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."

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

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' (TCX) Q3 2015 Results November 5, 2015
Tucows' (TCX) Q2 2015 Results August 6, 2015
Tucows' (TCX) Q1 2015 Results May 7, 2015
Tucows' (TCX) Q4 2014 Results February 11, 2015
Tucows' (TCX) Q3 2014 Results November 12, 2014
Tucows' (TCX) Q2 2014 Results August 12, 2014
Tucows' (TCX) Q1 2014 Results May 14, 2014
Tucows' (TCX) Q4 2013 Results February 12, 2014
Tucows' (TCX) Q3 2013 Results November 13, 2013
Tucows' (TCX) Q2 2013 Results August 8, 2013
Tucows' (TCX) Q1 2013 Results May 15, 2013

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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.

See also Five Year Graph of Canadian Dollar to US Dollar

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

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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. 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:

April 23, 2019: Phase 5 Fiber Construction to Start in Fuquay-Varina this Spring

Phase 5 Fiber Construction to Start in Fuquay-Varina this Spring. If you’re located in Phase 5, you’ll see our crews working in your neighborhood.

The Ting Blog reported on April 23, 2019 that construction of the Fuquay-Varina fiber network continues and Ting crews are moving into Phase 5 this spring:

If you’re located in Phase 5, you’ll see our crews working in your neighborhood. Find out more about the construction process and what to expect when we roll up with our trucks here. Construction work will happen in the city-owned right-of-way, the area on the street side of your home that’s owned by the city and that is reserved for utilities. If you’ve ever noticed a water cap on your lawn, that’s typically around the dividing line between your property and the city’s property.^[12]

April 11, 2019: Centennial Homeowners say Ting Fiber Installation Caught Neighborhood by Surprise

Contact7 reported on April 11, 2019 that neighbors in one Centennial subdivision say installation of Ting's high-speed fiber internet in their front yards was a complete surprise, and the only notice they received were from utility marking flags across their property. “I woke up to a sea for flags, and the first thought I had was, 'what's going on in our neighborhood?'” said homeowner Larry Edwards.

Voters approved a ballot measure in 2013 to allow the city to “begin exploring opportunities associated with indirect, competitive, and non-exclusive service provision models that support the transmission of high-speed Internet,” according to city documents. Decisions about partnerships and agreements since then were made by the City Council. That’s part of the reason why neighbors like Edwards are upset. “We did not choose nor did we invite Ting to come into our neighborhood and to destroy the looks of it,” added Edwards.

Due to pre-existing easements for utilities allowing access to the public-right-of-way, the internet company has a right to install fiber optic lines up to six feet onto someone’s property from the sidewalk. That’s where gas and some electric lines were marked in the neighborhoods. "Not only are they going to be digging up our yards to install cable four feet parallel to the sidewalk, they’re going to be installing boxes that measure 13-inches by 18-inches,” explained Edwards.

In an email obtained by Contact7, a Ting manager wrote that construction would start as soon as Monday April 15, and that “we hope to be out of the Homestead in the Willows neighborhood by July 15.” That email went on to say that the boxes that Edwards described would need to be installed at 90% of homes. “After they’re completed that's all you’re going to see, are these green boxes,” he said. Contact7 reached out to the City of Centennial. A spokesperson responded saying “Since Ting signed a 20-year lease on the City’s fiber network in 2018, Ting and the City of Centennial have continued to work cooperatively to find opportunities to expand broadband connectivity for the community.” Further questions were directed to Ting. Questions via email to the company were not returned.

The email from Ting claimed that “every house impacted will get a door hanger communicating the process and when we will be working next to their property.” Edwards and his neighbors say that hasn’t happened. One homeowner took a pamphlet to the HOA describing construction coming to Mill Creek, despite the fact they don’t live in Mill Creek. “Where are our rights? To allow a company to come into your neighborhood and decide what our future was?” concluded Edwards. "I felt bullied."^[13]

April 8, 2019: Ting to Offer Gigabit Fiber Internet in Fullerton, CA

Tucows reported on April 8, 2019 that Ting will provide service in Fullerton through a partnership with SiFi networks, an international fiber-optic network developer. This partnership model separates the construction, ownership and operation of fiber infrastructure from the provisioning of Internet service and customer support. With SiFi Networks taking on the former, Ting can scale more quickly and focus on its core business strengths of providing ultra-fast, low latency Internet service with a top-rated customer experience. Once completed, the Fullerton build will add just over 50,000 shared serviceable addresses to Ting’s potential addressable market.

“Fullerton is a solid market for us, with a strong, dense and diverse population of families along with colleges, beautiful public spaces, and businesses big and small,” said Elliot Noss, Tucows’ CEO. “Fullerton will be great for our business. We are pleased to embark on a California footprint, to test the Ting brand and customer experience through direct competition, and to see alternative models emerging in the ongoing fiberization of America.”

Ting builds, operates, and provides service on fiber networks in select markets across the US, and has differentiated itself from its competition by offering crazy fast symmetrical gigabit fiber Internet access, a deep local presence, and genuinely human customer support. Fullerton will be Ting’s eighth market, and first in southern California. Ting expects to light its first customers in Fullerton towards the end of 2019.^[14]

March 19, 2019: Tucows Inc. Acquires Wholesale Domain Registrar Ascio Technologies

Tucows announced on March 19, 2019 that it has signed a definitive agreement to acquire wholesale domain name registrar Ascio Technologies from CSC®. Tucows will pay $29.44 million and the transaction is expected to be immediately accretive to operating cash flow. The purchase price will be funded through Tucows’ existing credit facility. The acquisition of Ascio adds approximately 1.8 million domains under management and approximately 500 active resellers. The Ascio reseller base fits squarely with Tucows’ core customer profile — ISPs, web hosting companies and website builders serving quality businesses that reward outstanding customer service with long-term loyalty. Ascio also expands Tucows’ product portfolio with one of the most complete offerings of country code TLDs (ccTLDs) and generic TLDs (gTLDs) in the world. “This acquisition makes perfect sense for Ascio’s resellers, our business and our shareholders,” added David Woroch, Tucows’ Executive Vice President of Domains. “Ascio’s resellers get a customer-focused provider that is investing in its wholesale channel. Tucows gets an excellent business with a deeply experienced team, additional domain products, including more than 50 ccTLDs, and a high-quality customer base that strengthens our European presence. And our shareholders get the benefit of Tucows’ even greater scale and efficiency as the world’s largest wholesale domain registrar.”^[15]

February 5, 2019: Ting Internet to bring Gigabit Fiber Internet to Wake Forest, NC

Tucows announced on February 5, 2019 that Wake Forest, NC will be the next town to get crazy fast fiber Internet from Ting. Ting expects to light its first customers in Wake Forest in summer, 2019. With established markets and operations in nearby Holly Springs and Fuquay-Varina, Ting’s expansion into Wake Forest will benefit from its local brand strength and operational synergies. Once completed, it will also add approximately 10,000 serviceable addresses to Ting’s North Carolina footprint. In 2015, Ting announced it would bring fiber Internet to Holly Springs, NC, and in 2018 Ting named Fuquay-Varina as the next “Ting Town” in the greater Raleigh, NC area. The charming town of Wake Forest will be the third Ting Internet town in North Carolina, and the seventh in the country.

“Ting Internet is proud to be expanding into the Town of Wake Forest, which has so many of the qualities we look for in a Ting Town,” Said Tucows CEO Elliot Noss. “It’s a future-focused community with an entrepreneurial spirit and a strong focus on education and progress. It’s a place where community leaders value the importance of fiber infrastructure and all the benefits it will bring to their constituents.”

