceeds. The city has previously said that none of the offers would result in major staff changes at Burlington Telecom; that the city would have the option to retain a “significant ownership interest”; and that the entity would continue to offer residents an alternative to other cable or broadband providers.

Two offers are from established telecommunications companies. Both are cash offers and would not require Burlington Telecom to take on any new debt. The final offer comes from Keep BT Local, a group proposing a cooperative member ownership model, which publicly identified itself early in the process. The two cash offers from telecommunications companies are within a few million dollars of each other, and are more than double the offer from Keep BT Local.[96]

According to the Seven Days both Ting/Tucows and Schurz are offering cash. Ting is offering $27.5 million, while Schurz is offering $30.8 million. Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership. "Keep BT Local's" offer also includes $10 million in debt financing it will pay back at 14 percent interest over 10 years. "14% is a very heavy burden to carry. If no standard lender will lend the funds, at any interest rate, that should tell you something. No business history and no collateral should also be a red flag," wrote Charles Haffter in a comment to the article. "Given where the current prime rate is, if this is correct, lenders must have no faith in the coops ability to run a successful telecom company."[97]

All three bids include commitment to building out Burlington's fiber network, commitment to net neutrality, commitment to investment in community initiatives like BTV Ignite, commitment to customer service and restrictions on future sales. The anti-monopoly future sales clause would mean that a company can't sell Burlington Telecom to another telecom that owns a big section of the market in the area, but does not restrict other types of sales. The city will be looking at a company's history of buying utilities to ensure Burlington Telecom doesn't get sold to a bigger company in the near future. According to the article in the Burlington Free Press, Ting/Tucows is a public company based in Toronto that has been operating for 2 years (Tucows has actually been in business since 1993). Schurz Communications is an Indiana-based company that has been in business for 144 years.[98]

An independent financial analysis of the bidders is currently underway and Council President Jane Knodell said on September 13, 2017 that she expects the document to be released to the public on September 25, 2017. "We can have meaningful public input," she said. The input will take the form of public comment sessions, written comments, and councilor engagement with constituents at neighborhood meetings.[99]

Additional Information

September 19, 2017: ADTRAN Teams with Ting Internet to Provide In-Home Healthcare Monitoring in Westminster

ADTRAN issued a press release on September 19, 2017 reporting that ADTRAN has partnered with Ting Internet on two Mid-Atlantic Gigabit Innovation Collaboratory (MAGIC) Smart Homes in Westminster where Ting is providing gigabit broadband to two MAGIC Smart Homes for individuals living with disabilities in Carroll County, Maryland. According to ADTRAN, MAGIC Smart Homes will have sensors installed that can collect health measurements, as well as behavioral data that will help health specialists draw conclusions about how to improve quality of life and ensure safety inside the home. The intelligent MAGIC Smart Homes move “smart homes” well beyond a concept to a reality that will help improve lives and enable individuals to “age in place.” “Applying smart home technology to healthcare monitoring will help us improve the quality of life, ensure safety in the home, and provide much needed medical data to our community’s health providers,” said Dr. Robert Wack of MAGIC. “Ting Internet’s and ADTRAN’s roles in helping to develop a scalable fiber network to Westminster ensure the routing of this health data is highly secure, reliable and instantaneous.”

“As we continue to expand our service area, having the opportunity to witness first-hand how gigabit speeds can impact an individual’s quality of life in every aspect has been eye-opening,” said Adam Eisner, VP of networks at Ting Internet. “The applications that are benefiting from gigabit speeds continue to push the limits and do what traditionally was thought to be unachievable. The lives that the MAGIC Smart Home project is improving are proof of how broadband transforms communities.”[100]

September 19, 2017: T-Mobile and Sprint are in Active Talks about a Merger

T-Mobile and Sprint are in Active Talks about a Merger. T-Mobile and Sprint, the two companies that Ting has partnered with as an MVNO, are in active talks about a merger. Both companies and their parents, Deutsche Telekom and Softbank, have been in frequent conversations about a stock-for-stock merger in which T-Mobile parent Deutsche Telekom would emerge as the majority owner.

CNBC reported on September 19, 2017 that T-Mobile and Sprint, the two companies that Ting has individually partnered with as an MVNO, are in active talks about a merger. Both companies and their parents, Deutsche Telekom and Softbank, have been in frequent conversations about a stock-for-stock merger in which T-Mobile parent Deutsche Telekom would emerge as the majority owner. People close to the situation stress that negotiators are still weeks away from finalizing a deal and believe the chances of reaching an agreement are not assured. The two sides have not yet set an exchange ratio for a deal, but are currently engaged in talks to hammer out a term sheet.[101]

According to Bloomberg, Deutsche Telekom would put T-Mobile executives, led by Chief Executive Officer John Legere, in charge of the combined company, according to the person, who asked not to be identified because the talks are private. That’s important for the German carrier, which owns about 64 percent of T-Mobile and has come to rely on it as a key driver of sales and earnings growth, according to a second person familiar with the talks. It favors a deal with Sprint because potential savings could come relatively quickly, the person said. The idea of a combination between the No. 3 and No. 4 carriers was shot down by regulators in 2014, but with a new administration preliminary discussions picked up earlier this year. Washington regulators appointed by President Donald Trump haven’t signaled an insistence on maintaining a four-player nationwide wireless market that was a feature of the preceding administration.[102]

September 6, 2017: How does Ting Internet Decide Where to Build Next?

Monica Webb explained on September 6, 2017 on the Ting YouTube channel that there are many factors at play when choosing the next lucky city to get Ting crazy fast fiber Internet. Does the city want us there? Do the residents want and need gigabit Internet? What kind of Internet options are already available? Other varyingly sexy factors like geography, population density, utility pole ordinance and the construction permitting process that the city has in place all factor in too.

Transcript

Christian asks what factors going to deciding where to expand from internet service one day. I'd love to see you guys in Indiana.

There are a few factors that go into deciding where Ting goes in terms of the next internet market. First off we want to know that a city wants us there we want to know that city officials want to work with us and they're interested in that level of service because a high level of cooperation is required between Ting and city officials in order to deploy the network.

We need to know that the city wants us we need to know that the residents want us and we need to know how it's going to be in terms of efficiency of deploying.

Is your city's permitting regimes streamlined is it easy to get access to utility poles if we have to string cable on poles. These are all really important considerations. Does your market want a gigabit of service?

So all of those things we look at before we go to a community but ultimately it's the community and the residents of the community that need to take the first step in expressing their interest to Ting and you can do that on our website. You can encourage your city officials to do it on our website.

September 6, 2017: Google Fiber Shuts Down Kansas City Customer's Service Over 12 cent Bill

From the how-not-to-run-your-fiber-customer-service-and-billing department comes a report from Ars Technica on September 6, 2017 that Google Fiber cut off a Kansas City customer's internet access because she owed 12 cents after an odd series of events involving an unused e-mail address, automated customer account systems, and a sales tax increase. Google Fiber quickly restored her connection and forgave the 12-cent balance after she called customer service, but the incident highlights a problem that Google Fiber may need to fix in order to prevent other customers from losing service over similarly trivial amounts.

When her service was first cut off, Victoria Tane said she thought there must have been a problem on her end. But after two days of unsuccessfully trying to figure out what was wrong, she called Google Fiber customer service. "When she called, customer service informed Tane that her service had been suspended," the Star reported. "A 12-cent balance was overdue. There had been e-mails and, the company said later, two voice messages trying to collect." When Tane offered to pay the 12 cents, she was told that Google Fiber wouldn't take checks for less than $10.

Customer service consultant Micah Solomon criticized Google Fiber for not setting up its systems to prevent disconnection over tiny amounts. "Solomon said the company’s systems should have been set up to detect that the rift was over such a small amount of money and drop the case instead of the customer’s service," the article said. "Google Fiber’s systems may have operated efficiently, he said, but in this case they 'backfired.'"[103]

September 5, 2017: Bret Fausett Joins Tucows as Chief Legal Officer and VP, Regulatory Affairs

Domain Name Wire reported on September 5, 2017 that Bret Fausett has joined Tucows as Chief Legal Officer and VP, Regulatory Affairs. Fausett previously worked as General Counsel role at Uniregistry.[104]

September 1, 2017: Namecheap Files Suit For Bulk Transfer of 4 Million Domain Names

Namecheap Sues Tucows Demanding Transfer of 4 Million Domains. Namecheap, an Enom reseller before the sale of Enom to Tucows on January 20, 2017, has filed a lawsuit against Enom and Tucows alleging that Tucows is dragging its feet in the transfer from Enom’s accreditations to Namecheaps's own accreditation of 4 million domain names that were registered at Namecheap while it was an Enom reseller.

Domain Name Wire reported on September 1, 2017 that Namecheap, an Enom reseller before the sale of Enom to Tucows on January 20, 2017, has filed a lawsuit against Enom and Tucows alleging that Tucows is dragging its feet in the transfer from Enom’s accreditations to Namecheaps's own accreditation of 4 million domain names that were registered at Namecheap while it was an Enom reseller.

At issue is whether the transfer qualifies for a “Bulk Transfer After Partial Portfolio Acquisition”, or BTAPPA. This type of transfer was set up to transfer a bunch of domains between registrars in bulk. Namecheap says that Verisign has already approved the transfer of these domains through BTAPPA but Tucows, according to the suit, says it doesn’t qualify as a BTAPPA.

According to Namecheap's lawsuit, "Tucows has refused to complete the bulk transfer of the VeriSign Domains to Namecheap using the BTAPPA service based on the unmeritorious argument that doing so would violate ICANN/VeriSign rules, regulations and processes," says Namecheap in its lawsuit. "Tucows acquired eNom from Rightside on or about January 20, 2017. Tucows knew of eNom’s obligation to imminently transfer more than 4,000,000 domains to Namecheap and negotiated a reduced purchase price to account for their imminent transfer. Days after the acquisition, Tucows’ CEO confirmed that Tucows stepped into eNom’s shoes as its successor-ininterest and would honor its obligation under the Master Agreement to complete the transfer of the Namecheap-managed domains (specifically including by bulk transfer)."

According to Namecheap's lawsuit, "immediately following the eNom acquisition, during a meeting with Namecheap’s CEO, Richard Kirkendall, at the January 2017 NamesCon convention in Las Vegas, Tucows’ CEO, Elliot Noss, confirmed Tucows’ prior awareness of Namecheap’s transfer rights under the Master Agreement, and told Mr. Kirkendall that Tucows had specifically accounted for the imminent loss of the Namecheap-managed domains (specifically including the Enumerated Domains) in negotiating the price for acquiring eNom."

According to Namecheap's lawsuit, on "August 2, 2017, Tucows, via its attorneys, refused to comply with its obligation under the Master Agreement to sign the BTAPPA transfer request for the VeriSign Domains. Tucows based its refusal to comply on two purported grounds: first, that the transfer “would wreak such havoc and confusion” that there is no way that such transfer could “comply with all applicable ICANN and registry, rules, regulations and processes,” as required under the Master Agreement; and second, that Tucows is unaware of any agreement by which Namecheap purchased any or all of the portfolio of domain names managed by eNom (sic) or any other entity” that would satisfy the Qualifying Event requirements for an “acquisition” under the BTAPPA Guidelines."

According to Namecheap's lawsuit, "Tucows appears to believe a BTAPPA transfer of the Verisign Domains would “wreak such havoc and confusion” because the Verisign Domains are “thin” registries. As explained by ICANN, “A thin registry only includes technical data sufficient to identify the sponsoring registrar, status of the registration, and creation and expiration dates for each registration in its WHOIS data store. .COM and .NET are examples of thin registries. Thick registries maintain the registrant’s contact information and designated administrative and technical contact information, in addition to the sponsoring registrar and registration status information supplied by a thin registry. .INFO and .BIZ are examples of thick registries.” Tucows argues that a BTAPPA transfer of thin registries like the VeriSign Domains present a data integrity issue because the registrant data for the Verisign Domains resides with eNom (as the registrar) rather than VeriSign (as the registry). Bulk transferring thin registries, Tucows contends, poses a greater risk that data may be lost during the migration between registries."

According to the story on Domain Name Wire, neither Namecheap or Tucows has yet responded to Domain Name Wire's request for comment on the lawsuit.[105][106]

References

History of the Enom Acquisition by Tucows

Read more about the history of the sale of Enom to Tucows at:

August 20, 2017: Fatbeam Provides Fiber to Two Businesses in Sandpoint

The Bonner County Daily Bee reported on September 20, 2017 that Fatbeam recently expanded Sandpoint's fiber network to serve two businesses, Timberline Helicopters and Tamarack Aerospace. Greg Green, president of the fiber installation company Fatbeam, said it is the perfect example of a private/public partnership after helping get the two companies lit up. “We turned both of these aerospace companies up at the request of the city,” Green said, adding that City Administrator Jennifer Stapleton deserves much of the credit. “It’s the first time we’ve ever tried to do a public/private partnership, and it’s worked.”

Stapleton said there are three players coming in on the city fiber. Fatbeam, whose service is predominantly focused on the schools and service to commercial clients. Intermax Networks is a North Idaho company that provides commercial and some residential service, and Ting, which will be coming in this fall, and primarily focuses on residential and small business. Intermax has provided fiber services to commercial businesses in Sandpoint for several years already, said the company’s president, Mike Kennedy in an interview with the Daily Bee. In May, it became the first company to enter into all of the required agreements with Sandpoint to provide service on the city’s fiber network. The city’s expansion, Kennedy said, has allowed Intermax to get into some places it otherwise would not have been able to. “So we kind of have a mixture of all three going on,” Stapleton said.

Ting had Sandpoint on its radar for some time before the city went live on fiber, and is currently working on getting a central office set up near City Hall. The space has been secured, and the company’s director of networks, Adam Eisner, said they plan to get the office built in September. Shortly thereafter, he said, Ting will start construction on the network. “We have been working with the city to develop and submit construction plans, so we are in that process right now,” Eisner said. “As that gets firmed up, we are hoping to begin construction. So we don’t have a precise date yet when we will start. I would be disappointed if we didn’t have shovels in the ground this year.” Ting plans to start with coverage in Sandpoint proper, with hopes of expanding to surrounding areas in the future, such as Dover, Kootenai, and Ponderay. Eisner said Ting just had its first Sandpoint employee start, and the company is in the process of securing facilities in the area. Along with the central office, Ting will need a warehouse for storing equipment. “In the next few weeks, in the next couple of months, you will really see us start to ramp up both our presence and our work there, which we are pretty excited about,” Eisner said. “We are almost there. We know people have been waiting awhile, but the rubber is starting to hit the road now.”[107]

August 15, 2017: Tucows Clarifies the Daily Stormer Issue

Tucows made the following press release on their corporate blog on August 15, 2017:

Clarifying the Daily Stormer issue

Tucows (which owns the Enom, OpenSRS, and Hover brands) finds racism and its proponents detestable. We are proud to be a diverse company based in the most diverse city in the world. As well, Charlottesville, Virginia is home to a Tucows office and many of our employees there. We have all been shaken and deeply saddened by recent events.

In regards to the current issue around the Daily Stormer website, Tucows was never the webhost nor the registrar for the domain. Tucows provides a domain privacy service for millions of domains belonging to our wholesale domain resellers and to other registrars. The domain in question was transferred to one of our registrar partners and the privacy service was automatically applied.

Like Google, and GoDaddy before them, we felt this domain clearly violated our privacy service terms of service by inciting violence, and removed the privacy protection from the domain.

We are also monitoring our systems for incoming transfer requests for the Daily Stormer domain so that we can give our resellers the opportunity to deny those requests.

Domain names are gateways to speech and we take our responsibilities towards free speech and expression extremely seriously. Incitement to violence is not protected speech and the Daily Stormer regularly conducts such incitement, which is why we no longer provide it with any service.

The process of balancing free speech and the ugly opinions that people share is neither easy nor pleasant. Every day we receive many, many complaints about the content on any number of the 24 million domains on our platform. Let us be exceptionally clear: we find the content of many of these pages patently abhorrent and evidence of the worst that humanity can stoop to. Nevertheless, there are legal mechanisms and processes in place for dealing with issues of free speech and we consider it our responsibility to follow them.

We have and will act in what we call “exigent circumstances” where there is an imminent threat of violence or crime. GoDaddy responded to the Daily Stormer appropriately under these circumstances. However, these circumstances aside, we have found that the clearest path forward, to protect freedom of speech and expression, is to act where we have evidence that due-process has been observed. When such is provided to us, we act on it.[108]

August 15, 2017: A Ting Video: Has Ting Thought About Quitting?

A Ting Video: Has Ting Thought About Quitting

Luke Fredenburg asks if Ting ever felt like quitting the fiber game, Adam Eisner, VP of Internet, fires back with defiant ’no.’

That’s not to say we started off as seasoned experts. “When you’re a start-up company getting into the telecom and construction business, you do face a lot of adversity,” Eisner says. “In terms of companies who have been around a long time, doing things a certain way, that tell you this is the way things have to be done.”

We were new on the block but we had fresh eyes. We saw lots of ways to improve on established norms and came up with new processes.

Transcript

Question: In the beginning the Ting team was a small start-up with a burning idea that was gold. Did you guys never feel like quitting and so what did you do to motivate yourself to keep fighting for your idea when it seems like you're free.

Answer: That's a great question so I would say there was no point where we ever said we should pull the plug or we are going to quit but I would say there's been a lot of points at which and even today we sort of look around and go this can be done better right. So what I mean by that is when you're an upstart company getting into the telecom and construction business you do face a lot of yeah it's kind of adversity in terms of companies that have been around a long time doing things a certain way.

They tell you this is the way things have to be done and then once you start doing it yourself you realize there's a lot of different ways you can sort of improve upon the techniques that have been used to do things like deploy networks, deploy fiber and so we really do find ourselves in a lot of ways and we've made some videos on it before things like blowing fiber or the way networks are deployed where we look around and say this isn't the way this necessarily been done for the past two decades but boy it seems like we're really on to something here by doing it our way and it's really worked out well so far.

August 8, 2017: Tucows Reports Record Earnings for Second Quarter of 2017

Stock Price Chart for TCX from January 1, 2012 through August 8, 2017. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1822% since January 1, 2012. The S&P 500 has risen 93% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)
Incremental Contribution from Ting (Before Taxes and Other Expenses) (Click on chart to expand.)
Tucows EBITDA Per Quarter (Click on chart to expand.)
Tucows Net Income Per Share Per Quarter (Click on chart to expand.)

Financial Documents

Original financial documents are available at:

Net Revenue: Quarterly Net Revenue Increased 78% YOY

Tucows announced on August 8, 2017 that net revenue for Q2 2017 increased 78% YOY to $84.2 million from $47.2 million for 2016. “The second quarter of 2017 saw continued strong performance across all areas of the business our first full quarter following the Enom acquisition in January, which combined to drive year-over-year growth in revenue of 78% to a record $84 million, record earnings per share of $0.50 and cash flow from operations of more than $8.1 million,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc.

“We continue to execute well on each of our strategic initiatives. Our domains team made great progress on the integration of Enom toward significant future synergies and, in fact, exceeded our expectations year to date on organic growth. Our Ting Mobile business continued to add customers on the core base and saw the lowest monthly churn from our core base in two years. Ting Internet continued its steady climb in Charlottesville, ramped significantly in both Westminster, Maryland and Holly Springs, North Carolina and, most importantly, took meaningful operational steps toward scalability far beyond our existing Ting Towns.”[109]

Net Income: Quarterly Net Income Increased 29% YOY

Tucows announced on August 8, 2017 that net income for Q2 2017 increased 29% YOY to $5.0 million from $4.0 million for 2016.[110]

EBITDA: Quarterly Adjusted EBITDA Increased 50% YOY

Tucows announced on August 8, 2017 that Adjusted EBITDA for Q2 2017 increased 50% YOY to $10.3 million from $6.9 million for 2016.[111]

EBITDA: We Remain on Track for $42 Million in EBITDA

Elliot Noss told analysts on August 8, 2017 that "we remain on track toward our guidance of $42 million, or $50 million less the $8 million impact from the deferred revenue accounting for the Enom transition -- transaction. I say this as much as formal reiteration of guidance as a reminder of the adjusted $42 million number. As is often the case here, the near term looks bright and the long term looks even brighter."[112]

Enom: Q2 Marks the First Quarter of Contribution from Enom Acquisition

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that the second quarter marked Tucows' first full quarter of contribution from the Enom acquisition that was completed on January 20, 2017. All of the numbers presented for this quarter reflect the consolidated business.[113]

Operating Expenses: Total Operating Expenses for Q2 increased 50% YOY

Davinder Singh told analysts at the Q2 Conference Call on August 8, 2017 that total operating expenses for the second quarter of this year increased 50% to $14.3 million up from $9.5 million for the same period last year. The majority of the increase is due to the additional Enom operational expenses.[114]

Capex: Capex for Ting Internet Came in at $3 million for the Quarter

In answer to a question from Hubert Mak, Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "in terms of CapEx, the big things that really have sort of taken that number way down, especially, I mean, thinking now at this point of having even thought $30 million, $35 million back in that kind of October, November time frame, it's really us learning the cadence that cities work at. So in that number, we had Holly Springs starting, I want to say, 4, 5 months ahead of when it actually started. That of course pushed back some of the customer adoption as well, because you can't sell what you don't have.

We also had both Centennial and Sandpoint being further along, kind of now we would've seen both of those as being kind of in construction in the second half of the year. And it looks like we're doing good work in both places, but I don't know if we're going to get a shovel in the ground this year in either place. So what I'll tell you -- I mean, the best thing I can tell you, Hubert, is we're learning and we're trying to be more accurate. We will be more accurate every year that goes along, and we're trying to be -- kind of to give people pretty good visibility as we're going through. I'd like to be spending more money.[115]

Noss previously told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Capex will "be less than $30 million, $35 million, and the primary reason is because governments, municipal governments are just a little slower than we might expect. We have to build up our expertise at estimating their timelines. And I think we kind of had a little bit of happy years maybe in a couple cases and that'll slow down the spending. But I'm going to give you some more detail on that next quarter."[116]

Marketing Expense: Marketing Expense Increased $300,000 YOY

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "marketing expenses increased by $300,000 year-over-year, primarily for the acquisition and ongoing support of Ting Mobile and Ting Internet customers; credit card processing fees, primarily to support the growth of Ting Mobile and Ting Internet; facility costs and stock-based compensation increased by $0.4 million."[117]

August 8, 2017: Ting Mobile Moves Steadily Ahead

Number of Ting Mobile Customers (Click on chart to expand.) Note: In Q1 2017 Ting Mobile migrated over 45,000 RingPlus accounts, 22,000 of which accepted Ting Mobile's terms of service and provided a valid credit card and set up an account.
Gross Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2017 Ting Mobile migrated over 45,000 RingPlus accounts, 22,000 of which accepted Ting Mobile's terms of service and provided a valid credit card and set up an account.
Chart 6: Churned Customers Per Quarter (Click on chart to expand.)
Net Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2017 Ting Mobile migrated over 45,000 RingPlus accounts, 22,000 of which accepted Ting Mobile's terms of service and provided a valid credit card and set up an account.

Net Adds: Ting Mobile Added 4,500 Accounts in Q2

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "Ting Mobile is currently at 170,000 accounts and 278,000 devices, up significantly from the 151,000 accounts and 245,000 devices we had just 2 quarters ago. Of the 19,000 additional customers, about half were RingPlus and half were organic growth. We originally talked about 5,500 organic adds last quarter. After digging into the data a little deeper, it appeared the more accurate number would be 5,000 in Q1 and 4,500 and Q2, both significant increases from the 3,000 adds in each of the 2 prior quarters. And the early part of Q3 looks like it is continuing to see improved gross adds, although we note that this competitive environment continues to get more difficult." [118]

Churn: Churn is Down to 2.19%

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "Ting Mobile had another outstanding quarter of retention, with monthly churn, not including RingPlus customers, at just 2.19%, down from 2.27% in Q1 and 2.38% in Q2 of 2016. It was the lowest churn we've seen in our customer base in 2 years. As I said last quarter, I am especially comforted to see such healthy churn just as mobile carriers are aggressively ramping up their promotions and cable operators are rolling out their mobile offerings. Remember that Ting is probably the easiest postpaid service in the industry to leave. These churn numbers seem to validate our strong belief that people would come to Ting for the savings and stay for the customer experience. I will remind you that churn historically goes up in Q3 and again in Q4, but with monthly churn numbers of 2.27% in Q1 and 2.19% in Q2, we're starting in a great place."[119]

Churn: Ting Mobile is Working on Tactics to Reduce Churn Months or Years into the Future

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we're also doing some really encouraging work with our customer data, identifying tactics today that could reduce our churn months or years into the future. For example, looking back over the past year, we measured a significant improvement in survival rate or, said differently, a significant reduction in churn among customers who have [indiscernible] their devices with us. This has us particularly excited about the ramp in iPhone sales in our shop since the Apple deal we mentioned last quarter. Most of those sales are going to existing customers. It also has us promoting new devices more aggressively to customers that are holding older models or gone long periods without an upgrade. With 278,000 active devices, customer retention starts to rival customer acquisition and its potential impact on the business. Combined with our increased emphasis on data gathering and analysis, we hope to discern a whole new set of rich strategic opportunities."[120]

Ringplus: Ting Mobile Still Has 9,100 Customers from Ringplus

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we initially migrated over 45,000 accounts. 22,000 of those initially accepted our terms of service, gave us a valid credit card and set up an account. 4,500 had departed even before the end of Q1, leaving us with 18,500. We fully expected many more to leave us in the months to follow, as happens with any involuntary migration. In Q2, about 9,400 more RingPlus customers left, with about 9,100 remaining. Diving deeper, that trend was 4,100 cancels in April, 3,100 in May and 2,200 in June, and we've seen even fewer RingPlus cancels again in July. It is tough to say when we get to a cohort that behaves like typical Ting customers in lifetime value, but we're quite happy with what we got for the effort expended."[121]

Competition: The Landscape in Mobile is Increasingly Competitive

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "it now seems clear that there will be more casualties in the mold of RingPlus. Customers of these services can be a challenge, as they've often grown accustomed to unsustainable pricing models. But those pricing models, by definition, will get tougher to find. What is appealing about these customers is that they have picked up their heads and looked beyond the major carriers. This is the first crucial step to discovering Ting. As I've said before, we are well positioned as the credible, sustainable alternative to major carrier plans and major carrier experiences. Whether it is through so deals with the outgoing MVNOs themselves or campaigns directed to their customers, I'm hopeful more of these losses could be our gains."[122]

Price: Ting Mobile is Not Ready to Pull the Price Lever Competitively

In answer to a question from Hubert Mak, Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that Ting Mobile is not ready to pull the price lever competitively. "pull a price lever competitively. I think that one of the things we've talked about in the past is where we could probably have the most impact on prices is in data, but that's where our costs are the worst. And so there's probably not a lot we can do there. And so what you'll see us doing is doing things sort of more tactically all the way across. So that's at that marketing level, at that churn level. Putting iPhones in the mix gives us a little bit more in terms of levers around equipment and things we can do there. We've added financing recently and have a pretty significant portion of our customers picking that up. And so it's really -- it's like the marketing. I'll expand that thought. It's a bunch of little things.

So we don't think there's a silver bullet. We do feel good about kind of doing that 95%, 100% over of a couple of quarters. IF you look at the first half of 2017 relative to the second half of 2016, it's over a 50% pop in gross adds. We feel good about that. That's outside of RingPlus. So as we start to maybe see more of those types of opportunities, we can look at those as sort of accretive on top of the growth picking up a bit. And then, of course, part of that is the churn, where, again, we think we're just getting smarter at the data level and we're digging in more. And so it's just work. I really, really don't think there's a silver bullet in any of this."[123]

Advertising: Ting Mobile Has Been Tinkering with the TV Ads

In answer to a question fromRalph Garcea, Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we've had some successes with a couple different tactics I -- that I don't want to go into specifically but that were new to the marketing mix. And I think where we're really getting more and more comfortable with is that it is a lot of little things, and then it's each thing a little bit better over time. So we're really doing what we like to do, which is put our heads down and grind. I wish I had a big dramatic "here's a couple thousand per quarter" addition that we could point to, but there isn't. I really think, in terms of customer acquisition tactics, the things that may be emerging, and we'll see if the traffic yields any outcomes, but some of this sort of smaller MVNO or less focused MVNOs who sort of talk with us about taking over customer bases because there is more, certainly, message traffic than there's been."[124]

August 8, 2017: Ting Internet Continues its Progress

Charlottesville: Charlottesville is Really Only Limited by How Many Customers we can Install in a Week

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "Charlottesville is really only limited by how many customers we can install in a week." "While Charlottesville continued its steady growth in Q2, the combination of Westminster and Holly Springs, both at earlier stages, more than doubled in customers, recurring revenue and, most importantly, operational capacity."[125]

Charlottesville: Tucows Has Spent a Lot of Time Re-auditing Charlottesville to Make Sure it Could Accept all the Growth that it Could

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "in Charlottesville, it's a little bit different because we bought an existing network. It didn't have the same sort of planned and staged rollout. In fact, one of the things that we spent a lot of work on in the last couple of months is kind of a re-auditing of the Charlottesville network to kind of refit it and make sure that it was set to accept all the growth that it could."[126]

Westminister, Holly Springs: The Combination of Westminster and Holly Springs More than Doubled Our Customers and Operational Capacity

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "the combination of Westminster and Holly Springs, both at earlier stages, more than doubled in customers, recurring revenue and, most importantly, operational capacity." [127]

Westminister: Growth in Westminster Is Limited by How Quickly the Town can Expand the Network

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that growth in Westminster is only limited by how quickly the town can expand the network.[128]

Holly Springs: Growth in Holly Springs is Limited by How Quickly We Ourselves can Expand the Network

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that growth in Holly Springs is limited by how quickly we ourselves can expand the network.[129]

Centennial, Sandpoint: Centennial and Sandpoint Are in the Early Stages of Network Planning and Deployment

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "in both Centennial, Colorado, and Sandpoint, Idaho, we're finally in the early stages of network planning and deployment."[130]

Centennial, Sandpoint: Ting May Not Get a Shovel in the Ground This Year in Centennial or Sandpoint

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we also had both Centennial and Sandpoint being further along, kind of now we would've seen both of those as being kind of in construction in the second half of the year. And it looks like we're doing good work in both places, but I don't know if we're going to get a shovel in the ground this year in either place."[131]

Scalability: Ting Internet is Building Capacity to Serve the Demand for its Services

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "since we launched this service, our efforts have been much less about building demand for our services and much more about building capacity to serve the demand. This capacity includes install teams and processes, network expansion, network equipment and operations, pull permits, trenching technologies, customer support teams, industry knowledge in the form of senior hires, and of course, a pipeline of potential new Ting talents. It also includes city and incumbent relations, digital divide projects and dealing with the additional complexities of business and enterprise customers. And the theme over and over again is finding efficiency and scalability through systems and processes.[132]

Standardization and Scalability: Ting Internet is Forcing Itself to Operate with Three Active Towns Just Like We Would With Thirty

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we are forcing ourselves to operate with 3 active towns like we would with 30." "Particularly when you are a challenger, and one that is eager to please as we are, it is tempting to so solve a problem for one customer or one town that is not necessarily repeatable for others. So we are forcing ourselves to operate with 3 active towns like we would with 30. Of course, all within the context of viewing these as hyper-local businesses. In terms of demand, people simply seem to want the product we're offering at the price we are offering it. We are doing a great job integrating ourselves into these communities and demonstrating that we are a different kind of provider."[133]

Competition: External Forces are Moving in our Favor with Ting Internet

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "external forces [are] moving in our favor, Internet activities will continue to demand faster, more reliable access; wireless technologies will enhance the value of our fixed networks; and customers will continue to assert their power and look beyond incumbents to smarter, more innovative, more attentive service providers."

"Around 3 years ago, when we first shared our broad plans to pursue a fiber-to-the-home strategy, we talked about a simple hypothesis for the future of telecom. Fixed networks would always outperform mobile networks, therefore, people would use fixed networks when they could and mobile networks when they have to, and that the availability of fixed networks would naturally increase. Over the last 3 years, we have seen that trend develop and evolve."

"This quarter, we saw in particular a number of independent data points that really suggest we're starting to see the next phase of telecom. We saw acquisitions by both fixed and mobile incumbents in areas including fiber and fixed spectrum. We saw fixed incumbents commenting upon how competitive and difficult the mobile business was. We saw device announcements that include preparedness for the heterogeneous world that the transition to 5G now looks like. We can now see that the transition to 5G over the next couple of years will drive all of these trends significantly, and what comes out the other side will look very different than where we are now. We'll see the addition to the mix of additional spectrum in bands like 600 megahertz, 2 gigahertz and 3.5 gigahertz, each with robust equipment ecosystems that do not exist today but will 24 to 36 months from now, each with business approaches that are likely to be different from those we see today."[134]

Adoption Rates: Ting Internet Still Expect 20% Adoption Among Serviceable Addresses in a Year and 50% in 5 Years

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we continue to expect 20% adoption among serviceable addresses in a year and 50% in 5 years. These take rates, and with all the operational improvements I've mentioned, will be paying about $2,500 to $3,000 per customer, and those customers will be worth about $1,000 a year in margin."[135]

Expansion: Ting Internet is in Active Conversation with Other Potential Towns

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that Ting Internet is "in active conversations with some viable prospects to be new Ting towns. I note that these discussions are always necessarily quiet until they are not."

In answer to a question from Patrick Retzer, Noss added the following: "So I will say, if you made me guess whether there would be new markets announced between now and year-end, my guess would be yes. There's lots of dialogue, there's lots of action. I did want to call out very specifically in the script that sometimes these things are just subject to confidentiality, and sometimes you have city processes where cities themselves have to be very deliberate in who they talk to, when they talk to them and how they talk to them. And so I think we've always got to be respectful of cities in their processes. And as you can imagine, these things, any discussion about core infrastructure, like fiber, will be politicized and necessarily, and I think just by its existence. I don't think it's a right or a left, or a red or a blue issue, but I do think that it is very impactful at a municipal level. And so you just we have to be a little careful, that's all. But yes, I would not be surprised with an announcement or 2 before the year ends, and I won't be disappointed if there's not."[136]

Competition: Ting Internet is Very Confident in its Ability to be Flexible and Adaptive Against Larger Competitors

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "that I'm very confident in is our ability to be quite adaptive, quite flexible and I almost want to use the word adventurous. And I say that because, look, we're -- we've spent the bulk of our professional lives in deep Internet-centric markets. Telecom tends to be a little bigger, a little slower, a more -- a little more ponderous, a little more conservative. I think there's going be a lot of change at this next transition point, and I think that, that serves us well. It's kind of the more variables you throw into the mix or the more sort of pivot points, I think, the better served we are. Sometimes some of you have heard me say, talking about competing in the hypercompetitive, tiny-margin domain registration world and then moving into telecom, it was like moving from altitude to sea level with richer oxygen.

And I think that if and as, what, the speed of competition and the speed of the need for adaptation to market picks up, I think that serves us. I think it plays to our strengths and I think it plays away from some others. Now of course, we have a real weakness there, which is that we're small. The incumbents who are slow in pondering have a real advantage in that they're big. But that big will also tie them not only to practices but to -- practices in terms of business processes, but also to particular approaches to the market. We are -- because we're an MVNO, the bad news about being asset-light in this market, so we're not tied to anything. So we really get to deal with this change as it lands, and we're pretty excited about that."[137]

August 8, 2017: In Domain Services, the Integration of Enom is Going Well

Enom: The Integration of OpenSRS and Enom continues to Go Well

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "looking at our Domains business, the integration of OpenSRS and Enom continues to go well as we pool people, knowledge, code and technology to ultimately deliver a greater experience to our resellers and synergies to our shareholders. We continue our efforts to deliver these benefits by 2019, with the caveat that the European Union General Data Protection Regulation, or GDPR, could impact our timing. I will describe this in more detail in a moment."[138]

Enom: Feedback from Industry on the Integration is Positive

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "we are now just over 6 months into operating the Enom business and have had the opportunity participate in a number of industry events and hosting conferences with both brands. Feedback from resellers as well as suppliers and other industry members has been universally positive. Bringing these 2 businesses together was a logical evolution for both businesses from our perspective, and clearly, that has resonated with our target audience. We are acknowledged for our leadership role in the wholesale domain market and for having the expertise and resources to build something special and continue as a trusted supplier. Our resellers tell us that they look forward to seeing what we can do with the combined businesses. In fact, a number of resellers have domains on both platforms and they look forward to us simplifying their business operations."[139]

Enom: The Bulk of the Acquisition Benefits Come from Retiring the Platform at the End of Integration

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "the bulk of the acquisition benefits come from retiring the platform and a lot of the data center kind of lockout density that is associated with the Enom platform. And those things don't come until right at the end of the integration work. So we're kind of where we are until we're not. But what's important is, because it's a big body of work, that the work is tracking well as it is."[140]

Renewal Rates: Why There is a Big Difference in the Renewal Rates between Enom and OpenSRS

Elliot Noss told analysts at the Q2 Conference Call on August 8, 2017 that "the primary reason for the difference in rates -- well, there's 2, but the biggest component is the different nature of customers. So one of the things that I talked about, if you'll remember on the last couple of calls and in connection with the transaction, the Enom business has more traditional web-hosting companies in North America and Western Europe, whereas, on the OpenSRS side, we've done very well in those next-generation web-hosting companies and in parts of the developing world. And we really see a lot of the sort of difference in those customers' performance manifest in different renewal rates. And so that's not going to change, because what'll happen, really, over time is we'll just move everybody to a new platform."

"We're not going to call them one customers or the other. We might maintain the brand, but we're kind of looking at them on par. If you were to go back in time, 5 years, 8 years ago, you would have still seen a differential in renewal rates between the 2 businesses. Not quite as large, but at that point, it was because we had more of the larger customers who sort of valued the deeper customer relationship. And the Enom platform did a better job of getting the customers as they were sort of coming out of the gate and getting started. Their onboarding process was better, and a couple elements of their platform just made it that, that smaller, longer-tailed customer was there. And there also tended to be a couple few point difference in renewal rate that would be driven by that. So because it's about the type of customer, it's not just some sort of kind of widget in the machine that we can kind of get in and tinker with and change. So I think that we knew what we were getting when we signed up, and we're quite fine with that."[141]

August 8, 2017: A Ting Video: Why is Fiber Internet Important Infrastructure for America

A Ting Video: Why is Fiber Internet Important Infrastructure for America

What if we told you these tubes are as important as the roads you drive on. Or the railway system. Or whatever Elon Musk is working on next. “But I don’t even commute,” you say. That may be true. But you definitely tele-commute. There’s no avoiding it.

Gone are the days when the internet was purely a medium for entertainment. As Monica Webb, Ting Internet's Government Relations, points out: we need it for work. For Education. For Health Care. The Internet touches almost everything, so it’s important that we have access to fast and reliable service for today and beyond.

August 1, 2017: Does Ting Plan to Expand its Internet Service to a Broader Audience?

Ting would like to be everywhere, right now, offering unlimited, symmetrical, crazy fast fiber Internet service to one and all. However, with every state, city and municipality comes its own set of challenges and rules. “It’s like building the state highway system,” says Monica Webb, Ting Internet’s Government Relations, “It takes time.” We’ve outlined the dirty process of digging fiber in the ground before, but there’s also a lot of talking that needs to happen on a local level with various officials and organizations to get the necessary approvals to put said fiber in the ground. The good news is that Monica and company are out there, on behalf of Ting, trying to bring fiber Internet service to your hood.

August 1, 2017: Tucows Announces Ting Events Around Centennial

The Ting Blog reported on August 1, 2017 that Ting will be marketing their high speed fiber at the following events in Centennial:

  • Walnut Hill’s National Night Out Block Party, August 1
  • South Suburban Parks and Recreation Races, August 13
  • Homestead Farm’s Food Truck Wednesday, August 2 and 16, September 6 and 20
  • Foxridge’s Fair, August 23
  • Centennial’s Chalk Art Festival, September 24[142]

See also:

July 27, 2017: Elliot Noss Talks About Intelligent Investing in a Changing World

Elliot Noss has a a podcast at Latticeworks presented by MOI Global where he talks about Tucows, his 15 year history with the company, and how mobile phone service and fixed Internet are provided today.

"Under Elliot Noss, Tucows challenged how software was distributed in the 1990s and how domain names were offered and managed in the 2000s and is challenging how mobile phone service and fixed Internet are provided today. For nearly twenty years, Elliot has loved and championed the Internet as the greatest agent of positive change the world has ever seen. Through his role at Tucows, his involvement in ICANN and his personal efforts, he has lobbied, agitated and educated to promote this vision and protect an Open Internet around the world."

July 20, 2017: Welcome to Ting Park — Holly Springs Activates $300K Naming Rights Deal with Tucows

Welcome to Ting Park — Holly Springs Activates $300K Naming Rights Deal with Tucows. Ting is paying Holly Springs $330,000 over three years for the naming rights to the athletic complex and 1,700-seat stadium, home of the Holly Springs Salamanders collegiate summer league baseball team and dozens of local youth league teams. Photo: Photo: WithersRavenel

The Triangle Business Journal reported on July 20, 2017 that Ting is paying Holly Springs $330,000 over three years for the naming rights to the athletic complex and 1,700-seat stadium, home of the Holly Springs Salamanders collegiate summer league baseball team and dozens of local youth league teams. Todd Rubin, Ting’s manager in Holly Springs, said in a statement that adding its name to the athletic park enables Ting to strengthen its roots in the town. “The park is a cornerstone in the community,” he said. “We feel proud to support it and privileged to put our name on it.”

Ting “lit” its first customers in Holly Springs in January, 2017 with customers who have signed on for its ultra-high speed internet service that ties into the town's municipal-owned fiber optic network. The signs and banners around the North Main Athletic Complex in Holly Springs were officially installed on Wednesday and marks the activation of an agreement between Ting, a high-speed fiber internet and mobile phone provider, and the town that was signed in February. Additional signage at the main entrance and on N.C. 55 Bypass will be installed later in the summer.[143]

July 18, 2017: Ting's Thoughts on Fiber to the Home versus Wireless Links

Adam Eisner, VP of Internet, explains that while Ting is keeping a close eye on wireless link technology, we still believe fixed fiber (the kind we put in the ground) will ultimately provide customers with the most consistent, high speed experience.

Transcript

What are your thoughts on fiber to the home versus going last mile with a wireless link?

We get asked about wireless links a lot right now. It's a piece of technology that we're tracking pretty closely. We see all the different developments in the industry around that but really still believe that fixed fiber to a home is really the only way a customer can get a consistent high-speed experience that doesn't really vary in its consistency or delivery. So until we see some really solid developments around being able to predictably offer gigabit internet in the same way we can do it through fixed fiber I think you'll be seeing us stick to fiber.

July 12, 2017: TCX Added to Russell 2000 Small Cap Index

Cabot Wealth reported on July 12, 2017 that Tucows has been added to the Russell 2000 Small Cap Index.[144]

July 6, 2017: Four Insiders Sold Tucows Stock During June

Rawleigh Hazen Ralls sold a total of 106,342 shares of TCX during the month of June, 2017 for a total sum of $6,097,430 and an average price of $57.34 per share.

Allen Karp sold a total of 1,900 shares of TCX during June, 2017 for $113,848.

Davinder Singh sold a total of 1,236 shares during June, 2017 for $74,160.

Erez Gixxin executed options for the purchase of 1,713 shares of TCX at $5.52 per share during June, 2017 paying $9,456.

July 5, 2017: What's the Latest on Ting TV?

VP Adam Eisner talks about Ting TV, a project that Tucows has been working on in the background for some time.

Transcript What's the latest on Ting TV? Well I'm glad you asked. So Ting TV is deep into development. We are not too far away at this point from being able to talk more specifically about what's going to be available and when.

You know at a high level I think what you should expect to see the customer will be the same breadth of channels and service that you would typically want out of a TV provider with a few interesting twists around being able to make TV a more Tingy experience.

So I can't talk too much more specifically around what exactly that will be but you know expect some pleasant surprises and what the customer experience for television will be like.

See also

June 29, 2017: Monica Webb Talks About How to Get More Competition in Home Internet

Monica Webb, Ting Internet’s Government Relations, points out that there’s a hunger for better Internet in America. However, many municipalities aren’t being served by the incumbents, and as a result are looking to private providers, like Ting, for help building out faster networks.

And if those efforts are being thwarted by legacy providers, you can step in and help by writing, emailing or calling your elected officials at the state level.

Transcript of YouTube Video

William Beachley asks will there ever be more competition in home internet and what we do we kind of stop the incumbents from lobbying again against better internet?

Well to start with will there be more competition in home internet? I like to think my glass is half-full that there absolutely will. I see municipalities by the hundreds expressing interest in building their own networks or partnering with a private provider to build a fiber network because they are not getting what they need. The residents and businesses are not getting what they need from their current providers.

So I think if municipalities continue to go down the road of how do they make it happen I think that you will see increased competition.

What do we do about providers trying to stop municipalities from from doing exactly that. Talk to your state senators, representatives, assemblyman.

Your elected officials at the state level are critical to enabling that or not allowing it to happen so know who they are, talk to them about why this is important to you as a person, why it's important to businesses in your area and get the businesses to talk to them as well because elected officials will vote on what they perceive their constituents want so you need to talk to them and you need to express how important it is and that will lead to a place where municipalities have networks and there's more competition.

June 26, 2017: Sprint Enters Into Exclusive Talks With Charter, Comcast On Wireless Deal

The Wall Street Journal reported on June 26, 2017 that Sprint is in talks with Comcast and Charter Communications on a deal that could lead the cable companies to invest in the wireless company’s network for the right to use its network at a reduced rate and might even result in the total purchase of Sprint. According to the WSJ, with a market value roughly equal to its $33 billion in net debt, a tie up may be the only way for Sprint to get the resources to invest enough in its network to remain competitive. A deal with cable would be bad for Sprint’s wireless competitors because it would reduce the likelihood of industry consolidation through the hoped-for merger of Sprint and T-Mobile.[145]

June 23, 2017: Brutal Competition Means the Cost to Consumers of US Cellular Service in Rapidly Plunging

The Wall Street Journal reported on June 23, 2017 that the cost of U.S. cellular service is rapidly plunging, reversing years of increases that have squeezed consumers’ budgets and generated huge profits for wireless companies. The consumer-price index for wireless phone service, an indicator of current offers from cellphone service providers, dropped 12.5% in May from a year ago, according to the Labor Department. According to Ryan Knutson, offers from wireless providers are becoming increasingly extreme. Sprint this month launched a short-term promotion to give away a free year of wireless service to new customers who supply their own mobile phones.

A major reason for the steep decline in the wireless consumer-price index is companies’ return to unlimited-data plans. Back in 2010 and 2011, AT&T and Verizon ended their all-you-can-eat plans for smartphone customers and imposed monthly caps on usage. Verizon now charges $80 a month for an unlimited talk, text and data plan for a single line. Sprint charges $50 for a similar plan in the first year. In 2011, an unlimited Verizon plan cost $120 and one from Sprint cost $110.

Some economists believe consolidation among the four national carriers could end the price war, because three competitors with roughly equal market share would behave less aggressively to maintain the status quo. During a call with analysts last month, Sprint Chairman Masayoshi Son said he was looking to merge Sprint with another company and that T-Mobile was “the first priority.” But Sprint CEO Marcelo Claure said consolidation will make the industry even more competitive. “Sprint has been working hard to invest in its network and bring increased value to consumers, but as we look to the future, scale will be critical to sustaining competition,” he said in a written statement to The Wall Street Journal.[146]

June 9, 2017: Elliot Noss Encourages Wireless Competition in Canada

Elliot Noss testifies in 2014 before the the CRTC, Canada’s regulatory body for all things telecommunications, in favor of increased competition in Canada's mobile phone service.

Andrew Moore-Crispin wrote on the Ting Blog on June 9, 2017 that Canadians pay among the highest cost for mobile phone service in the developed world and that allowing MVNO's to operate in Canada would benefit consumers.

The Canadian mobile service market has been divvied up between the “big three” wireless companies; Rogers, Bell and Telus. Collectively and colloquially known as Robelus. Yes here in Canada, our oligopolies are so entrenched that they have cute, short-hand names. “Value” wireless brands like Chatr, Public, Koodo—all owned by the big three— only serve to create the illusion of choice. Back in 2014, the CRTC, Canada’s regulatory body for all things telecommunications, opted not to force the incumbents into offering service to “mobile virtual network operators” (MVNOs). It deemed that the quasi-competition seen in the Canadian mobile market, wholly dominated by three major carriers, was sufficient. It pointed to a far distant fourth carrier, then Wind Mobile now Freedom Mobile, as a panacea for what ails Canadian mobile customers. In short, it’s not a terribly vibrant competitive landscape.

According to Moore-Crispin, there are successful models of mandated MVNOs in markets all around the world. In the competitive US environment, MVNOs brought with them a wave of choice and raised the stakes for things like customer choice, customer service and more generally, for customer control and the overall customer experience. In other words, MVNOs put the power in the hands of the customer where it belongs. "Minister Bains speaking out presents a glimmer of hope for Canadians tired of paying the highest prices in the developed world for mobile phone service."[147]

June 9, 2017: Tucows Modifies Credit Agreement with Bank of Montreal

Reuters reported on June 9, 2017 that Tucows entered into an amendment to their credit agreement with the Bank of Montreal increasing the amount available for borrowing under Facility C, a committed, non-revolving credit facility by $502,500 which was the portion of Facility D which was not used by the Company to fund its acquisition of Enom.[148][149]

June 5, 2017: Elliot Noss Says Canadian Government Wireless Review Probably Won't Open Up Market to MVNOs

CTV News reported on June 5, 2017 that a government-ordered review of a recent decision restricting access to the networks of Canada's big wireless service providers is being hailed as potential good news for consumers. But Elliot Noss, CEO of Ting Mobile, an operator of a mobile virtual network (MVNO) in the United States, predicts the results of the review won't open Canada's wireless market to substantial competition any time soon. "If one of the (Canadian) providers would sell us network, we would come into the market immediately. We would love to," said Noss. "We don't expect that to happen in the near term, and today's announcement doesn't change that." Noss said the mandated review doesn't appear to open the door to full access to wireless spectrum by MVNOs, and it will likely be a long time before the regulator implements changes needed to ensure access by smaller players.

The Canadian Radio-television and Telecommunications Commission ruled in March that Rogers Communications, a Canadian communications and media company that operates in the field of wireless communications, cable television, telephone, and Internet connectivity, could block customers of Sugar Mobile, a subsidiary of Ice Wireless, from roaming on its network. The decision not only effectively paralyzed the startup, but also prevented other smaller mobile service providers from offering cheaper plans and consequently limits choice in the market, Innovation Minister Navdeep Bains said Monday in calling for a rethink of the ruling. "This decision excludes Wi-Fi based providers from access to regulated roaming services," Bains said while speaking at an annual conference in Toronto for the Canadian telecommunications industry. "And that effectively prevents Wi-Fi based providers from offering their low-cost plans to consumers. This lack of choice does not benefit Canadians."[150]

June 2, 2017: Ting Moves Ahead in the Race for Fiber in Centennial

Ting Moves Ahead in the Race for Fiber in Centennial. The city of Centennial has been hard at work building a main fiber backbone constructing more than 34,000 feet of conduit and fiber with brand-new, carrier-grade backbone and finalizing contracts for construction of the next phase, including more than 30,000 feet which completes the first ring of the fiber backbone. Click Graphic to expand. Graphic: Fiberworks

The Ting Blog reported on June 2, 2017 that there’s been some great progress on Ting Internet in Centennial. The City has been hard at work building a main fiber backbone constructing more than 34,000 feet of conduit and fiber with brand-new, carrier-grade backbone and finalizing contracts for construction of the next phase, including more than 30,000 feet which completes the first ring of the fiber backbone.

Ting Internet has been submitting plans for the Ting Centennial network to the City and are working together to finalize the design. Ting is also looking at real estate as they decide where to build required network infrastructure (known as the central office and fiber huts, in industry parlance) and lay down roots in Centennial. "Building a fiber network is no mean feat; there’s a ton of engineering and planning before we even think about putting a shovel in the ground. Before construction begins, we’ll announce some broad phases for the build, along with announcing which neighborhoods will get fiber first."

Right now Ting is taking pre-orders for fiber. "All things being equal, pre-order volume is absolutely a factor in our network planning. Build where there’s the most demand first; it just makes sense." The ten hottest neighborhoods in Centennial for pre-orders are: Orchard Valley, Saddle Rock, Willow Creek 1 and 2, Mill Creek, Heritage Village, Willow West, Tiffany, Chapparal, Piney Creek, Walnut Hills.

What about news that Comcast is planning to bring their gigabit to Denver and the surrounding area? "Gigabit gets promised a lot more than delivered. We (customers and lovable little providers alike) just need to believe it when we see it. Then, even when we see it, there is a big difference between the fiber-to-the-home, never compromised, symmetrical gigabit (upload and download of 1,000 Mbps) that Ting offers and what the cable companies tend to pass for gigabit Internet. Finally, we offer fair, honest pricing and outstanding customer support. How many of those words have you used to describe your cable company?"[151][152]

See also:

June 2, 2017: Intermax Becomes “First to Fiber” in Sandpoint

Intermax issued a press release on June 2, 2017 that they will be the first company to enter into all of the required agreements with the City of Sandpoint to provide service on the city’s Economic Development fiber network. “The city has worked for years to make this happen, and we’re proud to have Intermax be the first provider on the city’s network. They are a local North Idaho company who has many clients in Sandpoint and Bonner County” said Jennifer Stapleton, Sandpoint City Administrator. “We’ve provided fiber services to commercial businesses in Sandpoint for years,” said Intermax President Mike Kennedy. “But today we are proud to be the first private partner with the City of Sandpoint to expand our network by licensing space on the city’s new fiber infrastructure”, Kennedy added.[153]

See also:

May 25, 2017: OpenSRS Advises Resellers of Upcoming Uniregistry Price Increases

The OpenSRS blog reported on May 25, 2017 that Uniregistry has announced a number of TLD price increases taking effect on September 8th, 2017, a decision that has caused concern in the domain community. "We weren’t happy to hear the news but knew we had to take immediate action," writes Haley Midgette. "Our primary concern was to determine how the changes would impact you and your customers, and what adjustments could be made to minimize the effects." Tucows will continue to support the following TLDs: .click, .link, .help, .pics, .sexy, .christmas, and .tatoo. However Tucows will no longer support the TLDs that have the potential to be disruptive to your business because the following TLDs may subject your customers to unknowingly overpaying in a price range well beyond $100 per year: .audio, .juegos, .diet, .hiphop, ,flowers, .guitars,. hosting, .property, blackfriday.

According to OpenSRS, regardless of which boat a customer falls into, they’ll appreciate advanced notice especially those who own TLDs that Tucows is dropping. Resellers can advise those customers to request a renewal for the full 10-year period, well in advance of the September 8th deadline, should they wish to hold onto their domain name. "As a Reseller, you can take advantage of the opportunity to demonstrate that you are working proactively, and are committed to securing the best possible deal for your customers."[154]

May 18, 2017: Three Insiders Sold Tucows Stock During May

Jeffrey Nathan Schwartz sold 4,962 shares of TCX on May 18, 2017 at 57.05. Jeffrey Nathan Schwartz sold 7,222 shares of TCX on May 18, 2017 at 57.0. Jeffrey Nathan Schwartz sold 4,691 shares of TCX on May 11, 2017 at 57.05.

Rawleigh Hazen Ralls sold 469 shares of TCX on May 16, 2017 at 56.90. Rawleigh Hazen Ralls sold 9,531 shares of TCX on May 15, 2017 at 58.26.

Michael Goldstein sold 4,163 shares of TCX on May 16, 2017 at 56.83. Michael Goldstein sold 9,876 shares of TCX on May 12, 2017 at 58.76. Michael Goldstein sold 6,442 shares of TCX on May 11, 2017 at 57.05.[155]

May 18, 2017: Global Appetite for Gigabit Internet Not Slowing Down

WHIR reported on May 18, 2017 that Gigabit internet implementations have jumped 72 percent worldwide since June 2016, with more than 219 million people around the world accessing a gigabit internet service. The U.S. has 56 million consumers with availability but this represents only 17 percent of the country’s population. "The gigabit revolution shows no signs of cooling down in 2017," says Sameh Yamany, Chief Technology Officer, Viavi Solutions. "As bandwidth increases, so does consumer appetite for it. Likewise new business models have been quick to take advantage of new bandwidth, as we’ve seen with streaming video and audio in the recent past – and which we believe will continue in the near future with VR, AR and the Internet of Things.”[156]

May 9, 2017: Tucows Shifts Expired Domain Name Inventory from GoDaddy to NameJet

Domain Name Wire reported on May 9, 2017 that Tucows has stopped sending its expired domain name inventory to GoDaddy and will instead send it to NameJet. "Tucows’ move doesn’t come as a huge surprise," writes Andrew Allemann. "The company acquired half of NameJet when it bought Enom. Enom has sent its expired domain inventory to NameJet ever since it formed the partnership in 2007. However, the timing is a bit surprising given that Tucows’ deal with GoDaddy began less than a year ago. I would assume they had some sort of contractual obligations."

“We wanted to be good partners," says Paul Nicks, VP & GM, Aftermarket at GoDaddy. "We’re grateful for the opportunity Tucows gave us when they chose GoDaddy as their first partner for expiry inventory. We believe Tucows saw great results and we feel confident that GoDaddy’s performance will speak for itself and that we’ll earn the opportunity to win back that business.”[157]

May 9, 2017: Tucows CEO Elliot Noss Explains the Impact of the Enom Acquisition and Deferred Revenue on Q1 Earnings


Following is a transcript of Elliot Noss' video explaining the impact of the Enom acquisition and deferred revenue on 2017 earnings:

See also

Introduction

Hello. I thought it made sense this quarter to do a video talking about the impact of deferred revenue on our results for this quarter. I should note that I 'm talking about the first quarter of 2017.

If you've read the press release or if you listened to the conference call or read the script afterwards you would have heard me talk about a 4.8 million dollar impact from deferred revenue so I wanted to explain that a bit to help you all understand it in a little more detail and possibly save you from having to track me down for a deeper explanation.

How Accounting Works With Domain Names

First I want to talk about how the accounting works for domain names with deferred revenue.

When we sell a domain name we recognize it pro rata over the life of the domain. Typically, to take the simplest example, we sell a domain name for $12 and we sell it in January. In January we will recognize a dollar of revenue and we will defer $11 recognizing another dollar each month throughout that year's registration.

Now in addition we also will be pre-paying the registry fee. Let's imagine the registry fee was nine dollars for the year. So we'll be recognizing seventy-five cents in cost in January and then each month pulling a dollar to revenue and seventy-five cents into cost over the life of the registration.

How Deferred Revenue is Treated at the Accounting Level

Now the first thing that complicates this quarter is the way the deferred revenue is treated at the accounting level with transactions.

When a company acquires another company that has a deferred revenue asset on their balance sheet, essentially the deferred revenue gets wiped out and reset to zero. It's a simple way to think about it. So when we bring over that Enom book of business, we don't bring over all of the deferred revenue.

That deferred revenue gets re-evaluated and in this case there was a reduction of about eight million dollars.

Now that eight million dollar reduction is an accounting exercise obviously taken on by accounting professionals. That eight million dollar reduction is the total negative impact that we will have from the Enom transaction and that impact will take place overwhelmingly in 2017.

Refilling the Balances of Enom's Deferred Revenue

What we're essentially doing in the first quarter is we are refilling the balances of that deferred revenue. Now I'm just going to talk about the eight million dollars revalued. In January we are essentially putting that money back in, stocking up the balance for the remainder of the year, and pulling out 1/12 of that amount.

In February, when you're doing it, you will be recognizing both the February and the January and pushing the rest out. Over a year, that washes out.

As you can see in January it's going to have the biggest impact because in January you're only pulling in the one month and deferring the 11. But by the time that same thing is happening in December you've got all those previous months where you've already stopped yor deferral asset that you're pulling out into so the impact is by far the biggest in Q1.

Purchase Price Accounting

Now the second thing that complicates this is what's called purchase price accounting. I don't purport to explain it but it is a one-time charge in the amount of 1.4 million dollars that again takes place in Q1 and is part of the eight million dollars. That we are allowed at an SEC level to talk about in relation to EBITDA.

The rest of it, the other 3.4 million in the quarter we are not allowed to talk about because of the third complication.

SEC Change to Treatment of EBITDA for Companies that Sell Subscription Services

In May 2016, the SEC changed the way that they advised companies to talk about adjusted EBITDA. In particular the SEC was concerned how companies who sold a subscription service were in their EBITDA calculations and treating their sales as if they were the sales of a product.

Typically when you have a subscription service you recognize the revenue ratedly over the period of subscription. You know from what I've said above that that's what happens with domain names but unlike most subscriptions with a domain name once you pay upfront there is no right-of-return. The bulk of that work is done on our part right at the time we sell the domain name.

Put that aside because we're not debating the accounting treatment, we're just trying to understand it a little better. But because of the SEC's concern about subscription services, they strongly advise companies that that they should not bring deferred revenue amounts into adjustment of EBITDA calculations.

We had always included the amount of net deferred revenue in our adjusted EBITDA calculations. We did that through Q1 of 2016. When this change was made, we talked about it and we went along with the change and reported it on the basis of the new standard.

OpenSRS a Very Large, Slow Growing Business

Now because open SRS is a very large, very mature, relatively slow growing business, that change didn't really have a material impact on our adjusted EBITDA. It might have had a couple few hundred thousand dollar impact per quarter which we were very comfortable with. So we complied with the change.

But that change now, with the acquisition of Enom and with the way that the accounting treats deferred revenue, when you bring over balances with an acquisition has a material impact. The impact of deferred revenue is 4.8 million dollars in the quarter. That 4.8 million dollars really has an impact on adjusted EBITDA as we reported it under the old approach back in Q1 2016. In Q2 and going forward with the new approach only 1.4 million of the 4.8 million can be applied to adjusted EBITDA.

The Way We Run the Business Historically is on a Cash Basis

I know this is becoming convoluted but I'll ask you to bear with me and maybe watch the video a couple times if you need to. The point is that the way we run the business is on a cash basis. There's about a 4.8 million difference between the adjusted EBITDA number we report and the way that we have historically reported adjusted EBITDA prior to Q2 2016.

The total difference for 2017 will be 8 million dollars and you'll see that runoff.

To summarize, that impact I've talked about EBITDA on an apples-to-apples basis - going from 30 million dollars in 2016 going to 50 million dollars in 2017.

I've also talked on both the about the fact that the 50 million dollars EBITDA would be impacted by this change in the SEC approach would be more like in the 42 million dollar range. So you will see the 6.2 million we reported this quarter as relating to the 42 million number. If you wanted to compare it to the 50 million figure you'd add back that deferred revenue.

But most importantly that washes out through the year so in 2018 all of this will have washed through.

Summary of the Four Factors Affecting the Numbers

If we were to assume and this is just an assumption for strictly expository purposes which is the furthest thing from guidance, we would have assumed that we grew the business on a cash basis the way we have historically thought about it from 2017 to 2018 by 20%, the change in the this approach and the new way that the SEC would like us to talk about it, would have us go 30, 42, 60.

Using the old approach 30, 50, 60.

Of course the big difference in 2016 to 2017 is that Enom is coming.

So I hope that helps you understand both the what and the why. Again you have the combination of deferred revenue treatment in domain names, purchase price accounting, the way that the deferred revenue is treated with acquisitions, and a change in SEC policy or at least guidance that really leads to a somewhat convoluted explanation.

May 9, 2017: Tucows Reports Continuing Strong Financial Results for First Quarter of 2017

Stock Price Chart for TCX from January 1, 2012 through May 10, 2017. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1799% since January 1, 2012. The S&P 500 has risen 87% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)
Incremental Contribution from Ting (Before Taxes and Other Expenses) (Click on chart to expand.)
Tucows EBITDA Per Quarter (Click on chart to expand.)
Tucows Net Income Per Share Per Quarter (Click on chart to expand.)

Financial Documents

Original financial documents are available at:

Net Revenue: Quarterly Net Revenue Increased 55% YOY

Tucows announced on May 9, 2017 that net revenue for Q1 2017 increased 55% YOY to $69.5 million from $44.7 million for 2016.[158]

Net Income: Quarterly Net Income Decreased 45% YOY

Tucows announced on May 9, 2017 that net income decreased 45% YOY in Q1 2017 to $2.4 million, or $0.23 per share, from $4.4 million, or $0.42 per share for 2016.[159]

EBITDA: Quarterly Adjusted EBITDA Decreased 15% YOY

Tucows announced on May 9, 2017 that Adjusted EBITDA Q1 2017 decreased 15% YOY to $6.1 million from $7.3 million for 2016.[160]

EBITDA: Tucows Reiterates Adjusted EBITDA Guidance of $42 million for 2017

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Tucows is "able to reiterate our guidance of $42 million, which is the $50 million, less $8 million of the impact from deferred revenue, that I've discussed on previous calls."

In answer to a question from Hubert Mak concerning the $8 million revenue adjustment, Noss stated that "maybe a cleaner way to think about it is that it's, that $8 million revaluation of deferred revenue balances washes out overwhelmingly. Kind of 90-something-percent of it washes out in a year, so you don't see that impact going forward. In other words, the growth in 2018 will be as if that never happened."

"The total impact of deferred revenue sort of on the balance sheet, is $4.8 million. Now $1.4 million of that comes from purchase accounting, which the SEC allows us to connect to adjusted EBITDA. The other $3.4 million is a resetting of the deferred revenue balances, which as of May of 2016, the SEC does not like, related to adjusted EBITDA."

"So you'll see us talk about those numbers differently. So of the $8 million that comes from the changes in deferred revenue balances due to accounting policies in relation to the transaction, $1.4 million of that we -- it's okay for us to connect to adjusted EBITDA and $6.6 million of that, we should not connect to adjusted EBITDA. So that totals to $8 million and that's kind of the $50 million going to $42 million. I won't even ask you if that made sense, because I doubt it did. I'll ask you to maybe digest it, listen to me say it again on the transcript or on the recording and watch the video. And I apologize for this being so complicated. Believe me, it's not my choice."

In answer to a question from Patrick Retzer, Noss clarified that "the significant majority, $4.8 million of $8 million of the impact from deferred revenue was in the first quarter. So you not only have sort of the business growing underneath, as the rest of the year plays out, you also have succeedingly smaller impacts from the deferred revenue. And those impacts in total in the next three quarters are still only about two thirds of what the impact is in this first quarter. The other thing is, I don't -- I want to be clear on the language. This is -- the $8 million is impact on the deferred revenue balances on the balance sheet, It is noncash, but it's not an expense per se in the same way. When you use the phrase, transaction expense, I didn't want anybody to get in their heads that it was deal costs or anything along those lines."[161]

EBITDA: Net Income and Adjusted EBITDA for Q1 Are Tough to Read

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that the accounting for both Enom and RingPlus would make Q1 tough to read. "I noted that in relation to the Enom acquisition, there would be a deferred revenue impact of roughly $8 million in 2017. We have worked through the details and that number is pretty close to what we expected. The largest impact is in this quarter. The impact of the accounting treatment of deferred revenue impacted adjusted EBITDA by roughly $4.8 million this quarter. We note, that this impact is on adjusted EBITDA as we used it prior to May 2016. In addition, there were about $400,000 in deal costs this quarter."[162]

EBITDA: The Enom Acquisition Has a Large Impact on our Numbers

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that the Enom acquisition activity has a large impact on the numbers. "On January 20, Tucows acquired Enom, a wholesale domain name registrar from the Rightside Group for a purchase price of $83.5 million. The Enom business adds approximately $15 million in gross margin, less additional direct costs, which we hope to expand to $20 million over the next couple of years through additional synergies. In total, we are now managing 24 million domains under the Tucows and Enom accreditations and another 5.5 million domains on behalf of other registrars. I will remind you that this transaction was overwhelmingly about generating scale and realizing efficiencies, primarily in platform efficiencies and licensed software. Based on trends over the last few years, the Enom customer base will likely negatively impact profit margin, gross margin growth and renewal rates."[163]

Marketing: Marketing Expense Increased $800,000 YOY

Dave Singh told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that "marketing expenses increased by $800,000 year-over-year, primarily for the acquisition and ongoing support of Ting Mobile and Ting Internet customers. Credit card processing fees, primarily to support the growth of Ting Mobile and Ting Internet, public listing and stock-based compensation, increased by 0.2 million." [164]

Expenses: Total Operating Expenses for the Quarter were up 72% YOY

Dave Singh told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that "marketing expenses increased by $800,000 year-over-year, primarily for the acquisition and ongoing support of Ting Mobile and Ting Internet customers. Credit card processing fees, primarily to support the growth of Ting Mobile and Ting Internet."[165]

Capex: Capex Will Be Less Than $30 to $35 million for 2017

In answer to a question from Hubert Mak, Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Capex will "be less than $30 million, $35 million, and the primary reason is because governments, municipal governments are just a little slower than we might expect. We have to build up our expertise at estimating their timelines. And I think we kind of had a little bit of happy years maybe in a couple cases and that'll slow down the spending. But I'm going to give you some more detail on that next quarter."[166]

May 9, 2017: Ting Mobile Had Their Best Quarter Ever of Net Adds

Number of Ting Mobile Customers (Click on chart to expand.) Note: In Q1 2017 Ting Mobile migrated over 45,000 RingPlus accounts, 22,000 of which accepted Ting Mobile's terms of service and provided a valid credit card and set up an account.
Gross Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2017 Ting Mobile migrated over 45,000 RingPlus accounts, 22,000 of which accepted Ting Mobile's terms of service and provided a valid credit card and set up an account.
Chart 6: Churned Customers Per Quarter (Click on chart to expand.)
Net Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2017 Ting Mobile migrated over 45,000 RingPlus accounts, 22,000 of which accepted Ting Mobile's terms of service and provided a valid credit card and set up an account.

Net Adds: Ting Mobile Added 5,500 Accounts and 12,000 Devices Outside of the RingPlus Deal

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Mobile had a solid quarter of organic growth. "We added 5,500 accounts and 12,000 devices outside of the RingPlus deal that I mentioned in the last call. It was our best quarter for net adds in four quarters; our best quarter for gross adds in six quarters; and our most gross adds ever in a Q1. It was also the third straight quarter of increasing growth."[167]

Churn: Churn Has Decreased to 2.27%

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that churn was 2.27% in Q1, down from 2.4% in Q1, 2016. "Churn on Ting Mobile has been a pleasant surprise ever since we reduced data prices in December of 2016. Again, without RingPlus, which will complicate churn numbers for a while, churn was 2.27% in Q1, down from 2.4% in Q1, 2016. It is encouraging that more customers are coming to Ting and fewer customers are leaving us, as the incumbents have started pushing their unlimited data plans."[168]

Comcast Threat: The Entry of Comcast into the Mobile Space Will Be a Significant Threat

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that the entry of Comcast into the mobile space is obviously a significant threat "but we just keep hearing two things from Ting customers and prospects. First, Ting customers and hopefully millions like them, do not need unlimited data; and second, they're thrilled to spend even less than these unlimited plans cost. And in addition, customer experience matters. Customer experience and customer relationships continue to be our greatest advantages over the mobile carriers. And Comcast's entry into the category should hardly change that. It is also encouraging that most of the lifts we saw in adds versus previous quarters, came through attributable sources. In other words, things we have done and things we can track. We like that because it means we can potentially do more of these things."[169]

Marketing: Ting Mobile Had a Range of Small Wins in Digital Marketing Programs

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Mobile had a range of small wins in digital marketing programs such as Google AdWords, acquisition e-mail, retargeting, Facebook advertising and affiliate marketing programs with a handful of strategic partners. "We also funneled leads more aggressively to our phone sales team and saw increased conversions there. On all of these, we are testing and optimizing to discover just how much we can scale within our desired cost per acquisition."

In answer to a question from Hubert Mak, Noss clarified that "there was one other relatively speaking larger effort, which was something of a mixed media effort geared toward seniors, and that really didn't bear fruit. But it's the kind of, sort of bets, we're trying to make. And then, we're always talking about on the call, where we did see some reasonable traction, is in a bunch of the little things. So think about this as just doing a bunch of little things, a little bit better. I've talked a couple times on the call about sort of rebuilding some folks on the people side in marketing. And we're just seeing some of that take hold. So I don't think it's anything complicated, I just think it's a little more and a little better people doing a little more and a little better."[170]

Marketing: The Next Round of Testing of the Infomercial Had Mixed Results

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that the Ting Mobile infomercial is not quite a winner that we are ready to scale or a loser that we are ready to give up on. "I mentioned last quarter, that we would be engaging in the next round of testing for the infomercial. We did that in April and are still picking through the prospects and performance now. It is not quite a winner that we are ready to scale or a loser that we are ready to give up on. We are mostly focused on conversion, and we'll keep searching for incremental improvements. There were things that were improved and things that still need to be improved. Work continues."

In answer to a question from Hubert Mak, Noss clarified that "I would say that the infomercial is a larger strategy as opposed to a key strategy, because it's all important. But we call out those larger ones, because we're spending more money on them and we want to let you follow along more easily. So there's no change in strategy. With the infomercial, we did a second round of testing. There was plenty we liked, and plenty we could see that we could still work on. So it's not there yet, It may not get there. It's not there yet, but there's still plenty of encouraging signs in there. And so we're going to go to the next round of testing. And I'll let you know exactly when that's going to be, either on the next call I'll tell you how that went, or I'll let you know when it's going to be."[171]

RingPlus: 8,500 RingPlus Accounts Have Now Paid Some Portion of a Bill Out of Their Own Pockets

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Mobile "migrated over 45,000 RingPlus accounts, 22,000 of which accepted our terms of service, gave us a valid credit card and set up an account. Of those, about 3,500 departed even before the end of the quarter. So combining the organic growth and the RingPlus customers, Ting Mobile added 24,000 accounts and 35,000 devices in Q1 to bring our total to 175,000 accounts and 280,000 devices. I will add, through last week, just over 14,000 of those RingPlus accounts are still active. And of those 14,000, about 8,500 have used their credits and have now paid some portion of a bill out of their own pockets."

"As a reminder, RingPlus was a Sprint MVNO that was shutting down in Q1. We came to an agreement with RingPlus and Sprint to migrate all their customers to our platform. I will also remind you that these are among the most frugal and transient customers in the industry and that a significant majority of them were paying nothing for service at RingPlus. However, we were very willing to invest introductory service credits and a lot of hard work in customer service and across the business in order to find the valuable customers within that base."

In answer to a question from Hubert Mak, Noss clarifed that "we were told by the parties that there were 80,000 accounts. It turned out that probably something like 35,000 of them were dormant or were people moving things from one plan to another or just were irrelevant. So then, when Sprint did the migration to our platform, they moved 45,000 accounts onto our platform. Before we let them manage those accounts on our platform, they had to come in, agree to our terms of service, they either had to just immediately port out, go somewhere else and port out, or agree to our terms of service, give us a valid credit card and set up an account, which is kind of just, set it up with name, rank and serial number. So 45,000 were migrated to our platform, 22,000 and change went through that three step process."[172]

RingPlus: Ting Mobile Has Almost Broken Even With the RingPlus Customers

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Mobile has "nearly broken even already on these customers, between the revenue we have collected from them and the cost of goods that we have paid to the carriers. Of course, we hope we have added a significant number of accounts that will behave like typical Ting accounts in monthly margin and churn going forward. But at the very least, we are pleased that we will likely have a positive return on the investment. And I would like to note that when looking at Q2 net adds, the continued churn from RingPlus customers will have an impact."[173]

RingPlus: Ting Mobile Expects Significantly More Churn from the RingPlus Accounts

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Mobile expects there to be significantly more churn with the RingPlus customers. "We're seeing that in the first few weeks as that continues to burn down. We do expect to see more churn. So that will impact the Q2 numbers as well. And we're going to continue to make it nice and easy to see, here's what's organic and here what's RingPlus."[174]

Apple: Ting Mobile Has Signed its own Carrier Deal with Apple

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that after 5 years of trying to get them to return our phone calls, Ting Mobile has signed its own carrier deal with Apple. "First, this is a remarkable testament to our brand reputation and our business success. It gives us something that only network operators and a very small handful of MVNOs have. More importantly, it delivers tremendous benefits for our customers. Ting will now offer the iPhone with a Ting SIM right in the box, rather than sending folks elsewhere to try to find the appropriate model. Ting will always have the latest iPhone, the moment it is available for preorder. Ting will now offer AppleCare+ service and 24-month financing on all new phone models. Ting will now procure certified used iPhones directly from Apple. Ting will also get the Apple carrier bundles on all iOS devices, which includes visual voice mail and WiFi Calling. This deal will give our customers better phones, better purchase terms and protection for those phones, and better experiences activating and using those phones. We will roll this out in the Ting shop and on Ting devices within the next few days."

In answer to a question from Hubert Mak, Noss clarified that "it's tough to tell how much of a burden going to the Apple Store was instead of buying from us on the website. I'm somebody who uses an iPhone with a Ting SIM in the U.S. and I really dislike not having visual voice mail. So it will be nice to have that now. I'm looking forward to that carrier pack dropping. Should that impact? Yes, I think that should have a little impact. And then we'll see. There's a bunch of those little things in there, like the financing alternative, we'll see, we rolled out some financing alternatives that didn't really have much impact. Maybe with the iPhone, in particular, it will."[175]

In Many Ways It Feels Like Ting Mobile Has Truly Arrived

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that in many ways, it feels like Ting Mobile has truly arrived. "Our carriers send us acquisition prospects, Apple likes us, and customers increasingly turn to us as a credible, sustainable alternative to major carrier plans and major carrier experiences. Most importantly, net adds are trending up through improvement in both gross adds and churn."

"In Ting Mobile, we've continued the trends of increasing core net adds with continued improvement in both gross adds and churn. We have sorted through a number of tactics that will hopefully continue to bear fruit. We were also able to successfully digest the RingPlus customer base and have it perform roughly in line with what we hoped for. And after 5 years, we are now one of the very few MVNOs to have a direct relationship with Apple to sell the iPhone, a real tribute to how you're seen in the market. With the OpenSRS business, we had our strongest quarter for organic growth in the last number of years."[176]

May 9, 2017: Ting Internet Continues its Progress

Charlottesville: Ting Internet Continues to See Growing Adoption in Serviceable Neighborhoods in Charlottesville

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Internet continues to see growing adoption in serviceable neighborhoods and we continue to expand our network to neighborhoods where preorders are waiting.

"We are also just now lighting up our third apartment building of over 200 tenants."[177]

Westminster, Holly Springs: Ting Internet Has Been Giving Westminster and Holly Springs a Lot of Attention in Recent Months

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Internet has been been giving Westminster and Holly Springs a lot of attention in recent months. "Q1 saw the beginning of increased activations in Westminster, where the town has expanded its network and Holly Springs, where we are aggressively building out. The experience and people that we have acquired in Charlottesville have been crucial to helping these towns start to ramp. But each town requires some of its unique, own unique efforts on staffing, government relations, public relations and more. Having three very active Ting towns, now also allows us to use our centralized systems and processes, looking far ahead to a future where could have numerous Ting towns. So as examples, we've been improving the way we provision and monitor accounts, the way we schedule and track installs and more. As I've always said, the Internet business includes a lot of elements that will always be hyper-local, like awareness building and trench digging. But we are identifying every opportunity for centralization and automation and readying ourselves to scale more efficiently."[178]

Holly Springs: Perhaps Ting Fiber Will Expand Out to Neighboring Communities to Holly Springs

In answer to a question from Patrick Retzer on the chatter that that perhaps Ting fiber will expand out to neighboring communities around Holly Springs, Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that "with any fiber build, there tends to be some fiber envy in contiguous areas. And I'd be surprised if in general, when we're in a fiber footprint, we wouldn't be expanding in some direction outside of it, as we have completed the build in that market."