“Wake Forest is a growing community comprised of highly-educated, globally-connected residents that rely on high-speed communication to meet their ever-changing needs,” said Wake Forest Mayor, Vivian Jones. “We are extremely excited to welcome Ting to Wake Forest and look forward to experiencing the crazy fast speed and reliability fiber optic service delivers.”^[16]

“Increasingly, we see that cities and municipalities are looking for better Internet options for their residents and businesses because the incumbents aren’t stepping up,” said Tucows CEO Elliot Noss in the announcement. “Fiber is the technology that will power smart cities for the next hundred years.”^[17]

“We have no contingencies,” Noss says. “We’re not relying on anybody else for the capital to do this. We’re not relying on anybody else for the operating expertise to do this. Our track record, not just in the fiber business, but in the internet business more broadly over the last 25 years, is one of methodical execution and great customer experience and anybody that’s worried should go find a friend in Holly Springs and ask how it’s going.”

Noss says his firm has a methodical process – and while he doesn’t rule out a fourth Triangle town, no additional announcements are imminent. “When you’re a company our size taking on an endeavor like this … building fiber is a real project,” Noss says. “We respect the amount of execution that goes into this. We think it’s very important for us to make sure everything we do is inside the quality and cost parameters that we know make this work very well, so we’re always going to be good before fast.”^[18]

January 24, 2019: Tucows Stock Closes at Record High of 70.58

Nasdaq reported on January 24, 2019 that Tucows Stock (TCX) closed at a record high of 70.58 with an intra-day high of 72.33. The previous high of 70.05 was recorded more than one year ago on December 26, 2017.

December 28, 2018: Construction of Centennial’s Fiber Backbone Complete, Centennial Signs 20 Year Lease With Ting

Village Publishing reported on December 28, 2018 that Centennial has completed the construction of a 432 fiber strand backbone, FiberWorks, connecting key city sites and community anchor institutions. The project was completed on schedule and within the budget of $5.7 million. The city entered into a 20-year lease and O&M agreement with Ting Fiber and have provisioned a buffer tube of fiber for Ting’s use in the Central Fiber Ring.

“We have seen extremely strong demand in the neighborhoods where service is available or being built,” said Monica Webb, Ting’s director of market development and government affairs. “We intend to build this out to the entire city.” Webb admits that might take a couple of years, given the capital and effort involved in making the last-mile connections from Centennial’s fiber backbone to each individual address in the city. She said the company doesn’t have an official completion deadline but expects to have 30 to 40 percent of its network built in the city by the end of next year.

“Council’s goal with the Fiber Master Plan was to provide an opportunity to increase competition by completing a fiber backbone that could deliver superior and competitive choices and services for consumers. Businesses consider access to telecommunication services and speed a priority when deciding where to locate their facilities. Through partnerships with the private sector, our residents and existing and future businesses could enjoy faster internet services and possibly lower prices,” says member Ken Lucas, mayor pro tem and fiber commission chair. “I have appreciated being involved with this project since the vote in 2013 and am proud of our city for being innovative and forward thinking. We will continue to be future ready.”^[19]^[20]

September 11, 2018: First Centennial Home Gets Ting Internet

The Centennial Citizen reported on September 11, 2018 that the first official house in Centennial has received fiber-optic internet from Ting, a provider spreading service across neighborhoods in south part of the city. “From a citizen standpoint, this kind of stuff really excites me,” said Isaac Herman, a 43-year-old video game developer who lives in the Willow Creek neighborhood. His home near East Dry Creek Road and South Yosemite Street got a small facelift: a gray Ting box on its side that doesn't look like much, but that promises to make a difference in Herman's family's thoroughly plugged-in household.

Ting installed service for some "beta" customers first to work out kinks in late August, but Herman was the first to receive it as a non-beta customer, Said Mark Gotto, Ting's city manager for Centennial. Herman ordered the internet service last year — customers can pre-order — and expects it to improve life in more ways than one. “I work out of my house, so I have pretty high internet needs,” said Herman, who has a video game company that develops software for cellphones and desktop computers. “I have employees in other states.”

The city “council recognized fiber was the next infrastructure a city needs,” said Mayor Stephanie Piko, who still serves on the city's Fiber Commission, the body in charge of developing Centennial's fiber program. “I really have to give credit to our staff for being innovative.”^[21]

August 27, 2018: Tucows Purchases Land in Dove Valley for Headquarters for Centennial Contract

The Colorado Real Estate Journal reported on August 27, 2018 that Tucows has purchased 2.17 acres of land at SEC E. Broncos Pkwy. & E. Jamison Circle; east corner E. Jamison Circle & S. Wheeling Court, Englewood for $421,992 which will be used for their headquarters to provide fiber to homeowners in Centennial.^[22]

August 22, 2018: Tucows Says that Fiber Expansion is not Cash Constrained Or Opportunity Constrained But Resource Constrained

Tucows provided written answers to questions to stockholder questions on August 22, 2018 including one key answer on why no new Ting Fiber contracts with new cities have been announced recently. According to Elliot Noss:

When looking at the Ting Internet pipeline, there are a few things that I want to reiterate up front. First, we are not cash constrained. We are not opportunity constrained. We are resource constrained. There is plenty of opportunity out there. It is important to recognize that the fibre business at the start of 2017, consisted of our purchase in Charlottesville and our public-private partnership in Westminster. We were learning how to stand up the business. We did a nice job of figuring out some of the core elements of being an ISP, billing and provisioning, support, how to build out crew, manage truck rolls, and much much more.

At the beginning of 2017, and through 2017, we stood up our first market from scratch in Holly Springs. That was something that was significantly more work, and different work, and all of it needed to be repeatable. Things like network design and sourcing and managing contractors. Through the later part of 2017, we also were starting to get the initial work done for Sandpoint and Centennial. So, for the later part of 2017 and into 2018, we were now, for the first time, in three different markets, and doing those things simultaneously. And there was a lot of learning there. There was significant and skills development around what we needed to be able to do to build and light up in multiple markets at the same time. Later in 2018, we added and are already doing work in Fuquay Varina and we are now, with Centennial and Sand Point both coming onstream, and the rebuild work in Charlottesville, experiencing what it’s like to be in four and in five markets at the same time.

What investors should watch and track is the steady, consistent, significant progress that we are making in our ability to operate in multiple markets, and you can see that best through the lens of capex. You heard my comments in my prepared remarks for the quarter about that significant ramp. You’re going to see those levels of capex continue for the next few quarters and hopefully start to increase as well.

So from our perspective, new Ting towns are not slow in coming. In fact, we were quick out of the gate with Fuquay Varina, and I note that it’s a great example of something that’s easier to do. It’s easier operationally to start work in a city like Fuquay Varina where we came to an agreement with the city quickly where we already have a team in place in Holly Springs. We already have arrangements with existing contractors that we can just slide over to work in Fuquay Varina as they are finishing work in Holly Springs. We see a similar exercise in Charlottesville, where we’ve added solid numbers of serviceable addresses just outside city limits.

I have now noted a couple times in my remarks that cities are the wrong metric to be watching. Watch capex spend and serviceable addresses. We don’t feel like we have any lack of opportunity to sign contracts with cities. We continue to expand what we’re doing every quarter and we continue to improve the organizational muscle that allows us to take on more and more and more work.^[23]

August 22, 2018: Tucows Says All Three Business Lines Are Significantly Recession Proof

Tucows provided written answers to questions to stockholder questions on August 22, 2018 including one answer on the effect of protectionism and new tariffs on their business. According to Elliot Noss:

There are two comments I would make here. First, and probably most importantly, all of our business lines are significantly recession proof. Relatively speaking, low price items, whether they are domain names or mobile phone service or home Internet, they are core needs, things that people cannot do without. They are not luxuries. They are, in the context of today’s world, necessities. And so we believe our business to be relatively recession-proof.