"So where the efficiency would come from there would be in leveraging the -- really two things, the staff that are on the ground in that city and some of the brand awareness and just sort of word-of-mouth that you'll build up and reputation from being already in the area."[179]

Sandpoint, Centennial: Sandpoint and Centennial Are Still Hard at Work on Their Municipal Core Fiber Networks

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Sandpoint, Idaho, and Centennial, Colorado, are still hard at work on their own municipal core fiber networks. "We will share more as we get closer to being able to build out off these networks and start lighting up customers there."

"We haven't even put a shovel in the ground in Centennial and Sandpoint," said Noss in answer to a question from an unidentified analyst clarifying that the 20% penetration in the first year does not apply to the entire 85,000 households in the four Ting towns.[180]

Enterprise: Ting Internet Has Hired Leadership for an Enterprise Sales Team to Work Across all our Ting Towns

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Internet has hired leadership for an enterprise sales team to work across all our Ting towns. "They'll be working closely with our product, support, network and operations teams, to develop a high-end feature set, account management capabilities, and a Service Level Agreement that puts us in a position to support large businesses, hospitals, college campuses, schools, government buildings, and more."

"I remind you that most fiber businesses start with enterprise, anchor tenants, MDUs and greenfield builds. We have started with true fiber to the home and then work our way up to the more profitable opportunities."[181]

Expansion: Ting Internet's Pipeline of New Potential Ting Towns Remains Full

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Internet's pipeline of new potential Ting towns remains full. "We're excited about opportunities of all different sizes and shapes. We feel like we are being courted more than we are courting. We are also dealing with governments, which tends to take time."[182]

Expansion: Our Best Guess is Ting Internet Will Have Two or Three New Markets in 2017

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that "if I had to make a best guess, I think two to three [new fiber markets] would be about right. But again, I'll stress, we've got lots of work to do, it's what we have on our plate. And I'm quite fine if we don't announce anything. And there's lots of action out there, and so it could even be 3, 4, 5."[183]

Google: Google Backing Away From Fiber Doesn't Really Affect Ting Internet

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that "it's such a big market, and Google had such big halo, that I don't know that, that [Google backing away from new fiber markets] will necessarily have a material impact. It's not, in any way, like Boy, we're pleased that Google Fiber is limited now to the 11 markets they're in and not expanding further. We really believe that in the case of fiber to the home, a high tide rises all boats and we would love to see more players in the space, not less."[184]

Adaption: Ting Internet's Core Assumptions and Metrics on Cost and Adaption Remain Valid

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Ting Internet's "efforts so far on the ground have helped reinforce the core assumptions and metrics that I have shared on the Ting internet business. We expect to see 20% adoption amongst serviceable addresses in a year and 50% in five years. At these take rates we will be paying about $2,500 to $3,000 per customer and those customers will be worth about $1,000 a year in margin."

In answer to a question from an unidentified analyst, Noss clarified that the 20% penetration in the first year does not apply to the entire 85,000 households in the four Ting towns. "No, what you've done there is you've applied 20% to the 85,000. The 85,000 is a complete footprint build for the 5 cities that we've have announced. We haven't even put a shovel in the ground in Centennial and Sandpoint. We won't be, we'll, I'll be updating in some detail across the other 3 markets. But that's not, those are different things. And again, I want to reiterate just for people listening, less so for you, [Ralph], when I put out that 85,000 number, it was to help people understand that even with the 5 markets that we've announced today, there was a lot of meat on the bone, so the purpose of putting out that number. I will, again, start to update a little bit more next quarter on the serviceable addresses, et cetera. And we continue to be comfortable with that 20% first year take rate number."[185]

Cost: Cost Reductions for Fiber Installation are Really Incremental

In answer to a question from an unknown analyst on the possibility of getting the cost down to $2,000 to $2,500 per home if Ting Internet moves into contiguous cities, adds automation and uses some of the learning on the trench digging side, Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that the cost reductions are really incremental. "I think that one of the things, and I don't know this, but I wouldn't be surprised if one of the things that discouraged Google was the, you can't -- a home costs to build what it costs to build. There are some savings, but they are smaller. I think that, that's a number that we're consistently looking at. We have found some neat ways to save money on a per home basis. We find that experience is helping us. But -- and I do want to, when I talk about that $2,500 to $3,000, that's a lit home, so at 50%. So we think about $1,000 to $1,400, plus the install to build a home. You're not going to get that $1,000 down to $500. And if you're in a geography, the range there is because of the different costs in each geography. If you're in a geography where it's costing you $1,200 and you can get down into the lower $1,100s or into the high $1,000s, you're doing fantastic. So we're always looking for ways there, and we're finding those ways, but they are grinding for sure."[186]

May 9, 2017: Domain Services Has Doubled in Size with the Acquisition of Enom

Enom: Enom Integration Has Gone Very Well This Quarter

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that "the Enom integration has gone very well this quarter, with the heaviest lifting on the operational integration and on converging their data behind us; with pleasant surprises on the people side and most importantly, with the business itself comfortably meeting expectations and holding some interesting opportunities that we had not counted on."

Dave Singh clarified that Enom's operations have only contributed to Tucows' results since January 20, 2017. "Second quarter will be the first time our results reflect the full quarter of contribution from Enom."[187]

Enom: Tucows Expects Cost Savings from the Enom Acquisition Four to Eight Quarters Out

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that Tucows expects cost savings from integration to be mostly four to eight quarters out. "We will continue to operate Enom and OpenSRS as distinct reseller brands and see the businesses as complementary and affording us the benefit of increased market coverage. We have started to integrate the teams from Seattle and Toronto and continue to be pleased, even in these first few months, with the skills and knowledge that the Enom team brings to the entire organization."

In answer to a question from Ralph Garcia with Echelon Wealth Partners, Noss clarified that "it will take 8 quarters to get from -- to get the extra $5 million or so, in cost synergies that we expect. So that will strictly be about building the new platform, building a new platform, and migrating their existing book of business onto it and thereby reducing a bunch of costs. Most of those costs will come from data center footprints and commercial software licenses that we'll avoid."

"So first of all, we'll be learning. The businesses had different approaches to data and so we're rationalizing some of that stuff. But we generally think of their businesses on the wholesale side, their business as being slightly lower margin, slightly lower renewal rate, and kind of a longer-tail profile customer."[188]

Wholesale: For the Combined Wholesale Unit, Total Registrations were $4.5 million

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that for this combined wholesale unit, total registrations were $4.5 million in the quarter with approximately half coming from Enom and the Melbourne IT domains acquired in April 2016.[189]

OpenSRS: Total Registrations Excluding the Two Acquisitions Grew 10% YOY

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that for the legacy OpenSRS business, or the resellers prior to the two acquisitions, we had our strongest quarter in a while, with total registrations growing 10% year over year.

In answer to a question from Ralph Garcia with Echelon Wealth, Noss clarified that the growth in OpenSRS was pleasantly surprising. "The growth there, I think it exceeded even some of the folks working on it who were quite optimistic. I think it came generally from some of the larger customers, who were just engaging in successful activities. It wasn't any one customer. But that growth, the outsized portion of that growth, was concentrated in between five and 10 customers and there's enough there that I'm hopeful, so I'm not going to quite take up my expectations on that business. But I'll certainly be pushing it a little more. And we'll see if some of those people can keep it up."[190]

The Combined Renewal Rate Declined to 74%

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that the combined renewal rate declined to 74% in the quarter, still well above the industry average, but deflated a bit by the Enom domains, which renew at a lower rate.[191]

Retail Domains Has Effectively Doubled with the Addition of Enom Retail Customers

Elliot Noss told analysts during the 2017 first quarter earnings conference call on May 9, 2017 that on the retail side, the business has effectively doubled with the addition of the Enom retail customers. "Again, we acquired a mature retail business and customer base with slightly negative growth characteristics. While the Hover business continues to grow, combining the Hover and Enom customers into a larger single retail business will significantly suppress that growth as we look ahead to 2018. In Q1, that combined retail business represented 400,000 transactions, over 350,000 customers and an 81% renewal rate. Again, for both wholesale and retail, I will report on the aggregated businesses going forward. I will only pull out particular metrics or stories on particular brands, if they meaningfully impacted the results or signal some new strategic direction or contain some other important piece of information."[192]

May 5, 2017: Tucows Makes New Closing High of 62.10

Stock Price Chart for TCX from January 1, 2012 through May 5, 2017. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1916% since January 1, 2012. The S&P 500 has risen 86% over the same period. (Click on chart to expand.)

Tucows made a new closing high of 62.10 on volume of 76,778 shares traded. Tucows is up 76.19% YTD. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1916% since January 1, 2012. The S&P 500 has risen 86% over the same period.

May 2, 2017: Why Rightside Sold Enom to Tucows

Ever since Tucows announced that they had purchased Enom from Rightside on January 20, 2017, people have been wondering why Rightside made the sale. Even one of Rightside's biggest stockholders said it was a bad deal for Rightside and the market agreed as Tucows' stock price jumped 25% after the sale while Rightside showed a more modest gain.

Andrew Alleman wrote in Domain Name Wire on May 2, 2017 that the reason that Rightside sold Enom to Tucows is that Namecheap has always been a big part of Enom’s business and when new TLDs came out, Namecheap started registering many of these domain names under its own registration accreditation. Then, in January, 2017, Namecheap started registering .com domains through its own accreditation which means that Rightside was about to show a big drop in revenue in Q1 of this year. That's when Rightside moved to sell Enom. "It found a willing buyer in Tucows," writes Allemann. "On stage at NamesCon, Tucows CEO Elliot Noss said he was aware that Namecheap was moving off the platform. But that doesn’t hurt the deal from Tucows’ perspective." According to Alleman, Namecheap had negotiated very low rates with Rightside because it was so big and if you measure your business on revenue growth as Rightside does then losing Namecheap was a big loss. In Tucows’ case, however, it hopes to add about $20 million EBITDA/year from the business so losing Namecheap shouldn’t negatively impact that because it was so low margin.[193]

Read more about the history of the sale of Enom to Tucows at:

May 1, 2017: TCX Makes New Closing High of 59.75

Tucows stock (TCX) rose 1.10 to make a new closing high of 59.75 on volume of 46,744 shares. Tucows is up 69.50% YTD from 36.45 on January 3, 2017.

April 28, 2017: Ting's Project in Westminster is One of the Nation’s Most Closely Watched Public-Private Fiber Partnerships

Ting Fiber's Project in Westminster is One of the Nation’s Most Closely Watched Public-Private Fiber Partnerships. The approaches that small communities to get fiber take vary widely, and many are still in their early stages. But it’s the public-private partnership between Ting and Westminster that experts are watching most closely these days. "The city of Westminster has struck a deal with Ting that, it hopes, will result in a citywide network of fiber-optic connections to every home and business," writes Vock. Photo: Westminster Main Street by John Dawson Flickr Create Commons Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)

Governing Magazine published a long article by Daniel C. Vock in their May issue about the different approaches small and medium cities are using to form public-private partnerships to bring high-speed Internet to their communities. According to Vock small cities face a conundrum. On one hand, building and running a city-owned network is extremely difficult because they often don’t have employees with the technological expertise to run an Internet service. On the other hand, as their experiences with cable and phone companies show, cities have learned they can’t rely solely on the private sector to provide high-speed connections. That’s why so many cities have turned to public-private partnerships, using a mix of public resources and private know-how to achieve what neither sector could do on its own.

According to Vock, the approaches that small communities take to get fiber vary widely, and many are still in their early stages. But it’s the public-private partnership between Ting and Westminster that experts are watching most closely these days. "The city of Westminster has struck a deal with Ting that, it hopes, will result in a citywide network of fiber-optic connections to every home and business," writes Vock. "Under the terms of their public-private partnership, the city is laying all the fiber itself, which Ting is then paying to lease for customers, whom it is responsible for signing up and serving. The more fiber the city installs, the more customers Ting can reach. The more customers Ting signs up, the more the company pays the city."

The effort to bring higher-quality Internet access to the Maryland city started more than a decade ago, and the city considered all options, even the idea of installing and offering broadband on its own. Ultimately, it decided to partner with a private provider. Westminster had a few advantages that helped make it more attractive. For one, the city had enough cash on hand to fund a small pilot project. And Westminster found that businesses in town were very excited about getting the service. More than 90 percent of companies signed up when it became available to them. One of the things that distinguishes Westminster’s approach is that the city is building and keeping control over the physical fiber network. The strategy, says Councilman Robert Wack, who has worked extensively on the issue, is “perfect for municipalities. We are in the long time-horizon business,” he says. “We build water treatment plants that have a useful life of 40 years. We dump millions of dollars into pavement and nobody bats an eye because everybody understands how important good roads are for economic development. Why would building fiber be any different? We’re basically building a road for data.”

For Ting, selecting cities to work with comes down to both objective measures, like demographic data, and subjective judgments, like how easy a city is to work with. One thing that stood out about Westminster, says Monica Webb, the company’s director of government relations, was that the town was not just eager for service but also willing to do most of the hard work of financing and then installing the fiber all the way up to buildings. But Webb cautions that there are not enough private companies like Ting to partner with all the cities that want high-speed Internet. After the Westminster deal went through, Ting received more than 2,000 requests from residents or public officials to come to other communities. Currently, Ting serves just five cities, with a few more in the works. “Sometimes, the best thing cities can do is to do it themselves,” she says. “There needs to be a plan B.”

Even if private companies bring gigabit speeds to every big city in the country, they’d never be a viable solution for getting faster Internet to the small towns and rural communities that need upgrades the most concludes Vock. That’s why so many cities have turned to public-private partnerships, using a mix of public resources and private know-how to achieve what neither sector could do on its own.[194]

April 26, 2017: TCX Breaks 60 Intraday

TCX broke 60.00 on April 26, 2017.

April 24, 2017: Tucows Makes New Closing and Intraday Highes

Tucows Makes New Closing and Intraday Highes. Tucows made a new closing high of 58.35 and a new intraday high of 59.90 on a volume of 69,715 shares traded. The previous closing high was 58.15 on April 20, 2017 and the previous intraday high was 59.4 on April 21, 2017. Click on chart to enlarge.

Tucows made a new closing high of 58.35 and a new intraday high of 59.90 on a volume of 69,715 shares traded. The previous closing high was 58.15 on April 20, 2017 and the previous intraday high was 59.4 on April 21, 2017.

Tucows made another new closing high of 59.00 on April 25, 2017.

April 20, 2017: Tucows CEO Elliot Noss Speaks about Giga-bit Fiber at Charlottesville's Tom Tom Founders Festival


Ting Internet has been proudly sponsoring Charlottesville's Tom Tom Founders Festival since we first arrived in town. This year, Tucows CEO Elliot Noss, was invited to speak on a panel discussing what fiber internet can do for a city. Joining him is Mayor Andy Berke of Chattanooga, the city to watch for how the best Internet access improves cities; Sheila Dugan of GovEx at Johns Hopkins University and Aimee Meacham of the National Telecommunications and Information Administration. The panel discussion was moderated by Deb Socia of Next Century Cities.

April 20, 2017: TCX Reaches New All Time Closing High of 58.15

Tucows reached a new closing high of 58.15 on April 20, 2017.[195]

April 19, 2017: Centennial Seeks Voting Members for Fiber Commission

Village Publishing reported on April 19, 2017 that the City of Centennial is seeking two qualified citizen voting members to serve on its Fiber Commission, which was established to oversee FiberWorks. Centennial’s fiber backbone will connect and complete the city’s underground fiber infrastructure, connecting to key sites and community anchor institutions, such as schools, libraries and public safety. The two voting members must be Centennial residents and will be appointed at large, meaning they will represent the citizens throughout the city. To be considered for appointment, applicants should: Demonstrate expertise in a field relevant or associated with the purposes and goals of Centennial FiberWorks; Commit to attending commission meetings twice a month, periodic City Council meetings and other occasional community meetings; Be clear of potential conflicts of interest or the appearance of impropriety on commission action; Affirm motivation for seeking the appointment. Members will serve terms of two years and no more than four terms and will spend at least 10 hours per month, which includes a minimum twice-monthly meetings and the review of information prepared by staff.[196]

April 17, 2017: FCC Could Issue New Rules to Help Google Fiber Compete with ATT

Ars Technical reported on April 17, 2017 that the Federal Communications Commission is considering rules that would speed up the process of attaching wires to utility poles making it easier for Google Fiber and companies like Ting Internet to quickly complete utility pole work. Current FCC rules allow for up to a five-month waiting period before new ISPs can install wires on utility poles that already hold the wires of incumbent providers like ATT. The FCC's current five-month timeline for processing pole attachment requests includes 45 days for application review and engineering surveys, 14 days for cost estimates, 14 days for "attacher acceptance," and another 60 to 75 days for the "make ready" work of moving existing wires. The new FCC proposal from Chairman Ajit Pai could shave a couple of months off the maximum waiting periods. "Google Fiber is pleased the Commission is taking up the issue of pole attachment timing," the Alphabet-owned ISP said in FCC filings last week. Google Fiber offered what it called "minor edits" to fix some inaccurate descriptions of the current rules in the FCC's draft proposal, it but didn't suggest any major revamping.

Pai's pole proposal is part of a larger plan titled "Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment." A vote on this notice of proposed rulemaking is scheduled for April 20. There would then be a public comment period before the FCC decides whether to issue final rules. The entire rulemaking process will probably take at least a few months. "[A]ttaching Internet-related equipment to utility poles is a major cost element for companies of all sizes," Pai wrote. "We’ll seek to both lower costs for and speed deployment of this equipment."[197][198]

April 14, 2017: Elliot Noss Speaks about “What Can the Gig Do For Your City” at Hometown Summit in Charlottesville

Next Century Cities reported on April 14, 2017 that Tucows CEO Elliot Noss participated in a panel on "What Gig Can Do for Your City" at the Hometown Summit during Tom Tom Founders Festival in Charlottesville, VA as they discussed how and why cities invest in fiber internet and municipal broadband. Others on the panel included Deb Socia (Executive Director, Next Century Cities), Mayor Andy Berke (Chattanooga, TN), Sheila Dugan (Senior Implementation Advisor, Cities, Center for Government Excellence at Johns Hopkins University), and Aimee Meacham (Director of External Affairs, BroadbandUSA, NTIA). “I have seen first hand the incredible benefits, such as economic and job growth, better education, and telehealth opportunities, that bringing gigabit speed service has had on Next Century Cities’ member communities,” Deb Socia said. “Mayors are uniquely able to understand and execute broadband deployment plans that fit their communities’ needs, and as such should be given the tools necessary to make sure everyone is digitally included.”[199]

April 10, 2017: Ting is Strongly Opposed to Selling Consumer Browsing Data

According to the Electronic Frontier Foundation, despite massive backlash from the American people, Congress passed and President Donald Trump signed into law a resolution that repeals the Federal Communications Commission (FCC) rules to protect consumers from privacy invasions by their Internet service providers (ISPs) like Comcast, AT&T, Verizon, and Time Warner Cable. The rules—which codified and expanded on existing online privacy protections—were passed by the FCC in October of last year and set to go into effect later this year. They would have kept ISPs from selling customers’ data and using new invasive ways to track and deliver targeted ads to customers. Additionally, the rules would have required those companies to protect customers’ data against hackers.[200]

The Denver Post reported on April 10, 2017 that Ting stands strongly opposed to erasing broadband privacy protections and will not be selling consumer browsing data to anyone. "That’s why we took a stand asking Congress to keep the consumer privacy rule,” said Monica Webb, who handles Ting’s government relations. “Is this (Trump’s repeal) going to change anything? No, we’re holding to our terms of customer service, regardless that this allows us to do otherwise.” According to Ting’s privacy policy, the company may use cookies and web beacons to track how users interact with its website. Plus, it partners with a third-party ad network that uses technology to “collect non-personally identifiable information” about a person’s activities on its site. “Essentially our Terms of Service are specific in the way that ‘everything that is not mentioned is not permitted,'” Webb said.[201]

April 7, 2017: TCX Makes All Time Closing High of 54.10

Chart of TCX from April 6, 1996 to April 10, 2017: TCX Makes All Time Closing High of 54.10. TCX closed at an all time high of 54.10 on April 7, 2017 up 1.70 from the previous day's close. Tucows' previous closing high was 21 years ago on April 6, 1996 on its first day of trading when the stock opened at 57 and closed at 53 on a volume of 406,000 shares. Click on chart to enlarge.

TCX closed at an all time high of 54.10 on April 7, 2017 up 1.70 from the previous day's close. Tucows' previous closing high was 21 years ago on April 6, 1996 on its first day of trading when the stock opened at 57 and closed at 53 on a volume of 406,000 shares.

Tucows continued with a new closing high of 55.5 on April 10, 2017.

Tucows continued with another new closing high of 57.65 on April 11, 2017.

Tucows reached a new closing high of 57.85 on April 13, 2017.

Tucows reached a new closing high of 58.15 on April 20, 2017.[202]

April 6, 2017: Google Moves Two Top Executives Off Fiber Project

Bloomberg reported on April 6, 2017 that Google has removed two prominent executives Milo Medin, a vice president at Access, and Dennis Kish, a wireless infrastructure veteran who was president of Google Fiber, from its Google Fiber division, the latest sign of the business pulling back from ambitious, expensive goals. A Google veteran since 2010, Medin was a chief advocate for the company’s high-speed Fiber service in Washington. He has also been leading some of Alphabet’s more experimental efforts to tap wireless spectrum for better internet delivery. It’s unclear if that effort will move to another part of Alphabet. Google pushed to bring Fiber to more than a dozen U.S. cities but it hit some hurdles, including increased competition and legal challenges from telecommunications firms. Google Fiber also grew into one of the costliest efforts for the company, outside of the dominant Google internet business. After halting its expansion, some analysts praised Alphabet for implementing cost-cutting measures. Last month, Google Fiber canceled some planned installations in Kansas City, its first market.[203]

April 5, 2017: Ting Internet is Hiring an Enterprise Strategic Account Manager

The Ting Blog reported on April 5, 2017 that Ting Fiber is hiring an Enterprise Strategic Account Manager (ESAM) working out of Centennial who will be responsible for selling data, cloud and video services to new and existing customers as well as creating and developing long-term relationships with new and existing customers in the Enterprise and Mid-market space. This is a hunter, consultative field sales position within Ting's Business Services team that will report to the Director, Enterprise Sales. "While we are stretching our fiber to homes and small businesses that pay us $89 and $139 a month respectively, we are literally passing by enterprises, apartment buildings, schools, hospitals, city buildings and other large organizations that would gladly pay us thousands," reads the post. The candidate should have over 4 years of B2B sales experience, preferably selling data, voice, cloud and/or video solutions with ideally two years of Telecommunications or Premise Based Voice and Data product sales and have a working knowledge of computers, computer networking, Internet solutions and fiber connected networks.[204]

March 24, 2017: Kenneth Schafer is Stepping Down as Tucows' Chief Information Officer

Domain Name Wire reported on March 24, 2017 that Tucows has issued an 8-K announcing that Kenneth Schafer is stepping down effective today as Chief Information Officer at Tucows to pursue another opportunity and his resignation is not a result of any dispute or disagreement with the Company.[205] Schafer served as Executive Vice President, Chief Information Officer at Tucows since September 2, 2016, having previously served as Executive Vice President, Products since 2009. Schafer joined Tucows in 2006 as VP Marketing. Prior to joining Tucows, Schafer worked as an independent strategic Internet consultant for eight years.[206]

March 22, 2017: While Shooting a Commercial in Centennial, the Ting Team Enjoyed the Experience of Flying Over the Mountains in a Chopper


The Ting Video Team is always looking for interesting ways to showcase Ting Internet towns. Last time, they rented a hot air balloon. This time, while shooting a commercial in Centennial, they enjoyed the experience of flying over the mountains in a chopper. For some of the team, the helicopter ride was an experience that can now be crossed off the ol’ bucket list.

March 20, 2017: Tucows Insiders Sell Stock

Market Exclusive reported on March 20, 2017 that David John Woroch , EVP of Tucows sold 5,000 shares of the company’s stock at an average price of 49.02 for a total transaction amount of $245,100.[207]

Gissin Erez sold 7,300 shares of Tucows stock at $47.00 on March 14, 2017 for a total of $343,100.

The Cerbat Gem reported on February 17, 2017 that Director Rawleigh Hazen Iv Ralls sold 30,000 shares of Tucows stock at an average price of $46.85, for a total transaction of $1,405,500.00 in a transaction on February 14, 2017. Following the completion of the sale, the director now owns 188,647 shares of the company’s stock, valued at approximately $8,838,111.95.[208]

Sports Perspectives and Market News reported on February 22, 2017 that Director Allen Karp sold 2,650 shares of Tucows stock at an average price of $42.52 for a total value of $112,678.00 in a transaction that occurred on February 21, 2017.[209]

March 17, 2017: Dave Singh to Succeed Michael Cooperman as Tucows CFO

Dave Singh to Succeed Michael Cooperman as Tucows CFO. Singh joined the Tucows Finance team in February 2016 and brings nearly two decades of audit and public company financial experience. Photo: Tucows

Reuters reported on March 17, 2017 that following an 18 year career with Tucows, chief financial officer Michael Cooperman will retire at age 65 effective April 1, 2017 and will remain with company in a senior advisory role to ensure a seamless transition. Tucows Board of directors has appointed Dave Singh to succeed Cooperman.[210]

"Mike and I have had a strong and fruitful working relationship for a number of years," said Tucows President and CEO, Elliot Noss. "When Mike started in 1999, the goal was to see if we could monetize shareware distribution. Last month, we purchased an $80 million company and laid miles of optical fiber. We simply could not have had the success we have had without him. I am forever grateful for his partnership, wisdom and grit and for helping and supporting me when I most needed it. I am also very grateful that Mike has made it his responsibility to hand-pick, train and oversee his successor. As a result, we enter the Dave Singh era with the same confidence we have enjoyed for the past 18 years." "My career at Tucows has been a rewarding and enriching experience," said Cooperman. "The Company is in a strong position to continue growing and driving value for investors, and I am confident that Dave will continue to build on this momentum as CFO."[211]

Singh joined the Tucows Finance team in February 2016 and brings nearly two decades of audit and public company financial experience. Prior to joining Tucows, Singh spent 8 years at KPMG in Vancouver primarily focused on public company audits in the technology field. After KPMG, Singh joined TELUS and held a number of roles, including Director – TELUS Financial Reporting & Analysis, Director – Consumer Retail and most recently CFO of the TELUS International, TELUS’ outsourcing division. Telus is a Canadian national telecommunications company that provides a wide range of telecommunications products and services including internet access, voice, entertainment, healthcare, video, and IPTV television. The company is based in the Vancouver, British Columbia area; it was originally based in Edmonton, Alberta, before its merger with BCTel in 1999. Telus's wireless division, Telus Mobility, offers HSPA+, and LTE-based mobile phone networks. Telus is the incumbent local exchange carrier in British Columbia and Alberta. Telus had Revenue of CAD$ 12.5 billion in 2016, Operating income of 2.3 billion (2015), Net income of 1.38 billion and 47,700 employees.

Singh is a Chartered Professional Accountant with the Institute of Chartered Accountants of BC. Singh is a graduate of the Transportation and Logistics Management program from the Sauder School of Business at the University of British Columbia and holds a joint Executive MBA from Schulich School of Business and Northwestern University. "Having previously worked at a large bureaucratic company, I love the agility and can-do attitude of each and every Tucows employee. I come to work excited every day knowing I'll be challenged and have fun."[212][213]

March 15, 2017: Bloomberg Says Tucows is Roaring Back with Enom Acquisition, Ting Mobile, and Ting Fiber

Gerrit De Vynck wrote at Bloomberg on March 15, 2017 that Tucows is roaring back to life with an acquisition and a deepening effort to win over disgruntled U.S. mobile phone customer after a decade-long hibernation following the dot-com crash. According to Bloomberg, business is booming as ICANN, the nonprofit gatekeeper of web addresses, opens up hundreds of new domain names, giving individuals and companies the chance to have a web address that ends in something more creative than “.com” or “.org,” like “.beer” or “.Republican.” “It is a hyper-competitive market with extremely thin margins but we were early and we have had scale since nearly the beginning,” said Chief Executive Officer Elliot Noss. When someone buys a web domain for $15, most of it goes to regulators and registries. Tucows gets $1.20 to $1.40 per transaction, Noss said. Tucows also agreed in January to acquire long-time rival Enom from Rightside Group Ltd. for $83.5 million, consolidating its place as the main wholesaler of internet domains.

But, according to Bloomberg, Tucows' big bet on future growth is building out high-speed fiber networks in five mid-sized U.S. cities. The company plans to invest between $30 million and $35 million in the business in 2017 and that number will grow in the coming years, Noss said. Ting Fiber is going after U.S. consumers dissatisfied by the internet service provided by cable TV companies, which sometimes have near-monopolies over certain regions. “We have two businesses that generate a lot of capital, we’re happy to deploy it there,” Noss said referring to Tucows' domain wholesale business and Ting Wireless, a cell-service provider with 170,000 customers that rents space on T-Mobile US Inc. and Sprint Corp.’s networks, and re-sells it to consumers with its own customer service and billing practices.

Tucows recently expanded its credit revolver from $75 million to $140 million to fund the Enom acquisition. Still, the company’s leverage ratio is low and Noss said he’s open to pushing it as high as three times net-debt to ebitda if the right acquisition target came along. “We have a lot of power in our balance sheet,” Noss said. “We would look at anything in our spaces at the right price.”[214]

March 15, 2017: Fuquay-Varina Hopes That Ting (or Someone Else) Will Begin Extending Branches Off the Holly Springs Backbone into Fuquay-Varina Residential Districts

Fuquay-Varina Hopes That Ting (or Someone Else) Will Begin Extending Branches Off the Holly Springs Backbone into Fuquay-Varina Residential Districts. Fuquay-Varina is hoping that once its full network is live, Ting or other third-party internet providers such as AT&T and Google will take notice and begin extending branches off the backbone into Fuquay-Varina residential districts. Click Graphic to Enlarge. Graphic: Hugh Pickens using Google Maps

The News and Observer reported on March 15, 2017 that throughout the past year, Fuquay-Varina has been working to ensure that the wave of high-speed fiber internet moving into other parts of Wake County soon will be able to take hold in Fuquay-Varina. Fuquay-Varina’s neighbor to the north, Holly Springs, has been able to leverage its municipal fiber network into a partnership with internet provider Ting, which is now providing high-speed internet service to certain neighborhoods in Holly Springs. According to the News and Observer, Fuquay-Varina is hoping that once its full network is live, Ting or other third-party internet providers such as AT&T and Google will take notice and begin extending branches off the backbone into Fuquay-Varina residential districts.

The immediate purpose of Fuquay-Varina’s network, though, is to service municipal government buildings, where Town Manager Adam Mitchell said employees need gigabit speeds to efficiently send massive mapping files and other large datasets back and forth. Fiber-optic lines offer speeds at least 10 times faster than what’s available along standard copper internet cables. “We also like the idea of having a reliable backbone and network to service our facilities and our needs,” Mitchell said. “Having infrastructure that we can maintain, that we can service, that we have security in, for us, has great value.”[215]

Fuquay-Varina is a town in Wake County, North Carolina, United States. The population was 17,937 at the 2010 census,[1] up from 7,898 at the 2000 census. The town is a 25-minute drive south of Raleigh, the capital of North Carolina. The hyphenated name attests to the town's history as two separate towns. Fuquay Springs and Varina merged in 1963 to create the modern town. Economically, the town initially grew due to tobacco trade and agriculture, but has seen recent population growth and real estate development due to its proximity to Research Triangle Park.[216]

March 10, 2017: The Centre Region of Pennsylvania Has Fallen Behind its Peers in Fiber Optic Internet

Mark Parfitt wrote in an op-ed piece in the Centre Daily Times on March 10, 2017 about how the deployment of publicly accessible fiber-optic internet is one movement where State College has fallen behind many peers. "Where we have fallen even further behind is the ability to provide fiber internet as part of a broader economic development strategy.," writes Parfitt. "Make no mistake: fiber-optic internet is no longer a luxury in the business world. It is a basic necessity and an absolute “must have” when selling the Centre Region as a place to do business. After gigabit internet was introduced to Chattanooga, Tenn., the founder of a business incubator told the New York Times that 'it created a catalytic moment' and 'allowed us to attract capital and talent into this community that never would have been here otherwise.'"

According to Parfitt, the competition to become a fiber community is fierce and instead of asking fiber suppliers why we need them, we need to proactively communicate why State College is a good contender for a fiber town. "For example, Ting, a gigabit internet supplier that recently wired the college community of Charlottesville, Va., won’t spend time convincing towns “why” they should prioritize fiber. Ting’s website argues that communities should 'be coming to the discussion with the sense that crazy fast-fiber internet is a thing they need in order to keep pace.'"

"Now is the time to explore how we can best develop and deploy our own gigabit internet," concludes Parfitt. "Centre Region leaders have proven capable of uniting across municipal lines to improve other regional infrastructures. The same can be done with fiber-optic internet."[217]

March 10, 2017: Tucows Hosts Third Annual Ting Open StarCraft 2 Competition in San Jose

The Ting Blog reported on March 10, 2017 that Ting will host the finals of Season 3 live of the Ting Open alongside BaseTradeTV in San Jose, California on March 25 and 26. "The four StarCraft 2 semi finalists will compete live at the Corsair headquarters on March 25 and 26. This tournament will be open to the public, so if you live in the area or would like to take a weekend trip to watch some of the best StarCraft 2 players in the world compete face to face, come join us!" The Ting Open Season 3 finals will be streamed live from twitch.tv/basetradetv.[218]

March 10, 2017: Ting Team Holds Community Information Night About Fiber Internet in Centennial

The Ting Blog reported on March 10, 2017 that the Ting Team is hosting a Community Information Night about fiber Internet in Centennial at Smoky Hill Library on March 23, 2017. "If you have questions about Ting Internet or would like to learn more, this is an event you don’t want to miss out on," says the announcement. "The team will be on hand to give a short presentation followed by an opportunity to ask us questions. We’ll be kicking things off at 7pm and wrapping things up at 9pm. Light refreshments will be served. Admission is free, so feel free to bring your friends and neighbors! Please RSVP on our event page."[219]

March 8, 2017: Tucows Files Annual Report with SEC

Tucows Files Annual Report with SEC. Photo: Thomas Hawk Flickr Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)

On March 8, 2017 Tucows filed its annual report with the SEC.[220] The following highlights from the report provide insights into Tucows' strategy, management, and operation:

Source of Revenue from Ting Internet: "The Company also derives revenue from the sale of fixed high-speed Internet access (“Ting Internet”) in select towns including Holly Springs, North Carolina; Westminster, Maryland; and Charlottesville, Virginia. Our primarily sales channel of Ting Internet is through the Ting website. The primary focus of Ting Internet is to provide reliable Gigabit Internet services to consumer and business customers. We also derive revenue from providing Internet hosting and network consulting services to business customers in Central Virginia through our acquisition of a 70% share in Ting Virginia, LLC on February 27, 2015."
Employees: "As of December 31, 2016, we had approximately 375 full-time employees. None of our employees are currently represented by a labor union. We consider our relations with our employees to be good."
Risk Factors in Fiber Investments: "We have invested and expect to continue to invest in new fiber to the home (“FTTH”) deployments in select markets in the United States. The investments are a reflection of our ongoing efforts to build FTTH network via public-private partnerships in communities we identify as having strong, unmet demand for FTTH services. Such FTTH investments may involve risks and uncertainties, including: insufficient revenues from such investments in the short and medium term to offset any new commitments assumed and expenses associated with these new investments; inadequate return of capital on our investments; inability to obtain the appropriate technical and operational resources; and unanticipated local or federal regulatory changes that could cause us to fail to realize the anticipated benefits of such investments. Because these new FTTH deployments are inherently risky, no assurance can be given that such investments will be successful and will not adversely affect our financial condition and operating results."
Seasonality: "During the summer months and certain other times of the year, such as major holidays, Internet usage often declines. As a result, many of our services (OpenSRS, Hover and Ting) may experience reduced demand during these times. For example, our experience shows that new domain registrations decline during the summer months and around the year-end holidays. Seasonality may also affect advertising, which may have a slight impact on advertisement-based revenue. These seasonal effects could cause fluctuations in our financial results. For Ting Mobile, we see increased gross activation and churn activity in late summer as part of back-to-school activities as well as the holiday season in December."
Competitors: "Our competitors may be divided into the following groups: • US Mobile Phone Service providers such as AT&T, Verizon, T-Mobile and Sprint, who primarily compete with Ting Mobile Services. • US Broadband providers such as Comcast, Verizon and CenturyLink, who primarily compete with Ting Internet Services. • Retail-oriented domain registrars, such as GoDaddy and Web.com who compete with our Reseller customers in Wholesale Domain Services and with Hover. • Wholesale-oriented domain registrars, su ch as GoDaddy, who market services to resellers such as our customers. • Wholesale Email Service providers, such as Google, Microsoft, Bluetie and MailTrust."
Competitive Advantages in Network Services: "We believe the primary competitive factors in our Network Access Services are: • Providing superior customer service experience • Providing a simple and friendly user experience through more usable web and application interfaces and more fair and transparent pricing; • Being agnostic on telephony and internet hardware, including phones and network routers; and • Providing superior technology, speed and reliability with fiber to the home services"
Branding: "In recognition of the evolving nature of the internet services market and to make it easier to clearly differentiate each service we offer from our competitors, we enhanced our branding by focusing our service offerings under four distinct brands namely “OpenSRS”, “YummyNames”, “Hover” and “Ting”. We also believe that maintaining and enhancing the “Tucows” corporate brand and our service brands is critical to expanding our customer base. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend largely on our ability to be a technology leader providing high quality products and services, which we may not do successfully. To date, we have engaged in relatively little direct brand promotion activities. This enhances the risk that we may not successfully implement brand enhancement efforts in the future."
Risk Factors from Debt Service Obligations: "In January 2017, we amended and increased our existing credit facilities to $140 million from $60 million in order to complete the acquisition of Enom. As of March 3, 2017, our outstanding debt under our credit facility was $97.7 million. Our ability to generate cash flow from operations to make principal and interest payments on our debt will depend on our future performance, which will be affected by a range of economic, competitive and business factors as well as changes in government monetary or fiscal policy. If our operations do not generate sufficient cash flow to satisfy our debt service obligations, we may need to seek additional capital to make these payments or undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets or reducing or delaying capital investments and acquisitions. We cannot assure you that such additional capital or alternative financing will be available on favorable terms, if at all. Our inability to generate sufficient cash flow from operations or obtain additional capital or alternative financing on acceptable terms could have a material adverse effect on our business, financial condition and results of operations."
Volatility of Stock Price: "Our share price has varied recently and the price of our common stock may decrease in the future, regardless of our operating performance. Investors may be unable to resell their common stock following periods of volatility because of the market ’s adverse reaction to this volatility. The following factors may contribute to this volatility: • actual or anticipated variations in our quarterly operating results; • interruptions in our services; • seasonality of the markets and businesses of our customers; • announcements of new technologies or new services by our company or our competitors; • our ability to accurately select appropriate business models and strategies; • the operating and stock price performance of other companies that investors may view as comparable to us; • news relating to our industry as a whole; and • news relating to trends in our markets. The stock market in general and the market for Internet-related companies in particular, including our company, has experienced volatility. This volatility often has been unrelated to the operating performance of these companies. These broad market and industry fluctuations may cause the price of our common stock to drop, regardless of our performance."
Corporate Culture: "We believe that a critical contributor to our success has been our corporate culture, which we believe fosters innovation, creativity and teamwork. As our organization grows and we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our future success."
Real Property: "We do not own any real property. Our principal administrative, engineering, marketing and sales office totals approximately 26,900 square feet and is located in Toronto, Ontario under a lease that expires on December 31, 2020. In addition, we also maintain offices of approximately 14,100 square feet in St Catharines, Ontario, approximately 11,200 square feet in Charlottesville, Virginia, approximately 5,000 square feet in Holly Springs, North Carolina, approximately 4,000 square feet in Starkville, Mississippi, approximately 2,900 square feet in Bonn, Germany and a satellite office in Westminster, Maryland. Substantially all of our computer and communications hardware is located at our facilities or at server hosting facilities in Toronto, Ontario and Ashburn, Virginia."
Legal Proceedings: "We are involved in various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, will materially harm our business. We cannot assure you that we will prevail in any litigation. Regardless of the outcome, any litigation may require us to incur significant litigation expense and may result in significant diversion of management attention."
2017 Stock Buyback Program: "On February 28, 2017, the Company' s Board of Directors authorized the repurchase of up to $40 million of the Company's common stock at the Company's discretion. The new $40 million buyback program commenced on March 1, 2017 and will terminate on or before February 28, 2018. Purchases for this program will be made exclusively through the facilities of the NASDAQ Capital Market. All shares purchased by the Company under this program will be retired and returned to treasury. Repurchases under this program may have included open market purchases, block trades or a combination of such methods. The number of shares purchased and the timing of the purchases depended on a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations and other factors, including alternative investment opportunities. The Company may suspend or discontinue the repurchases at any time, including in the event the Company would be deemed to be making an acquisition of its own shares under Rule 13e-3 of the Exchange Act. Subject to applicable securities laws and stock exchange rules, all purchases will occur through the open market and may be in large block purchases. The Company does not intend to purchase its shares from its management team or other insiders."
2016 Stock Buyback Program: "On February 9, 2016, the Company announced that its Board of Directors had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market. Purchases were made exclusively through the facilities of the NASDAQ Capital Market. The stock buyback program commenced on February 10, 2016 and terminated on February 9, 2017. The Company repurchased 308,416 shares under this program during the year ended December 31, 2016 for a total $7.2 million."
2015 Stock Buyback Program: "On February 11, 2015, the Company announced a stock buyback program. Under this buyback program, the Company could repurchase up to $20 million of the Company's common stock over the 12-month period that commenced on February 11, 2015. The Company repurchased 868,549 shares under this program during the year ended December 31, 2015 for a total of $20.0 million."
Revenue from Ting Internet: "High speed Internet access, Internet hosting and network consulting services generated $3.7 million in revenue during Fiscal 2016, up $0.5 million from Fiscal 2015. Growth in High speed Internet access revenues was as a result of the increased Ting Internet footprint in Charlottesville, VA in Fiscal 2016. We expect expansions in Westminster, MD and Holly Springs, NC to contribute to revenue in 2017. Increased access revenues were partially offset by ongoing declines in legacy revenues from hosting and network consulting services."
Loan Repayments on Stock Repurchases, Acquisitions, and FTTH Capital Expenditures: "In accordance with the terms of the 2016 Credit Facility, Facilities A, B and C accrue interest and standby fees at variable rates based on borrowing elections by the Company and the Company’s Total Funded Debt to EBITDA ratio. Facility A is for general working capital and general corporate requirements. It requires interest only monthly payments and a final principal payment due upon maturity of the 2016 Credit Facility. The purposes of Facility B and C are to support share repurchases, acquisitions and capital expenditures associated with the Company’s FTTH program. Under the repayment terms for Facilities B and C, the amortization periods are based on the purposes of the loan as follows: borrowings for share repurchases are repaid over four years, borrowings for acquisitions are repaid over five years and borrowings for FFTH capital expenditures are repaid over seven years."
Opportunities, Challenges, and Risks: "As a MVNO our Ting service is reliant on our Mobile Network Operators ("MNOs") providing competitive networks. Our MNOs each continue to invest in network expansion and modernization to improve their competitive positions. Deployment of new and sophisticated technology on a very large scale entails risks. Should they fail to implement, maintain and expand their network capacity and coverage, adapt to future changes in technologies and continued access to and deployment of adequate spectrum successfully, our ability to provide wireless services to our subscribers, to retain and attract subscribers and to maintain and grow our subscriber revenues could be adversely affected, which would negatively impact our operating margins. Ting has also enjoyed rapid growth in its first four years of operation. During this growth phase we have been able to continue to grow gross customer additions and maintain a consistent churn rate, which has allowed us to maintain net new customer additions despite the impact of churn on a fast growing customer base. We expect price competition to grow more intense in the industry which could result in increased customer churn or reductions of customer acquisition rates either of which could result in slower growth rates or in certain cases, our ability to maintain growth. The communications industry continues to compete on the basis of network reach and performance, types of services and devices offered, and price. The increased competition in the market for Internet services in recent years, which we expect will continue to intensify in the short and long term, poses a material risk for us. As new registrars are introduced, existing competitors expand service offerings and competitors offer price discounts to gain market share, we face pricing pressure, which can adversely impact our revenues and profitability. To address these risks, we have focused on leveraging the scalability of our infrastructure and our ability to provide proactive and attentive customer service to aggressively compete to attract new customers and to maintain existing customers. Substantially all of our Domain Services revenue is derived from domain name registrations and related value-added services from wholesale and retail customers using our provisioning and management platforms. The market for wholesale registrar services is both price sensitive and competitive and is evolving with the introduction of New gTLDs, particularly for large volume customers, such as large web hosting companies and owners of large portfolios of domain names. We have a relatively limited ability to increase the pricing of domain name registrations without negatively impacting our ability to maintain or grow our customer base. Growth in our Domain Services revenue is dependent upon our ability to continue to attract and retain customers by maintaining consistent domain name registration and value-added service renewal rates and to grow our customer relationships through refining, evolving and improving our provisioning platforms and customer service for both resellers and end-users. In addition, we also generate revenue through pay-per-click advertising and the sale of names from our portfolio of domain names and through the OpenSRS Domain Expiry Stream. The revenue associated with names sales and advertising has recently experienced flat to declining trends due to the uncertainty around the implementation of ICANN ’s New gTLD Program, lower traffic and advertising yields in the marketplace, which we expect to continue. From time-to-time certain of our vendors provide us with market development funds to expand or maintain the market position for their services. Any decision by these vendors to cancel or amend these programs for any reason may result in payments in future periods not being commensurate with what we have achieved during past periods. Sales of domain names from our domain portfolio have a negative impact on our advertising revenue as these names are no longer available for advertising purposes. In addition, the timing of larger domain names portfolio sales is unpredictable and may lead to significant quarterly and annual fluctuations in our Portfolio revenue. Our revenue is primarily realized in U.S. dollars and a major portion of our operating expenses are paid in Canadian dollars. Fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar may have a material effect on our business, financial condition and results from operations. In particular, we may be adversely affected by a significant weakening of the U.S. dollar against the Canadian dollar on a quarterly and an annual basis. Our policy with respect to foreign currency exposure is to manage our financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some or all of the impact of foreign currency exchange movements by entering into foreign exchange forward contracts to mitigate the exchange risk on a portion of our Canadian dollar exposure. We may not always enter into such forward contracts and such contracts may not always be available and economical for us. Additionally, the forward rates established by the contracts may be less advantageous than the market rate upon settlement."
Acquisition of Enom: "On January 20, 2017, the Company, through its indirect wholly owned subsidiary, acquired all of the issued and outstanding capital stock of Enom, Incorporated, a domain name registrar business, from the Rightside Group, Ltd. The purchase price was $83.5 million in cash, less an estimated net working capital adjustment of approximately $6.8 million and other customary adjustments. Concurrent with the acquisition, the Company entered into an Amended Credit Agreement to, among other things, reduce the existing non-revolving Facility C from $40 million to $35 million, and establish a non-revolving credit facility of $85 million of which approximately $84.5 million was drawn to fund the acquisition, working capital deficit and related transaction costs. The Amended Credit Agreement provides the Company with access to an aggregate of $140 million in funds. Under the amended credit agreement, the Company has agreed to comply with the following financial covenants at all times, which are to be calculated on a rolling four quarter basis: (i) maximum Total Funded Debt to EBITDA Ratio of 3.00:1 until September 30, 2017, 2.50:1 until September 30, 2018 and 2.25:1 thereafter; and (ii) minimum Fixed Charge Coverage Ratio of 1.20:1. Further, the Company's maximum annual Capital Expenditures cannot exceed $32.8 million per year, which limit will be reviewed on an annual basis. In addition, funded share repurchases are not to exceed $20 million, or up to $40 million so long as the total loans related to share repurchases do not exceed 1.5 times of trailing twelve months EBITDA. The amended credit agreement also provides for an additional interest rate tier if the Company exceeds a 2.25x funded debt to adjusted EBITDA ratio and repayment terms remain unchanged for the existing facilities with the new non-revolving credit facility having a repayment term of five years with equal quarterly repayments commencing in second quarter of 2017."
Acquisition of Additional Stake in Ting Virginia: "On February 1, 2017, the Company exercised its call option to purchase an additional 20% ownership interest in Ting Virginia, LLC for consideration of $2.0 million."
Director Nomination: "Our Corporate Governance, Nominating and Compensation Committee is responsible for identifying potential nominees to our Board of Directors. In considering candidates for nomination, our Corporate Governance, Nominating and Compensation Committee seeks individuals who evidence strength of character, mature judgment, career specialization, relevant technical skills or financial acumen, diversity of viewpoint and industry knowledge. As set forth in the charter of our Corporate Governance, Nominating and Compensation Committee, our Board of Directors endeavors to have directors who collectively possess a broad range of skills, expertise, industry and other knowledge and business and other experience useful to the effective oversight of our business. In addition, our Board of Directors also seeks members from diverse backgrounds so that our Board of Directors consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. In determining whether to nominate a current director for re-election, our Corporate Governance, Nominating and Compensation Committee will take into account these same criteria as well as the director ’s past performance, including his or her participation in and contributions to the activities of the Board of Directors. 76 Our Corporate Governance, Nominating and Compensation Committee will evaluate and consider recommendations for director candidates from shareholders using the same criteria described above. As set forth in the charter of the Corporate Governance, Nominating and Compensation Committee, recommendations submitted by the Company ’s shareholders shall be submitted, along with the following to the attention of the Chairperson of the Corporate Governance, Nominating and Compensation Committee at 96 Mowat Avenue, Toronto, Ontario M6K 3M1 Canada at least 120 days before the first anniversary of the date on which we first mailed our proxy materials for our prior year’s annual meeting of shareholders: • the name and address of the recommending shareholder; • the candidate ’s name and the information about the individual that would be required to be included in a proxy statement under the rules of the SEC; • information about the relationship between the candidate and the recommending shareholder; • the consent of the candidate to serve as a director; and • proof of the number of shares of our common stock that the recommending shareholder owns and the length of time the shares have been owned."

March 3, 2017: Ting Considers Bringing Fiber-optic Internet Service from Charlottesville to Crozet

Ting Considers Bringing Fiber-optic Internet Service from Charlottesville to Crozet. Ting has yet to announce formal plans to run fiber to Crozet, but rumors are circulating. “Ting is planning to pull fiber to Crozet,” wrote Mark McCardell, a member of the Parkside Village Homeowners’ Association, addressing other Crozet residents via neighborhood social networking site Nextdoor.com. “Many in our neighborhood have already paid the $9 to pre-order. The more people that express interest, the greater the incentive for them to pull the fiber out to Crozet.” Ting Internet vice president of networks Adam Eisner said nothing has been decided. Graphic: Hugh Pickens from Google Maps. Click on Graphic to expand.

The Crozet Bulletin reported on March 3, 2017 that Ting has yet to announce formal plans to run fiber to Crozet, but rumors are circulating. “Ting is planning to pull fiber to Crozet,” wrote Mark McCardell, a member of the Parkside Village Homeowners’ Association, addressing other Crozet residents via neighborhood social networking site Nextdoor.com. “Many in our neighborhood have already paid the $9 to pre-order. The more people that express interest, the greater the incentive for them to pull the fiber out to Crozet.” Ting Internet vice president of networks Adam Eisner said nothing has been decided.

“The acquisition of BRI put us into the Charlottesville area and since then the goal has been to cover as much of the city in fiber as we can. That said, as we continue to build up Charlottesville, we’ll be looking at customer interest in surrounding areas, and Crozet checks off a lot of the boxes that are interesting to us in terms of evaluating markets.," said Eisner. “On the customer side of things, we’ve worked with a lot of HOA’s in the Charlottesville area that got our attention basically by generating interest on the ground-level. While some companies are very specific about the metrics they need to move into a given area—for instance, Google says they need 20 percent in x or y neighborhood or they’re not coming—we don’t do that. Instead, what we do is take $9 pre-orders, which serves as a barometer to gauge people’s interest.” While Eisner refrained from setting a specific number, he said that a strong level of preorders would indicate it was worthwhile for Ting to invest in the expensive process of running fiber down Route 250 and into Crozet. “We have a unit that’s dedicated to working with HOA’s on bringing service in, so if the interest is there, that would be the place to begin,” he said.[221]

March 3, 2017: Ting Fiber's Adam Eisner Discusses the Advantages of Fiber

The Crozet Bulletin reported on March 3, 2017 on Adam Eisner, Ting Internet vice president of networks, discussing what fiber-optic service can do. “So, I’ll start with saying this is the fastest Internet you could possibly get,” said Eisner. “Fiber is essentially a transformative technology—in other words, having a gigabit completely changes what you can do at home or work.” Imagine a future where, despite four kids gaming online, Netflix streaming in the back bedroom, a video conference taking place in mom’s home office, high-resolution photos uploading, dad in the kitchen making a Google Home grocery list—so on and etc.—there’s never any lag-time or buffering, ever, with uploads next to instantaneous. “Fiber allows the possibility for increasing connectivity between devices in the home, because data is no longer an issue,” added Eisner. “You could have 20 or 30 devices all running at once and no matter how many you have everything happens immediately… Like autonomous cars in the realm of transportation, this technology is going to absolutely revolutionize what’s possible in a household.”[222]

March 1, 2017: Tucows Announces $40 Million Stock Buyback Program

Tucows announced on March 1, 2017 that that its Board of Directors has approved a stock buyback program to repurchase from time to time up to $40 million of its common stock in the open market. The new $40 million buyback program will commence March 1, 2017 and will terminate on or before February 28, 2018. Purchases for the new $40 million buyback program will be made exclusively through the facilities of the NASDAQ Capital Market. All shares purchased by Tucows under the stock buyback program will be retired and returned to treasury. The timing and exact number of common shares purchased will be at Tucows’ discretion and will depend on available cash and market conditions. Tucows may suspend or discontinue the repurchases at any time, including in the event Tucows would be deemed to be making an acquisition of its own shares under Rule 13e-3 of the Securities Exchange Act of 1934, as amended. Subject to applicable securities laws and stock exchange rules, all purchases will occur through the open market and may be in large block purchases. Tucows does not intend to purchase its shares from its management team or other insiders. The purchase will be funded from available working capital and existing credit facilities. As of March 1, 2017, Tucows had 10,469,406 common shares outstanding.[223]

March 1, 2017: Centennial, CO - A Great Town Deserves Great Internet


Centennial, Colorado knows all about starting something: A business. A movement. It's a place to work. To play. To raise a family.

February 27, 2017: i2Coalition to Present Internet Community Leadership Award to Tucows CEO Elliot Noss

CircleID reported on February 27, 2017 that the "Ron Yokubaitis Internet Community Leadership Award" will be presented to Elliot Noss, the Chief Executive Officer and President of Tucows, at a ceremony on May 3rd in Washington, D.C., during the closing ceremonies i2Coalition's yearly Washington, D.C. Fly-In. "Elliot has been challenging industry norms since the early days of the commercial Internet. He is one of the Internet's most effective champions for users' rights during that entire period," said i2Coalition Executive Director Christian Dawson. "Elliot sees beyond the business. He works diligently through his role at Tucows, his involvement in ICANN, and his personal efforts. He identifies important opportunities Internet infrastructure providers have to bring positive change in the world. Elliot has lobbied, agitated, and educated to promote and protect the Open Internet around the world. We are proud to have him as our Internet Community Leadership Award recipient and keynote speaker for our 2017 Fly-in event."[224]

February 21, 2017: Ting Purchases Naming Rights For Holly Springs Athletic Complex

Ting Purchases Naming Rights For Holly Springs Athletic Complex. Holly Springs unanimously approved an agreement February 7, 2017 that would allow Ting to rename the town’s $19 million North Main Athletic Complex including the facility’s 1,800-seat, multi-purpose stadium and the complex at large which has been home to the Holly Springs Salamanders, a collegiate summer league baseball team, and Wake Tech’s baseball team. As part of the agreement, the town will refer to the complex by Ting’s chosen name in all official town communications, and Ting will be able to use the facility for two company-sponsored events each year. Photo: Photo: WithersRavenel

The News and Observer reported on February 21, 2017 that Holly Springs unanimously approved an agreement February 7, 2017 that would allow Ting to rename the town’s $19 million North Main Athletic Complex including the facility’s 1,800-seat, multi-purpose stadium and the complex at large which has been home to the Holly Springs Salamanders, a collegiate summer league baseball team, and Wake Tech’s baseball team. As part of the agreement, the town will refer to the complex by Ting’s chosen name in all official town communications, and Ting will be able to use the facility for two company-sponsored events each year. The three-year contract for a total of $330,000 won’t begin until the complex’s primary sign is erected. Town spokesman Mark Andrews said he expects that process could take several months. A name like “Ting Park” is expected to be chosen, although the contract gives the company some discretion over the name while giving the town veto power if a proposed name is too unusual. Daniel Weeks, Holly Springs’ assistant town manager, said the town had considered pursuing the sale of the complex’s naming rights for the past few years. The town approached Ting about six months ago about such an agreement, he said. “Ting had some interest in getting there first,” Andrews said. “Because some people still call it SAS Soccer Park. People remember who had the name first. Like with the RBC Arena, in Raleigh – I can’t even remember what it’s called now.”[225]

February 21, 2017: Holly Springs Mayor Appreciates How Unobtrusive Ting Fiber's Installation Practices Have Been Relative to Other Fiber Service Providers

The News and Observer reported on February 21, 2017 that Holly Springs Mayor Dick Sears said he has appreciated how unobtrusive Ting’s fiber installation practices have been relative to those of other fiber service providers which have generated complaints throughout the area while laying fiber cables along residential streets. Speaking about the agreement to provide naming rights to Ting for the North Main Athletic Complex, Sears said the town wouldn’t want to burden one of its most popular facilities by associating it with an unpopular company, but he’s confident Ting’s name will continue to develop a positive connotation among residents as it builds its network in Holly Springs during the next three years. “We’ve already been out to watch how they do it compared to their competition,” Sears said. “Their tear-up is minimal. When a rival company came into our neighborhood, they tore up some of the yards pretty good. They fixed it pretty well, but not great.”[226]

February 20, 2017: Rightside Activist Investor Says Enom Was Sold to Tucows Too Cheap

Comparison of NAME and TCX Stock Performance in the Month Since Rightside Sold Enom to Tucows. J Carlo Cannell, an investor who owns 9% of Rightside, says that the $76.7 million deal to sell Enom to Tucows "marks a step in the right direction” for the company, but that he was “not satisfied” with the price or the $4 million legal fees accrued. "Conversations with management suggest that the Company took only two months to evaluate and close the transaction. Perhaps if they had been more patient and diligent, shareholders would have enjoyed more than the 0.5x 2016 revenues which they received in this 'shotgun sale'," wrote Cannell.

Domain Incite reported on February 20, 2017 that J Carlo Cannell, an investor who owns 9% of Rightside, says that the $76.7 million deal to sell Enom to Tucows “marks a step in the right direction” for the company, but that he was “not satisfied” with the price or the $4 million legal fees accrued. "Conversations with management suggest that the Company took only two months to evaluate and close the transaction. Perhaps if they had been more patient and diligent, shareholders would have enjoyed more than the 0.5x 2016 revenues which they received in this 'shotgun sale'," wrote Cannell. "This price was a fraction of Tucows’ own valuation of 2.6x 2016 estimated revenue. For the two trading sessions following the Enom transaction, NAME traded up 10% while TCX was up 32%, suggesting that investors believe it was a better deal for TCX shareholders than NAME shareholders."

Cannell said last week he has formed Save NAME Group, named after Rightside’s ticker symbol, as a means to exert pressure on the board and added that it is currently “difficult to justify” the company remaining publicly listed, and that the “sale of the entire company” or a “special and substantial dividend” could help appease shareholders.[227][228]

February 19, 2017: Sandpoint City Council Passes Resolutions on Dark Fiber Fees and a Lease Agreement with Ting Fiber

The Donner County Daily Bee reported on February 19, 2017 that the Sandpoint City Council passed resolutions for dark fiber fees, a memorandum of understanding with Bonner County concerning the fiber network backbone, and a lease agreement with Ting Fiber, Inc. for a piece of city-owned property to house network equipment. Council members also heard presentations from Ting and Intermax Networks representatives who are looking to offer service to residents in the near future. Monica Hubbard from Ting said the company officials are currently focused on planning and design, which will take about six months, after which construction will begin. During the planning and design process, the company will put out a neighborhood announcement based on its pre-order campaign. Residents can pre-order service for $9, she said, which is refundable if someone changes their mind. Neighborhoods with the highest pre-order rates are generally built first, Hubbard said. "Our goal here is to start construction, based on the neighborhoods that have the strongest demand, sometime in the summer with a goal of finishing in November," Hubbard said. "If we don't finish by November, of course, we have to go into next spring and we'd rather have it wrapped up in November."

Ting will likely use the "indefeasible right of use" cost outlined in the dark fiber pricing structure, which is a lump sum, one-time fee. IRU pricing is outlined at $3,550 per strand with a six-strand minimum. For 13 to 24 strands, the price per strand is $2,367 — a 33-percent discount — and 25 or more strands at $1,183 per strand. According to the pricing structure, Ting will be charged an annual maintenance fee of $333 for up to 24 strands, and $167 per year for 25 or more strands. The maintenance fee includes a stipulation that it can be increased or decreased every other year based on changes in actual maintenance costs.

The final resolution approved by council on the topic of fiber was the lease agreement with Ting for a portion of city-owned property at the corner of Superior Street and Ella Avenue. It was determined by city staff the location would be ideal for Ting's equipment hut because the city is not using it and because it is located along the main fiber line.[229]

February 19, 2017: Intermax May Also Provide Fiber Service in Sandpoint

The Donner County Daily Bee reported on February 19, 2017 that one other company is also interested in providing fiber service in Sandpoint. Jim Cost with Intermax said Ting is "not the only player in town" and the North Idaho-based company is also looking to provide service in Sandpoint. Intermax is located in Coeur d'Alene and, while it does not offer television packages, Cost said the company offers high speed data services, managed IT services, security services and digital voice services. Since it was founded more than 10 years ago, the company has grown to more than 3,500 customers in North Idaho. "We've been building this a long time and we continue to hope to play a big part in the growth of economic development for Sandpoint and surrounding areas," Cost said.[230]

According to their web site, Intermax Networks has built the largest independent fiber and private microwave data network in North Idaho providing internet, digital phone, transport connections, and Point-to-Point circuits connecting North Idaho to places all across Idaho and the Northwest. Their main office is in Coeur d’Alene, Idaho with offices in Sandpoint and Bonners Ferry serving Kootenai, Bonner, Boundary, and Spokane Counties. Intermax supplies more than 3,000 customers with service on a monthly basis, from individual residences to major infrastructure connections for business, government, health care and schools. Their network includes direct Intermax fiber connections to: Tierpoint in Liberty Lake, Downtown Spokane (U.S. Bank), Seattle (The Westin Fiber Hub) and other POPs around the Inland Northwest. Intermax has a staff of nearly 30 people across three offices in North Idaho and is owned and managed by North Idaho people. "We have no conflicting objectives in California or Virginia. We don’t have a corporate parent expecting us to send our earnings to New York or be small outposts for large corporate mergers."[231]

Intermax says they have built the largest independent fiber network in Northern Idaho with over 350 miles of total fiber connectivity and has fiber connections at many professional and office locations in Coeur d’Alene and Sandpoint. The Intermax network taps into the internet from three core locations with direct links to Seattle, Boise, and Denver.[232]

February 17, 2017: Directors Sell Tucows Stock

The Cerbat Gem reported on February 17, 2017 that Director Rawleigh Hazen Iv Ralls sold 30,000 shares of Tucows stock at an average price of $46.85, for a total transaction of $1,405,500.00 in a transaction on February 14, 2017. Following the completion of the sale, the director now owns 188,647 shares of the company’s stock, valued at approximately $8,838,111.95.[233]

Sports Perspectives and Market News reported on February 22, 2017 that Director Allen Karp sold 2,650 shares of Tucows stock at an average price of $42.52 for a total value of $112,678.00 in a transaction that occurred on February 21, 2017.[234]

February 16, 2017: RingPlus Drops Lawsuit Against Sprint

Prepaid Reviews reported on February 16, 2017 that RingPlus has voluntarily dropped their lawsuit against Sprint that included a number of allegations including breach of contract, extortion, trade dress infringement, patent infringement, and unfair practices and competition. The lawsuit has been dismissed with prejudice, which means that it can never be brought up again. Details on exactly what kind of deal was reached (or other reasoning for the voluntary dismissal) are not available, but it seems kind of like the death knell for this little MVNO. In the meantime, customers who have not already ported out of RingPlus will be transferred to Ting.[235][236]

February 16, 2017: Why Comcast is so Afraid of Municipal Broadband and Open Access

Karl Bode wrote at Techdirt on February 16, 2017 that for years incumbent ISPs have waged a not-so-subtle war on towns and cities looking to escape from the high prices and abysmal service of the country's broadband duopoly but now many cities have taken to either building fiber networks themselves -- or striking public/private partnerships with companies like Google Fiber or Ting/Tucows -- because the private sector has failed to deliver the service and connectivity they want at prices they can afford. That's why large ISPs like Charter, Comcast and AT&T have spent the last decade lobbying for protectionist bills across twenty different states banning local citizens from making these kinds of decisions for themselves.

For example, city-owned Huntsville Utilities has been building a fiber broadband network that should service the lion's share of the city's homes and businesses over the next few years and the network will be open access -- meaning that ISPs can come in and compete with each other over the regional infrastructure. Google Fiber has already signed up to be one of at least three ISPs taking advantage of the build, and should begin offering service there by the middle of this year. "FCC data has long noted that the open access model provides consumers with better service at lower prices, thanks to the miracle of competition," says Bode. "Obviously that's a nightmare for large ISPs used to doing the bare minimum while charging captive subscribers the absolute maximum. As such, the government consistently has treated open access networks like a plague, given that regulators and lawmakers are consistently terrified of upsetting some of the biggest campaign contributors in the country."

According to the FCC Study, "Our most surprising and significant finding is that “open access” policies—unbundling, bitstream access, collocation requirements, wholesaling, and/or functional separation—are almost universally understood as having played a core role in the first generation transition to broadband in most of the high performing countries; that they now play a core role in planning for the next generation transition; and that the positive impact of such policies is strongly supported by the evidence of the first generation broadband transition. The importance of these policies in other countries is particularly surprising in the context of U.S. policy debates throughout most of this decade. While Congress adopted various open access provisions in the almost unanimously-approved Telecommunications Act of 1996, the FCC decided to abandon this mode of regulation for broadband in a series of decisions in 2001 and 2002. Open access has been largely treated as a closed issue in U.S. policy debates ever since. Yet the evidence suggests that transposing the experience of open access policy from the first generation transition to the next generation is playing a central role in current planning exercises throughout the highest performing countries. In Japan and South Korea, the two countries that are half a generation ahead of the next best performers, this has taken the form of opening up not only the fiber infrastructure (Japan) but also requiring mobile broadband access providers to open up their networks to competitors. In leading countries like Sweden and the Netherlands, following the earlier example of the United Kingdom, regulators are addressing the complexities of applying open access policy to next-generation infrastructure by pushing their telecommunications incumbents to restructure their operations and functionally separate their units that sell access to network infrastructure from their units that sell connectivity directly to consumers. Moreover, countries that long resisted the implementation of open access policies, Switzerland and New Zealand, changed course and shifted to open access policies in 2006."[237]

"Claiming that municipal broadband is spend-crazy government run amok is a violent misread of what's actually happening in these towns and cities," concludes Bode. "Municipal broadband business plans are like any other business plan; some are good, some aren't. Ideally that should be up to the locals to decide, not billionaire CEOs and grumpy armchair partisans sitting half a world away in judgement. Municipal broadband isn't the devil, it's a genuine, grassroots, local reaction to market failure; one that can be avoided by ISPs doing one thing: actually delivering the kinds of services, prices and features locals have spent fifteen years clamoring for."[238]

February 13, 2017: Google Fiber Battles ATT in Louisville With a Mix of Fiber Optics and Fixed Wireless

Google Fiber Battles ATT in Louisville With a Mix of Fiber Optics and Fixed Wireless. AT&T Fiber is unleashing an army of employees and contractors to wire up virtually every single home in the city while Google Fiber is preparing to launch the prototype for the 2.0 version of its ultra high speed service. Combined with their ongoing lawsuit over utility pole access in Louisville, it's turning the southern city into the epicenter of the fiber broadband wars of 2017--with important implications for the future of both companies and gigabit internet across the United States.

Digital Trends reported on February 13, 2017 that in early February, the "new cities" section of the Google Fiber website quietly moved Louisville, Kentucky from its list of "Potential" cities to "Upcoming" cities, joining San Antonio, Texas and Huntsville, Alabama and setting the stage for a Battleground with ATT where Google Fiber will prototype its next generation architecture, using a mix of fiber optics for the internet backbone and fixed wireless for the last mile to connect customers. This has the potential to supercharge deployments by bypassing the hardest, slowest, and most expensive part of the process--digging ditches and climbing poles to connect cables to every single residence. Meanwhile AT&T Fiber is unleashing an army of employees and contractors to wire up virtually every single home in the city where Google Fiber is preparing to launch the prototype for the 2.0 version of its ultra high speed service. Combined with their ongoing lawsuit over utility pole access in Louisville, it's turning the southern city into the epicenter of the fiber broadband wars of 2017--with important implications for the future of both companies and gigabit internet across the United States.

Return of the Jedi

Google Fiber has had a unique connection to the city ever since Louisville Mayor Greg Fischer went to bat for Google Fiber with a "One Touch Make Ready" ordinance that gave Google Fiber (and other broadband challengers) the right to make use of public utility poles owned by providers such as AT&T. Louisville and Google argued that the move was a common sense measure to bring more broadband competition and quickly spread ultra high speed internet throughout the city. According to ZD Net AT&T took the city to court over it, and Louisville immediately morphed into an important battleground for the future of Google Fiber and broadband. In the initial Google Fiber cities, it could simply make a deal with the city and get to work. However, Louisville was more like many other US cities with a tangled web of ownership, laws, and ordinances around utilities. If Google Fiber could make it in Louisville, then it could set a precedent that could spread to other cities. "We will vigorously defend the lawsuit filed today by AT&T. Gigabit fiber is too important to our city's future," said Mayor Fischer. Google Fiber joined the lawsuit on Louisville's side, and said, "Mayor Fischer, we couldn't agree with you more, and stand with you."

Fiber-optic cable infrastructure rollout costs were also a huge impediment. Last summer, Google Fiber acquired WebPass wireless, a gigabit technology that only needs point-to-point airspace, obviating the need to dig or hang cables. Webpass wireless isn’t cost effective in terms of connecting to single homes, but it’s fine for sending data traffic between larger buildings and distribution hubs. Louisville will be Google Fiber’s first hybrid wireless and fiber-optic cable gigabit internet service city.

Google Fiber's Louisville network is going to include its wireless Webpass technology for last-mile connections to homes. While other cities where Google Fiber had already done infrastructure work--San Antonio, Huntsville, and Raleigh, North Carolina--have continued with the same technology as the original Google Fiber cities, the timing of the Louisville build (along with the One Touch Make Ready battle) has made it the perfect candidate for Google Fiber to launch the 2.0 version of its gigabit ambitions. "We are excited to bring Google Fiber to Louisville and are still figuring out the path," said a Google spokesperson. "We've made great progress working with the city and are excited to find innovative new ways to deploy superfast internet, such as One Touch Make Ready and wireless technology. We'll make a full announcement with the city at the right time."

The Empire Strike Back

Then, in August, AT&T openly mocked Google Fiber's decision to start using wireless to speed up its deployments. In a published statement, AT&T said: "Google Fiber still complains it's too hard... Meanwhile, without excuses or finger-pointing, and without presenting ultimatums to cities in exchange for service, AT&T continues to deploy fiber and to connect our customers to broadband services in communities across the country. Welcome to the broadband network business, Google Fiber. We'll be watching your next move from our rear view mirror." In March 2016, AT&T touted to the press that it was about to connect its first two subdivisions to gigabit fiber in Louisville. In July, AT&T started bragging that it was already installing gigabit fiber throughout Louisville--even as Google Fiber was getting all the hype after the One Touch Make Ready ordinance, but had yet to start its deployment. AT&T's work across the city has exploded. TechRepublic has heard from several contractors associated with AT&T that the company is bringing in more and more contractors and is working non-stop to put tons of new fiber in the area. It has told the contractors that they have to keep up or else AT&T will give the business to others who can. And, that it expects to work continuously over the next couple years bringing fiber to every corner of the city.

Final Shot

All of AT&T's moves over the past couple months in Louisville appear to indicate that the telecom giant is looking to go to war over the next generation of internet broadband. And, it views Google Fiber as its most dangerous opponent. "With the lawsuit ongoing, it's clear that this battle is getting personal." writes ZD Net. "Google Fiber is setting the stage for its comeback tour, to display its latest innovations. AT&T, on the other hand, is hoping to stamp out any energy the upstart could drum up, working hard to dig and deploy gigabit before Google Fiber arrives in Derby City. In the fight for the next generation internet, Louisville is set to be the Gettysburg of the fiber war--in the courtroom and neighborhood-to-neighborhood."[239][240]

February 17, 2017: Tucows Mentioned in the Wall Street Journal

The Wall Street Journal reported on February 17, 2017 that Roslyn Layton, a visiting fellow at the American Enterprise Institute who has studied net-neutrality practices in other countries and was part of Mr. Trump’s transition team, believes we need what she calls “soft net neutrality,” where multiple stakeholders, including both big internet companies and carriers come together and make the rules together.

Investors are proceeding with caution. “We’re assuming that net neutrality in its wired and wireless fashion is gone,” says Andy Weissman, a venture capitalist at Union Square Ventures who has been an outspoken defender of net neutrality. He’s investing in Tucows, an internet service provider that is beginning to roll out fiber in some areas. Tucows will be “pure pipes” he says, which means in the future, it could differentiate from incumbent carriers by committing to equal treatment for all data.[241]

February 12, 2017: The Future of Ting Internet at McDaniel College in Westminster

The McDaniel Free Press reported on February 12, 2017 that the biggest challenge between Ting Internet and McDaniel College in Westminster is figuring out how Ting’s service will work with McDaniel’s existing infrastructure. Seamlessly combining the two infrastructures and networks may be quite difficult. “There’s some technical challenges that both of us are looking at,” says Greg Dumont, chief information officer at McDaniel, “We want to take it slow.”

Part of what makes partnering with Ting so complicated is the nature of Westminster’s fiber internet project, a private and public partnership. Like every lot in town, the city will bring the fiber infrastructure to the edge of the campus property, but it’s up to the college what to do from there. Another problem is the volume of traffic that McDaniel would add to Ting’s network. Dumont says that Ting was originally planning on operating on a single bandwidth pipe, pushing all of their traffic together. “We were a little cautious in the beginning when the project started,” Dumont said about the single pipe, “Several thousand users will be more than they’ve ever done.” But Ting soon changed their model, showing some dedication to their possible client’s interests.

Whether or not the partnership between McDaniel and Ting will work out is somewhat contingent on how the remainder of the project continues. “It’s like entering a marriage,” says Val Giovagnoni, Ting Internet city manager for Westminster, “There’s so much that has to be discovered for Ting to be explored [with McDaniel].” For now, McDaniel community members will have to wait to see what happens between the new internet provider and their college. “It’s got to be a right fit,” Dumont added, “let’s not rush anything.” “No decision has been made today,” Giovagnoni concluded. “It’s not an overnight, we’ve got to do it right. You can’t rush good things.”[242]

February 10, 2017: How Ting Has Expanded into Holly Springs

Triangle Business Journal reported on February 10, 2017 that Ting Mobile has been connecting fiber customers in Holly Springs for about a month and its earnings call on February 7, 2017 provides insight into how the math works when it comes to implementing high-speed connections. Elliot Noss, CEO of Ting’s Canadian parent Tucows, told analysts Ting expects a 20 percent adoption among its serviceable addresses in a year and 50 percent in five years. “At these take rates, we’ll be paying about $2,500 to $3,000 per customer in CapEx and those customers will be worth about $1,000 a year in margin,” he says, adding that, in Holly Springs, pre-orders are guiding the buildout. “We’re moving quickly to convert all the [Holly Springs] pre-orders in the first few neighborhoods there into active customers,” he says.

However legacy contenders have been building up their own fiber arsenals in the background. CenturyLink continues to expand its gigabit offerings in the Triangle offering its highest-tier service plan in parts of several towns across the region, such as Wake Forest, Clayton and Pittsboro, but with some geographic limits. “All new subdivisions we build into are fiber to the home with Gigabit speeds, and the growth in our markets has been robust, so more and more fiber being added daily,” Rondi Furgason, vice president of operations, said in an email. On the other hand, Wake Forest partnered with a Salisbury firm, RST Fiber three years ago, only to have the company abandon its plans (and, in some cases, its equipment) in the town.[243]

February 7, 2017: Tucows Finishes Year With Record Revenue and Earnings

Chart 1: Stock Price Chart for TCX from January 1, 2012 through February 7, 2017. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 1390% since January 1, 2012. The S&P 500 has risen 80% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)
Incremental Contribution from Ting (Before Taxes and Other Expenses) (Click on chart to expand.)
Tucows EBITDA Per Quarter (Click on chart to expand.)
Tucows Net Income Per Share Per Quarter (Click on chart to expand.)

Q4 References

Original financial documents are available at:

Revenue: Quarterly Revenue Increased 9% YOY

Tucows announced on February 7, 2017 that net revenue for the fourth quarter of 2016 increased 9% from Q4 2015 to $48.8 million from $44.7 million for the fourth quarter of 2015.[244]

Revenue: Annual Revenue Increased 11% YOY

Tucows announced on February 7, 2017 that net revenue for 2016 increased 11% to $189.8 million from $ 171.6 million for 2015.[245]

Net Income: Quarterly Net Income Decreased 7% YOY

Tucows announced on February 7, 2017 that for the fourth quarter of 2016 decreased to $2.8 million, or $0.27 per share, from $3.1 million, or $0.29 per share, for the fourth quarter of 2015. Net income for the fourth quarter of 2016 was negatively impacted during the quarter by one-time items totaling $1.0 million related to the Enom acquisition and the Ting Mobile business. [246]

Net Income: Quarterly Net Income Decreased from Q3

Tucows reported fourth-quarter net income of $2.8 million or 27 cents per share down from their record third-quarter profit of $4.7 million or 45 cents per share.[247]

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Tucows incurred some one-time expenditures totaling approximately $1 million related to the Enom acquisition and the Ting Mobile business and is still expecting to incur approximately $0.5 of additional Enom transaction related costs during the first quarter of 2017.