The second comment I would make is that I do have a personal view that there is a little higher risk than there has been for the last few years of a significant economic correction -- not a market correction, I don’t offer opinions on the market -- but in that context, and even with a recession-proof business, it does make us slightly more conservative in terms of how we are looking at our uses of capital. I don’t want you to take any alarm away from that comment -- if previously we were at a 6 in terms of worry, now we are at a 7 or a 7.5. And I do tend to be relatively conservative -- I’m probably more prone to fiscal conservatism than most.^[24]

August 22, 2018: Tucows Expects a Cash Burn Rate of Roughly $5 million for 2018

Tucows provided written answers to questions to stockholder questions on August 22, 2018 including one answer on the cash burn rate for 2018. According to Elliot Noss:

The expected cash burn for Ting Internet for 2018 should be about the same as it was for 2017 - - roughly $5.0 million. When we originally provided our forward view on this metric for 2018, we estimated it would be more in the $3.5 million range. The difference is almost entirely due to the delay in launch in both Centennial and Sand Point that we’ve talked about numerous times. This has simply delayed the onset of revenue. What is missed is months 5-7 in those markets as those months are pushed into 2019. It’s not a concern for the business, just a timing matter.

In terms of looking further forward, it’s certainly too early to talk about 2019 at this time, but we are seeing the right characteristics towards profitability at the city level. And I want to remind everyone that we look at the contribution from or burn for Ting Internet at three levels: At the city level -- this is basically on a cash flow basis, comparing the revenue or gross margin in a city to the direct operating expenses in the city; At a business unit level -- in which we add the costs of anyone at head office who is working across all of the different markets; And then company overheads, which of course we don’t allocate. Again, we are seeing the right characteristics towards profitability at the city level. And when we are talking about cash burn from a cash EBITDA perspective, we are talking about that at the
business unit level.^[25]

August 22, 2018: Centennial's New Gigabit Internet Service Ready To Light Up

Denver Busness Jurnal reported on August 22, 2018 that early customers of a new gigabit internet service in Centennial are set to go online next month as Ting, which built its network off the city-owned fiber optic network, will host a “lighting of the network” ceremony on September 6. The ceremony is more symbolic, officials with Ting said, but customers that week will be able to start using the network. “It’s a major innovation for them,” said Monica Webb, director of market development and government affairs for Ting.

Crews have been building out the infrastructure in Centennial’s Willow Creek and Walnut Hills neighborhoods for the past nine months. Ting’s gigabit-speed internet goes for $89 per month, plus a monthly modem rental of $9 and a one-time $200 installation fee. Customers who signed up early had the installation fee waived, Webb said. Webb declined to comment on how many Centennial residents have signed up for the service to date, saying the publicly traded company can’t disclose that information. “We’ve seen an extremely enthusiastic response for an alternative to traditional internet offerings,” she said. There are 1,776 households in Willow Creek and 1,873 in Walnut Hills.

Centennial’s business model is different from many other cities in that taxpayers there are only paying to guarantee adequate network capacity exists across all parts of the city. Ting was contracted to extend the network to customers and market the service.^[26]

July 18, 2018: With High Demand, Ting's Network Expansion in Charlottesville Going Slower than Expected

C-ville reported onJuly 18, 2018 that while it has a footprint in about 80 percent of the local area, Elliot Noss says the waitlist for Ting Fiber in Charlottesville is “certainly north of 1,000” people. Here’s why: When Ting acquired a majority stake in Blue Ridge InternetWorks in 2014, Noss says it bought a preexisting network that wasn’t built to service the whole city. “There’s no criticism in that,” says Noss. “We all knew what we were signing up for.” While Ting's existing backbone has plenty of fiber capacity, Noss says it lacks electronic capacity. In other words, says Noss, “Some portions of the network need and needed to be improved. We probably thought we had a little more coverage than we did.”

Ting is stringing internet cables up on poles and running fiber-optic cables to subscriber’s homes in town and they expect to be able to service 70 percent of the city by the end of the year, with an additional 15 percent by the end of 2019. “More people have access every week,” promises Noss, who adds that he reads Charlottesville’s subreddit on discussion website Reddit, and he’ll often see someone say they’re moving to town and looking for recommendations for the best internet service provider. He says city residents are quick to suggest Ting, but add that it likely won’t be available. “That breaks our heart,” says Noss. “We are certainly doing the work as fast as we can.”

Redfields resident Michael Smith says he waited 13 months for Ting. “Initial expectation from conversations with Ting personnel was the August/September of 2017 timeframe, but obviously that didn’t happen,” he says, adding that he was finally provided a “temporary connection” to the service in mid-February, before his permanent connection was completed two months later. For Smith, a self-employed computer consultant who primarily works from home (and who was also a former BRI employee from 2002 to 2007), switching to Ting from Comcast was about speed and reliability. “Ting is a lot faster for less money,” he says. And though he still has CenturyLink as a backup, “given the reliability of Ting so far,” he plans to cancel the second service this fall. Smith says Ting is worth the wait: “I’m happy with the switch to Ting. I wish it hadn’t taken so long.”^[27]

July 16, 2018: Ting Mobile is Looking at Ways to Expand

Fierce Wireless reported on July 16, 2018 that Ting Mobile is looking to expand its distribution and potentially tweak its service and pricing in response to the changing dynamics of the industry. “We are at a really interesting moment in the life of Ting mobile. I would say we got to our first 286,000 subscribers (on 165,000 accounts) by zigging where everyone else was zagging,” said Ting’s Michael Goldstein pointing to Ting’s services, including its pay-for-what-you-use pricing and its focus on online sales and bring-your-own-device activations, as examples of the company’s early innovations. “In each of those, we are thinking about whether it is time to zag just a bit (partly because the industry has evolved and become more competitive, partly because we are leaping from our hyper-rational, frugal, capable early adopters to an early majority).” “We are talking to customers and prospects about price to try to understand the most desirable balance between value and simplicity,” Goldstein wrote. “Maybe we end up with some combination of unlimited and pay for what you use. Maybe there is some opportunity to still address confusion and game playing in the industry like throttling or silly fees for things like tethering or other kinds of usage.”^[28]

July 16, 2018: Ting Mobile Purchases The People's Operator (TPO) for $1 million

According to Wave7 Research, Ting recently purchased the U.S. customer base of a U.K.-based MVNO, The People's Operator (TPO), for roughly $1 million.^[29]

June 7, 2018: Ting Lights Up First Customers in Sandpoint

The Bonner County Daily Bee reported on June 7, 2018 that Ting sent its “crazy fast” fiber intenet to its first two customers on June 6, 2018 marking the culmination of “an incredible amount of work by the Ting team" according to Tucows CEO Elliot Noss. Construction of the fiber network began in early April and the lighting ceremony celebrates the company’s first phase of installation, which includes most of the downtown and central Sandpoint areas. Ting also announced the second phase of its fiber network infrastructure in the south Sandpoint area and the rest of the city may not be far behind. Ting officials anticipate that all of the city will have access to Ting in the next year.

“This is really a game-changer for the city of Sandpoint in terms of an economic driver,” said Sandpoint Mayor Shelby Rognstad. “It really puts Sandpoint on the map and it also raises the bar for quality of life. Quality of life is something we talk a lot about in the community, it’s why people chose to live here and internet, high-speed reliable internet that’s affordable is one of those things that had eluded us for a long time.”