Noss added that "marketing expenses increased by $500,000 year-over-year, primarily for the acquisition and ongoing support of Ting Mobile and Ting Internet customers. Credit card processing fees, primarily to support the growth of Ting Mobile and Ting Internet, and contact and outside services increased by $200,000 and finally, depreciation and amortization which increased by $200,000, primary the result of our acquisition of the BRI Group in February 2015 and the acquisition of the international reseller channel of Melbourne IT in April of this year."[248]

Net Income: Annual Net Income Increased 41% YOY

Tucows announced on February 7, 2017 that for 2016 increased 41% to $16.0 million, or $1.53 per share, from $11.4 million, or $1.04 per share for 2015.[249]

EBITDA: Quarterly Adjusted EBITDA Increased 33% YOY

Tucows announced on February 7, 2017 that Adjusted EBITDA for the fourth quarter of 2016 increased to $7.3 million from $5.5 million for the fourth quarter of 2015.[250]

EBITDA: Yearly Adjusted EBITDA Increased 44% YOY Meeting Guidance

Tucows reported on February 7, 2017 that their adjusted EBITDA for 2016 was $30.13 million meeting their guidance of $30 million for the year and increased 44% YOY over the 2015 adjusted EBITDA of $20.94 million.[251]

EBITDA: Tucows is Providing Adjusted EBITDA Guidance of $50 million for 2017

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "we are providing adjusted EBITDA guidance for 2017 of $50 million. This is being delivered with continued solid growth expected in our Ting Mobile business, a bit of growth from our existing domains business and the addition of Enom. I will also note that this is being delivered while investing between $4 million and $5 million in the Ting Internet business on an operating level. I should note that this number is up only slightly from the investment this year which was higher than planned but not at all troubling."[252]

Capex: We Will Be Spending on the Enom Integration, Ting Internet, and Ting Mobile Customer Acquisition in 2017

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "there are a lot of big moving parts right now; the Enom integration, the huge opportunity represented by the Ting Internet business and some very real customer acquisition initiatives in Ting Mobile including the potential hit of credits around the RingPlus marketing transaction. We may choose to step up and spend in any of these areas. As always, we will keep you well apprised as we proceed. In terms of the transaction itself, it has been 100% financed as we have used our strong cash flows and clean balance sheet to access significant capital efficiently and inexpensively without impacting our planned capital expenditures on fiber in anyway."[253]

February 7, 2017: Ting Mobile Had 4,000 Net Adds in Q4

Number of Ting Mobile Customers Note: Ting started in February 2012. Prior to the earnings report for 2013:Q4 Tucows did not break out the number of customers or devices so the number of customers in Q1 through Q3 for 2013 is estimated. (Click on chart to expand.)
Gross Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2016 Ting Mobile had a one-time influx of 7,000 customers, migrating from PlatinumTel Wireless, also known as PTel, that closed its doors.
Chart 6: Churned Customers Per Quarter (Click on chart to expand.)
Net Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2016 Ting Mobile had a one-time influx of 7,000 customers, migrating from PlatinumTel Wireless, also known as PTel, that closed its doors.

Growth: Ting Mobile Had Net Adds of 4,000 Accounts and 10,000 Devices in Q4 2016

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Mobile added over 4,000 accounts and 10,000 devices in Q3 to bring our total to 151,000 accounts and 245,000 devices. "Taking a closer look at those numbers, it was another strong quarter of growth in devices per account as more accounts moved beyond just one device. With service on multiple networks, support for just about every old and new device on the market lower data rates and even a generous relief program for early termination fees. It is getting easier and easier for families to bring every member to Ting."[254]

Churn: Ting Mobile's Churn Rate Came Down to Just Under 2.5%

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that the fourth quarter benefited from better than expected churn at just under 2.5%. "Q4 is typically a time for increased switching throughout the category and has historically been the highest quarter for churn at Ting. That 2.5% is a welcome improvement over the 2.7% we reported in Q4 of 2015 and the 2.8% were reported last quarter. After defying seasonality for the last two quarters of the year, it seems that our data rate decrease in August has had an impact on churn. We impacted the top addressable reason why customers were leaving us and they responded almost immediately. We looked forward to a full year with these new rates and increased retention efforts."[255]

Profitability: There Was a Slight Decrease in Gross Margins for Ting Mobile

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that there was a slight decrease in mobile gross margin dollars from just over $9 million in Q3 to just under $9 million in Q4. "I want to remind you that Q3 saw inflated margin as we receive cost breaks from the carriers in July and customers did not start seeing those price breaks until early September. Now that the dust has settled from our decrease in COGS and price drop, I should update a key metric on the business. I've historically talked about Ting Mobile customers representing about $200 a year in billed gross margin, around a $35 bill at a 50% margin, and you'll remember that I took that gross margin number up last quarter. As total usage per account has increased and our costs have decreased that total gross margin dollars per year per account is now around $240. Overtime we expect bills to continue to go up with increased usage and our profit margin to go down within our margins on high usage, but we will likely continue to land around that absolute margin dollar number."[256]

Marketing: Ting Mobile Ran a Pilot Infomercial in November with Moderately Encouraging Results

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Mobile ran a pilot November with moderately encouraging results. "The placements made the phone ring which is a great start. We would like to improve the cost per call but conversion is where we need to focus. We believe that there is enough potential to test further but before we turn it back on we've been doing quite a bit of work, particularly on the conversion side. We have listened to thousands of calls and built training document scripts and tools aimed at closing more deals. We've engaged an outside sales capability to help us optimize and scale quickly through the pilot phases."

"There are very few acquisition channels that have the scalability the television does; so we are determined to give it our best shot and we are hopeful that there is a path to an acceptable cost per acquisition. The next round of testing will take place later this month and I will update you on the next call. Of course, if you're up late and happy to see the infomercial running repeatedly, you will have some early indication."[257]

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that the infomercial Ting Mobile is trying is uniquely scalable. "Television uniquely -- you're able to turn the dial and as you've heard me lament about our customer acquisition processes for years, you know, the CAC has always been fantastic but it wasn't inherently scalable. So you know, I think that for all of those reasons I've been calling out the infomercial particularly. [258]

Marketing: Ting Was Once Again the Top-Rated Post-Paid Service in Consumer Reports Annual Survey

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "in November, consumer reports released its annual survey of U.S. cell phone providers and Ting was once again the top-rated post-paid service outranking major carriers and challenger brands alike."[259]

Expansion: Ting Has Reached a Tentative Marketing Agreement to Migrate RingPlus Customers to Ting

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting has reached a tentative agreement to migrate their customers to Ting after RingPlus has announced that it will be shutting down its service. "It is simply a marketing agreement, not an acquisition of any assets or resources. They had roughly 80,000 customers, most of whom were on a free plan. We do not know how many real customers this will produce after an inevitable initial exodus but we know that it will initially inflate gross adds, churn and marketing expenses in the form of credits we are providing. We wanted to share this as it has been made public on their forum and on Reddit, and we wanted you to know that this is a good opportunity but it will take a lot of work, especially at the customer service level and we really will have no indication of success until the next call; the data simply will not be right."[260]

In answer to a question from Michael Cooperman, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "we started kind of mobilizing Saturday, so -- but between Friday and the time we eventually do migrate that base, you know, there is people who are finding new suppliers. We certainly have had a number of ports in that are awaiting approval. So that's going on, so whatever -- from the 80,000 there is going to be some number that are going to move before we do anything; so that's kind of the first point. The second point is then that base will all kind of come over to us. So yes, that's correct, mitigated by the first point. And now the third point is -- but only the people who agree to our terms of service give us a valid credit card and sign up for Ting account; and you know, as you know that means really picking a username and a password and providing the address set around the credit card, right. Only people who take those positive steps will come over."[261]

Expansion: Ting Mobile May Get Several Thousand New Customers from RingPlus

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that it's very difficult to tell what the end numbers will be like from marketing to RingPlus customers. "They were certainly -- of that 80,000 customers, the significant majority -- most of those customers took advantage of the free offering. There were still a solid number of customers well into the five figures who were paying something every month. Now it's a little bit more of a pay as you go service and the plans were all over the place; so we're looking at the usage. But I would say two things; first, this allows us to leverage some of the things we do very well. So particularly there our ability to provide a quick solution to both RingPlus and Sprint in terms of platform, our ability to get the website where it will need to be to receive these people comfortably, our ability to deal with challenges on the communication and social side to sort of all of that customer experience stuff that we do so well. In addition, this will really, really put a lot of work on customer service. So we're going to be sorting through these customers. I think I'm comfortable saying I'm -- you know, it's very difficult to say what we will expect but if we get at the end of the day, you know, it's a year from now and there is an extra 5000, 6000, 7000 regular Ting customers will be quite happy with the approach.[262]

Legislation: Ting Mobile Joined with Netflix and Google in Objecting to a Proposed Law in Virginia that Would Limit Cities Getting Involved in Fiber

In answer to a question from an analyst, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Mobile "joined with others in objecting to legislation which would have limited cities and towns in the State of Virginia from trying to take steps to be more involved in their cities getting fiber."

"Charlottesville in particular, you know, I don't think there is going to be any impact on the ground in the city in terms of our relationship with the municipal government. I will also tell you that I believe at least what I was seeing trending was that some of those issues in Virginia were going to be fairly and effectively dealt with. So I think there might be a good news outcome in some of those efforts as well."[263]

February 7, 2017: Ting Internet Continues to Move Forward

Charlottesville: Ting Internet Now Passes Over 12,000 Potential Customers in Charlottesville

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Internet added a couple of thousand serviceable addresses in Q4 bringing this up to about 12,000 potential customers.[264]

Charlottesville: Ting Internet Is Getting a 90% Converstion Rate in Charlottesville with Pre-Orders

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that pre-order is proving to be about as good as an order with over 90% conversion. "It is also worth noting that while we start -- started building the network in service and customers in Charlottesville even before we instituted our pre-order system, pre-orders now play a key role in guiding our network expansion there just as we will see in a new town like Holly Springs."[265]

Westminster: The City Is Nearly Finished with Its Next Wave of Construction and Ting Is Now Lighting Up Customers in These New Neighborhoods

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that in Westminster, Maryland, where the city is building the network, the city is nearly finished with its next wave of construction and we have just started lighting up the first customers in these new neighborhoods.[266]

Centennial: Ting Internet Expects to be Servicing the First Customers in Centennial Later This Year

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Centennial, Colorado and Sandpoint, Idaho, are both hard at work on their municipal core fiber networks and we expect to be servicing the first customers in both markets later this year.[267]

Sandpoint: Ting Internet Expects to be Servicing the First Customers in Sandpoint Later This Year

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Centennial, Colorado and Sandpoint, Idaho, are both hard at work on their municipal core fiber networks and we expect to be servicing the first customers in both markets later this year.[268]

Holly Springs: Ting Internet Lit Up the First Customers in Holly Springs

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Internet did light up the first customers in Holly Springs at the start of 2017 and "we're moving quickly to convert all the pre-orders in the first few neighborhoods there into active customers."[269]

Strategy: Ting Internet Remains Comfortable with their Core Assumptions and Metrics on Gross Margins and Adoption Rates

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Internet remains comfortable with the core assumptions and metrics that the company has shared on the Ting Internet business in previous quarterly conference calls. "The variables we will most look at optimizing going forward will be build costs and adoption rates; we do not expect to be changing those variables for your modeling quarterly. Much like gross margin per customer per year on Ting Mobile we will more likely revisit them over the years. Again, we expect to see 20% adoption among serviceable addresses in a year and 50% in five years. At these take rates we'll be paying about $2,500 to $3,000 per customer in CapEx and those customers will be worth about a $1,000 a year in margin. "[270]

Expansion: Ting Internet Expects to Have 85,000 Serviceable Addresses at Completion in the Five Announced Ting Towns

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that just these first five towns should represent about 85,000 serviceable addresses at completion.[271]

Expansion: Ting Has More In-Bound Interest Than Ever Before

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that we "certainly look forward to expanding our footprint further and we have more in-bound interest that we have ever had before"[272]

Expansion: Ting Internet Expects to Announce Additional Towns This Year

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that he expects to announce additional towns this year "but I have no imminent announcements at this time."[273]

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "there is nothing imminent but I think you will still see a couple few markets this year and the exact number will really depend on two things; one, watching some cities come out of the other end of their process; and two, how well we do with running multiple builds and multiple installed teams and multiple marketing efforts across markets as we're now taking on for the first time; so we're going to scale up a bit there."[274]

Expansion: Ting Internet Is at Capacity and Is Expanding Capacity

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "every quarter two things happen - we're at capacity and we expand capacity. This is a business that's going to be ramping up really for the next couple of few years. So there is really -- there is almost not a day in this business where we're not at capacity and that we're not working on expanding capacity at the same time. You know, if I took anything as points on a line whether it was people working on that business and head office, whether it was number of crew doing installs, number of crews during construction; all of those numbers would be up and to the right."[275]

Expansion: Ting Internet Expects to Spend $30 million to $35 million CapEx Spending for Fixed Internet in 2017

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that there will be $30 million to $35 million CapEx spending for the fixed internet in 2017.[276]

Installation: Blowing Fiber During Construction Has Received a Good Response with Customers in Holly Springs

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that there are advantages to blowing fiber in terms of not upsetting customers during construction. "It's something that our guys picked up on some of their travels in Asia. And you know, we were -- we worked with our contractor in the Holly Springs to practice with that and the thing that probably was most positive to come out of that is that really when -- you know, when we were on your street, getting your street ready for fiber you noticed much less than would have historically or traditionally been the case. So we had a very good response from the people of Holly Springs, just in terms of not upsetting them too much which often when people are laying conduit laying infrastructure, there tends to be a lot of issues and here there is not very much gap between -- we're doing the construction work and we'd love to have you as a customer. So we think that's pretty positive and we were pretty aggressive on social as well in dealing with anybody who did have a question or an issue."

There are also some costs savings to blowing fiber. "What used to take a number of human beings laying fiber in an open trench or a ditch is now done by machine in seconds. So there absolutely is a real cost savings to it."[277]

Expansion: You Can Take the Capex Spend and Divide That by Installation Cost to Come up with the Number of Serviceable Addresses

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "you can take the CapEx spend, you can divide it by the cost per build that we put out which is think about that in the $1,250 to $1,500 range and you can get to the number of serviceable addresses we're projecting, then you can look at the markets that we're in and you can kind of lay them out of the map and you can fill in however many additional cities you want for the rest of the addresses."[278]

Learn more at:

Expansion: Interest in Ting Internet Remains Strong

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that interest rates remains consistently strong. "I do think that a lot of municipal processes are kind of waiting a little bit to see what happens with some of the infrastructure program or infrastructure tax plan. There is a lot of regulatory uncertainty right now, for some that's causing them to maybe try and accelerate, for others that maybe they are a little -- you know, sitting back a little more but the native interest is just as strong as it's ever been and continues to get stronger as people need for fast reliable Internet over fiber increases."[279]

Profitability: Ting Internet is Still Looking at Breakeven in 2018

In answer to a question from Huber Mak, Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that Ting Internet is looking for breakeven here operationally for 2018. "What I said more specifically was towards the end of 2018, so not necessarily in 2018. And that was -- if you remember Hubert, that was the way I kind of flagged it for the Ting Mobile business as well. You know, what I'm looking at there is less about what is the calendar year result and more -- what is -- you know, when does it move from costing money to generating money."[280]

February 7, 2017: Domain Services Has Doubled in Size with the Acquisition of Enom

Acquisitions: Acquiring Enom is Overwhelmingly about Generating Scale and Realizing Cost Efficiencies

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that the acquisition of Enom is overwhelmingly about generating scale and realizing cost efficiencies and most of these will be realized through greater efficiency in the technical footprint and a much lower reliance on licensed software. "As a quick recap, on January 20, Tucows acquired Enom, a wholesale domain name registrar from the Rightside group for a purchase price of $83.5 million. The Enom business has approximately 14.5 million domains under management, 28,000 resellers and approximately $15 million in EBITDA which we hope to be able to expand to $20 million over the next 24 months as we realize the synergies available to us."[281]

Acquisitions: The Enom Business is a Flat, Potentially Even Slightly Negative Growth Business

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that the Enom business is a flat, potentially even slightly negative growth business in terms of gross margin dollars. "This is primarily due to the customer mix being composed of a higher number of traditional web hosting companies in North America and Europe, the two customer profiles that we've been calling out as more growth challenged for the past couple of years. Enom also has historically lower renewal rates than the open SRS business."[282]

Acquisitions: The Strategy with Enom Will be Maintaining and Servicing Existing Customers as Opposed to Growth

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "as part of the Enom acquisition, we acquired a mature retail business and associative customers which for the past few years has been more about maintaining and servicing Enom existing customers as opposed to growth, it has not been actively promoted and as a result has a flat to declining trajectory. It's something we don't intend to change in the short-term but as we look under the hood and get a better sense of the platform as we will with all of the operations, the long-term plan might be different. Going forward we're not going to be breaking the two retail businesses out separately. We'll report a single retail domain line as we always have but we will provide a sense of how these individual businesses are doing relative to their current trajectories. On the people side, we've already recognized a few places where we will be able to use people and skills more broadly. We all know that the domain's business is a very low margin business and one where you have to be extremely careful of your costs. Accordingly, we've always run the domains business pretty lean, this gives us a singular opportunity to take advantage of the good people we've been able to pick up. We even see some opportunities in people across the Ting businesses."[283]

Wholesale: Wholesale Performance Has Had Steady Growth

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "in our wholesale channel, total registrations for the fourth quarter were up 19% year-over-year with continued strong growth in open SRS transactions supplemented by the addition of the Melbourne IT names acquired in April of 2016. The number of new transactions grew by 18% and renewals were up and equally healthy 19%. Our renewal rate continued in its historical range of within a point or so of the 75% coming in at 76% in Q4, well above the industry average. Total domains under management expanded 12% from the end of Q4 last year to 14.9 million with a bulk of that driven by the Melbourne IT acquisition. I will also highlight that in Q4 gross margin again increased continuing an ongoing trend as we continue to benefit from the shift to mix in higher margin product."[284]

Retail: Hover Delivered Strong Performance

Elliot Noss told analysts during the 2016 fourth quarter earnings conference call on February 7, 2017 that "on the retail front, Hover delivered another strong performance with gross margin up 13% from Q4 2015 driven by continued steady growth in the customer base which was up 22% from the end of 2015. And I will note for you that our customer growth in Q4 benefited from a one-time pick up of about 13,000 customers from a deaccredited registrar. In addition, our renewal rates remained well above the industry average at 81%."[285]

February 6, 2017: Venture Capital Firm Union Square Ventures (USV) Invests in a Public Company, Tucows, For the First Time

Venturebeat reported on February 6, 2017 that in a blog post authored by partner Brad Burnham, VC firm Union Square Ventures (USV) announced that it had made a substantial investment in Tucows. This is the first time USV is making an investment in a public company, an uncommon practice among top VC firms. It’s unknown at present how long USV intends to hold its Tucows shares, the size of the investment, or from what fund the investment was made.[286] Burnham joined the Tucows Board of Directors on January 12, 2017.

We are investing in Tucows because we believe they have built a great business, but also because they have been a stalwart defender of the open Internet. We are excited to be working with them now because they are challenging the incumbent access providers and the conventional wisdom, by building modern fiber networks in local communities across the U.S.. They are doing this at a time when telephone and cable companies are exploiting their natural monopolies in these communities, underinvesting in their outdated networks, raising prices and using the excess profits to buy back their stock, and buy their way into global entertainment businesses, pleasing shareholders but doing nothing for the communities they serve.

Tucows is doing the exact opposite. They are using hard won profits from the competitive wholesale domain name business to invest in modern fiber networks in cities like Charlottesville VA, Holly Springs, NC, and Centennial, CO. They believe, as we do, that, a modern communications infrastructure is the most important investment any community can make to expedite the transition from a 20th century economy based on undifferentiated manufacturing to a 21st century economy based on highly specialized manufacturing and services.

The cable and telephone companies would like us to believe the open Internet is threatened by over reaching government regulation. In fact, it is threatened by crony capitalism. Instead of investing in local communities, the incumbents deploy thousands of lobbyists to argue that communities should not be able to invest in their own future. We are thrilled to be working with Tucows, because instead of lobbying Washington, to prevent competition, they are actively investing in fiber networks, the critical 21st century community infrastructure, and while they are at it, proving that investing in community fiber networks is a great business.[287]

"I have been bugging Brad to join the board for years," said Elliot Noss. "Of course I love all of the folks at USV, but this is really about Brad. As they noted, this is not their typical investment (at all). In fact it is the mirror image in many ways. That being said we have lots to learn from each other and we are both excited to start working on things together. And it is nice to have a sexy VC in the domains space!"[288]

February 6, 2017: Ting has Struck a Deal with Sprint to Move All Displaced RingPlus Customers over to Ting

Cnet reported on February 6, 2017 that mobile carrier (and Sprint MVNO) RingPlus sent a notice to subscribers indicating service would be shut off on February 11, 2017 so it's time to start shopping for a new carrier because if you don't make a change before service terminates on Saturday, you'll lose your phone number. Ting, an MVNO famed for its excellent customer service, is already welcoming RingPlus refugees with open arms offering $35 in Ting credit to RingPlus customers that bring their number over to Ting. There's no charge to port your number, though Ting does warn that the process could take a couple days.[289] "Number ports from RingPlus to Ting are running slowly right now because of volume. Things should speed up once RingPlus opens the gates. While a lot of MVNOs might consider this a “heavy lift,” we’ve done this kind of thing a few times before so rest assured, you’ll be in good hands."[290]

The Ting Blog reported on February 7, 2017 that Ting has struck a deal with Sprint to move all displaced RingPlus customers over to Ting. "Assuming you haven’t already ported your number away from RingPlus, it will soon be safe with Ting. If you choose to take us up on our offer, which we’ll talk about in a sec, you’ll join the ranks of happy Ting customers paying a fair price for whatever usage levels you reach each month," reads the post. "If you choose not to stick with Ting, that’s your call. We’re not holding your number hostage: You’re free to go wherever the mobile winds may blow. That probably didn’t need to be quite so poetic. Whatever. Point stands. Your number is yours. If nothing else, we’ve bought you a little time to figure out your next move. Obvious biases aside, we think you should stick around."[291]

According to Fortune Magazine RingPlus has 90,000 wireless customers.[292]

February 1, 2017: Ting Celebrates Fifth Birthday

Ting Celebrates Fifth Birthday. Ting celebrates its fifth birthday today with a look back at the ups and downs of five years of service.
Ting Celebrates Fifth Birthday. In the five years since Tucows started Ting, the stock price has risen 1573% while the S&P500 has risen 79%. Click graphic to enlarge.

The Ting Blog reported on February 1, 2017 that Ting celebrates its fifth birthday today with a look back at the ups and downs of five years of service.

Ting mobile was conceived of the idea that cell phone companies ask too much and give too little. We took aim at contracts, bundling and locking people in. We came out against mobile business as usual: “Free” phones that come with handcuffs, bloated unlimited plans that lock people in to pay for stuff they don’t need or use and fee creep that makes the bill you receive look nothing like the plan you signed up for. People really seemed to appreciate our straight-forward approach, honest pricing and the much needed clarity we try to bring to an industry that profits on confusion. We really appreciate the appreciation. We believe that you win your customer’s business every day. We’re proud of the work we’ve done and we’re not about to rest on our laurels.

Since launching Ting with mobile that makes sense, we’ve branched out to offer crazy fast fiber Internet in select US cities and towns. Symmetrical gigabit Internet. Suffice it to say, that’s going pretty well. We’ve heard more conglomerate cable co. horror stories than we care to recall in our visits to the various Ting towns. It’s clear that if there’s one place where our open, conscientious and honest approach is more needed than in the mobile space, it’s in fixed Internet access. People are tired of getting tired, tiered Internet access over tired copper that wasn’t designed with today’s Internet in mind. We’ve laid down roots in Westminster, MD, Charlottesville, VA, Holly Springs, NC and we’ll come online soon in other towns and cities including Sandpoint, ID and Centennial, CO.

Some Ting mobile wins. Perhaps our most notable achievement on the mobile side: We dropped our prices. Twice. First, coinciding with our two year anniversary, we cut voice, text and data rates across the board. Later, after successfully negotiating with our carrier partners, we were able to drop data pricing further, down to $10 per gigabyte after the first. In classic Ting style, these price cuts were across the board, for both new and existing customers. No grandfathering and certainly no forcing customers to call and threaten to leave in order to extend the new pricing to them. We launched service on a second network, adding GSM to our existing nationwide coverage. Thus affording people more coverage options and—the thing we were most excited about—more phone choices. With this addition, over 80 percent of phones in the market were able to come to Ting and the Ting Shop was no longer the only place someone could buy a Ting-compatible phone. Since unlocked phones have become more the norm in North America (called it!) that 80 percent number continues to grow.

We’ve had the distinct honor of being included in Consumer Reports annual survey on cell phone service several years running, beating out the big guys handily and trading top honors back and forth with other scrappy MVNOs intent on changing what people expect from phone companies. A little foresight and a little good fortune saw us working with Neeb, the top ranked North American StarCraft II pro gamer who consistently leaves a trail of computer-generated carnage in his wake. Seeing him in his Ting Starcraft jersey and hoisting the KeSPA Cup, the first North American in 16 years to do so, was quite a moment.

Every rose has its thorn. It hasn’t all been smooth sailing and we’ve had some challenges to face along the way to year five. The first one that comes to mind, the “financial eligibility date” rules that came into effect in February, 2015. Our blog post on the subject still has the dubious distinction of being the most commented on post to hit the Ting blog. We got past that and ended up in a better place for it with even more phones becoming eligible to come to Ting.

Another bump in the road: Someone found a way to exploit a little coffee-themed incentive program we ran and managed to snag a bunch of $5 digital gift cards very quickly… to the tune of >$35,000. We shut this person down, invalidated the codes, closed the loophole and got the promo back up and running quickly. We learned some important lessons. Not least of which, have someone with a criminal mind examine your promotions for possible loopholes.[293]

February 2, 2017: Tucows OpenSRS Partners with Symatec to Introduce 'Encryption Everywhere'

Tucows OpenSRS Blog reported on February 2, 2017 that Tucows has partnered with Symantec to bring resellers the Encryption Everywhere program, an ambitious program designed to equip everyone with basic web security, free of charge. Tucows is offering SSL Lite to all its resellers – a complimentary certificate that provides basic encryption without the bells and whistles. If your domains are registered through OpenSRS and you are using our SystemDNS nameservers, resellers will be eligible to grab a FREE certificate through the Reseller Control Panel/API. "So what’s in it for you? There are numerous reasons why you should take advantage of the Encryption Everywhere program. For starters, you can strengthen your trust with your customers. Also, upselling to more robust certificates leads to growth. Lastly, you are contributing to a better, safer Internet for all. Yes, even for that lonely cave dweller. It’s a win-win situation for everyone."[294]

February 1, 2017: Chair of Centennial’s Fiber Steering Committee Runs for Mayor

The Villager Publisher reported on February 1, 2017 that Centennial Mayor pro tem C.J. Whelan, the chair of Centennial’s Fiber Steering Committee, has become the first candidate to officially announce his candidacy for the top elected job in this year’s municipal elections. The City Council member and 30-year resident has promised to bring “smart, experienced and responsible leadership,” saying he deeply believes in “Centennial’s way of doing business” and “saving up for capital projects and maintaining no debt and a healthy balance sheet, and contracting out for most of the city’s services.” As mayor, the tech-savvy Whelan said he would continue driving Centennial’s fiber-optic network, as approved by voters. Canada’s Ting reached a lease agreement with the city last year. Whelan boasts two degrees from the Massachusetts Institute of Technology and the business owner co-founded and was chief technical officer for a teleconferencing company. Cathy Noon, the 16-year-old city’s second mayor, is term-limited.[295]

February 1, 2017: Google Fiber Debuts Raleigh Service Near Ting's Holly Springs Location

Google Fiber Debuts Raleigh Service Near Ting's Holly Springs Location. Google Fiber is debuting in Raleigh and has begun taking a handful of “advanced orders” in in Raleigh’s North Hills/midtown area. Ting Fiber, just down the road from Raleigh, recently started connecting customers to high-speed fiber in Holly Springs, a metro Google Fiber left out of its plans. According to Noss having just spent a quarter digging in the dirt in Holly Springs, North Carolina,” he could relate to Google’s reprioritization when it comes to fiber. Graphic: Hugh Pickens

The Triangle Business Journal reported on February 1, 2017 that Google Fiber is debuting in Raleigh and has begun taking a handful of “advanced orders” in in Raleigh’s North Hills/midtown area. “We’ve seen tremendous response in Morrisville and we expect the same tremendous response in North Hills/Midtown,” said Erik Garr, Google Fiber regional manager. Garr declined to be specific about how many people have signed up for the service in the Triangle, but says all is going according to plan. Additional geographic launches “will all depend on how long it takes to finish North Hills/Midtown,” he says, adding that North Hills was picked for engineering reasons.

In October, Google Fiber said it would “pause” operations in most of the cities it had announced as potential locales for the service. Blair Levin, former director of the National Broadband Plan, said the reasoning behind Google’s rollout reduction is pretty simple: “It’s hard and expensive ... It's not an accident that there are very few companies willing to take that risk ... As Google Fiber slows ... what you’re going to see is a slowdown by the other companies offering improved speeds and lower prices, so the advantage to North Carolina just increases, actually."

Ting Fiber, just down the road from Raleigh, recently started connecting customers to high-speed fiber in Holly Springs, a metro Google Fiber left out of its plans. According to Noss having just spent a quarter digging in the dirt in Holly Springs, North Carolina,” he could relate to Google’s reprioritization when it comes to fiber. “It does not perfectly match their skills,” adding that it would take time for Google to “learn [fiber’s] complexities.”[296]

January 27, 2017: Sandpoint Sets Hearing for Proposed Fee Structure for Leasing Fiber to Ting

The Bonner County Daily Bee reported on January 27, 2017 that Sanpoint City Administrator Jennifer Stapleton presented the Sandpoint City Council last week with a "dark fiber" fee structure proposal, which was approved through a vote with a public hearing scheduled for February 15, 2017 for adoption of the fees structure for leasing fiber to bring it to businesses and residents in the Sandpoint area. City officials worked with consultants from Design Nine to develop the proposed fee structure. "Dark fiber," according to the proposed structure, will cost providers $150 a month per strand, with a required five-year minimum contract and $250 application fee. One conduit line on the backbone containing 144 fiber strands is an open-access network that can be leased out to public and private companies like Ting.

Stapleton said service providers like Ting, a company that has been interested in bringing fiber to local businesses and residents for several months, would likely use the "indefeasible right of use" (IRU) pricing also listed in the proposal. IRU prices refer to a lump sum, one-time fee, which Stapleton said essentially gives the lessee ownership of the strands. "It is the most common structure in terms of ownership or, I guess, perpetual leasing of fiber," Stapleton said. "In these models it has the benefit to the city that it assures us the maintenance operations revenue stream in perpetuity as well. There is not a lot of cost once the fiber is in the ground and there really isn't, at this point, a set time that (the fiber) expires and is no good any longer."

IRU pricing is proposed at $3,550 per strand with a six-strand minimum. For 13 to 24 strands, the price per strand is $2,367 — a 33-percent discount — and 25 or more strands at $1,183 per strand. According to the proposed structure, providers will be charged an annual maintenance fee of $333 for up to 24 strands, and $167 per year for 25 or more strands. The maintenance fee includes a stipulation that it can be increased or decreased every other year based on changes in actual maintenance costs.[297]

Indefeasible right of use (IRU) is a permanent contractual agreement, that cannot be undone, between the owners of a communications system and a customer of that system. The word "indefeasible" means "not capable of being annulled, or voided, or undone." The customer purchases the right to use a certain amount of the capacity of the system, for a specified number of years. IRU contracts are almost always long term, commonly lasting 20 to 30 years. The communication system can be a wire cable, such as submarine communications cable, or a fiber optic cable, or a satellite. Depending on the type of system the customer might be buying exclusive use of one, or more, wires in a wire cable, fibers in a fiber optic cable, or channels through a satellite. An IRU owner can unconditionally and exclusively use the relevant capacity of the IRU grantor’s network for the specified time period.[298]

January 26, 2017: Neteo Explores Competing with Ting to Provide Gigabit Internet Service to Centennial

Neteo Explores Competing with Ting to Provide Gigabit Internet Service to Centennial. Neteo, a wireless internet service provider for Morrison, Colorado, is testing customer demand for gigabit internet in the city of Centennial joining Ting who began taking pre-orders in September although the Canadian ISP has not signed an official agreement yet with the city. Meanwhile officials from Ting Internet were in town this week to meet with residents, said Adam Eisner, Ting’s vice president of networks. “The response so far has been very positive,” Eisner said. “Alongside that, we are undertaking a lot of planning right now, from how much of Centennial’s fiber network we will leverage via lease to exactly where we will build, and the specifics behind that. We’re hoping to announce more details in the coming weeks.” Photo: City of Centennial

The Denver Post reported on January 26, 2017 that Neteo, a wireless internet service provider for Morrison, Colorado, is testing customer demand for gigabit internet in the city of Centennial joining Ting who began taking pre-orders in September although the Canadian ISP has not signed an official agreement yet with the city. “This is great because that was our goal from the beginning," said Allison Wittern, a city spokeswoman. “All along we’ve said we wanted to increase competition and generate interest." Neteo already offers wireless internet in Morrison, Conifer, Evergreen and other cities but faster internet has been challenging for the small startup, which doesn’t have the resources to tear up roads to run fiber cables, said Ryan Smith, Neteo’s co-founder. “The city is doing two things I like: They’re putting in a backbone but they’re not becoming an ISP,” Smith said. Neteo is exploring the possibility of offering fiber-based internet to homeowners, apartment dwellers and businesses in Centennial and is taking sign-ups at their web site.

Meanwhile officials from Ting Internet were in town this week to meet with residents, said Adam Eisner, Ting’s vice president of networks. “The response so far has been very positive,” Eisner said. “Alongside that, we are undertaking a lot of planning right now, from how much of Centennial’s fiber network we will leverage via lease to exactly where we will build, and the specifics behind that. We’re hoping to announce more details in the coming weeks.”[299] Tucows CEO Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that in Centennial Ting Internet "hopes to be able to begin our construction in Q2 2017 or so and start lighting up customers sometime in the summer."

January 25, 2017: Elliot Noss Says Combining Tucows with Enom Will Be Done Piece by Piece with Backwards Compatibility in Mind

Namescon reported on January 25, 2017 on their interview with Tucows CEO Elliot Noss that touched on a number of topics. With regard to the purchase of Enom which added 14.5 million domains under management and 28,000 active resellers to Tucows, Noss says that combining the two entities will be done piece by piece with backwards compatibility in mind. Noss referred to himself as an ICANN troublemaker after Tucows was described by the US White House as “notorious” because the registrar wouldn’t take down names just because a government demanded it. “Groups like the EFF [Electronic Frontier Foundation] and others came to our defense,” said Noss.[300]

January 25, 2017: Elliot Noss Says There are 20,000 Cities in America That Will Eventually Need Fiber

Namescon reported on January 25, 2017 on their interview with Tucows CEO Elliot Noss that Ting is now working on a fiber-to-home product, to bring high-speed internet to whomever wants it and says that there are 20,000 cities and towns in the United States that are eventually going to need fiber, so competition with Google isn’t something that keeps him up at night: “There aren’t a lot of people doing this.” Cities are approaching Ting on their own, asking to be… fiber-ized.[301]

January 25, 2017: Elliot Noss Says He Discovered Internet Law in His Student Days

Namescon reported on January 25, 2017 on their interview with Tucows CEO Elliot Noss that Noss says he discovered internet law in his student days, and noted one truism: “The legal system just moves too slow.” Noss doesn’t worry too much about individual pieces of legislation, because they tend to be backwards-looking in an industry where everything moves forward very quickly. However, he notes, there are real casualties of poorly-written or badly-implemented internet law. Keep running forward, he advised anyone in the internet industry. Noss recounted his failure in trying to get Tucows into music and movie distribution. When they launched the first wholesale blog hosting platform in 2003, he was sure it would be a success… but it was not to be. Blogging blew up, sure, he said; but “nobody ever paid for it.”

Noss noted that he "was an abject failure until I was 35 years old!” and spent his life waiting for the internet to come along… and when it did, it was slow and painful to use. “I knew as soon as I touched it that it was going to be what it is [today].” Noss joined Tucows when it was a download site for freeware and shareware, and that introduced him to the intricacies of domain names. “At that time if you could configure an email address, you had godlike powers!” In the nineties, Tucows got into the pre-ICANN push for new TLDs. Noss values long-term relationships with employees and customers alike and says that it takes a long time to figure out what you’re doing at a job. “I’ve been extremely lucky to be in one place, working for one company, for twenty years now."[302]

January 25, 2017: Ting Joins Google and Netflix in Fight against Virginia Municipal Broadband Restrictions

Ars Technica reported on January 25, 2017 that Google, Netflix, and Ting joined advocacy groups and other companies lobbying against a proposed Virginia state law that would make it far more difficult for municipalities to offer Internet service. "This bill would effectively ban new public broadband networks and public-private partnerships and cripple existing ones, harming both the public and private sectors, retarding economic growth, preventing the creation or retention of jobs around the Commonwealth, particularly in rural areas, hampering work force development, and diminishing the quality of life in Virginia," bill opponents including Google and Netflix wrote in a letter last week to State House Commerce Committee Chairman Terry Kilgore, a Republican. Cities and towns with speeds limited to 10Mbps/1Mbps "cannot realistically hope to attract or retain modern businesses or provide their residents, particularly their young people, a reason to stay in them," the letter to Kilgore said. "These communities will be condemned to economic stagnation or worse—like the 'ghost towns' that died a century ago for lack of adequate electricity."[303][304]

The bill is being heavily promoted by the Virginia Cable Telecommunications Association. Virginia is only the latest state to consider such laws. Missouri is also contemplating a similar restriction in SB 186, which places numerous restrictions on how municipal broadband (or public private partnerships) can be drafted, voted on, and funded. "Frequently, the efforts are framed by ISPs and their PR allies as taxpayer disasters waiting to happen," writes Karl Bode. "But these business models are like any business model: some are good, and some aren't. Often overlooked is the fact that these towns and cities wouldn't be getting into the broadband business if they were happy with the service they're getting. And instead of shoring up their service and competing, ISPs like AT&T, Comcast, CenturyLink, Charter and others are happily buying state laws to ensure they never have to."[305]

January 25, 2017: Video of Ting's First Installation in Holly Springs


Ting representatives and local officials gathered to ceremonially light up the fiber connection for Holly Springs’ first Ting customer – Josh Bordelon of Dexter Ridge Drive. “If you have lot of devices connected concurrently or you work from home, gigabit internet changes the way you use the internet,” said Adam Eisner, vice president of networks for Ting. “The individual we lit up was talking about how the way he uses video has entirely changed. No more buffering, no more spinning wheels. He just turns it on and there it is.” Eisner said his company tends to look for rapidly growing and tech-savvy small towns that might be passed over by larger fiber-optic players such as Google or AT&T. Holly Springs was attractive, Eisner said, because the town already had installed a fiber network ready for lease.

January 25, 2017: Ting Fiber Now Online in Holly Springs

Ting Fiber Now Online in Holly Springs. Josh Bordelon of Dexter Ridge Drive in Holly Springs stands next to his laptop and fiber-optic control panel. He was the first customer in Holly Springs to receive the service through Ting. Photo: Courtesy of Ting Internet

The News Observer reported on January 25, 2017 that about 2,000 addresses in Holly Springs now have access to fiber-optic internet through Ting and on the morning of January 17, 2017 Ting representatives and local officials gathered to ceremonially light up the fiber connection for Holly Springs’ first Ting customer – Josh Bordelon of Dexter Ridge Drive. “If you have lot of devices connected concurrently or you work from home, gigabit internet changes the way you use the internet,” said Adam Eisner, vice president of networks for Ting. “The individual we lit up was talking about how the way he uses video has entirely changed. No more buffering, no more spinning wheels. He just turns it on and there it is.” Eisner said his company tends to look for rapidly growing and tech-savvy small towns that might be passed over by larger fiber-optic players such as Google or AT&T. Holly Springs was attractive, Eisner said, because the town already had installed a fiber network ready for lease.

Ting is one of several active and prospective fiber-optic internet providers in the Triangle. AT&T’s fiber service already covers parts of Holly Springs. Google and Frontier are also competing to bring fiber-optic internet to the area. Google Fiber plans to expand to several Triangle towns after launching first in Morrisville. The connections went live in September 2016. Google and AT&T’s gigabit home services both cost $70 per month. The scramble to install the necessary fiber-optic cable has drawn hundreds of complaints from residents around the Triangle as contractors dig up roads, sidewalks and yards to lay cable. Mark Andrews, a spokesman for Holly Springs, said the town hasn’t kept track of which companies are associated with complaints about utility work. But Andrews said residents comments suggest Ting has been relatively diligent in minimizing the impact of its cable installations.[306]

January 23, 2017: Tucows Amends Credit Agreement to an Aggregate of $140 million in Funds

Reuters reported on January 23, 2017 that under an SEC filing on January 20, 2017 Tucows entered into a first amended and restated credit agreement increasing their access to an aggregate of $140 million in funds. The amended credit agreement reduces the existing non-revolving facility from $40 million to $35 million and establishes a non-revolving credit facility of $85 million.[307]

January 23, 2017: Elliot Noss Encourages Canadian Municipalities to Ensure Their Communities Have Access to High Speed Internet

Wire Service reported on January 23, 2016 that in December, 2016 the Canadian Radio-television and Telecommunications Commission (CRTC) ruled that all Canadians should have access to reliable, world-class Internet services and the Commission established a $750 million fund to help municipalities, ISPs, community access programs, and non-profit service providers to deliver these services to Canadians. According to the CRTC, local governments have a crucial role in delivering faster, cheaper Internet to their communities. That's the message of a new platform launching today with the support of the Canadian Internet Registration Authority (CIRA) Community Investment Program. The platform highlights a number of municipalities in urban and rural communities alike which have successfully rolled out affordable, high-speed Internet, most often through deploying fibre networks.

"Over the last century, governments have taken measures to ensure citizens have access to critical services, including electricity, phone, water and sewer," said Elliot Noss, CEO of Toronto-based Tucows. "Today, high-speed Internet is considered an essential service, and we applaud municipalities taking steps to ensure their communities have access to the transformative power of the Internet. We especially look forward to seeing the kinds of innovative partnerships that Ting has cultivated with local governments in the U.S. to enable gigabit Internet right here in Canada."[308]

January 20, 2017: Tucows Acquires Enom with its Network of over 28,000 Domain Name Resellers and 14.5 million Domain Names under Management

Tucows Acquires Enom with its Network of over 28,000 Domain Name Resellers. Tucows announced on January 20, 2017 that it has acquired Enom from Rightside for $83.5 million, less a net working capital adjustment of $6.8 million, resulting in net cash at closing of $76.7 million. The Enom business is a leading wholesale registrar that provides domain services to a network of over 28,000 resellers. Enom has approximately 14.5 million domains under management and generated approximately $116.5 million in revenue through Q3 2016, primarily from its wholesale registrar business.

Nasdaq reported on January 20, 2017 that Tucows has acquired Enom from Rightside for $83.5 million, less a net working capital adjustment of $6.8 million, resulting in net cash at closing of $76.7 million. The Enom business is a leading wholesale registrar that provides domain services to a network of over 28,000 resellers. Enom has approximately 14.5 million domains under management and generated approximately $116.5 million in revenue through Q3 2016, primarily from its wholesale registrar business. That will give Tucows a total network of over 40,000 resellers globally and 29 million domains under management, making it the second largest domain registrar in the world.

As part of Tucows, Enom will continue to be a distribution partner for Rightside’s new gTLDs. Rightside will receive $76.7 million of net cash proceeds from the transaction, net of working capital adjustments. Concurrent with close, Rightside will pay approximately $4 million of transaction related expenses and will repay all of the debt outstanding under its credit facility. Following the transaction, Rightside will be in a strong financial position with approximately $90 million in cash on its balance sheet.

“The divestiture of Enom creates a stronger alignment between Rightside’s vision, strategy and financial profile and we believe this is the best way to increase shareholder value,” said Chief Executive Officer Taryn Naidu. “The market for new gTLDs is rapidly developing and the divestiture enables us to more intensely focus on our higher growth and higher margin businesses, where our Registry and Name.com businesses are leading the way with the new domains. We would like to thank our Enom colleagues for their hard work in building such a well-respected business and for their dedication to Rightside. We look forward to seeing their continued success and continuing to work with Enom as a valuable distribution partner as part of Tucows."

“Enom is one of the great and long-lived brands in the domain industry, with an outstanding reputation among its large network of resellers,” said Elliot Noss, President and Chief Executive Officer of Tucows. “We welcome Enom’s talented team into the Tucows family as they continue to deliver innovative products and excellent service to resellers and end-customers.”[309]

“For years, Enom and OpenSRS have been the two leading registrars primarily focused on the needs of resellers. This focus means these businesses fit very well together,” said David Woroch, Tucows’ Executive Vice President of Domains. “The acquisition keeps Enom resellers where they will be well understood, well valued and well served and creates tremendous value for Tucows and resellers on both sides through efficiency and scale.”

Elliot Noss, Tucows’ CEO added, “This industry has changed so much since Tucows and Enom each launched wholesale registrar services over fifteen years ago and .com, .net and .org essentially represented the namespace. It is a lot more challenging and complex now. At the same time, it is more mature and much more competitive. Scale is absolutely critical. This is a rare deal that gives Tucows and its investors exactly that while offering an immediate cash on cash return.”[310]

January 18, 2017: Ting Fiber Uses Existing City Networks in Holly Springs to Accelerate Fiber Builds

Fierce Wireless reported on January 18, 2017 that one of the secrets that allows Ting Fiber to accelerate their deployment and scale quickly is that they use the city’s existing fiber backbone in markets like Holly Springs, North Carolina, where it just began to connect neighborhood residents with its 1 Gbps FTTH service. “The town of Holly Springs built its own fiber backbone, so we’re leasing some of the backbone and building off of it,” said Adam Eisner, VP of networks for Ting Internet. “That means we did not have to go in and build a backbone through the middle of town.” Ting still has to build fiber into each neighborhood and then install a fiber drop and the optical network terminal (ONT) at the customer’s home. “To get into every neighborhood, we still had to go and construct that ourselves,” Eisner said.[311]

January 18, 2017: Ting Fiber Used Underground Deployment in Holly Springs, Aerial Deployment in Charlottesville

Fierce Wireless reported on January 18, 2017 that Ting uses varied deployment approaches, including a mix of underground and aerial poles across the initial markets where it offers service. “In Holly Springs it’s entirely underground which was new to us as an organization; it worked out very well,” said Adam Eisner, VP of networks for Ting Internet. In Charlottesville, Virginia, the network is all on aerial utility poles, while in Westminster, Maryland, Ting is just operating the network the city already built.[312]

January 18, 2017: Ting Deploys Optical Network Terminals Inside Homes Rather Than Outside

Fierce Wireless reported on January 18, 2017 that when Ting bought Blue Ridge Networks in Virginia, they tried deploying the Optical Network Terminals (ONT) both inside and outside the home and settled on bringing it indoors. “There are some real philosophies on whether you should use an indoor or outdoor ONT,” said Adam Eisner, VP of networks for Ting Internet. Eisner said that while there are various camps on whether to install an ONT inside or outside of a home, Ting found it has various options at its disposal. After initially using a converged ONT and residential gateway (RG), Ting found that customers wanted separate units. This allows customers to have more flexibility in how they deploy a Wi-Fi network and other devices in their homes to connect to the internet and stream video content. “We found that people seemed happier if we separate it out,” Eisner said. “We put the ONT on the inside and giving people the option of using an RG we provide or allowing the consumer to bring their own.”

In the neighborhoods it has targeted for buildouts, Ting will pass every home with fiber and only connect a home when they order service. “We have deployed enough capacity to hook up anybody in a neighborhood, but we don’t build a drop to your house until you sign up for service,” Eisner said. “We build an underground drop to the side of your home and put the ONT inside.”[313]

January 18, 2017: Ting Fiber Used Blown Fiber to Accelerate Fiber Deployment in Holly Springs

Ting Fiber Used Blown Fiber to Accelerate Fiber Deployment in Holly Springs. Ting used blown fiber, a process that uses air to push the microfiber through a duct to to ease fiber network installations in Holly Springs. “We blew a lot of the fiber,” said Adam Eisner, VP of networks for Ting Internet. “Fiber blowing as a deployment technique is still kind of new in North America.” Eisner added that “after watching service providers in Europe use fiber blowing, we gave it a shot and it’s worked very well.”

Fierce Wireless reported on January 18, 2017 that Ting used blown fiber, a process that uses air to push the microfiber through a duct to to ease fiber network installations in Holly Springs. “We blew a lot of the fiber,” said Adam Eisner, VP of networks for Ting Internet. “Fiber blowing as a deployment technique is still kind of new in North America.” Eisner added that “after watching service providers in Europe use fiber blowing, we gave it a shot and it’s worked very well.”[314]

Fiber Blowing also known as cable jetting is the process of blowing a cable through a duct while simultaneously pushing the cable into the duct. Compressed air is injected at the duct inlet and flows through the duct and along the cable at high speed. (Preferably, no suction pig is used at the cable head.) The high speed air propels the cable due to drag forces and pressure drop. The friction of the cable against the duct is reduced by the distributed airflow, and large forces that would generate high friction are avoided. Because of the expanding airflow, the air propelling forces are relatively small at the cable inlet and large at the air exhaust end of the duct. To compensate for this, an additional pushing force is applied to the cable by the jetting equipment. The pushing force, acting mainly near the cable inlet, combined with the airflow propelling forces, increases the maximum jetting distance considerably. Special lubricants have been developed for cable jetting to further reduce friction.

The advantages of jetting compared to pulling include: Longer installation distances can be reached; Installation distance less dependent on bends and undulations in duct; Forces exerted on the cable are lower; Easier use jet in tandem operation; The step of installing a winch rope is avoided; Equipment is needed only at one end of the duct route.[315] According to Clay Harris, a fiber blowing specialist with Condux, blowing is one of the most efficient and safest means of installing fiber optic cable. "When using fiber blowers, you're combining a pulling force (compressed air) and a pushing force (hydraulically driven tracks) during the installation, providing an efficient, stress-free deployment in far greater increments than possible when pulling fiber," Harris said. Because the blowing operation floats the cable on a cushion of air, it minimizes the contact points with the duct-reducing the friction that would be created by pulling the fiber through the duct with a fiber optic cable puller. A high-quality, silicone-based lubricant is also used to further minimize the friction, especially when navigating the bends. "Compared to a pulling application, blowing cable is faster and puts the cable under less stress. Through cable blowing, contractors are able to install more cable per day with less manpower," Harris said.[316]

January 16, 2017: Legislator Sponsors Bill to Ban Towns and Cities in Virginia and Private ISP Partners like Ting and Google Fiber From Improving Local Broadband

DSL reports reported on January 16, 2017 that Republican lawmaker Kathy Byron is sponsoring a bill in Virginia that would ban towns and cities from improving their local broadband, even if locals vote to approve such a measure. HB 2108 is dubbed the Virginia Broadband Deployment Act, but it actually stops deployment. It's most key component is a restriction that prevents towns and cities from deploying their own broadband networks if there's an incumbent ISP offering speeds of 10 Mbps down, 1 Mbps up to 90% of the state.

The bill is being heavily promoted by the Virginia Cable Telecommunications Association. Virginia is only the latest state to consider such laws. Missouri is also contemplating a similar restriction in SB 186, which places numerous restrictions on how municipal broadband (or public private partnerships) can be drafted, voted on, and funded. "Frequently, the efforts are framed by ISPs and their PR allies as taxpayer disasters waiting to happen," writes Karl Bode. "But these business models are like any business model: some are good, and some aren't. Often overlooked is the fact that these towns and cities wouldn't be getting into the broadband business if they were happy with the service they're getting. And instead of shoring up their service and competing, ISPs like AT&T, Comcast, CenturyLink, Charter and others are happily buying state laws to ensure they never have to."[317]

Summary of Virginia Broadband Deployment Act. Provides that a locality or a locality's affiliate may own and operate a broadband or Internet communications system, including ownership or lease of fiber optic or other communications lines and facilities, to provide broadband expansion services if a variety of conditions are met, including a report or study by an independent consulting firm knowledgeable and experienced in analyzing broadband deployment, such as the Center for Innovative Technology, which report or study specifically identifies any unserved areas. An unserved area is an area in which broadband speeds are not generally available from any provider. The bill defines "broadband speeds" as average Internet speeds of both 10 Mbps or more download and 1 Mbps or more upload. A locality or a locality's affiliate that seeks or desires to provide "overbuild broadband services," shall not do so unless it complies with various operating requirements. The bill defines "overbuild broadband services" as broadband or Internet services offered by a locality or its affiliate in exchange for compensation that do not qualify as internal government services or broadband expansion services. The bill also repeals several disclosure exclusions related to local telecommunications services that currently exist under the Freedom of Information Act (§ 2.2-3700 et seq.).[318]

January 13, 2017: Ting to Connect Their First Customer in Holly Springs

The Triangle Business Journal reported on January 13, 2017 that after a process that’s spanned fifteen months, Ting is about to pull the trigger on fiber internet in Holly Springs as the first customer gets connected. Holly Springs officials will join Ting on January 17, 2017 at an address on Dexter Ridge Drive the fiber team said in a media invitation. There's been a lot accomplished since October 2015 when Ting announced it was assessing a plan to bring ultra high-speed internet to Holly Springs. Tucows CEO Elliot Noss said in the Tucows November, 2016 earnings conference that Ting had competencies in alignment for a rollout – and, more importantly, that it could make the math work. Noss told investors that spending about $2,500 to $3,000 per customer yields a recurring margin of about $1,000. He said the goal is to achieve 50 percent penetration in five years in the fiber cities Ting serves.[319]

Phase 1 construction is now complete in the neighborhoods of Holly Glen, Braxton Village and Holly Pointeand construction is underway in the Phase 2 neighborhoods of Oak Hall, Windcrest, Morgan Park, Windward Pointe. “We’re through the ‘dirt and hard work’ phase of construction here in Phase 1,” said Adam Eisner, VP Networks, Ting Internet. “While construction of the larger network in Holly Springs is ongoing, we’re very happy to be able to start getting people connected with crazy fast fiber Internet here, starting today.” “Ting has demonstrated its commitment to Holly Springs, and that’s exactly what we look for when working with the private sector,” said Holly Springs Mayor Dick Sears. “The citizens of Holly Springs deserve the best Internet access to allow them to telecommute, to inspire kids with the possibilities technology brings and to keep Holly Springs growing at the impressive pace we’ve been driving.”[320]

Chronology of Ting Fiber Rollout in Holly Springs

Following is the chronology of Ting Fiber rollout in Holly Springs from the initial announcement in October, 2015 to the first live customer in January 2017:

January 12, 2017: Brad Burnham Joins Tucows Board of Directors

Brad Burnham Joins Tucows Board of Directors. Burnham is a managing partner at Union Square Ventures. “Tucows, with Ting in particular, has huge ambitions right now.” explained Tucows CEO Elliot Noss. “We are providing core services in mobile and fixed Internet and competing with some of the largest, most successful companies in the world, like AT&T and Comcast. But we want to challenge pricing conventions, offer far better experiences, contribute more to local communities and create greater returns for investors. In that regard, we are holding ourselves up against the kinds of companies in Brad’s portfolio. We want to be that usable, delightful, bold and innovative. Brad might be singularly qualified to help us with that challenge.” Photo: Burnham at Poptech 2012 by Thatcher Cook for PopTech Flickr Creative Commons. Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0)

Reuters reported on January 12, 2017 that Brad Burnham has joined Tucows' board of directors.[321]

"On January 12, 2017, the Board of Directors (the "Board") of Tucows Inc. (the "Company") increased the size of the Board to seven members and, upon the recommendation of the Corporate Governance, Nominating and Compensation Committee of the Board, appointed Brad Burnham to the Board as a director, with a term expiring at the Company's 2017 Annual Meeting of Shareholders. There were no arrangements or understandings between Mr. Burnham and any other persons pursuant to which Mr. Burnham was selected as a director of the Company. The Board has determined that Mr. Burnham is an independent director in accordance with the NASDAQ listing standards. Mr. Burnham will be compensated pursuant to the Company's independent director compensation plan including, without limitation, an initial grant of options to purchase 4,375 shares of the Company's common stock at an exercise price per share that is equal to the closing price per share of the Company's common share as reported on the NASDAQ Capital Market on the date of the grant."

“Tucows, with Ting in particular, has huge ambitions right now.” explained Tucows CEO Elliot Noss. “We are providing core services in mobile and fixed Internet and competing with some of the largest, most successful companies in the world, like AT&T and Comcast. But we want to challenge pricing conventions, offer far better experiences, contribute more to local communities and create greater returns for investors. In that regard, we are holding ourselves up against the kinds of companies in Brad’s portfolio. We want to be that usable, delightful, bold and innovative. Brad might be singularly qualified to help us with that challenge.”

Mr. Burnham added, "I am a huge fan of decentralized, bottom up, start-up innovation. I feel fortunate to have been able to work with companies that fundamentally transformed markets. I think Tucows has an exceptional opportunity to change the way we think about access to the Internet.”[322]

Burnham is a managing partner at Union Square Ventures. Burnham started working in information technology with AT&T in 1979, spun Echo Logic out of Bell Laboratories in 1989 and joined AT&T Ventures in 1993. Burnham co-founded TACODA in 2001 before joining Fred Wilson to create Union Square Ventures in 2003.[323] Burnham currently serves on the boards of Indeed, Pinch Media, Tumblr, Wesabe, Adaptive Blue, SimulMedia, UpCompany, Meetup, and Bug Labs.[324]

Union Square Ventures (USV), is an American New York-based venture capital firm, that manages assets totaling $1 billion as of March 2016. The firm is one of the top returning venture capital funds in the world, its 2004 fund returning 13.91 times cash-on-cash with an IRR of 67.0%. The firm has had a billion dollar exit every year since 2011 including Zynga ’11 at 7.7B, Indeed ’12 at 1.4B, Tumblr ’13 1.1B, Twitter ’13 at 14.2 B, Lending Club ’14 at 5.42B, Etsy ’15 at 1.78B and Twilio ’16 at 1.23B.[325]

"I believe that free market capitalism has created enormous amount of wealth for a very large number of people," says Burnham, "and that the alternative systems have not succeeded in creating that amount of wealth. I think that the peer economy is a logical evolution of free market capitalism. The large incumbent bureaucratic hierarchies that dominate sectors of the existing economy actually constrain free market capitalism, because they've gotten to a point where they control policy and politicians, and affect the ability for people to compete, and stuff like that. I think the peer economy is an extension of that free market capitalism."[326]

January 4, 2017: TCX Reaches New Closing High, Market Cap Exceeds $400 million for First Time

Nasdaq reported that Tucows stock (TCX) rose 1.00 points to reach a new closing high of 37.45. Tucows market cap also exceeded $400 million for the first time with a market cap of $402,890,000. Tucows made new closing highes on January 9, 2017 closing at 37.95, and January 13, 2017 closing ar 38.00.

January 1, 2017: After Millions Of Investment, Jurisdictions in Maryland Try To Achieve Potential Of Fiber Network

The Baltimore Sun reported on January 1, 2017 that three years ago, the state of Maryland completed one of the nation's largest public investments in a fiber optic network— installing hundreds of miles of cables that politicians said would secure fire and police communications, spur economic development and lead to faster, cheaper internet. The network, much of it financed by $115 million in federal stimulus funds, connects primarily to public buildings, like schools, libraries and police and fire stations but today much of that potential remains untapped, lying unlit like a 21st-century highway to nowhere. Bringing fiber to individual homes and offices is expensive — installation often requires negotiating permits and rights of way, and digging up streets. Across the country, investment by big internet providers such as Comcast and Verizon has lagged, especially in poor or rural areas.

Progress toward making greater use of the region's public fiber varies. The city of Westminster floated $21 million in bonds to install a fiber network. The city granted Ting, a unit of a Canadian telecom company, the exclusive right to lease its network in the beginning, but other internet providers eventually will be able to lease fiber and offer service to customers, competing on price. "It's a perfect division of labor," said Dr. Robert P. Wack, president of Westminster's City Council.

Officials in other jurisdictions said they want to use the networks to spur economic development but are still figuring out which model will work. "The question is, how do you enable a government-owned infrastructure to be used commercially?" asked Rick Napolitano, interim chief information officer in Anne Arundel. Plans "are in the incubation stages and will likely take many years to develop."[327]

December 22, 2016: Sandpoint Officials Are Finalizing Fiber Lease Rates to Ting

The Bonner County Daily Bee reported on December 22, 2016 that city officials in Sandpoint are working on finalizing a maintenance and operations plan for fiber, as well as a rate structure for leasing the infrastructure to private providers looking to expand service into the community. Ting, a fiber service provider that has been looking at expanding the service in Sandpoint, announced last week it plans to have fiber Internet available to the community in June or July of 2017, which City administrator Jennifer Stapleton said is contingent upon the city finalizing lease rates. Those rates are expected to be finalized in January, said Stapleton.[328]

December 21, 2016: Some Say Paying Centennial Councilmen to Oversee Fiber May Violate City Charter

The Villager reported on December 21, 2016 that the Centennial City Council voted 7-2 on December 12, 2016 to create a city-owned business operation to manage the leasing of Centennial’s multi-use underground fiber-optic network and the commission’s members, three of whom are to be sitting councilmembers, are slated to receive $350 per month. “City Councilmembers are policymakers, not to be involved in operational matters,” argued Councilmember Kathy Turley, the second no vote on the question. Assistant City Attorney Maureen Juran, who helped facilitate the drafting of the city charter says that the stipend did not rise to the level of substantive employment, but said she had not done extensive research into the question.

The move to create Fiberworks comes three years after Centennial voters overwhelmingly approved a measure allowing the city to lease its 48 miles of publicly owned fiber-optic lines. In October, Canada-based Ting announced plans to bring its high-speed internet services—or “crazy fast internet,” as the company says—to Centennial next year. Ting will be the first firm to do so since voters allowed the city to create a nonexclusive broadband network from fiber-optic lines that have so far been used only for traffic-signal operations and connecting public facilities. Centennial is required to lease its $5 million in fiber-optic lines on a nonexclusive basis, meaning the city cannot exclude any cable or internet companies.[329]

November 19, 2016: Ting Sponsors Annual Holiday Lighting Event in Centennial Center Park

The Centennial Citizen reported on November 28, 2016 that Ting sponsored the fifth annual holiday lighting event on November 19, 2016 in Centennial Center Park. Dancers from the Denver Ballet Theater Academy leaped and twirled to select pieces from "The Nutcracker" as about 4,000 people attended the event. After the "Nutcracker" performances, choirs from Newton Middle School and Creekside, Peakview, Peabody, Sandburg and Homestead elementaries performed holiday songs leading up to the tree lighting. The evening concluded with Mayor Cathy Noon and seven members of Centennial's city council surrounding Santa as he plugged in the holiday lights.[330]

November 9, 2016: Ninety-Five Colorado Communities Have Voted Yes on Broadband Internet Alternatives

The Denver Post reported on November 9, 2016 that 26 Colorado municipalities have approved ballot measures allowing them to explore the idea of offering their own broadband internet service joining 69 other counties and municipalities in the state — or 95 total, according to Community Broadband Networks — who voted in years past to opt out of SB 152.

However many of the municipalities are still be in the exploratory phase, if they’ve done anything at all. “A lot of communities are nervous and really prefer for someone else to come in and invest,” said Christopher Mitchell of the Institute for Local Self-Reliance, which tracked voting in 26 municipalities Tuesday on MuniNetworks.org. “But there are just not a lot of private companies that have the ability to come in and work with communities in a partnership today.”

One company that appears to be moving forward is Ting Internet, which hopes to latch on to Centennial’s plans to build a fiber network in the city. Ting, a division of Tucows in Canada, would offer gigabit internet to city residents by connecting to that main internet pipe. “It’s going really well. I’d be surprised and disappointed if we didn’t do it. But we haven’t put a shovel in the ground yet,” said Adam Eisner, Ting’s vice president of networks. ““What I’ve seen on the ground is we’re getting a lot of attention from different areas because of what we’ve been doing with our partnership in Centennial. There just aren’t a lot of providers that will go, ‘Yeah, we’ll go in on that.'”[331]

November 7, 2016: Tucows Reports Record Third-Quarter Profit of $4.7 million

Chart 1: Stock Price Chart for TCX from January 1, 2012 through November 7, 2016. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 975% since January 1, 2012. The S&P 500 has risen 68% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)
Incremental Contribution from Ting (Before Taxes and Other Expenses) (Click on chart to expand.)
Tucows EBITDA Per Quarter (Click on chart to expand.)
Tucows Net Income Per Share Per Quarter (Click on chart to expand.)

AP reported on November 9, 2016 that Tucows reported third-quarter profit of $4.7 million or 45 cents per share on revenue of $49.1 million.[332]

See also:

Revenue: Quarterly Revenue Increased 11% YOY

Tucows announced on November 7, 2016 that net revenue for the third quarter of 2016 increased 11% from Q3 2015 to $49.0 million from $44.29 million for the third quarter of 2015.[333]

Profitability: Net Income for the Year Increased 50% YOY

Tucows announced on November 7, 2016 that net income for the third quarter of 2016 increased 50% to $4.7 million or $0.45 per share from $3.1 million, or $0.29 per share, for the third quarter of 2015.[334]

EBITDA: Adjusted EBITDA for the Year Increased 48% YOY

Tucows announced on November 7, 2016 that adjusted EBITDA for the third quarter of 2016 increased 48% to $8.5 million from $5.8 million for the third quarter of 2015.[335]

EBITDA: Tucows Reiterates Adjusted EBITDA guidance of $30 million for 2016

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Tucows is reiterating its existing adjusted EBITDA guidance of $30 million for 2016.[336]

EBITDA: Tucows Has Changed the Way the Company Computes EBITDA

Michael Cooperman told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Tucows modified the definition for adjusted EBITDA in response to clarification guidance regarding non-GAAP measures issued by the SEC in May, 2016. "The SEC guidance indicated that adjusted earnings for deferred revenue may not be consistent with disclosure rules. Accordingly we have revised our definition of adjusted EBITDA to eliminate the adjustment for the effective net deferred revenue to reflect net revenue on an earned basis. For those of you wishing to compute our adjusted EBITDA in our prior definitions, this can be done with reference to our disclosure financials and our MD&A. Adjusted EBITDA using this new definition for the third quarter increased 48% to $8.6 million from $5.8 million for the corresponding period last year."[337]

See the *Calculation of Tucows' New Adjusted EBITDA under the SEC Compliance Update

November 7, 2016: Ting Mobile Growth Slows with 3,000 Net Adds in Q3

Number of Ting Mobile Customers Note: Ting started in February 2012. Prior to the earnings report for 2013:Q4 Tucows did not break out the number of customers or devices so the number of customers in Q1 through Q3 for 2013 is estimated. (Click on chart to expand.)
Gross Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2016 Ting Mobile had a one-time influx of 7,000 customers, migrating from PlatinumTel Wireless, also known as PTel, that closed its doors.
Chart 6: Churned Customers Per Quarter (Click on chart to expand.)
Net Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2016 Ting Mobile had a one-time influx of 7,000 customers, migrating from PlatinumTel Wireless, also known as PTel, that closed its doors.

Growth: Ting Mobile Had Net Adds of 3,000 Accounts and 8,000 Devices in Q2 2016

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Mobile added over 3,000 accounts and 8,000 devices in Q3 to bring Ting's total to 147,000 accounts and 235,000 devices.[338]

Churn: Ting Mobile's Churn Rate was 2.8%

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that churn was 2.8% in Q3. "We are seeing some successes with efforts intended to reduce churn and at the same time, the base continues to get slightly more challenging with the mix between carriers. We expect churn to rise again a bit in Q4 and then drop in Q1 and Q2."

Noss added that he expects monthly churns to average out to around 2.5% for the year.[339]

Profitability: Gross Margins for Ting Mobile Remain in the 45% to 50% Range

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that after the recent price decrease and reductions in cost, Ting Mobile still slightly above the 45% to 50% gross margin target. "We expect this will come down as we see more data usage at higher levels. This may take a quarter or two to sort out and we will continue to watch it and keep you posted. We are of course thrilled to have more competitive data pricing in an increasingly data hungry world."[340]

Profitability: Price Decreases Have Not Had Much Impact on Gross Account Adds Yet

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Mobile's price decrease has not had much impact yet on gross account adds. "Our new pricing was necessary more than newsworthy. As we continued to share our challenges brand awareness and we do expect that as we grow awareness, the price decrease will contribute positively to conversion. I've talked on prior calls about some of our key strategic directions with respect to gross adds and I want to give you an update on these. First, retail; as I said, we've seen a modest contribution from our distribution at Kroger and Staples locations but it has not given us a material lift. These partnerships offer presence but not a lot of push. We will continue to work these opportunities and others. Now that we have experience, they are easier to execute and do give us a bit of mainstream exposure and credibility but we do not expect to invest much more there or get much more there."[341]

Affiliates: The Challenge in Affiliate Relationships is Finding Scale

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that the challenge in affiliate relationships is finding scale. "Most of the large national affinity groups have exclusivity with a major carrier, the largest private organizations and enterprises tend to push their employees to the carriers that they use at an enterprise level. So we need to work around the edges and grow through smaller partnerships. We are doing that and we are finding wins but just like our direct response efforts through bloggers, podcasters, social media and other channels, we expect affiliates to be an efficient slowly growing contributor to our acquisition program rather than a step change. Through the last few quarters we have learned better what winners look like and use that learning to try and find more. We will continue to grind here."[342]

Sales Process: Ting Mobile Continues to Optimize Sales Capability

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Mobile's continues to focus on strengthening its sales capability from direct response drivers of traffic and calls to an optimized purchase path to sales processes and people to close deals on the phone.

"We have made progress there and as we've begun to have more confidence in both, our tracking and our performance, we have started to look more aggressively for sources of potential new customers. Closers that includes simply increasing our advertising spend and familiar platforms like Ad Words and Twitter where we can test landing pages, special offers, phone tactics, lead capture tactics, retargeting and more. Slightly further out, we're experimenting with targeting and digital display campaigns that model prospects against our current customers."[343]

Marketing: Ting Mobile Has Produced an Infomercial

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Mobile has produced a Ting infomercial.

"In the next couple of weeks, we're going to test an entirely new direct response vehicle that we think can also give us some of the bigger, broader awareness we need," said Noss. "This is a full half hour program in the traditional infomercial format, it is heavily focused on a Sensex [ph] spirited customer testimonials leveraging Ting's biggest asset, its reputation. As with other infomercials, it is not in the voice that we usually use to talk with our customers but it does a wonderful job of illustrating how Ting treats customers better and costs them less, and we are hopeful that it will be very appealing to an audience that is less technical. And as I have said politely less than our current base. We will be running at a lower rates during late night and early morning hours for a couple of weeks in November. If we like the traffic and calls that generate, we will look to scale in the New Year.

This is a slightly larger bet than we've made in the past, I think mid-six figures but given the size of the business and the size of the opportunity, we feel it's well worth it is tiny relative to media spend in the category."

In answer to a question from Matt Miller from Bayview Asset Management on concerns about an infomercial approach to brand editing, Noss responded that that he had no concerns. "What would I say is none. So I think the way that we experienced it when we first considered it and really throughout the process is that the response was more emotional than rational. So I think that there is it's a very, very different voice, which is what I tried to call out in the script there than we usually talk to our customers, we usually talk to our customers more conversationally, we usually talk to them in a little more sophisticated way. We have to respect that there's a lot of great product that is moved in a lot of high volume through these channels, and I think we I don't mean you and I, I mean we internally here. And I think that probably what gave us -- I mean when you see it and happy to let you, when you see it, it certainly is an infomercial. There's no -- it's clear that that's what it is, but I will also tell you that the biggest Body of topic in there is customer testimonials, and those are completely consistent with the way that we approach our communication. And had completely consistent with everything that we would have wished and hoped our customers would say of us. So I think that what sometimes you serve a dish that you might not eat regularly and it serves you well."[344]

November 7, 2016: Ting Internet Is Moving Forward

Strategy: Ting Internet is Focusing on Expanding Supply to Meet Demand

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "on Ting Internet, Q3 was primarily about expanding supply to meet demand."[345]

Strategy: 2016 Has Been a Year of Learning for Ting Internet

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that 2016 has really been a year of learning for Ting Internet.

"In Ting Internet, we have learned the nuts and bolts of operating a fiber channel. We have learned how to work city opportunities through a pipeline. We have learned how to start a build in a new market dealing with everything; from design to staffing. We have done it all while spending wisely. Most importantly, we have learned that Ting Internet plays to our organizational strengths of strong back office, excellent customer service, attention to detail, and sense of community and building long-term win-win partnerships with communities in the same way we have historically done so with customers, employees and investors."[346]

Charlottesville: Ting Internet has Doubled its Install Team

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that in Charlottesville both Ting Internet's network and customer base continue to grow and Ting Internet has doubled the install team. "This allows us to handle more installs every day and has helped to produce continual months of record new customer install. It also allows us to extend the network quality more quickly to the neighborhoods with the most pre-orders and to housing developments and multi-dwelling units that want to offer gigabit space to the residents. It also provides golden learning for future markets."[347]

Charlottesville: Ting Internet Now Passes Over 10,000 Potential Customers

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Internet's "network in Charlottesville now passes over 10,000 potential customers and we will continue to expand aggressively through 2017."[348]

Westminster: The Next Wave of Construction is Underway

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that in Westminster where the city is building the network, the next wave of construction is underway. "So I've said we're only at about 300 serviceable addresses right now in Westminster. The city projects another 2,700 addresses finished by this time next year.[349]

Holly Springs: Ting Internet Expects to Light Up the First Customers by the End of 2016

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that in Holly Springs Ting Internet "expects to light up the first customers by the end of the year and get to around ten thousand serviceable addresses throughout Holly Springs by the end of 2017."[350]

Centennial: Ting Internet Hopes to Begin Construction in Q2 2017 and Start Lighting Up Customers in Summer 2017

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that in Centennial Ting Internet "hopes to be able to begin our construction in Q2 2017 or so and start lighting up customers sometime in the summer."

"It will be our largest single town to date and we impressed with how quickly Centennial reaches consensus and makes decisions and how willing it embraces private partnerships to get things done. We have already started taking preorders and they have begun construction on their core fiber network. We hope to be able to begin our construction in Q2 2017 or so and start lighting up customers sometime in the summer. I'm confident Centennial will be a great partner with a great community of savvy-forward thinking residents and businesses. Centennial is also still working on the buildout of their core fiber network. Pre-orders there continue to be strong, we hope to start lining up the first customers there in mid-2017 as well."[351]

Profitability: Ting Internet Expects to Have 85,000 Serviceable Addresses Within 5 Years with the Existing Five Towns

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "altogether and in the state, these five towns will represent about 85,000 serviceable addresses, and 50% adoption after five years an average margin of $1,000 a year for customer. You have a business right there that would surpass the current Ting Mobile and build gross margin."[352]

Profitability: Tucows Continues to Feel Positive About their Investment in Ting Internet

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Tucows continues to feel good about the numbers and their investment in Ting Internet, "specifically spending $2,500 to $3,000 per customer for a recurring margin of about $1,000 year."

In answer to a question from Patrick Retzer, Noss reiterated that he sticks by his estimate of about a 50% penetration rate after five years and a $1000 of gross profit per subscriber. "Okay. So just on, the -- we're looking at when the companies reach that point, gross profit of $42.5 million a year," said Retzer. "I mean and to put that in perspective, your gross profit for the first nine months of the year for their entire company was $46.6 million."[353]

Expansion: Ting Internet Does Not Expect to Announce Any Additional Towns Before the End of the Year

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Internet does "not expect to announce any additional towns between now and the end of the year. With the five current projects we will be in execution phase for a bit. We continue to work the pipeline but we have plenty of building to do with the markets we've announced."[354]

Expansion: Ting Internet Doesn't See Hurdles in Adding to its Major City Pipeline

In answer to a question from Matt Miller from Bayview Asset Management, Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Internet doesn't really see much in the way of hurdles to adding to the pipeline.

"The limiting factor there is our ability to want to sort of increase the breadth of what we take on or the surface area of attack, we're really treating it very seriously. We want to be great at it and we think to rush it would be a mistake. So there are there is -- there is it's not hurdles that we see there is just sort of us keeping ourselves in check."[355]

Challenges: Ting Internet Sees Two Potential Hurdles Affecting Their Penetration Targets

In answer to a question from Matt Miller from Bayview Asset Management, Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "in terms of hurdles around penetration, I think there is two that I would call out, one internal one external."

"The external we really haven't yet seen, we haven't seen I won't say yet as if it's an eventuality but we do expect it, a strong competitive response from competitors in our markets, we think a part of that is because it's early days, the first and most likely place we would see that would be Charlottesville. I think it's an expectation, we certainly have of bring it on attitude, but we do respect the competition and we well understand that that's going to be something that we would be -- we would minimize it to our churn. So, I think we -- that's kind of its unknown and it's certainly a hurdle.

The internal hurdle that I reference is we really do think that what we're trying to do on a marketing level is a bit unique. When I talk about hyperlocal marketing on a national scale, how do you go into a location the size of Holly Springs, or Sandpoint or Centennial and really achieve national brand scale in that small footprint. It takes new and innovative thinking and approaches and techniques and we're really just at the beginning of that. I've got real confidence in the folks that are handling it. I think people are thinking about the problem in the right way and I think it's like a lot of other things, it's going to take experience and practice and learning."[356]

Challenges: Ting Internet Does Not See a Large Competitive Threat From 5G

In answer to a question from Daniel Asoski from Asoski Capital regarding regarding 5G risks when it comes to the fiber business, Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Ting Internet is very comfortable with the idea that fiber is the best, fastest, most reliable medium or for internet access.

"We think that there is the fact that it's light over glass, really puts us bumping up against some of the limits that physics provides over 5G. In the longer term, I think most people who talk about it know that we're still three to five years away from a standard for 5G. So I don't mind saying that we think 5G. provides more opportunity than it does a threat in that, when you project out a few years, the thing that 5G will need the most is to get on a fiber backbone as quickly as possible and the one thing that is unmistakable truth is that in Ting towns, we will have by far the richest and deepest fiber network.

Meaning if you want to have a great 5G coverage in the same town you need to speak to us about back call, and I think I can say that we're in the back call business, you should model that in four years; I could say that because we're talking about 5G which again is three to five years away. So, we're not worried when it comes to five or about tech ups lessons.

And then when you talk about sort of what are we most worried about, I think that that it will be by far it's executing around these opportunities; don't take on too much too fast, but take on enough that we're continually challenging ourselves. I talked just in the previous set of questions about competitive response from some of the existing competitors, that's something again that we take very seriously. And I think that the one of the things that we don't worry about is whether the demand for better, faster, cheaper, more reliable internet access, will continue to increase significantly. I hope that gets at it for you."[357]

CapEx: Tucows Expects CapEx for Ting Internet to Come in at less than $10 million for the Year

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Tucows expects CapEx for Ting Internet to come in it less than $10 million for the year."

"There is nothing negative in this lowered number. Simply learning about the nature and pace of fiber deployments. We will apply this learning to 2017 and beyond. In addition, when we laid out our guidance for the year. We share what we expected to spend, roughly $2.5 in 2016 on Ting Internet at an operating level. At this point, we think this number will more likely come in at $3.5 million to $4 million. Again, we continue to grow and learn and are very happy with the spend."[358]

CapEx: Ting Internet Expects to Begin Deploying Capital Toward Fiber on a Greater Scale in 2017

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "as we look towards 2017 and beyond, we expect to be deploying capital towards fiber and other significant opportunities on a greater scale than in the past."

"We feel that the combination of operating opportunities and capital deployment opportunities that sit in front of us really play to our strengths and bode well for our ability to provide outsized returns for years to come."

In answer to a question form Hubert Mark from Cormark Securities, Noss added that you're going to see CapEx rise pretty significantly year-over-year. "here is a lot of boring and digging to be done simply in those markets. So we will see the increase pretty significantly and in terms of the pipeline, I think we're learning that cities take a long time to come through on one hand and on the other, that -- when you're doing as a fiber build, there is a lot of work involved. And so what I was trying to do a little bit when I was laying out simply the number of addresses that you see in these markets is to say look, there is a lot here, there is a business here already that by no means means we're not going to be adding markets in 2017, I fully expect us to but it's to say that's probably not the most important variable to track. And as always, we'll keep you well in the loop as we go along."[359]

Google Fiber: Google is Finding that Fiber Installation is Messy, Unpredictable, and Does Not Perfectly Match Their Skills

Elliot Noss talked to analysts during the 2016 third quarter earnings conference call on November 7, 2016 about Google Fiber.

"Google has built one of the largest and most successful company in the world with unparalleled achievements in advanced computer science and organizational scaling. They have astonishing aspirations to cure highway traffic and death, among other things. Like any business, they prioritize among their opportunities based on fit with their core competencies, competitive landscape, and potential return on investment.