Kate McAlister, Greater Sandpoint Chamber President and CEO, told Noss and the others gathered to celebrate at the lighting ceremony that she remembers that initial meeting from three years ago. As others celebrated, she said she was hesitant, telling Ting officials that the community had been down the road to high-speed internet before only to have it end in frustration. Noss looked at her and said, “we’re going to make it happen.” And, to her delight, she said they have.^[30]

June 5, 2018: Ting Announces that Ting TV is Coming soon to Ting Towns

The Ting Blog announced on June 5, 2018 that Ting soon offer Ting TV set-top boxes and DVRs to buy or rent. It will also be viewable in your home on most tablets, smartphones and set-top boxes such as Apple TV and Amazon Fire TV. "With the clear, upfront pricing we’re known for, the best customer support in the game, simple options and smart services that fit into your life, we’re pretty excited for you to get your hands on Ting TV.," wrote Christine Ottoni. "As with everything we do at Ting, Ting TV will be contract-free and feature simple pricing. Your bill will be easy to understand. Where big cable will charge you extra fees for broadcast TV, regional sports and HD channels, all these features are included upfront in Ting TV.^[31]

May 28, 2018: Tucows Makes Statement on ICCANN Legal Action

Tucows made the following statement on May 28, 2018 regarding the legal action filed by ICANN against EPAG, a Tucows-owned Registrar based in Bonn, Germany:

Tucows Statement on ICANN Legal Action
On Friday the 25th of May, ICANN filed a legal action1 against EPAG, a Tucows-owned Registrar based in Bonn, Germany. This action was taken because of a disagreement between Tucows and ICANN on how the GDPR should be interpreted, with respect to our contracts. While we look forward to defending our position in court, the below is intended to provide some context and insight into the dispute.

The GDPR begins with a statement of its core principle: “The protection of natural persons in relation to the processing of personal data is a fundamental right.” Tucows has long been concerned with privacy and the rights of our customers, and takes the principles enshrined in this law extremely seriously.

In order to have a domain registration system reflective of “data protection by design and default”, we started with the GDPR itself and crafted our procedures and policies around it. We built a new registration system with consent management processes, and a data flow that aligns with the GDPR’s principles. Throughout the registration life-cycle, we considered things like transparency, accountability, storage limitation, and data minimization.

We realized that the domain name registration process, as outlined in ICANN’s 2013 Registrar Accreditation Agreement, not only required us to collect and share information we didn’t need, it also required us to collect and share people’s information where we may not have a legal basis to do so. What’s more, it required us to process personal information belonging to people with whom we may not even have a direct relationship, namely the Admin and Tech contacts.

ICANN’s goal since discussions about the impact of the GDPR on domain registration began has been to preserve as much of the status quo as possible. This has led ICANN to attempt to achieve GDPR-compliant domain registration via ‘process reduction’, as opposed to Tucows’ approach of starting with the GDPR and rebuilding from the ground up. These two approaches have led to significantly different results, and consequently a need to determine whether ICANN’s insistence on the collection of the full thick Whois data and this data’s transfer to gTLD Registries is in compliance with the GDPR. It is this disagreement and need for legal clarity that is at the heart of the lawsuit filed by ICANN.

— On the 17th of May 2018, the ICANN board passed a ‘Temporary Specification2‘, meant to temporarily bring gTLD registration services in line with the GDPR. The goal of the Specification is to serve as a stop-gap while the ICANN community works to resolve and balance issues between privacy law and existing ICANN policy.

With that background in mind, we perceive three core issues with the Temporary Specification that we do not believe are compliant with the GDPR. These issues are the collection, transfer, and public display of the personal information of domain registrants and the other contractually-mandated contacts.

Personal Data Collection Article 5(1)(c) of the GDPR speaks to data minimization: collecting and processing only what personal data is necessary. It is clear to Tucows that we need to continue capturing some information about the domain Registrant—we always want to ensure we have the ability to contact the person legally responsible for the domain. However, in the vast majority of gTLD registrations, the Registrant (Owner), Admin, and Tech contacts are the same. As such, collection of Admin and Tech contacts is meaningless, as the data belongs to the Registrant.

That said, in the less common scenario, the Admin or Tech contact does not match the Registrant. In these cases the mandatory collection of their contact data is problematic because it requires us to store and process personal data belonging to people with whom we have no legal or contractual relationship.

ICANN will need to prove that the minor, marginally incremental benefit of collecting, processing and transferring Admin and Tech contact data at the request of third parties outweighs the principles of data minimization and lawful processing enshrined in the GDPR. We find the argument that duplicative technical contacts are necessary for the security and stability of the DNS implausible. We were not convinced this was the case when we first examined the law, and we remain unconvinced following the release ICANN’s Temporary Specification.

Tucows will continue to ensure that those with legitimate purposes, including law enforcement, intellectual property, and commercial litigation interests will have access to domain registrant information. On a daily basis, we see plenty of important circumstances wherein we find sharing that information to be legally is necessary, and this will not change. We collect a contact for the owner of each domain name sold on our platforms, and have the ability to contact the owner. When necessary, we also share that contact with law enforcement and others with a legitimate interest.

Personal Data Transfer to a Registry ICANN’s continuing requirement that registrars transmit all data collected to the relevant registry is counter the GDPR’s principle of use of data only when a legitimate legal basis applies. There are circumstances where this transfer is necessary and reasonable, for example where a TLD has specific registrants requirements such as geographic restrictions. We are not opposed to these circumstances, but require agreements between ourselves and the registry for the specific collection, processing and transfer of that personal data.

However, as the registrar, we collect data that we need in order to enter into a contractual relationship with and provide requested services to the registrant. Transfer of that data to a registry is unnecessary—this is proven by the decades-old ‘thin model’ that 140 million .com and .net domains follow. We don’t feel that the temporary specification offers a robust legal basis for the transfer of data to registries and therefore presents an unacceptable risk under the GDPR.

Personal Data Display ICANN has also required that we continue to publish the organization, state/province, and country fields in the public Whois. We disagree that the organization should be published because, although it is optional, many people do not realize this and put their own first and last names in the organization field. We do not want to expose the personal data of these registrants because of a misunderstanding, and it will take considerable time to educate registrants and cleanse this data from the field.

Desire for Clarity
Fundamentally, ICANN and Tucows disagree on how the GDPR impacts our contract. The facts and the law as we see them do not support ICANN’s broader view of what will impact the security and stability of the internet. Neither do we find the purposes outlined in the temporary specification proportional to the risks and consequences of continuing to collect, process and display unnecessary data. We look forward to, and welcome the clarity that will come from this legal action.^[32]

May 25, 2018: ICANN Files Legal Action against Tucows Registrar over GDPR

Domain Name Wire reported on May 25, 2018 that ICANN has filed injunction proceedings against EPAG, a domain name registrar owned by Tucows (NASDAQ:TCX), in a challenge meant to get clarity on the European Union’s General Data Protection Regulation (GDPR). EPAG is a German registrar that Tucows acquired in 2011. EPAG has told ICANN that it will no longer collect administrative and technical contact details because it believes doing so will violate GDPR. ICANN has taken this step to ask the court for assistance in interpreting the European Union's General Data Protection Regulation (GDPR) in order to protect the data collected in WHOIS. ICANN's "one-sided filing" in Bonn, Germany, seeks a court ruling to ensure the continued collection of all WHOIS data, so that such data remains available to parties demonstrating legitimate purpose to access it, consistent with the GDPR.^[33]^[34]

May 10, 2018: Ting Fiber Announces Expansion to South Sandpoint

The Sandpoint Reader reported on May 10, 2018 that Ting Fiber has announced that they’re expanding their installation plans into south Sandpoint. This expansion is sometimes referred to as “Phase 2.” “Although we are announcing Phase 2 tonight, our goal is to get most, if not all, of the Sandpoint city limits done by the end of the year including west of Division and around the airport,” said Ting’s VP Networks Adam Eisner. “We are also dedicated to lighting up downtown.” Ting announced Phase 2 during a community hall event on May 7, 2018 at the Panida. Along with Eisner, the Sandpoint’s local Ting team was all there. Ting Sandpoint City Manager Kari Saccomanno said every Sandpoint team member is from this area, including herself.^[35]

April 30, 2018: Ting Internet to Bring Gigabit Fiber Internet to Fuquay-Varina, NC

Tucows issued a press release on April 30, 2018 reporting that Fuquay-Varina, NC will be the next town to get gigabit fiber Internet from Ting. Ting has an established market in neighboring Holly Springs, NC, so building a network in Fuquay-Varina will leverage the existing operation and enable us to break ground much faster than might otherwise be possible.