Having just spent a quarter digging in the dirt in Holly Springs North Carolina. It does not surprise me that building fiber networks would not be Google's highest priority. It is messy and unpredictable. It does not perfectly match their skills. We also think that they have been clear that they too are not abandoning the work but are taking time to learn its complexities. As for us, we don't mind getting dirty. Billing, provisioning, customer service and process innovation are the keys to this business. Those match our core competencies well. Google will also in parallel be pushing advances in cutting edge wireless technologies. We think wireless has an important place in the total connectivity toolkit but we are looking at the fiber business a ground level and we like what we see."

In answer to a question from Patrick Retzer, Noss added that "what we haven't seen yet is one of the cities that Google explicitly pulled back from, reaching out to us but I would note Pat, that I really when people talk about them pulling away or pulling back, I really think it's more accurate to describe them as taking stock and recognizing, that they're in I want to say it's their business not mine; So don't quote me, I want to see the eleven markets that they're staying in and that we're looking at five markets and saying; wow this is plenty for us to really sort of refine our game here and I think they're looking at the markets they're in and saying the same thing.

It's an operationally complex business and I looked at their announcement in some ways sort of a positive reinforcement of our view that this was complicated operationally and that the right thing to do was kind of get okay, and then good and then great. So, we felt whatever really smart people like they have at Google kind of see something through the same lens as we do, we're quite happy with that."[360]

November 7, 2016: Domain Services Continues its Track Record of Steady Performance

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "our domain services business continued its track record of steady performance in the third quarter with year-over-year growth bolstered by the incremental contribution of the international wholesale-reseller channel of Melbourne IT which we acquired in April of this year." [361]

Growth: Total Registrations Were Up 7% YOY

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "total registrations for Q3 were up 7% year-over-year with strong growth in open SRS renewals and the addition of the Melbourne IT names. The number of new transactions was more or less flat year-over-year as growth in open SRS and the contribution of the Melbourne IT channel were offset by the impact of a single reseller."[362]

Renewals: Domain Renewals Continue in their Historical Range of 74%

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "our renewal rate was consistent with its historical range at a healthy 74%."[363]

Profitability: Gross Margins for Domain Names Continue to Benefit from the Shift in Mix to Higher Margin Products

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "Q3 is one of our strongest quarters recently for gross margin as we continue to benefit from the shift in mix to higher margin products."

"In terms of new GTLDs, Q3 saw a notable add with the launch of duck shock [ph] towards the end of September. The strength of the launch push the number of new GTLD registrations as a percentage of all com-net and new GTLD registrations during the quarter upto about 8% above our historical rate of around 5%. As noted last quarter, top blog will go live this quarter and launch schedule for November 21. In terms of reseller participation around new GTLDs, the number of resellers with at least one new registration increased by 14% year-over-year and 8% sequentially to nearly 2,900. "[364]

Growth: The Transfer and Migration of Customers from Melbourne IT Has Been Smoothly and Successfully Completed

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that "the acquisition and migration of customers from Melbourne IT and the shutdown of their platform has now been smoothly and successfully completed. This bodes well in a mature market which can present tactical opportunities for a scale player that provide excellent cash-on-cash returns."[365]

Growth: Hover Presented Another Quarter of Strong and Steady Growth

Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Tucows' retail business, Hover, "delivered another quarter of steady strong performance."

"Revenue and gross margin once again processed strong year-over-year growth with gross margin up 11%. The Hover customer base also showed strong year-over-year growth, up 16% from the end of Q3 last year and 4% from the end of Q2 this year. Our renewal rate held steady at 81%, well above the industry average."[366]

October 28, 2016: Westminster has its Sights set on an Open-Access Municipal Fiber Network Model

American City and County reported on October 28, 2016 that Westminster has its sights set on an open-access municipal fiber network model to provide a multitude of services without much commitment to residents. In Westminster’s model, the city owns and builds out the fiber network infrastructure. However, a private company called Ting serves as the network’s operator and wholesaler, Westminster City Council President Robert Wack says. In this role, Ting connects customers with the network, bills them and handles ongoing customer service. Ting is currently the network’s sole Internet service provider and leases network access from Westminster.

Once Ting meets certain milestones related in part to growing its customer base, it will begin leasing network access to other service providers, who will offer their services to customers via the fiber network. Wack estimates that Ting will begin acting in this wholesaler role in about three years. “The end state is that we will have multiple providers using the same fiber network to create a real choice for our residents without any barriers to switching,” Wack says.

Currently, Westminster’s fiber network passes about 400 premises, which include residences, government buildings, businesses and open lots. Fiber passing over 2,000 residential buildings and lots is currently under construction, and Wack says Westminster will likely connect all of its residences and businesses to the fiber network in two to three years. Westminster is financing the network’s construction through a $21 million general obligation bond, according to a report by the Institute for Local Self-Reliance.[367]

October 25, 2016: Google Fiber Cuts Staff by 9%, “Pauses” Fiber Plans in 11 cities

Ars Technica reported on October 25, 2016 that Google Fiber is laying off or reassigning about nine percent of its staff as well as "pausing" or ending fiber operations in 10 cities where it hadn't yet fully committed to building. Google Fiber chief Craig Barratt will step down from his post and remain only as an adviser. He won't be replaced immediately. According to Jon Brodkin, Google Fiber apparently has not hit its subscriber goals, and fiber construction is a costly endeavor. While the company isn't giving up on fiber entirely, it may be able to deploy Internet service at a lower cost using wireless technology.[368]

"Just like Google Glass — the company's ill-fated attempt to build an augmented-reality visor — Google Fiber may be just a little ahead of its time. The thing about Fiber and businesses like it is that most consumers simply can't find a use for that much bandwidth yet. Google Fiber provides gigabit connectivity, which is orders of magnitude faster than what many Americans get in their homes today," says Brian Fung. "Our consumption of broadband is undoubtedly going to increase as we connect more devices to the Internet and those devices communicate in more sophisticated ways. But for now, Fiber is reportedly missing its subscriber goals, indicating there may not be enough demand for that level of service."[369]

According to Mark Bergen, some executives previously described Google Fiber’s business model as working best in mid-sized cities. In those markets, the costs of fiber installation isn’t as high and incumbent telecom companies have less of a footprint. Moving into big cities was a contentious point inside Google Fiber, according to one former executive. Leaders like Barratt and Dennis Kish, who runs Google Fiber day-to-day, pushed for the big expansion. Others pushed back because of the prohibitive cost of digging up streets to lay fiber-optic cables across some of America’s busiest cities. "I suspect the sheer economics of broad scale access deployments finally became too much for them," said Jan Dawson, an analyst with Jackdaw Research. "Ultimately, most of the reasons Google got into this in the first place have either been achieved or been demonstrated to be unrealistic."[370]

October 17, 2016: Video of How Ting's Fiber Network in Holly Springs is Being Built

Part 1: Dirt and Hard Work


Building a fiber network is a big job. Ting aims to keep things as surgical and precise as possible. In part one of this series titled Dirt and Hard Work, we looked at the process of putting conduit into the ground. The conduit carries and protects the tiny glass fibers that pipe crazy fast fiber Internet into homes.

Part 2: Light at the End of the Tunnel


Building a fiber network is no mean feat. In part one of this series, Dirt and Hard Work we detailed the process of putting conduit, the protective carrier medium for the delicate fiber optic cable, in the ground.

October 5, 2016: Three Years Ago Centennial Voters Approved a Measure to Allow the City to Create a Nonexclusive Broadband Fiber-Optic Network

Centennial Voters Approved a Measure to Allow the City to Create a Nonexclusive Broadband Fiber-Optic Network. Three years ago voters in Centennial approved a measure allowing the city to lease its 48 miles of publicly owned fiber-optic lines and now Canada-based Ting has plans to bring its high-speed internet services—or “crazy fast internet,” as the company says—to town next year. Photo: Ting

The Villager reported on October 5, 2016 that three years ago voters in Centennial approved a measure allowing the city to lease its 48 miles of publicly owned fiber-optic lines and now Canada-based Ting has plans to bring its high-speed internet services—or “crazy fast internet,” as the company says—to town next year. Ting, an internet and wireless service provider, plans to begin hooking up to Centennial’s system by the end of the year and provide service by mid-2017. It would be the first firm to do so since voters allowed the city to create a nonexclusive broadband network from fiber-optic lines that have so far been used only for traffic-signal operations and connecting public facilities. The arguably underused city asset has been valued at $5 million..

Mayor Cathy Noon said it was an honor that Ting chose Centennial as its first Colorado market, after Centennial became among the first cities in the state to allow such deals. “The critical infrastructure has been in place throughout the city. We just needed the opportunity to partner with an organization such as Ting to provide service to our residents and businesses,” she said. Because the deal is nonexclusive, it is still possible for other companies to lease into Centennial’s fiber-optic network.

Ting is expected to provide faster and comparably priced Internet service at multiple tiers to residents and businesses in Centennial, offering what Ting says will be an improved alternative to internet sources currently available. “If you’re getting internet from your phone company or your cable company, you are getting it based on those technologies, which are not purpose-built to deliver internet, unlike fiber which is,” said Adam Eisner, VP of Networks for Ting Internet. “This is basically the fastest, strongest internet you’re going to get on a residential basis in North America.” Although service will initially be offered only in Centennial proper, Eisner says there is no reason Ting could not eventually grow into surrounding communities. “Once we build a network through town, it’s very easy to keep expanding, so we wouldn’t rule that out,” he said[371]

See also An Estimation of the Potential Impact of Fiber Penetration in Centennial on Tucows' Quarterly Earnings October 10, 2016

October 3, 2016: Tucows Insiders Sell Stock

Insider Trading Watch reported on October 3, 2016 that EVP Human Resources Goertz Carla Anne sold 20,708 shares for $665,247 on September 29, 2016.

Director Karp Allen sold 5,000 shares at an average price of $39.89 on September 29, 2016.

Director Nathan Schwartz sold 13,125 shares on on September 26, 2016.

Director Ralls Rawleigh Hazen IV sold 22,695 shares for $666,908 on September 23, 2016.[372]

September 29, 2016: Tucows Begins to Send Expired Domain Names to GoDaddy Auctions

Domain Name Wire reported on September 29, 2016 that GoDaddy Auctions has begun auctioning off Tucows’ expired domain name inventory. This is the first time GoDaddy has sold a third-party registrar’s expired domain name inventory. Tucows had been sending its expired domain name inventory to SnapNames, which is now a Web.com company. Before that, it partnered with NameJet. The inventory is direct-transfer inventory that is sold before it goes through the entire deletion cycle. Domain names that make it to pending delete can be picked up by any expired domain name service. "We can confirm that GoDaddy has launched a new product line to assist partner registrars to monetize their expiring domain feed using our GoDaddy Auctions platform," said GoDaddy Paul Nicks, VP of Aftermarket. "We launched today with one partner and will continue to add new partners as we expand the program. We are very excited about this as it allows more choice for our domain investors that use GoDaddy Auctions and provides another choice for registrars as well. Any registrar interested in joining our new expiry platform should contact Bob Mountain bmountain (at) godaddy.com, VP of Business Development for our Aftermarket."[373]

September 28, 2018: Tucows Stock (TCX) Increases $2.06 for New Closing High of $33.25

Tucows Stock (TCX) increases $2.06 for New Closing High of $33.25. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 993% since September 28, 2011. The S&P 500 has risen 87% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.

Tucows stock (TCX) rose $2.06 on September 28, 2016 for a new closing high of $33.25 on volume of 343,377, more than four times the normal average number of shares traded (73,136).

Tucows' stock price has risen 993% since September 28, 2011. The S&P 500 has risen 87% over the same period. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with the beginning of the rise in Tucows (TCX) stock price.

The market capitalization of Tucows now stands at 334 million.

Tucows stock has risen 16.9% over the last five trading days coinciding with Tucows' announcement on September 22, 2016 that Ting Internet will bring its fiber-optic network to the 107,000 residents of the Centennial, CO as early as next year. “In round terms, there are about 37,000 households in Centennial and about 4,000 to 5,000 registered businesses,” said Centennial councilman and mayor pro tem Charles “C.J.” Whelan. “If they get 20 to 30 percent penetration here, that will be a strong hit for [Ting].”

September 23, 2016: Ting Uses Adrian and Calix Solutions in its Gigabit Networks

Lightreading reported on September 23, 2016 that Ting uses a mixture of Adtran Inc. (Nasdaq: ADTN) and Calix Networks Inc. (NYSE: CALX) solutions in its gigabit networks, with ZyXEL Communications Corp. routers deployed to customer homes.[374]

September 23, 2016: Tucows Reaches 250,000 new gTLDs

Tucows OpenSRS blog reported on September 23, 2017 that Tucows has reached a significant milestone: 250,000 new gTLDs sold. Gustavo Arruda says that there are a couple of things tucows has learned dealing with the new gTLDs:

  • Adoption is now steady: The adoption curve shows a steady growth. Every month, the number of resellers who have sold at least one new gTLD increases, and we expect this to continue over the next few months and years.
  • Europe is still leading the charge: More than half of our new gTLDs have been sold in the EMEA region, largely due to the success of regional TLDs such as .LONDON and .AMSTERDAM.
  • User experience continues to be an issue: It is a challenge to present hundreds of top-level domains in a way that is both user-friendly and relevant. Users continue to be presented with endless drop-down menus, and we know well that an overwhelming choice can impact the experience tremendously. Users are often faced with suboptimal UIs. The resellers who are seeing the most success are the ones focused on solving the user experience issue.
  • End-user awareness is close to non-existent: The lack of awareness is one of the main issues with new gTLDs, and we should be asking ourselves: whose job is it to create awareness around them? Registries have not done a good job. Registrars can’t effectively market 400+ TLDs, resellers are overwhelmed by choice and end users are left on their own.

Arruda says that he expects Tucows to sell the second batch of 250,000 new gTLDs a lot faster than we sold the first, that the sales gap between Europe and North America will close considerably, and that end user awareness will be marginally better than it is today. "As a registrar, our view is that new gTLDs continue to be an interesting opportunity, and we continue to be excited about the potential. The biggest challenge for registries and registrars is to learn how to work together in an environment that is radically different from what it used to be three years ago. If registries and registrars can collaborate effectively, we may be able to tell a better story."[375]

September 22, 2016: Ting Looking for 20 Per Cent Fiber Penetration in Centennial in the First Year

The Denver Post reported on September 22, 2016 that if enough people are interested, Ting Internet will bring its fiber-optic network to residents of the city as early as next year and according to Centennial councilman and mayor pro tem Charles “C.J.” Whelan Ting wouldn’t have gotten this far without researching the demand. “In round terms, there are about 37,000 households in Centennial and about 4,000 to 5,000 registered businesses,” Whelan said. “If they get 20 to 30 percent penetration here, that will be a strong hit for them.”

Ting charges $89 a month per household for 1 gbps service up and down, plus a $200 installation fee, confirmed Tucows CEO Elliot Noss while businesses pay $139 a month. You can cancel anytime. But in order to get fiber to a user’s house, Ting will either dig up streets to lay cables in the ground or run them in the air over existing telephone lines. If you leave the service, Ting owns the lines. “There are very few companies other than Google and ourselves that are doing what we’re doing,” Noss said. “Generally for us, communities are approaching us.”

Noss shared the economics of Ting entering a market: they need a 20 percent penetration rate in the first year and 50 percent after five years. The cost of connecting a home is about $2,500 to $3,000

Centennial’s partnership with Ting isn’t exclusive, Whelan said. “They are the first at this point, the only ones that have stepped out to add this to our city,” Whelan said. “If there are others, we would look at them as well. Ting has stepped up and we are excited about it.” In the Denver area, Comcast and CenturyLink are offering gigabit internet. But CenturyLink’s service is available only in certain locations. Comcast offers up to 2 gbps for residential customers for $300 a month with a two-year contract.[376]

September 21, 2016: Ting to Bring Fiber to Centennial, Colorado (Pop 107,000)

Ting to Bring Fiber to Centennial, Colorado (Pop 107,000). Ting will be bringing fiber to Centennial, CO, population 107,201 (2014 Census), the largest Ting town by population to date. “Centennial has been refreshing to work with", said Elliot Noss, CEO of Tucows. “Centennial’s approach to partnering with Ting has been excellent. They have found a great balance between being business-friendly while deeply serving the needs of their citizens. They understand how these need not be in conflict.” Photo: Kent Kanouse Flickr Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)

Tucows announced on September 21, 2016 that Ting will be bringing fiber to Centennial, CO, population 107,201 (2014 Census), the largest Ting town by population to date. “Centennial has been refreshing to work with", said Elliot Noss, CEO of Tucows. “Centennial’s approach to partnering with Ting has been excellent. They have found a great balance between being business-friendly while deeply serving the needs of their citizens. They understand how these need not be in conflict.”

“Having Centennial as Ting Internet’s first Colorado market is an honor and one that we are very excited about. The critical infrastructure has been in place throughout the City, we just needed the opportunity to partner with an organization such as Ting to provide service to our residents and businesses,” says Centennial Mayor Cathy Noon. “I would like to recognize and thank Council Members Whelan, Piko and Lucas for serving on the fiber steering committee. Their leadership and guidance has led us to see the City’s dark fiber network become a reality.”

“Ting Internet in Centennial will enable faster and more affordable Internet services for both residents and businesses,” says Mayor Pro Tem and District 4 Council Member Charles “C.J.” Whelan, just as the City’s Fiber Master Plan intended. Technology, and in particular connectivity to the Internet, has become essential to everyday life, so much so that we experience withdrawals when it is not there. Data connectivity needs to be efficient and readily available, and it is at its best when it, ‘just works’ and you don’t have to think even about it. Bringing such a high level of service to Centennial is what makes this collaboration with Ting so exciting."

Pre-orders are being accepted in Centennial starting September 21, 2016. Ting takes a gauge of demand on the ground by raising awareness of gigabit fiber Internet and then opening up to accept pre-orders. "Pre-orders determine not just whether Ting Internet comes to a town, but they also impact where network construction begins," said Adam Eisner, VP of Networks for Ting Internet.

To get to the pre-order stage, a town passes a series of checks and balances: availability of a fiber backbone, population, density, local permitting and many other factors are considered before Ting Internet formally expresses its intent to bring crazy fast fiber Internet service to a town.[377]

September 21, 2016: Why Centennial for Ting Internet?


Ting Internet has named the next Ting Internet town: Centennial, CO, population greater than 100,000. Elliot Noss, CEO of Ting parent company Tucows explains why Ting is excited to set up shop in town.

September 7, 2016: Google Fiber Wins Faster Access to Utility Poles in Nashville over AT&T’s Objections

Jon Brodkin wrote at Ars Technica on September 7, 2016 that the Nashville Metro Council has voted 32-7 to give Google Fiber faster access to utility poles, approving an ordinance opposed by AT&T and Comcast. AT&T has already said it would likely sue the city if it implements the new rule. Google Fiber is available in parts of Nashville, but expansion has been slow in part because of how long it takes to get access to utility poles. The One Touch Make Ready ordinance would let a single company—such as Google Fiber—make all of the necessary wire adjustments itself without having to wait for incumbent providers to send construction crews. Google Fiber applauded the vote last night, saying that "Improving the make-ready construction process is key to unlocking access to a faster Internet for Nashville, and this Ordinance will allow new entrants like Google Fiber to bring broadband to more Nashvillians efficiently, safely and quickly."[378]

September 7, 2016: Ting Fiber Hosts Hiring Event in Charlottesville

The Augusta Press reported on September 7, 2016 that the City of Charlottesville Downtown Job Center will host a recruitment fair September 8, 2016 to help Ting find qualified employees. The recruitment fair is being held from 10am-1pm at Carver Recreation Center located at 233 4th St NW, Charlottesville, VA 22903. The company is hiring numerous Underground Cable Technicians and Installation Technicians, as well as supervisory and management positions. Technician jobs start in the $30,000 range. Ting recruiters will be present to answer questions and offer details about the various jobs. Interviews will be conducted onsite. The hiring turnaround time is expected to be fast.[379]

September 5, 2016: Tucows Directors Sell Stock

Community Financial News reported on September 5, 2016 that Tucows Director Rawleigh Hazen Iv Ralls sold 50,000 shares of Tucows stock in a transaction dated September 6, 2016. The shares were sold at an average price of $27.46, for a total transaction of $1,373,000.00. Following the sale, the director now owns 281,575 shares of the company’s stock, valued at approximately $7,732,049.50.

Tucows Director Erez Gissin sold 10,000 shares of the stock in a transaction on Thursday, September 1, 2016. The stock was sold at an average price of $27.25, for a total value of $272,500.00. Following the sale, the director now owns 7,300 shares of the company’s stock, valued at $198,925.[380]

August 30, 2016: Installation of Fiber Infrastructure Continues in Sandpoint

The Bonner County Daily Bee reported on August 30, 2016 that Fatbeam, a company that installs fiber infrastructure in the Pacific Northwest and Rocky Mountain region, recently entered into an agreement with the Sandpoint, Bonner County and the Lake Pend Oreille School District to build a 49-mile, high-capacity fiber optic network connecting the district's 13 facilities, including 11 schools and district offices. Fiber Internet will allow every school to have a 1 gigabit connection to the district offices, which will, in turn, have a 1 gigabit Internet connection. That is more than three times faster for the district offices, Brass said, and 10 to 20 times faster for the schools. The company expects to have the "core," which includes all Sandpoint schools, installed by June or July 2017. The remainder of the schools, including Hope, Sagle and Clark Fork areas, done between fall, 2017 and spring, 2018. The city of Sandpoint has been installing fiber infrastructure under the streets of the city for several years during road construction projects. City Administrator Jennifer Stapleton expects to have the city's administration buildings, such as City Hall, "lit" by the end of September.[381]

Ting, a subsidiary of the Internet service company Tucows, recently announced Sandpoint as its next destination. Adam Eisner, director of networks at Ting, said the company is ready to bring gigabit Internet to the area. Ting has been working with the city to leverage from the infrastructure the city is providing, he added. "Our intent and hope in Sandpoint is to take advantage of that to build into the various parts of the Sandpoint area," Eisner said. Eisner said he is unsure when Ting will be in the area, but hopes to have areas of the city lit by early next year. He said Ting aims to provide service in the cities surrounding Sandpoint as well. Eisner said one thing that is unique is there is no data caps or contracts — everything is month-to-month. "What you see is what you get, which has been really popular because it's very straightforward and very transparent," Eisner said.[382]

August 19, 2016: Smaller Communities Strategize to Take Their Internet Future into Their Own Hands

The American Prospect reported on August 19, 2016 that for years, nearly 40 percent of people in rural America have been saddled with slow internet speeds and no opportunity to get broadband internet services which provide fast connections. Now local governments have been fighting back by building their own municipal broadband networks. For more than 150 communities across the country, a core benefit of building their own networks is the ability to separate the infrastructure from the private ISPs. For example, the city of Westminster, Maryland, has hired Ting, a private company, to operate its network of fiber optic cables and provide servers for internet access. If city officials decide that they no longer want to use Ting, they can look for another company to operate its network. But the city still owns the valuable infrastructure that it financed and built. (italics mine)

In June, U.S. Court of Appeals’ D.C. Circuit upheld the FCC’s 2015 net neutrality decision, but the issue of municipalities building their own networks remains unsettled and, for the moment, the Sixth Circuit ruling has put a damper on municipal efforts to bring the internet to unserved and underserved communities. “What stands behind this whole debate is whether broadband access is like a utility,” says Tim Karr, senior director of strategy for Free Press, a democracy advocacy group that was at the forefront of the fight for net neutrality. “We’re beyond that debate. Local government, state government, and the federal government all have an obligation to ensure everyone has access to open networks.”

The established ISPs have largely operated under the radar until now but as more people recognize that the industry giants’ power is not based on free-market competition, those companies have good reason to be uneasy. “It’s an exciting moment for an incredible new coalition of people—workers, people who need access to the internet, tech champions—all coming together to push out a really different vision,” says Zephyr Teachout, a Democrat running for New York’s 19th congressional district seat. “The big companies are running scared, and they should be.”

Hillary Clinton has expressed support for increasing competition and innovation as a way to reinvigorate the economy. Clinton specifically highlighted Westminster, Maryland’s community broadband initiative (operated by Ting) in her technology plan. In a 2014 tweet Donald Trump declared that “Obama’s attack on the internet is another top down power grab. Net neutrality is the Fairness Doctrine.”[383]

August 18, 2016: Tucows Enters into New Secured Credit Agreement for up to $75 million

Globalnewswire reported on August 18, 2016 that Tucows has entered into a new, syndicated five-year secured credit agreement for up to US$75 million, inclusive of a $15 million accordion facility, with Bank of Montreal and Royal Bank of Canada. The 2016 Credit Facility will be used to support share repurchases, acquisitions and capital expenditures associated with the Company's Fiber-to-the-Home program, as well as general working capital and general corporate requirements. "As planned, this new expanded credit facility provides us with additional financial resources and flexibility to support the ongoing build out of fiber infrastructure for Ting Internet," said Elliot Noss. This new facility refinanced and replaced the Company's current US$14 million credit facility with BMO.[384]




Comment on October 4, 2016: Tucows estimates that it costs about $2,500 to wire a home for fiber. According to Hugh Pickens, an investor in Tucows who follows the company closely, the $75 million line of credit would allow Ting to wire 30,000 homes.




August 15, 2016: Google’s High-Speed Web Plans Hit Snags

The Wall Street Journal reported on August 15, 2016 that Google Fiber has spent hundreds of millions dollars digging up streets and laying fiber-optic cables in a handful of cities to offer web connections roughly 30 times faster than the U.S. average but is now rethinking its high-speed internet business after initial rollouts proved more expensive and time consuming than anticipated, a stark contrast to the fanfare that greeted its launch six years ago. The company is trying to cut costs and accelerate its expansion by leasing existing fiber or asking cities or power companies to build the networks instead of building its own. “If you’re in the telecommunications industry for 150 years, there are no surprises here,” said Jonathan Reichental, chief technology officer of the city of Palo Alto, Calif. “But if you’re a software company getting into the business for the first time, this is a completely new world.”

Google Fiber last month bought Webpass Inc., a company that beams internet service from a fiber-connected antenna to another antenna mounted on an apartment building. Webpass Chief Executive Charles Barr, now an Alphabet employee, said wireless offers an opportunity to overcome the challenging economics of building fiber networks from scratch. “Everyone who has done fiber to the home has given up because it costs way too much money and takes way too much time."

Some analysts have long suspected that Google Fiber's primary goal was to prod other broadband firms to increase their speeds. AT&T, Comcast Corp. and Time Warner Cable, which recently was acquired by Charter Communications Inc., have done so in some competing markets. Google Fiber insists that fiber to the home is a real business. “We continue to see Fiber as a huge market opportunity,” Chief Financial Officer Ruth Porat told investors last month. “We’re being thoughtful and deliberate in our execution path.”[385]

August 12, 2016: Sandpoint Makes Great Strides on Fiber Internet

The Bonner County Daily Bee reported on August 12, 2016 that the city of Sandpoint has been installing a fiber optic network underground for at least five years, and City Hall should be "lit up" with the faster, more reliable Internet by the end of September. City Administrator Jennifer Stapleton said the city has been installing the infrastructure for a fiber network during road construction projects over the years, which has "significantly" lowered the cost of installation. The city has spent a total of around $250,000 installing the infrastructure for the first phase of the project, which runs from the city's water treatment plant and throughout the downtown area to City Hall. Jack Maytum, the city's consultant from Design Nine, said the city installed two conduits that are two inches in diameter, and each conduit holds 144 strands of fiber. One conduit line is dedicated to administration use by the city to connect its buildings and keep services like 911 secure. The second line will be an open access network that can be leased out to private companies to provide service to businesses and residences. "The city is not in the business of providing cable services," Maytum said. "The city is simply in the business of building the infrastructure, just like building a road."

Ting, a subsidiary of the Internet service company Tucows, recently announced Sandpoint as its next destination. Adam Eisner, director of networks at Ting, said the company is ready to bring gigabit Internet to the area. Ting has been working with the city to leverage from the infrastructure the city is providing, he added. "Our intent and hope in Sandpoint is to take advantage of that to build into the various parts of the Sandpoint area," Eisner said. Eisner said he is unsure when Ting will be in the area, but hopes to have areas of the city lit by early next year. He said Ting aims to provide service in the cities surrounding Sandpoint as well. Eisner said one thing that is unique is there is no data caps or contracts — everything is month-to-month. "What you see is what you get, which has been really popular because it's very straightforward and very transparent," Eisner said.[386]

August 8, 2016: Tucows Reports Strong Quarter for Q2 2016

Chart 1: Stock Price Chart for TCX from January 1, 2012 through August 8, 2016. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 871% since January 1, 2012. The S&P 500 has risen 74% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)
Incremental Contribution from Ting (Before Taxes and Other Expenses) (Click on chart to expand.)
Tucows EBITDA Per Quarter (Click on chart to expand.)
Tucows Net Income Per Quarter (Click on chart to expand.)

See also:

Quarterly Revenue Increased 13% YOY

Tucows announced on August 8, 2016 that revenue for the second quarter of 2016 increased 11% from Q2 2015 to $47.5 million from $42.9 million for the second quarter of 2015.[387]

Net Income for the Year Increased 78% YOY

Tucows announced on August 8, 2016 that net income for the second quarter of 2016 increased 78% to $4.1 million or $0.39 per share from $2.3 million, or $0.21 per share, for the second quarter of 2015.[388]

Adjusted EBITDA for the Year Increased 64% YOY

Tucows announced on August 8, 2016 that adjusted EBITDA for the second quarter of 2016 increased 64% from $4.3 million in Q2 2015 to $7.1 million in Q2 2016.[389]

Tucows Has Changed the Way the Company Computes EBITDA

Michael Cooperman told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that that Tucows has amended the definition of adjusted EBITDA to adhere to the SEC compliance update. "We have again modified the definition for adjusted EBITDA this quarter. Essentially, this was in response to clarification guidance issued on May 17 of this year by the SEC in a compliance and disclosure interpretations update regarding non-GAAP measures. That guidance indicated that adjusting earnings for deferred revenue may not be consistent with disclosure rules," said Cooperman. "Following discussions with our audit committee and auditors, we concluded that we still believe adjusted EBITDA is a useful metric for our investors; however, we thought that the prudent path forward would be to amend the definition of adjusted EBITDA to adhere to the SEC compliance update. Accordingly, we are revised our definition of adjusted EBITDA to eliminate the adjustments for the effect of net deferred revenue to reflect net revenue on an earned basis. For those of you wishing to compute our adjusted EBITDA in our prior definitions, this can be done with reference to our disclosure financials and our MD&A. Adjusted EBITDA for the second quarter increased 64% to 7.1 million from 4.3 million in the corresponding periods of last year."[390]

See the *Calculation of Tucows' New Adjusted EBITDA under the SEC Compliance Update

Tucows Reiterates Adjusted EBITDA guidance of $30 million for 2016

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Tucows is happy to reiterate our existing 2016 adjusted EBITDA guidance of $30 million.[391]

Tucows Invested $5 million to Buy Back 210,000 Shares

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Tucows invested $5 million to purchase just under 210,000 shares in Q2. "I noted that with respect to our open market buyback program, we will be less active in some quarters and more active in others. As Mike discussed, it was a relatively active quarter in this regard as we invested $5 million to purchase just under 210,000 shares, we continue to be able to comfortably balance CapEx spend, stock repurchases and probably most importantly solid growth and profitability. All-in-all, Q2 was a good quarter for both the present and in the future. "[392]

August 8, 2016: Ting Mobile Growth Slows with 4,000 Net Adds in Q2

Ting Mobile Had Net Adds of 4,000 Accounts and 6,000 Devices in Q2 2016

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Mobile added 4,000 accounts and 6,000 devices in Q2 to bring Ting's total to 144,000 accounts and 227,000 devices[393]

Ting Mobile previously added 12,000 net adds in Q1 2016. However this figure included a one time influx of 7,000 new customers from Ptel when they went out of business. According to Tucows, net adds have been going down over the past year dropping from 10,000 net adds a year ago in Q2 2015 to 4,000 this quarter. According to calculations by Hugh Pickens, a long term investor in Tucows who follows the company closely, gross adds have dropped from 18,475 to 14,368 over the same period.

2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2
Total Customers 113,000 122,000 128,000 140,000 144,000
Net Adds this Quarter 10,000 9,000 6,000 5,000 w/o Ptel
12,000 with Ptel
4,000
Quarterly Churn Rate 7.50% 7.50% 8.20% 7.17% 7.20%
Churned Customers 8,475 9,150 10,496 10,038 10,368
Gross Adds 18,475 18,150 16,496 15,038 w/o Ptel
22,038 with Ptel
14,368

Note: Q1 2016 Gross adds and Net adds includes a one time influx of 7,000 new customers from Ptel when Ptel went out of business.

Ting Mobile's Churn Rate Stayed at about 2.4%

Number of Ting Mobile Customers Note: Ting started in February 2012. Prior to the earnings report for 2013:Q4 Tucows did not break out the number of customers or devices so the number of customers in Q1 through Q3 for 2013 is estimated. (Click on chart to expand.)
Gross Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2016 Ting Mobile had a one-time influx of 7,000 customers, migrating from PlatinumTel Wireless, also known as PTel, that closed its doors.
Chart 6: Churned Customers Per Quarter (Click on chart to expand.)
Net Additional Customers Per Quarter (Click on chart to expand.) Note: In Q1 2016 Ting Mobile had a one-time influx of 7,000 customers, migrating from PlatinumTel Wireless, also known as PTel, that closed its doors.

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that churn was 2.4% in Q2 2016 in line with 2.39% in Q1 2016.

In answer to a question from Hubert Mak, Noss said that he didn't expect net adds to get worse. "So I think that the way we’re thinking about it is, we certainly don’t think it's going to get worse. We hope that few of the pieces that we’re focusing on are going to get better. So, there is all of the little things, we’ve talked about some of those and with each of those, whether it's retail or some of the tactical programs. We’re seeing a little bit more and a little bit more from them. The two big things hopefully the two that we think might have kind of real kicked to them are the price drop and some of the targeting of new segments that we’re looking at. We’re talking more probably on the next quarter’s call about some of our specific plan there. On this call just to repeat in case you missed that as well, we’re going to start taking some marketing dollars and throwing them at slightly different segment, little bit less tax savvy, a little bit lower income and frankly a little bit older. We think that there is some opportunity is there. And that’s something that we’re hoping that we can get some real contributions from."[394]

Ting's Acquisition Costs Remain at About $100 per Customer But Could Go Higher If Ting Finds Things That Work at That Level

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting continues to acquire new customers for less than a $100.[395]

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that he is comfortable taking that $100 number up to $110, $120, even $150 if Ting Mobile finds things that work at those levels. "I think that in the plan that we have that are sitting right in front of us right now, we think that will be generally within the same parameters that we’ve had to-date. I think that if we see a breakout over that top range, will be very -- will tell you all about it and we’ll give you detail. I have said in the past that few times, you know, boy, I am comfortable taking that some $100 number up to $110, $120, even $150. There is nothing that’s kind of sitting on the table right now that I think will start to quite get that high, but boy if we were finding things that work at those levels, I think we push on them. And so, we’ll give you as much visibility as we can as soon as we can."[396]

Ting Had a Defection of 1,000 New Customers from the One-Time Influx Migrating from Ptel

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that about 1000 of the former Platinumtel Wireless customers that came over to Ting from Ptel in Q1 defected once they had used the free service credits Ting gave them. "That is almost inevitable with any migration of that nature, and we are still quite happy with the bump we got there for the price, but it does mean that the 12,000 net ads we reported in Q1 were inflated as we noted and the 3,000 net ads were reporting for Q2 are of course deflated. "[397]

Ting Reduced Their Data Pricing for Higher Data Users by 33%

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting has made a significant reduction in data pricing for higher data users and now charge $10 per gigabyte for usage beyond 1 gigabyte, a 33% reduction from $15.

With this price drop, we are no longer just the smart choice for low data users. We offer an even more overwhelming majority of Americans substantial potential saving on their monthly cell phone bills and with our approvals usage, and low monthly line fee, we’re pretty much in numerator for families, small businesses or any account with multiple devices. I am also very proud of how we implemented our price changes of thing unlike typical industry promotions and plans intended to attract new customers, without sacrificing revenue on existing customers, we simply drop prices for everyone. Ting customers do not need to take any action to see their data prices drop next billing cycle. We did this back in 2014 and found that the appreciation and word of mouth we got from our existing customers was the best possible marketing our money could buy. As I said, we announced the new pricing late last week, but I am hopeful that both the buzz and those more favorable savings calculations will give us a lift in customers in the second half of Q3. We were able to lower our supply cost which is what allowed us to make this move.[398]

Gross Margins for Ting Mobile are in the 45% to 50% Range

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that the cost reductions in data usage keep Ting Mobile very comfortably within Ting's 45% to 50% gross margin target. "As most of you know, we were out the top-end of our guidance range in gross margin."[399]

Marketing Expenses and Network Access Expenses Have Increased for Ting Mobile

Michael Cooperman told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that marketing expenses increased by 450,000 when compared to the second quarter of last year primarily to support and acquire Ting Mobile and Ting Internet customers. "And second, professional fees credit card processing fees, stock based compensation and travel increased by 0.5 million primarily to support the growth of Ting network access services. Third, workforce related expenses increased by 450,000 primarily to support the growth of network access services. "[400]

Ting is Starting to See its Biggest Opportunities Among Populations that are Less Technical, Less Affluent and Politely Less Young

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting is starting to see itsbiggest opportunities among populations that are "less technical, less affluent and politely less young. We recognized that the people who would benefit the most from our rate plan and the handholding we provide in customer support are likely not on the niche blogs and forum where we have enjoyed the most exposure. And the good news there is that this is also the customer group that has a greatest depreciation for value, not the least reason being because they are also the ones most often paying the phone bill."[401]

Ting Is Starting to Explore More Traditional Marketing Channels

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting is starting to explore some more traditional channels. "I will reveal more on that as some of these experience materialize and this will not be with Super Bowl ads or other spend that will drive customer acquisition through the roof. We continue to grow our existing distribution partners, Kroger, Staples, Amazon and pound the favorite looking for more. We continue to experiment with affiliate partnerships and in fact have seen some encouraging scalable results with employer benefit program."[402]

Ting Continues to Optimize Purchase Staff on the Website with AB Testing and Improved Conversion

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting continues to optimize its purchase staff on the website with AB testing and its sales team on the phones to improve conversion in events of growing awareness and consideration.[403]

Ting Is Partnering with Makers of Standalone Smart Devices

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting is discovering some interesting partnership opportunities with makers of standalone smart devices.

These are often being marketed and distributed internationally with an empty SIM card slot, so that end users in each country can choose their own service provider. These manufactures like Ting because our rate plan is perfect for the sort of tactical usage they see on their devices and because our customer support will enhance their customer experience. We love the source of new customers that could eventually bring their primary smartphones as well. The first of these partnerships is with brands called [TVtel]. A successful kick-start adventure that produces a simple, wearable device designed for young children. They shipped a small initial batch to U.S. customers in Q2 and will be shipping more in Q3. A Ting SIM card with instructions activate will be included in every box. As we cautioned last quarter, our renewed sales and marketing efforts will take time, but we’re excited about the price drop and the opportunities to expand our awareness in our customer base, and we look forward to seeing the numbers grow in the quarter’s ahead.[404]

August 8, 2016: Ting Internet Had a Very Positive Quarter

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Q2 was a very positive quarter for Ting Internet.[405]

Virtually all Residents of Charlottesville Will be Able to Order Ting Fiber by the End of the Year

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that in Charlottesville, Ting saw demand for our service jump to a new level and and just as importantly our capacities have fulfilled that demand. In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that the vast majority or virtually all residents of Charlottesville will be able to order Ting fiber by the end of the year.[406]

Our advertising partnerships and events have given us brand awareness. We are getting better and better at every step of the process from building out the network to taking orders and scheduling installs, to performing those installs more efficiently to permitting. And we continue to see the same sort of customer satisfaction and advocacy with Ting Internet to propel the business on Ting Mobile. We also activated our first large bulk deal multi-dwelling unit or MDU in Q2. A 234 unit apartment complex called Jefferson Ridge Apartment Homes. Residents of these apartments now have 10 gigabyte internet service included in their monthly rent and residences in other large residential buildings in Charlottesville are starting to pressure the landlords to offer the same. In Westminster, where the city is building the fiber network and we currently have less than 300 serviceable addresses, the next phase of construction has been delayed a bit because of fiber shortages. That phase is just beginning now and should give us over 2,700 serviceable homes and businesses by 2017.[407]

Ting Internet Expects to Have Homes in the neighborhood of Holly Glen in Holly Springs Connected by the end of 2016

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet expects to have homes in the Holly Glen neighborhood in the city of Holly Springs connected by the end of 2016. "Holly Glen earned that position by having the most pre-orders and we will continue to use pre-orders to demonstrate demand."[408] Note: Holly Glen is the first neighborhood in the city of Holly Springs where Ting will begin installing fiber.

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet will be through the first two or three neighborhood rolls outs this year. "We’re going to be through the first two or three depending on how to build rolls out neighborhood this year. And I’m quite happy with that given that it’s all underground and given that, this is kind of the first planned community we’re just breaking ground there and certainly in our planning and our internal models where we're everywhere or where most neighborhood that we’re going to build out to by the end of next year."[409]

Ting Internet Expects to Be Taking the Next Steps in Sandpoint Soon

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet is getting pretty close to taking the next steps in Sandpoint. "They had a process, it’s probably four or five years in the making at this point. So these things really- really do ripe in both unevenly and over long period of time. And all that being said, Pat, I feel good about I won’t be surprised if in '17 I’m starting to make some capital trade off. I can't tell you, if that's a summer or the end of ’17, but I feel like there is lots of going."[410]

Ting Continues to See Cost Per Wired Home at about $2,500 to $3,000

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet continues to see the cost per wired home at about $2,500 but this will vary from town-to-town and may be closer to $3,000 in some markets.

As we begin construction at Holly Springs, it is worth reiterating that the $2,500 per customer number that we have outlined will vary from town-to-town based on the nature of the build. In Holly Springs for example, we will be extending the fiber primarily underground rather than across poles and the lot sizes are bigger than in most markets. There are also very few MDUs at Holly Springs. MDUs of course tend to bring down the average cost per customer with their density. We decided to blend the $2,500 spend per customer at our desired adoption rates of 20% in the first year and 50% in five years. In Holly Springs, we’re projecting closer to $3,000, again with an average of $1,000 in margin on Ting Internet and very-very low churn, we are still perfectly happy with the cash-on-cash returns there.[411]

Ting Internet is Learning More About Capital Flows in Terms of Timing and Amount

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet islearning much more about how capital flows through this project in terms of timing and amount. "This gives us more visibility into our CapEx spend through the end of 2016 and help teach us how to best plan for 2017 and beyond. We now expect CapEx to come in between $10 million and $15 million in 2016. For the future, the most important tactical work we are doing is improving growth as at Ting Mobile. We’re starting to see some slivers of improvement, learning would have not working with others and most importantly started to get a better sense of where the push harder long-term in order to create greater awareness."[412]

Ting Internet is Learning How to Scale and Effectively Deliver Installs

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet is learning how to scale and effectively deliver installs. "At Ting Internet, we are learning everyday and applying that learning with each new neighborhood build and every new channel we engage with," said Noss. "We are learning how to market hyper locally. We showed strong growth in gross margin as mobile growth. We showed strong growth in operating margins due to the scalability of our model, and we’re doing the right work to position us well to deliver continued growth for both the short-and long-terms."[413]

Ting Was Prepared for the Nationwide Shortage of Fiber Optic Cable

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that there has been a shortage in the U.S. of supplier fiber optic cable. "I am pleased that we protected ourselves ahead of this shortage by securing and storing large amounts of fiber for our project by dealing with suppliers globally. "[414]

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that the time frame is absolutely still intact. "I mean the numbers we’re talking about at this stage of the ramp are small relative to the total picture. I think probably if anything just with what I am seeing, I think, I mean, it'd have to really sort of move some levers around in my head. But we’re quite comfortable where we were with those numbers because what we’re seeing is interest that’s in line or more with what we expected. And by that, I mean from towns and how quickly we’ll be able to build out, how quickly we’ll be able to get things online."[415]

Ting Internet's Pipeline of New Cities is Full and Ting Expects to Be Sharing New Locations by the End of the Year

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet's pipeline of new cities is full and Ting expects to be sharing additional locations before the end of the year. In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting expects to be making announcements later this year that will represent a nice bucket of serviceable addresses.

I think that as I am going to and you know something I debated kind of putting into the script this quarter, the most important economic unit in the fiber business is serviceable addresses, not cities. And so the bigger the city, the more addresses there are. There is something that’s a couple of times the size of Charlottesville have 10 standpoints. And so I've thinking about and then you kind of go through the sales cycle at a city level. So I have been thinking about how to communicate that well. I think that between now and at the end of the year, we’re going to be making announcements that will represent a nice bucket of serviceable addresses. So let me just say that for now.[416]

Ting Internet Has Submitted a Proposal for Boulder, Colorado

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that there is a publicly available broadband feasibility study document for the City of Boulder, Colorado and Ting is on record as having submitted a proposal. "Examining Boulder gives a sense of just how long and complicated the road to fiber can be for these towns. Boulder has great fiber assets and has gotten great work from industry consultants, but still has many options to analyze and consider including choices along the spectrum from public to private. Towns that publicly fund their fiber network like Westminster are making an investment that the town will benefit from 10, 20 and even a 100 years from now. I have endorsed that approach many times in the past but it isn't more difficult road. Understandably, towns that choose to invite private companies like us to build an operator network will have fiber a lot sooner and as long they are chosen partner in the company like Ting, their customers will receive excellent treatment and fair pricing."[417]

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that nothing is going to happen in Boulder in a hurry.

I would say that this is certainly like a duck paddling. There is a lot more going on under the surface than you see on the surface. I should note that Boulder which you’re seeing a lot publicly about or you and others can see a lot of sort of public facing information about is probably not super high on our list. We love that market but what came out of that city council meeting were the council half wanted to go private, half were really considering public private partnership, and I think they should make the right decision, not the fast decision. And so nothing is going to happen in Boulder in a hurry. So I think it’s a great example, you see a lot in Boulder but that’s not near the top of the list. And I think the other thing about that part is these processes, the thing that I most want people to take away from that Boulder thing is, imagine if there is -- if what happen in Boulder, happen the week after the call, not sort of a month or so before the call. And we might have been talking but you might have been rightly talking about, hey, publicly you’re one of the three finalists who are in RFI in 100,000 population town. Tell me about that and then a week later, it’s kind of well deferred. Some of these cities have had processes that I’ve been going on for years.[418]

Ting Internet Is Seeing Requests for Information Coming in Every Month

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet is seeing more requests for information and proposals coming in from towns every month. "One thing that is clear is the upgrading internet infrastructure and providing faster internet speed is getting increasing attention throughout the United States," said Noss. "Candidates for public office highlighted in their tech platforms as Hillary Clinton did recently naming Westminster Maryland as an example of the new model of the public private partnerships."[419]

Ting Internet is Starting to See Other Fiber Players Become More Active

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Ting Internet is starting to see other fiber players become more active. "People asked me whether I am concerned about increasing competition. There were 20,000 cities and towns in the U.S., Ting Internet needs only a tiny fraction of them to have a booming business.[420]

August 8, 2016: Domain Services Had Another Quarter of Solid Performance

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Tucows' Domain Services saw another quarter of solid performance which was punctuated by the acquisition of the international wholesale reseller channel of Melbourne IT on April 1st.[421]

Tucows' Wholesale Channel Has Almost 15 million Domains Under Management

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that the acquisition of the reseller base outside of MIT’s domestic market of Australia, New Zealand added hundreds of resellers and approximately 1.6 million domains under management bringingthe total number of domains under management in Tucows' wholesale channel to just shy of 15 million mark. "The migration of the acquired MIT resellers and domains is for the most part now complete and I’m pleased to report that the feedback from our new customers has generally been positive."[422]

Wholesaler Growth Increased 14% YOY

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that Tucows' expanded reseller channel contributed to a healthy 14% year-over-year growth in total wholesale registrations during the quarter with both new registration and renewal growth in line with that our overall number.[423]

The Number of Launches of new gTLDs Has Slowed to a Trickle

Elliot Noss told analysts during the 2016 second quarter earnings conference call on August 8, 2016 that in terms of new gTLDs, the number of launches has slowed to a trickle. "The story here is now more of the quality than quantity. In this regard, we're anticipating new gTLDs for us. '.blog', will go live during Q4. So the exciting new gTLDs that we think has tremendous potential. In addition, '.web' has now been resolved with Verisign, so we'll wait to hear what's the plans are for this gTLD. The number of resellers who have registered to this one new gTLD grew to more than 2,650, up about 5% from the end of Q1 this year, and 27% from the end of Q1 last year."[424]

August 5, 2016: Ting Drops Data Prices 33%

Andrew Moore-Crispin reported on the Ting Blog that Ting has dropped data prices from $15 to $10 per gigabyte beyond the 1 GB Medium level, a price reduction of about 33%. "We have wholesale relationships with our carrier partners and we’re always looking to get the best deal we can for our customers," writes Moore-Crispin. "We have been working with said carrier partners to negotiate better data rates for some time. We were successful and as was always the plan, we’re passing those savings on to our customers, new and old, immediately."[425][426]

"This remains a genuine price drop," said Bertel King, Jr. at Android Police. "There's no trickery going on to get consumers spending more. Ting customers who use the same amount of data this month as last month will see a smaller bill. Nice." King noted that Ting's last previous price reduction in data was in February, 2014.[427] Debarshi Nayak writes at Android Headlines that Ting's data price is now the same as what Google's Project Fi charges per GB of data. "But Project Fi, owned and operated by Google, has a significant disadvantage. It can only be used on Nexus devices, where Ting supports any unlocked phone," writes Nayak. "The other advantage Ting has over its competitors is the highly customizable family plans, which lets the user have granular control over sharing amount of data, messages and minutes among multiple connections. The lower prices position Ting as a formidable competitor to other competitors in the MVNO market."[428]

July 8, 2016: What Has Ting Learned from a Year of Internet Support?

Ross Rader, VP of Ting Customer Experience, has a video on the Ting Blog where he talks about the differences between providing support on Ting Mobile and Ting Internet and what Ting has learned supporting internet for the past year. According to Rader, one of the primary differences between the two support processes is that Ting Internet owns its network allowing Ting to have complete visibility with everything that is going on in the fiber network. "We don't have that visibility with Ting Mobile because at a certain point we have to ask our partners (Sprint and T-Mobile) what is going on with that tower, or is there construction going on in that area," says Rader. "With the internet we know what is going on with construction in that area and what is going on with the equipment in the house."

Rader says that there is also a lot more information available for support personnel on Ting Internet so Ting Support can build a support process that is a lot more comprehensive and a lot more thorough that allows Ting to hand off much later to a third party than with mobile. "The quality of support we can provide with internet exceeds the potential quality we can provide with mobile and that is really exciting. I don't think we are there yet. We have a lot of work to do and a lot ahead of us but it is an exciting path and one I am looking forward to.[429]

July 7, 2016: What has Customer Service Learned from a Year of Ting Internet Support?


Ross Rader, VP of Ting Customer Experience, explains the differences between supporting Ting mobile and our new Ting Internet service.

July 4, 2016: Why Tech Support Is Unbearable at Most Companies and Why Ting is the Exception

Getting caught in a tech support loop — waiting on hold, interacting with automated systems, talking to people reading from unhelpful scripts and then finding yourself on hold yet again — is a peculiar kind of aggravation that mental health experts say can provoke rage in even the most mild-mannered person. Kate Murphy wrote at the New York Times on July 4, 2016 in an article titled "Why Tech Support Is (Purposely) Unbearable' that just as you suspected, most companies are aware of the torture they are putting you through as 92 percent of customer service managers say their agents could be more effective and 74 percent say their company procedures prevented agents from providing satisfactory experiences. “Don’t think companies haven’t studied how far they can take things in providing the minimal level of service,” says Justin Robbins, who was once a tech support agent himself and now oversees research and editorial at ICMI. “Some organizations have even monetized it by intentionally engineering it so you have to wait an hour at least to speak to someone in support, and while you are on hold, you’re hearing messages like, ‘If you’d like premium support, call this number and for a fee, we will get to you immediately.’”

Hugh Pickens comments: In Consumer Reports annual cell-phone service comparison for the past two years running Ting has come out on top as the best mobile wireless provider with a company rating of 91 out of 100 because of their excellent service and customer support. So why is Ting the exception to the rule on customer support? "I think it is because at most companies, customer support is an afterthought - something the company has to say that they provide in order to sell their cable modems or battery chargers," says Hugh Pickens, a long term investor who closely follows Ting and Tucows. "I think most companies know that their sales are 'one of' and poor customer support is not going to have much of an effect on repeat sales and their bottom line." Ting, on the other hand, sells a monthly service and if customer support is unsatisfactory, it is very easy for consumers to change to a different MVNO says Pickens. "Ting realized early on that customer support was the key differentiator between them and other MVNOs. Ting's business model will only work if they make excellent customer support into a core competency."[430]

June 28, 2016: Clinton Campaign Praises Ting's Westminster Broadband Project

The Carroll County Times reported on June 28, 2016 that as a part of Hillary Clinton's tech policy, she points to Huntsville, Ala., and Westminster, Md., as positive examples of communities implementing broadband and attracting businesses. That's an endorsement that Jason Stambaugh, a marketing consultant for the City of Westminster, said everyone can take some bipartisan pride in. "Providing ultra-fast broadband and high-speed internet to folks is a huge economic development driver in this country. I don't care who the presidential candidate is, it's something they are all going to care about," Stambaugh said. "We're happy to be out in front of the pack on that and very delighted that presidential candidate Clinton gave us some props in the media."

Stambaugh was in attendance recently at an open house at Ting, the internet service provider company that has partnered with the city to operate the fiber network as it grows — with a small pilot phase now complete, about 2,700 homes and businesses along the western side of the city and along Md. 31 will be connected with fiber over the course of the next 12 months. "The city decided that we are not in the business of being an internet service provider, that's not what we do well; we do infrastructure really, really well," he said. "That's where the Ting partnership has been so crucial, they are the ones that are operating the network and ultimately selling services to our business owners and our residents."

The project of wiring up the whole city will take three to four years if all goes well, according to City Councilman Robert Wack, who spearheaded the infrastructure plan. As far as each resident or property owner is concerned, he said, the project comes in two parts — running the fiber to each address, for which the owner must grant access, and connecting the fiber into the house to begin service, which is done by Ting once a service is purchased. "An important thing to keep in mind for the city's residents is that the installation of the fiber is free — it's only if they choose to take the service from Ting that they would actually have to pay something," Wack said. "The more people we get to sign up for the fiber installation, the cheaper we can get it done because we can get some volume discounts from the construction company."[431][432]

June 26, 2016: Westminster Demonstrates Speed of Ting's Fiber Network

The Carroll County Times reported on June 26, 2016 that among telecommunications circles, "the Westminster model" is being used to describe the city's innovative public-private partnership for a citywide fiber network. Jeff Cornejo, product manager for Tucows Inc., which owns Ting, was at a demonstration on June 24, 2016 as officials and businesses gathered to see the network's speed demonstrated at a launch party at Intellitech Inc. Cornejo demonstrated common tasks using the gigabit service, including downloading a 5-gigabyte operating system update — which took less than 2 minutes — and a 2-gigabyte data backup — which took less than one minute. A high-definition movie is usually about 4 gigabytes and can take up to an hour to download using a standard download speed, according to Cornejo.

"This is an exciting day for the City of Westminster," said Mayor Kevin Utz adding that he hopes the eventual citywide network will entice businesses and residents alike to move to Westminster. "We would like some of those government jobs to come to Westminster."[433]

June 15, 2016: Why are You so Invested in Bringing Fiber into Westminster?


City Council President, Dr. Wack, has been instrumental in bringing Fiber Internet to Westminster. His hope, as he explains in this video, is that this new technology will bring new jobs and opportunities to the community.

June 14, 2016: Gigabit Fiber Has Helped Revive Chattanooga

The Tennessean reported on June 14, 2016 that Chattanooga Mayor Andy Berke points to the city’s fiber network as a significant source of its new vibrancy. “It changed our conceptions of who we are and what is possible,” Berke said. “Before we had never thought of ourselves as a technology city." In the past three years, the city’s unemployment rate has dropped to 4.1 percent from 7.8 percent and the wage rate has also been climbing. Volkswagen’s presence has boosted the manufacturing sector and 10-gigabit speed internet has fueled wage growth. “We know that the wage rise is linked to internet jobs and particularly the technology sector,” Berke said. A pioneer in municipal broadband, Chattanooga developed its fiber network in 2010 with $330 million, paid for with $105 million in federal funds and the rest from bonds. The high-speed access led to direct and indirect economic gains and has been profitable. “Our fiber goes to each and every home,” Berke said. “We can’t have digital gated communities. If we do that we and only allow fiber to go to some parts of the city, some parts of the state, we will see technology widen the gulf between people as opposed to bridging it."[434]

June 1, 2016: Fiber Network Construction in Holly Springs to Begin in August

Fiber Network Construction in Holly Springs to Begin in August. Ting will begin installing fiber in Holly Springs in August. The initial roll-out plans include Holly Glen, Holly Pointe, Autumn Park and Morgan Park. Phase 2 of the fiber network roll-out will begin in October in Windcrest and Oak Hall. Phase 3 will being in November with 12 Oaks, Arbor Commons, and Arbor Creek. (Click on graphic to expand.)

The Ting Blog reported on June 1, 2016 that Holly Glen will be the first Holly Springs neighborhood where Ting will begin installing fiber in August. The initial roll-out plans include Holly Glen, Holly Pointe, Autumn Park and Morgan Park. Phase 2 of the fiber network roll-out will begin in October in Windcrest and Oak Hall. Phase 3 will being in November with 12 Oaks, Arbor Commons, and Arbor Creek.[435]

“Internet speed and infrastructure is an issue that is on the national agenda,” says Elliot Noss. “While it’s obviously very important to get major metros connected with fast fiber Internet, Ting Internet is proving that the fastest Internet access available isn’t just for city centers. Smaller cities and towns need faster, more reliable Internet too. Maybe even more so.”

“We go where we’re needed and wanted most,” says Adam Eisner, VP of Networks, Ting Internet. “We use pre-orders to determine where the strongest desire lies. Holly Glen reached that tipping point quickly and we’re eager to get started. By the end of 2016, we plan to have the first homes in Holly Glen connected with Ting crazy fast fiber Internet.”

“Ting has demonstrated its commitment to Holly Springs, and that’s exactly what we look for when working with the private sector,” says Holly Springs Mayor Dick Sears. “The citizens of Holly Springs deserve the best Internet access to allow them to telecommute, to inspire kids with the possibilities technology brings and to keep Holly Springs growing at the impressive pace we’ve been driving for the past several decades.”

Ting Internet start up costs in Holly Springs vary by location but are not more than $200 for residential or $400 for an individual business. The Ting Internet Box, which doubles as a high-speed wireless router, is required equipment and costs $199 to purchase outright and can be rented for $9 per month. Symmetrical gigabit Internet costs $89 a month for a home, $139 for a business.[436]

May 27, 2016: First Ting Makerspace Goes Live in Westminster

The Ting Blog reported on May 27, 2016 that the first Ting makerspace is live in Westminster, MD. The makerspace includes tech tools like a 3D printer, CNC router, Arduino boards — "everything one might need to experiment with a computer or electronics project, including crazy fast fiber Internet." Ting plans to bring a makerspace to every Ting Internet town that doesn’t already have one.[437]

May 20, 2016: Maryland Senator Ben Cardin Visits Ting Internet in Westminster

Maryland Senator Ben Cardin Visits Ting Internet in Westminster.

Maryland Senator Ben Cardin visited Westminster, MD on May 20, 2016 and praised Ting Fiber in a tweet: "A great town deserves great internet. At @tingFTW in #Westminster learning the impact of being #gigabit city"[438]

May 25, 2016: Elliot Noss Talks About How a Town Can Make Itself More Attractive to Ting Fiber

Elliot Noss has a new video up the Ting Blog on May 25, 2016 that talks about how cities or towns can become attractive to Ting or Google Fiber or any other fiber partner. First go read the documentation that is out there says Noss. "Google provides great documentation on what it takes to become a Google town. We provide documentation. The things that cities or towns should do are not complicated. For starters, towns need to know their municipal assets and access policies. Towns should also be coming to the discussion with the sense that crazy fast fiber Internet is a thing they need in order to keep pace; Ting doesn’t want to spend a lot of time convincing people that symmetrical gigabit Internet is important infrastructure."

Noss says that the thing that isn't talked about is that cities and towns need to bring themselves to the exercise as ready for it. "We don't want to spend any time convincing a city or town that they need gigabit fiber. Really there are already so many hundreds and hundreds of towns that have recognized and decided that that was important infrastructure for them to remain competitive that we are sorting through those that have already gotten over the hurdle of why should I do this?"[439]

May 18, 2016: Elliot Noss Talks About Barriers to Competitors in Ting Towns

Elliot Noss has a new video up on the Ting Blog on May 18, 2016 where he talks about barriers to competition in Ting Fiber and why he's not worried about another company coming in and competing in a Ting Town. Noss says that in terms of competition in the fiber arena there are three things to consider.

  • The first person to build fiber is the last person to build fiber. It doesn't make much sense to overbuild fiber.
  • It is early days in the fiber market. "The only people who are doing what we are doing today is Google Fiber and we continually are asking each other: Where is everybody else? We think that there will be tens and hopefully hundreds of companies in the future bringing fiber across America."
  • There are 20,000 cities and towns across the United States so there is plenty of meat on the bone for everybody. This is not a land rush where we need to be grabbing at all. The building of end-to-end fiber is going to take place over 15 to 20 years and has lot of room for hundreds of different competitors.[440]

May 17, 2016: Ting Internet Rolls Out Plans for Winchester Fiber

Rollout of Winchester, MD Fiber Network.

The Ting Blog reported on May 17, 2016 that the physical construction of the fiber network in Westminster is already underway and Ting Internet is providing a road map for the roll-out of fiber throughout the city. Phase 1, to be completed in 2016 will include Bolton Hill, Cliveden Reach, Village of Meadow Creek, and Whispering Meadows. The City of Westminster has been accepting bids for construction of Phase 1 and the most recent information is that they plan to break ground for the network backbone around the middle of June. Fiber drops (for which you need to sign an “access agreement…” that’s important) will follow shortly thereafter. All signs currently point to installing fiber in the first the homes in Phase 1 in Q4 of this year. "If you think you may want fiber Internet. Even if you’re on the fence. It behooves you to sign the City of Westminster’s fiber access agreement. Not to put too fine a point on it but if the team installing fiber drops passes you by and you decide later that you might want fiber, you’re going be waiting for quite some time. A signed access agreement lets the City install a fiber drop on your property. It costs nothing and it in no way obligates you to get service from Ting."

Phase 2 of the network build will begin as Phase 1 nears completion but timeframes are much harder to pin down. Phase 2 will include the following areas: The Greens, Stoneridge Overlook, Eagle View Estates, Furnace Hills, Fernby Farm, Avondale Run, and Wakefield Valley.[441]

May 13, 2016: Ting Wants to Help Cities and Their Citizens Plug Directly into the Internet Backbone

Gizmodo reported on May 13, 2016 that some cities and private companies are working together to offer customers a choice for better, cheaper internet service that doesn’t come from a company called Comcast. Ting installs fiber and the equipment needed to handle gigabit connections directly in people’s homes. In essence, Ting wants to help cities and their citizens plug right into the internet backbone, skipping over the slow coaxial cable that still powers the last mile in many of the big telecom networks. For now, Ting’s footprint is pretty small. The startup ISP is starting in Charlottesville, Virginia and Westminster, Maryland, about an hour north of Baltimore. Ting is partnering with cities as well as larger networks in order to bring fiber speeds directly to homes and businesses. The key for success here is the ability to streamline the challenge of building out the fiber optic network in a given city.

“You tend to be able to build much easier much faster if the city is positive about what you’re doing and helpful,” said Elliot Noss, the chief executive of Tucows. “Once the network is built inside of the city and once it’s connected to the back bone the rest is about hooking up homes and lighting them up.” Ting did just that on June 26, when it turned on the fiber optic network in Westminster. The city will now enjoy gigabit speeds and more choice when it comes to picking a provider. Westminster Mayor Kevin Utz boasted about how the new fiber network would attract new businesses and residents. “For too long, people and businesses have had no choice, or at best the illusion of choice, as to who provides them with access,” said Noss.[442]

May 9, 2016: Tucows Reports Strong Quarter for Q1 2016, Beats Earnings Estimate

Chart 1: Stock Price Chart for TCX from January 1, 2012 through May 9, 2016. In February, 2012, Tucows launched Ting, a mobile virtual network operator (MVNO). Ting's launch coincided with a rise in Tucows (TCX) stock price. Tucows' stock price has risen 684% since January 1, 2012. The S&P 500 has risen 63% over the same period. (Click on chart to expand.)
This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who owns stock in Tucows and is interested in following the company. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Tucows.
Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)
Incremental Contribution from Ting (Before Taxes and Other Expenses) (Click on chart to expand.)
Tucows EBITDA Per Quarter (Click on chart to expand.)
Tucows Net Income Per Quarter (Click on chart to expand.)

See also:

Quarterly Revenue Increased 13% YOY

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that revenue increased 13% from Q1 of last year to a record $45.6 million.[443]

Net Income for the Year Increased 57% YOY

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that net income for the first quarter of 2016 increased 57% to a record $4.4 million or $0.42 per share from $2.8 million or $0.25 per share from Q1 of 2015. [444]

Adjusted EBITDA for the Year Increased 10% YOY

Tucows announced on February 9, 2016 that adjusted EBITDA for the year came in at $7.486 representing year-over-year growth of 10% YOY.[445]

Tucows Reiterates Guidance of $30 million Adjusted EBITDA for 2016

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that with a solid start to 2016, we are comfortable reiterating our previous guidance for the year of $30 million in adjusted EBITDA. "Just again, I don't want to be back every quarter readjusting that number or working with precision. And I think, I'd probably think a little bit more about that, if we were trading at a higher multiple as well. So I am not feeling too bad about the $30 million number at this price."[446]

Tucows Had an Increase of $2.3 Million in Cash Flow from Operating Activities

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that cash and cash equivalents at the end of the first quarter of 2016 was $10 million compared to $7.7 million at the end of 2015 and $13.7 million at the end of Q1 a year ago. "The increase relative to the end of 2015 is primarily the result of our generating $5.6 million in cash flow from operations, and the advancement of $6 million under our credit facility that was used to fund the acquisition of the international wholesale domain reseller channel of Melbourne IT that Elliot discussed earlier."[447]

Tucows Invested $0.9 million, Primarily in Ting Fiber

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Tucows invested $0.9 million in property and equipment, mainly in continuing to build out the footprint for Ting Internet.[448]

Tucows Repurchased 231,000 Shares in Q4 for $5.4 million

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Tucows used $2.2 million to repurchase just over 98,000 shares under our open market share buyback program. Noss added that "we bought back a little stock during the quarter. This is not reflective of any change in our philosophy around returning capital to shareholders. We've always said that repurchases would vary from quarter-to-quarter. The more the stock falls in a given quarter, the more we are likely to buy, and more the stock rises in a given quarter, the less we are likely to buy. This is simply a matter of moment and process. The Board setting a price subsequent to the meeting that takes place just before the calls. The stock right now is up over 25% from the time of the last earnings call. And all things being equal that is likely to be a quarter in which we buy less than another."

"It's always being opportunistic. And to put a final point on it, we'll decide what we're going to do for quarter typically in our Board meeting, which will take place typically the day of the call, the day before the call. If you go back to the last call, stock was in the 18's at that point, so we're going start price on that basis. I think you as a smart trader will appreciate as much as anyone. You don't want us kind of being super aggressive off that price. And the stock traded up pretty quickly, and so that's really going to be an impact there, but tactically we go through that exercise on a regular basis."[449]

Tucows Incurred a Small Gain on Canadian Currency Exchange

Michael Cooperman told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that during the first quarter of this year, Tucows incurred a gain on foreign exchange, primary related to revaluation of our foreign denominated assets and liabilities of $79,000 compared to a loss of $239,000 during Q1 of 2015.[450]

May 9, 2016: Ting Mobile Continues to Grow Adding 12,000 New Users in Q1

Number of Ting Mobile Customers Note: Ting started in February 2012. Prior to the earnings report for 2013:Q4 Tucows did not break out the number of customers or devices so the number of customers in Q1 through Q3 for 2013 is estimated. (Click on chart to expand.)
Gross Additional Customers Per Quarter (Click on chart to expand.)
Chart 6: Churned Customers Per Quarter (Click on chart to expand.)
Net Additional Customers Per Quarter (Click on chart to expand.)

Ting Mobile Added 12,000 Accounts and 18,000 Devices in Q1 2016

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that "Ting Mobile had an outstanding quarter, adding over 12,000 accounts and 18,000 devices. That brings our total to over 140,000 accounts and 220,000 devices. This was a significant spike-in as relative to recent quarters. And I must note was driven by a one-time influx of customers, migrating from another MVNO that closed its doors."[451]

Ting added 7,000 New Customers in a One-Time Influx Migrating from Another MVNO

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that much of the increase in customers was driven by a one-time influx of customers, migrating from another MVNO that closed its doors. "In late January, PlatinumTel Wireless, also known as PTel, alerted its customers that it will be shutting down the service and included Ting among a few recommended mobile providers. Ting welcomed roughly 7,000 of these customers and early behavior and usage indicate that they are satisfied and well-suited to be great additions to our base."[452]

Ting Mobile Offered a Service Credit to Ptel Customers to Come Over to Ting Mobile

In answer to a question from David Tomljenovic, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that "with those 7,000 PTel customers, we offered a service credit to bring them over and turning out to be great piece of [ph] calc, but all of that gets taken in, in the quarter. So there's a fair bit there."[453]

It is Unlikely There Will be More Opportunities Like Ptel in the Next Year

In answer to a question from David Tomljenovic, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that it is unlikely that there will be any other non-organic opportunities out there like Ptel that might come to closure in the next six to 12 months. "One of the biggest challenges, David, is price points. And so you have to be able to bring over another company's customer base at something similar around price points. So for instance, a deal or two that we look at, you might see, and only from a distance because by the way there's not a lot of action in the vertical in the space, you might see a chunk of unlimited customers with really, really high daily usage. You've almost got to assume them as a 100% churn when you're bringing over. And if you're vendor, you want to get paid for that, right. So you're going to want to find somebody who has got plans that you can map on to a little better. So it's tricky. I think its, what? It's good business, but it's hard to find."

Ting Mobile Expects About 5,000 Net Adds in Q2

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Q2 looks kind of like Q1 with about 5,000 net adds exclusive of the one time addition of users from the MVNO that closed its doors. "I think you want to be modeling in that 5%, 6%, 7% and we'll take you up and keep you tracking as we're going along there."[454]

Ting Mobile's Churn Rate Fell to 2.39%

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Ting churn fell to 2.39% in Q1, down from 2.73% in Q4. "This appears to be the result of three factors. The first is seasonality. With a history of only four-plus years and hyper growth that has obscured other trends, we are just starting to get meaningful data on seasonable ups and downs. It appears the first half of the year tends to bring lower churn and the second half of the year higher churn, with Q4 typically being the worst."

"The second factor, surprisingly, is the growth of GSM customers as a portion of our base. In their first few months, GSM customers appeared to us to be more transient. In fact, as that base has matured, they are proving to be even slightly more loyal than our CDMA base and are having a positive impact on our retention, when looking at the cohort data."

"The third factor is our own retention work. As we mentioned on the last call, we've been identifying predictors of churn in our customer data and have launched same efforts against our at-risk customers. We have begun to see some early success there and will continue to get more aggressive on that front."[455]

There is a Lot of Effort Being Expended to Generate More Gross Add

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that there is a lot of work going on in Ting Mobile; almost all of it is with respect to generating more gross add. "Certainly, a fair amount of work going into continuing to drive that churn number down, but the real focus is on generating more gross adds; and I think that with all of the three headings or three buckets that I have talked about, they all take real work to put the pieces in place. So that work is certainly meaningful. That work is kind of the core focus of all of the people in that group.

And I think the simplest way to think about it, if you want to take a good positive look at that, I talked about the simple exercise of routing calls between support calls and presales calls, that's something that just about every company, every mobile phone company in the world does, and they tends to do it with an aggravating IVR system.

We're really looking at taking the 15% to 20% of our interactions today that are presales and trying to more efficiently route, maybe it does end up being IVR much simplified, but even getting that 15% to 20% of interactions in the hands of folks that are more trained up and skilled up to convert those leads into sales will have an impact, so it's really simple blocking and tackling like that."[456]

Ting Mobile's Data Prices Are Too High and Gross Margins Are At the Top of Their Range

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that "I think I had always said two things or have consistently said them for the last little while, one, that our data prices are too high, and as competition in the industry has stepped up that's really been exposed more and more, and then that that's because our costs are too high, and that our gross margins are towards the top end of our range. So there is nothing that I have to announce, so that's evident, but certainly those two things are both true." [457]

Ting Mobile is Continuing Efforts in Retail Distribution, Affiliate Programs, and Sale Capabilities

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that despite the one-time migrations from PTel and the decline in churn in Q1, the underlying trend on Ting net add is not at all where we wanted to be and that Ting Mobile is continuing its efforts in three areas: retail distribution, affiliate programs and sales capabilities.

None of these will provide instant lifts, but each has the potential to provide long-term impact.

In retail distribution, we are learning from our existing relationships and pursuing more of them. We are particularly interested in working closely with retailers large and possibly very small that offer a high-touch experience. As Ting tends to win, the more shoppers are encouraged to contrast and compare.

On affiliate programs, we're exploring large channel partners and beginning the same sort of experimentation we do with any other marketing vehicles. This is essentially just direct response marketing with an inside track. So for example, a discrete offer to military personnel through a private website that validates their identity or an offer to large company employees that appear on the back of their biweekly paychecks. For each, we can test target, placement, offer and message to find winners and scale.

On direct sales, we are just beginning to build an internal team, establish our infrastructure and processes and identifying new marketing channels to drive calls. In fact, the greatest initial hit would very likely come from just redirecting prospects that already come to our site everyday. All visitors to the Ting site today get the same phone number, whether they are customers or prospects, and all reps are expected to juggle those very different types of calls. By pushing prospects towards a dedicated sales team, we are leveraging people who are handpicked and trained to convert those leads. Just as we have said about improving conversion on the website, a small improvement on thousands of prospect calls a month can make a big difference in our numbers. With the success of our customer referral program and some of our most effective podcasters and bloggers, it is clear that Ting is most appealing when is explained by someone familiar, passionate and knowledgeable.

At its simplest, the acquisition areas we are pursuing are intended to connect more prospects to retailers, organizations and sales people that will do just that. I note also, that the biggest thing we can do for mobile adds is to deal with our data cost and thereby deal with data pricing. This is something we continue to work on with both our carrier partners.[458]

Affinity Marketing of Ting Mobile Is a Step Function With Long Lead Time

In answer to a question from Jamie DeYoung, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Affinity marketing is quite kind of step function. "You're going after kind of a longer lead time big fish there. And I think when I say about affinity is we continue to have good discussions, there are a couple of interesting trials going on this quarter. Those tend to be -- they're not things that are visible. It would be great, if we have one or two of them to begin to talk about specifically next quarter. But I'd have to take a step back and think about short of something that's very visible, like consumer cellular with AARP. If we really want to be on the call talking about detail around some of that, I know, that I'd love if some of my competitors is were. So I'd want to give that some thought."[459]

Ting Mobile Is Going to be Looking at Some of the Best Practices of its MVNO Competitors

In answer to a question from Hubert Mak, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that now we need to start learning from the things that everybody else is doing. "So I think the simplest way to think about it, the way that I've been expressing it is, we did a great job for four years doing things differently than everybody else has been doing. We've kind of taken that to where we've gotten and now we need to start learning from the things that everybody else is doing. The good news in that for me is we have loads of examples to learn from. It's a lot easier to try and layer in things that are working consistently for most are all of your competitors around you than it is to try and come up with new and normal strategies. So I think if we can just do an okay to pretty good job of doing what everybody else is doing that in the coming quarters that starts to have a real impact."[460]

May 9, 2016: Ting Internet Took Some Big Steps This Quarter

Ting Internet Has Launched a Campaign to Measure Demand in Charlottesville and Holly Springs

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Ting Internet took some big steps forward in Q1. "With our system in place to take $9 pre-orders, we began mapping demand at the neighborhood and street levels in our existing Ting towns to help plan our network builds. We can also now measure demand in a perspective town like Holly Springs to determine whether the potential justifies the investment. This transition from a world where only serviceable addresses could order to one where everyone in these towns could now pre-order, justified casting a much wider net with our marketing. Working with an outside creative team and local production crews, talent and musicians, we developed a campaign for each town around the idea, a great town deserves great internet, with movie theater spots, radio, billboards, print, direct mail and in Charlottesville, where there are local network television affiliates television ads. And I note, those ads are available on YouTube, if you're interested in looking for them. Since launching the campaign in late March, we have seen a sustained lift of 150% in website traffic from these towns. We are also pleased with the levels of pre-order, particularly in the Holly Springs, where we are now completing the deal and planning the build."[461]

Ting Internet Has Announced a Fourth Market for Consideration in Sandpoint

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that in March, Ting Internet announced their fourth market for consideration, the Greater Sandpoint, Idaho area, where we would serve the town of Sandpoint and eventually the towns of Dover, Ponderay and Kootenai. "The area has a combined population of around 10,000 residents. Smaller than our first three markets. Indeed, Sandpoint is likely smaller than any town that any commercial provider in the new wave of gigabit internet providers has looked at in the U.S. A number of you have asked me, if it make sense to build a fiber network in a market this size. We look at each market individually and there were a few factors here. First, Sandpoint has reasonable density, over 1,000 people per square mile. Second, Sandpoint has solid connectivity to the greater internet. But Sandpoint has one market condition that none of our other markets have. The best internet connection you can reliably buy in Sandpoint is 12-megabits per second. That is extremely slow. We are told that it is often also unreliable and expensive. Market like Sandpoint is an important experiment, to see whether the increased take-up rate we expect from less competition makes up for some slight operating inefficiencies."[462]

Ting Internet Is Seeing Cost Come in Within its Parameters

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Ting Internet continues to see build cost coming in within its parameters. "Thus we continue to be happy with $2,500 per connected home and a $1,000 dollars in annual gross margin as well as take-up rates of 20% in the first year and 50% over five years."[463]

Ting Internet Will Probably Be Entering Two or Three Additional Markets In 2016

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Ting Internet will probably be entering two or three additional markets this year. "Four is not impossible; one is not impossible; but best guess two or three."

Noss added that Ting Internet is actively working on 12 to 15 additional markets that are in the pipeline. "It's really a function of how you define active. I'd bet you if I just look at what's in the pipeline, well, like 12, 15 anyway. But there's plenty. And those are ones that we've decided to actually enter into the internal tracking system. There's probably another a dozen, 20 on top of that, where there has been a contact, the discussion, an engagement of sort of. It's very much sellers market in that regard."[464]


Comment on January 7, 2017: Tucows announced on September 21, 2016 that Ting will be bringing fiber to Centennial, CO, population 107,201 (2014 Census), the largest Ting town by population to date.[465]

The Backbone of the Buildout in Charlottesville Will Be Completed by the End of 2016

In answer to a question from Patrick Retzer, Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that by the end of this year, the overwhelmingly most addresses in Charlottesville will be able to order. "There will be the odd little pocket where that's not the case, and of course, with MDUs that's a building-by-building another thing. And Charlottesville does have a fair number of MDUs over a third of the residences. But we're actually just starting in this last quarter, we've really just started to get to the final stages and start to light up our very first MDUs."[466]

May 9, 2016: Domains Had a Steady Quarter