"Fuquay-Varina is one of the fastest growing towns in North Carolina. High-speed fiber optic broadband is the key to modern communications, economic growth, and access to a world of opportunities. Having Ting bring 'crazy fast fiber Internet' to Fuquay-Varina is very positive for our fast-growing town. It provides greater choices for citizens to connect to the Internet and helps the town prepare for the future," said Mayor John W. Byrne.

"Over the past 15 months, the Town of Fuquay-Varina has been building a fiber network to ensure that town facilities have sufficient network capacity to meet needs now and in the future," said Town Manager Adam Mitchell. "Taking a proactive approach to planning and investing in fiber infrastructure has made the Town attractive to service providers. We are excited that Ting is coming to Fuquay-Varina."

“I regularly meet residents from Fuquay-Varina at Ting events in Holly Springs. They are frustrated with their existing Internet options and often ask if Ting will expand to serve Fuquay-Varina,” said Todd Rubin, Area Manager for Ting. “Likewise, Fuquay-Varina has everything we love about a town. It’s smart, it’s growing, there’s a progressive, entrepreneurial spirit here. We can’t wait to get started.”

Ting expects to light the first customer on its crazy fast fiber network in Fuquay-Varina before the end of the year.^[36] Fuquay-Varina's population has doubled in the past 10 years to over 25,000 citizens making it one of the fastest growing towns in North Carolina!^[37]

April 4, 2018: Adding Fiber Optic Conduit in Centennial Increases Property Value by 3%

Villager Publishing reported on April 4, 2018 that as Ting has been installing conduit in Centennial, some residents have been distressed by the digging on the right of way. What residents may not realize is that the conduit that is being laid (six to eight feet underground) likely will result in a 3 percent increase in the value of their property, according to Ting. Ting's City Manager for Centennial, Mark Gotto, concedes that some residents have complained about the digging on the right of way that extends into their yards. He states that Ting tries its best to restore the property at the conclusion of the digging. The rights of way have to do with Ting’s digging in areas that many residents have not realized exist on their property. Generally, for properties inside a city, the municipal entity has a right of way (a license) for use (but not ownership) of the front of the property, for two to four feet. If there is a strip of land at the front of the property, then a sidewalk, then the property, there generally is a right of way inside the sidewalk.^[38]

March 20, 2018: Charlottesville Council Member Proposes Low Cost Fiber for Public Housing

The Daily Progress reported on March 20, 2018 that Charlottesville City Councilor Wes Bellamy is proposing that the city consider allocating $150,400 to subsidize installation and hardware costs to residents of Charlottesville’s public housing. If the plan is approved, public-housing residents will pay only $10 a month for the “crazy fast fiber internet” service Ting touts in its promotions. “I think it’s a phenomenal deal, especially when we talk about building equity and closing the digital divide while making sure that everyone has the opportunity to be as successful as possible,” said Bellamy.

If Bellamy’s proposal is approved, the money would be drawn from a contingency fund for capital projects. The contingency fund currently has $8.4 million in it, but the proposed budget for fiscal year 2019 includes a $2.2 million transfer from the fund. Ting already provides free internet service to about a dozen local nonprofits and community organizations. Bellamy, a council representative on the housing authority’s board of directors, said he started speaking with officials from Ting about the idea last summer. “Around November, there was a request from the housing authority on what we can do to provide internet service to our public housing sites,” Bellamy said. “Ting was listening to that conversation, and what we came up with is an offer that, in my personal opinion, is one we can’t refuse.”

While Ting has been operating in the city for about three years, several parts of the community remain unconnected to its fiber-optic network. Webb said the company is planning to finish expanding its service throughout the city in the next year. “We are concurrently expanding into neighborhoods in Albemarle County surrounding Charlottesville where we have a high level of pre-orders for service,” she added.^[39]

March 16, 2018: Ting is Making Steady Progress in Centennial

The Ting Blog reported on March 16, 2018 that Ting Fiber is working on Phase 1A in Willow Creek 1 and 2 and Phase 1B in Walnut Hills and Hunters Hill simultaneously.

We began work in Willow Creek 1 and 2 in early January of this year. We’re happy to say we’re on track to start installing customers in these neighborhoods six months from the start of construction, in the summer of this year. In February we began construction in Walnut Hills and Hunters Hill while continuing our work in Willow Creek 1 and 2. We expect to finish construction in Walnut Hills and Hunter Hill this summer. From there we’ll begin lighting individual homes and businesses.^[40]

March 1, 2018: Ting Signs 20-Year Lease for Fiber Backbone in Centennial

The Denver Post reported on March 1, 2018 that the city of Centennial has signed a 20-year lease with Ting to use the city’s new fiber backbone. Ting will pay a one-time fee of $302,500 for use of 12 strands of the city’s new 432-strand fiber backbone, which was built to improve communications for emergency workers, businesses and the city. Ting also will pay an annual lease of $4,325, which would increase 3 percent a year for operations and maintenance costs. The fees are “consistent with industry standards,” the city said. Ting is building the “last mile” of internet connecting homes and businesses to the city’s main internet backbone and plans to be “lighting up” customers six months after construction begins. Centennial still is building out a 50-mile fiber backbone that will cover most of the city by the end of the year.^[41]

February 15, 2018: Tucows Introduces New Domain Pricing Structure

The Open SRS blog reported on February 15, 2018 that beginning March 19, 2018, Tucows will introduce a new pricing structure for domains that will involve increases in list prices and a move to a tiered, four-plan pricing structure that offers resellers greater discounts by rewarding strong performance and growth. "Instead of offering a single price point for each TLD, we’ll provide discounted pricing based on new domain registration volume and annual domain spend. This change marks a significant departure from our current model and will make our pricing more flexible while maintaining a high-level of transparency. We’ve also taken the opportunity to simplify our TLD classification, reducing it to two categories – generic and geographic."^[42]

February 14, 2018: Ting Internet Publishes 2017 Build Scorecard

Ting Internet Publishes 2017 Build Scorecard. The scorecard shows 85,000 serviceable addresses, 16,000 serviceable addresses completed, and 4,500 subscribers. (Click on the graphic to expand it.)

On February 14, 2018 Ting published their Build Scoreboard for 2017 showing an estimate of how many serviceable addresses Ting has built to so far in each of the five Ting Internet towns and project the total potential build in each town. "We will update this annually to help shareholders easily track both progress and potential," said the post. The scorecard shows 85,000 serviceable addresses, 16,000 serviceable addresses completed, and 4,500 subscribers.^[43]

February 14, 2018: Tucows Announces $40 Million Stock Buyback Program

Tucows issued a press release on February 14, 2018 announcing 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 February 14, 2018 and will terminate on or before February 13, 2019. Purchases for the new $40 million buyback program will be made exclusively through the facilities of the NASDAQ Capital Market. The previously announced $40 million buyback program for the period March 1, 2017 to February 28, 2018 has been terminated. 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 February 13, 2018, Tucows had 10,588,958 common shares outstanding.^[44]

February 3, 2018: Ting Official to Speak at Sandpoint Chamber Luncheon

The Bonner County Family Bee reported on February 3, 2018 that Kari Daarstad Saccomanno, the new city manager for Ting will be presenting information regarding Ting Fiber and the construction rollout in Sandpoint. Kari will also introduce the new Ting team members. “I’m excited to be a part of Ting and very excited for what new opportunities it can bring to my hometown with not only fast fiber, but exceptional customer service and sincere community involvement,” said Kari.^[45]

February 2, 2018: Ting Fiber Rents Space in Centennial

Ting Fiber Rents Space in Centennial at 6981 S. Quentin St.

BusinessDen reported on February 2, 2018 that Ting Fiber leased 7,557 square feet at 6981 S. Quentin St. in Centennial. Brady Alshouse and Tyler Voell represented the tenant.^[46]

January 30, 2018: Ting Fiber Begins Construction of Phase 1B in Walnut Hills and Hunters Hill in Centennial

The Ting Blog reported on January 30, 2018 that Ting Fiber is starting construction in Phase 1B of their fiber network build, which is made up of Walnut Hills and Hunters Hill. Construction in Phase 1B will occur while Ting Fiber continues with their work in Phase 1A in Willow Creek 1 and 2. "Ting fiber network construction will start in Walnut Hills and Hunters Hill in early February and we anticipate we’ll be lighting up customers in this area six months from the start of construction," says the blog. "If you’re not in Phase 1A or Phase 1B, don’t worry. We’re still in the early days of the build. We’ll continue to build, neighborhood by neighborhood, bringing fiber to homes and businesses in Centennial. If you’re located in Walnut Hills and Hunters Hill, you’ll see our crews out and about in the coming weeks. We’ll be working in the public right-of-way, which is the 5 to 12 feet on the street side of your home that’s owned by the City and that is reserved for utilities, or in some circumstances in an “easement,” controlled by your HOA. While many utilities work at the back of properties, Ting fiber network construction will be happening in the front. Find out more about the construction process and what to expect when we roll up with our trucks."^[47]

January 11, 2018: How Fiber Installation is Going in Centennial

How Fiber Installation is Going in Centennial. Ting’s conduit contains several smaller internal conduits. These smaller internal conduits will eventually hold fiber optic cables which are distributed to each street and customer.

The Ting Blog reported on January 11, 2018 how fiber construction is going in Centennial:

Phase 1 construction has started: Willow Creek 1 and 2
Leading up to the start of construction, our team and the City of Centennial worked together to get all the necessary permits and paperwork together in order for Ting to be able to work in the City right-of-way. We began construction in Willow Creek 1 and 2 in December and have been making steady progress.
So far, our construction efforts have been focused on installing conduit in the City right-of-way. Most of this work consists of trenching and digging to install conduit in the ground.
Ting’s conduit contains several smaller internal conduits. These smaller internal conduits will eventually hold fiber optic cables which are distributed to each street and customer.

As we install conduit, our teams put in splice domes, which are access points used to join or connect fiber to the network in the field. You may also notice access hatches in the neighborhood. These access hatches are known in industry parlance as flower pots. Flower pots allow workers to access fiber easily and at regular intervals between homes.
We’ve also installed fiber cabinets. These cabinets look similar to other utility cabinets but are different in that they house fiber-optic cables, which are run to cabinets to serve specific areas. Customers will be able to connect to these cabinets and to the network at large.

You can read more about what to expect from construction as we continue to work on Phase 1. We’re hard at work wiring Willow Creek and expect to begin lighting up customers in Willow Creek 1 and 2 this summer.^[48]

January 9, 2018: Tucows Initiates BTAPPA Transfer, Does Not Believe Namecheap Litigation is a Material Pending Legal Proceeding

Reuters reported on January 9, 2018 on an8-K filing from Tucows that says that pursuant to a court order, Tucows took steps to transfer certain domain names from Enom to the Namecheap Platform:^[49]

In an order dated January 4, 2015 and issued January 5, 2018 (the “January 5, 2018 Order”), the court in Namecheap, Inc. v. Tucows, Inc., et al., No 17-2-26522-5-SEA (Wash. King Cty. Sup. Ct.), clarified an injunction order against Tucows, Inc. (the “Company”) pursuant to which the Company has complied by taking steps to transfer certain domain names from the eNom, LLC platform to the Namecheap, Inc. (“Namecheap, Inc.”) platform using a method called a Bulk Transfer After Partial Portfolio Acquisition.

By way of background, on August 30, 2017, Namecheap filed a complaint against the Company, eNom, Inc., and unknown John Does in the United States District Court for the Western District of Washington alleging breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment (the “Namecheap Federal Action”). Namecheap voluntarily dismissed the Namecheap Federal Action without prejudice on October 10, 2017. That same day, Namecheap filed a substantially similar complaint against Tucows Inc., eNom, LLC and unknown John Does alleging breach of contract and breach of the implied duty of good faith and fair dealing in Washington State Court, King County (the “Namecheap State Action”). In the Namecheap State Action, Namecheap sought preliminary and ultimate equitable relief by way of the transfer of approximately 2.7 million domain names from the eNom, LLC platform to the Namecheap platform using BTAPPA. By Order dated November 15, 2017, the Court granted Namecheap’s Motion for Preliminary Injunction and the Company complied therewith in taking steps with Namecheap towards the BTAPPA. The Court ordered Namecheap to post a bond against damages sustained by the Company. The Company sought clarification from the Court on one BTAPPA requirement which the Court provided in the January 5, 2017 Order. The BTAPPA transfer was initiated on January 8, 2018. In addition to the equitable relief it has sought, Namecheap also seeks direct and consequential damages in the Namecheap State Action

The Company believes that the claims lack merit and intends to defend them vigorously. The Company also believes that the November 15, 2017 Preliminary Injunction Order was entered in error, and that Order is subject to appeal. The Company does not believe that this litigation is a material pending legal proceeding.^[50]

January 9, 2018: Law Firms Johnson Fistel and Faruqi & Faruqi Announce Investigations of Tucows

PR Newswire reported on January 8, 2018 that the law firm Johnson Fistel, LLP, announced they are investigating potential violations of federal securities laws by Tucows in a press release that asserted the following:

On January 8, 2018, Copperfield Research issued a report stating that Tucows failed to disclose a lawsuit "that should imminently result in the loss of 11% of the Company's revenue producing domains; nine insiders who sold $21 million of stock while hiding the fact its eNom subsidiary was being sued by its largest partner for breach of contract; and a laundry list of accounting shenanigans and financial irregularities." If you have information that could assist in this investigation, including former employees and others, or if you are a Tucows shareholder and are interested in learning more about the investigation or your legal rights and remedies, please contact Jim Baker.^[51]

Faruqi & Faruqi, LLP, a self described leading national securities law firm, also announced they are investigating potential claims against Tucows and asked Tucows shareholders to contact their firm.^[52]

January 8, 2018: Short Seller Copperfield Research Targets Tucows with Misleading Report

Domain Name Wire reported on January 8, 2018 that short seller Copperfield Research has released a report targetting Tucows titled “Cashing in on Neo-Nazis, Child Porn, & A Hidden Lawsuit as Insiders Dump”. According to Andrew Alleman, the report highlights three major grievances with Tucows:

All three of its business segments have issues,
It is helping people operate unsavory websites, and
It hasn’t disclosed its imminent loss of domains to Namecheap

"The hyperbole-filled report has some valid points," says Alleman, "but I’m the type of person who sees a few misleading statements and then assumes that many of the other statements are wrong."^[53] Shares in Tucows are down about 8%. After opening the year around $70 they are now trading for $55.

December 29, 2017: Tucows Stock Closes on Record High, Nearly Doubling in 2017

Tucows Stock Closes on Record High, Nearly Doubling in 2017. Tucows stock closed on a record high of 70.05 for 2017 nearly doubling in the past year from a close of 35.20 for 2016. TCX rose 98% in the past year while Amazon rose 53% and the S&P 500 rose 19% over the same period.

Tucows stock closed on a record high of 70.05 for 2017 nearly doubling in the past year from a close of 35.20 for 2016. TCX rose 98% in the past year while Amazon rose 53% and the S&P 500 rose 19% over the same period.

December 21, 2017: Court Orders Tucows to Transfer 3.2 million Domains to Namecheap

Domain Name Wire reported on December 21, 2017 that a court has ordered Tucows to transfer 3.2 million .com and .net domain names to Namecheap, and an appeals court has denied (pdf) Tucow’s motion for an emergency stay. Earlier this year, Namecheap requested that Tucows transfer domain names that Tucows acquired when they purchased Enom, and Tucows balked at Namecheap’s request to do the transfer through a “Bulk Transfer After Partial Portfolio Acquisition”, or BTAPPA. Namecheap already has approval from .com/.net registry Verisign to do a BTAPPA transfer of the 3.2 million .com and .net domains. Namecheap believes the deadline for doing the transfer is the end of 2017, so it asked the court for an injunction forcing Tucows to comply in a timely manner. The court agreed and demanded that Tucows comply with the transfer. "Namecheap represents a large portion of Enom’s revenue, historically accounting for about 25% of Enom’s domains under management. While margins on the registrations slim, Enom gets to keep 100% of expired domain revenue and all parking revenue during registrations and during the expiration cycle," writes Andrew Alleman. "This gives Tucows an incentive to delay the transfer as long as possible. At the same time, it risks bad will with reseller customers who will now question how they will be able to transfer off the platform should they want to in the future."^[54]

History of the Namecheap Lawsuit

Read more about the history of the Namecheap Lawsuit at:

September 25, 2017: Tucows Responds to NameCheap Lawsuit
September 1, 2017: Namecheap Files Suit For Bulk Transfer of 4 Million Domain Names

December 18, 2017: Ting Explains How Fiber Optic Infrastructure Gets Built

How Fiber Optic Infrastructure Gets Built. We split construction into two main stages. We like to call the first dirt and hard work. This is where our teams dig to put conduit in the ground. Conduit carries the super thin glass fibers that will carry information to homes and businesses. The last step as far as an end user is concerned is getting connected. Installation can take up to three hours. Most of the work is done outside and the install team only needs to be inside for about an hour. Our install team will bring the fiber cable to your home or business from the main fiber network and will set up your Ting Internet Box so you’re ready to go

The Ting blog published a long post on December 18, 2017 that includes some of the specifics about how Ting builds networks and partners with your community to bring crazy fast Internet to American homes and businesses. Some excerpts:

Identifying a town
There’s no one factor that makes a town or city a candidate for Ting crazy fast fiber Internet. It’s a combination of density, desire and demographics. We’re fortunate to hear from people and municipalities that want the benefits fiber brings.
We invite town leadership and citizens to open the conversation. There are things that municipal leadership can do to make their town or city more attractive to a fiber Internet provider like Ting. We’ll leave it to the boss to run through a few of those.

Planning and design
Once we decide to go ahead, we start planning the fiber build. Ting partners with city staff and officials and together we take a look at existing infrastructure. We look for utility paths and explore permitting options in the easement or right-of-way. Permitting is a large part of our planning process and is highly collaborative work between Ting and local officials.
We explore the type of fiber construction methods we’ll use. Every town’s needs are different and where one town might be prepared for fiber running through conduit underground, other localities might require aerial installation with the fiber carrier medium strung along utility poles. Ting works with municipal offices to ensure we’re following all construction and contracting best practices and laws.
Design is a key part of planning and we carefully map out the route of our fiber network build in phases. You can read a bit more about how demand plays into our design plans below under Pre-order.

Community engagement
When we start planning and designing the network, there’s a good chance you’ll see our Ting Team out and about at some events in your town.
We start by hosting town hall meetings where the community can come out and ask questions about Ting fiber. We also attend and sponsor local events like farmer’s markets, pool parties, festivals and more so community members and residents have a chance to say hello and ask us about fiber Internet in general or Ting in particular.
We hire locally for most construction, build management and local marketing roles. You’ll also be able to find us easily online on Facebook, Twitter, Instagram and reddit. You can post on our wall, respond to a Tweet or drop us a line whenever you want. We’re always available to talk or answer any questions.

Pre-order
You can pre-order Ting as soon as we announce we’re coming to town.
What’s does pre-ordering mean? Aside from securing the best possible discount on installation (up to an including the full cost of installation and then some), a $9 pre-order is a more than just a deposit. It’s a vote for your neighborhood to get fiber first and it puts you and other pre-orders at the top of the list when we start building on your street.
There are many factors that go into determining where the fiber build begins in your town. Pre-order density is a deciding factor and something that anyone who’s interested can do easily. We tend to build where there’s the most demand first. It just makes sense.
When we announce construction in a particular neighborhood we’ll also let that area know what their deadline is to pre-order. Send us your pre-order by the deadline to get the best possible discount on Ting Internet.

Construction
We announce we’re breaking ground on our blog, with an email to everyone that pre-ordered in your town and with dedicated communications for the neighborhoods affected. We’ll let you know what to expect from construction, talk about the construction methods we’ll be using and provide contact information for our local construction team should you have any questions or concerns.
We announce our build in phases, leading with a Pilot Phase or Phase 1, and roll out subsequent phases from there. Construction timelines depend on a lot of factors including permitting from municipalities, state transportation departments and even other existing utilities.
We split construction into two main stages. We like to call the first dirt and hard work. This is where our teams dig to put conduit in the ground. Conduit carries the super thin glass fibers that will carry information to homes and businesses.

Installation
The last step as far as an end user is concerned is getting connected. If you pre-ordered, the Ting Internet valet team will reach out to schedule your installation as soon as possible. It’s worth noting that our installation appointments are appointments, not broad windows.
Fiber comes to your home or business in a little white plastic square. In industry parlance, an ONT or “optical network termination.” From there, you can plug in your Ting Internet Box or use your own router. We strongly recommend the Ting Internet Box because it’s built for gigabit speeds and offers super fast Wi-Fi to all your devices, too.
Installation can take up to three hours. Most of the work is done outside and the install team only needs to be inside for about an hour. Our install team will bring the fiber cable to your home or business from the main fiber network and will set up your Ting Internet Box so you’re ready to go.

Fiber to the home
So, there you have it. The long story of how fiber goes from hope to reality to your home or business.
Connecting cities and towns street by street, business by business, house by house, is a big job. Fiber is the only infrastructure that’s built specifically with the Internet in mind. It replaces aged copper networks to bring fast and, equally important, reliable Internet access.
Bringing fiber to town means much more than just better Internet access today. It brings potential for a better tomorrow.^[55]

Learn more

Watch the video on How a town can make itself more attractive to a fiber ISP
Watch the video on Building a Fiber Network, part 1
Watch the video on Building a Fiber Network, part 2

December 15, 2017: Ting Takes Top Honors Again in Consumer Reports’ 2017 Cell-Phone Service Survey

Ting Takes Top Honors Again in Consumer Reports’ 2017 Cell-Phone Service Survey. Consumer Cellular, Project Fi, and Ting took the top spots this year in Consumer Reports’ 2017 Cell-Phone Service Survey, as they did in 2016 and were the only companies to receive the highest rating for customer support. Graphic is from the 2016 Survey.

Consumer Reports reported on December 15, 2017 that Consumer Cellular, Project Fi, and Ting took the top spots this year in Consumer Reports’ 2017 Cell-Phone Service Survey, as they did in 2016 and were the only companies to receive the highest rating for customer support. "As a group, prepaid services, where customers pay in advance for packages of voice minutes, text messages, and data, received higher scores for value. Companies such as Project Fi, Ting, and Republic Wireless keep rates low by leaning heavily on WiFi networks, even for making phone calls and sending text messages. And they charge customers only for the data they use rather than a monthly allotment of data they might not need."^[56]

December 15, 2017: Tucows Explains Why It Doesn’t Take Down Domains for Website Content Issues

Tucows has a new post on their main web site explaining why it is neither appropriate nor effective to resolve content issues at a Registrar. "We do not see ourselves, or similar infrastructure companies, as the appropriate arbiters of what content belongs on the Internet," writes Tucows. "That power belongs to agencies of justice and should continue to be exercised via due process."

Tucows and its domain-related brands (OpenSRS, Enom, and Hover) are Registrars. It’s important to understand what a Registrar is, and what it can and cannot do. Registrars manage the technical infrastructure, which enables the buying and management of domain names. Domain names are not websites; they are strings of characters (such as ‘example.com’) and act as a human-friendly layer that points to a website. Web-hosting companies, rather than Registrars, provide the services that allow website content to be available online, making that content accessible to Internet users.
Tucows cannot exercise control over the content of a website pointed to by a domain registered via our platform.
Because we’re not a web-hosting company, we cannot remove specific pages or content on a website. The tools available to a Registrar to address content issues are very blunt; we can only suspend a domain, or force the registrant (owner) to move it elsewhere.
We don’t consider forcing a registrant to transfer domains off our platform to be a compelling solution for multiple reasons:
1. It resolves nothing with transgressive website content. Forced transfers only push domains pointing to problematic website content elsewhere, which is both unfair to our competitors and devoid of actual resolution.
2. Multiple domains from multiple registrars may be pointed at a single website, limiting the efficacy of suspending any one single domain. If a domain is suspended, a replacement domain may be registered, pointed, propagated, and socialized in minutes, leading to an endless game of whack-a-mole.
To be clear, asking a Registrar to suspend a domain is an ineffective method of resolving content issues. The content can be relabeled, quickly and easily, with a new domain name, or accessed by use of an IP address.
Web-hosting companies are in a better position to address content issues. Web-hosts have the ability to provide a much more granular response and almost always have a direct relationship with their users and content.

"While, as an organization, we may vehemently disagree with the values and ideas a given website aims to disseminate, we feel the power to decide what types of content should and should not be online must rest with the people, rather than in the hands of a select group of corporations,"concludes Tucows.^[57]

December 15, 2017: Tucows Make Official Statement Lamenting Repeal of Net Neutrality

Tucows posted the following message on the Ting Blog on December 15, 2017 lamenting the repeal of net neutrality:

As it now seems was inevitable, yesterday the FCC overturned “net neutrality” regulations that were put in place to protect an Open Internet.
Now, Internet service providers – ISPs – will be allowed to prioritize and deprioritize traffic as they see fit. It’s good news for myopic ISPs and their investors but bad news for Internet innovation in North America and, more importantly, for people without choices of ISPs who put their customers first.
Ting’s stance on net neutrality is and will remain unchanged: We will never block, throttle or otherwise interfere with the online activity of our customers.
As a company actively working and investing to build and support fiber networks in Ting towns around the US, we can definitively say that net neutrality had no bearing on our decision to help build the next generation of Internet infrastructure North America so sorely needs. The repeal of net neutrality protections won’t change how we continue this important work, and will not change our continued operation of Ting Internet under the principles of net neutrality.^[58]

December 15, 2017: Burlington City Council Delays Final Burlington Telecom Vote Until December 27 to Meet December 31 Deadline

Katie Jickling wrote in Seven Days on December 15, 2017 that although councilors were scheduled to approve the $30.8 million sale of Burlington Telecom to Schurz Communications and ZRF Partners on December 18, 2017, councilors will meet in executive session at the December 18 meeting so they can clarify details of the deal, according to council president Jane Knodell (P-Central District). Afterwards, the council will release the purchase and sale agreement, which it now expects to vote on at a December 27 meeting. Knodell would not say what questions remain about the bid, though she did say they'd be made public once the proposal is released. If the sale isn't completed by the end of the year, the city's portion of the net proceeds decreases from 50 to 35 percent. Knodell said she's "not really concerned" about the possibility of additional delays and lost revenues. "I think things are going well and we're working through [remaining issues]," she said.^[59]

December 12, 2017: Burlington Council Member Dave Hartnett Apologizes for His Outburst at a Previous City Council Meeting

Burlington Council Member Dave Hartnett Apologizes for His Outburst at a Previous City Council Meeting. Councilor Hartnett apologized for his outburst at the council meeting on November 27 when he attacked fellow Councilor Joan Shannon as she posed questions to the head of ZRF about their bid, their inability to answer questions about their secret investors, their plans to flip Burlington Telecom in five to ten years, and the meetings between council memebers and ZRF. "You know I crossed the line," said Hartnett.

WAMC reported on December 12, 2017 that at the meeting of the Burlington City Council on December 11, 2017 Councilor Hartnett apologized for his outburst at the council meeting on November 27 when he attacked fellow Councilor Joan Shannon as she posed questions to the head of ZRF about their bid, their inability to answer questions about their secret investors, their plans to flip Burlington Telecom in five to ten years, and the meetings between council memebers and ZRF. "You know I crossed the line," said Hartnett. "There's a code of conduct that a councilor should adhere to and I you know was disrespectful and you know I crossed the line and you have to step up to the plate and just apologize. My actions are reflection on the council so I apologized to the entire Council as well."

A final copy of the agreement to purchase Burlington Telecom is expected to be released by December 15 and the City Council meets again on December 18. A special council meeting could be scheduled on December 27. The city council started and ended its meeting in executive session to discuss the purchase and sales agreement with Schurz Communications to obtain Burlington Telecom. Because the purchase agreement is being reviewed by lawyers, the public deliberative agenda could only include discussion of the company’s Letter of Intent, or LOI, according to Ward 4 Republican Councilor Kurt Wright. “The LOI is already crafted. That's basically done. Whoever won the bid we would have had to spend significant time throughout the month of December with attorneys on both sides working on the final purchase and sales agreement. Because really the LOI we had already seen the LOI from Schurz weeks earlier. And that's what they worked from on the night that we passed it except they added some elements from the ZRF LOI which actually strengthened it. So this was not what's being characterized the way it's being characterized.”^[60]

December 12, 2017: Charlotte Dennett writes: Answers Needed About Schurz Communications

Answers Needed About Schurz Communications. The chaos surrounding the last-minute offer by Schurz Communications to buy Burlington Telecom raises the question if the progressive councilors who pushed for Schurz fully vetted Schurz before choosing them. Shay Totten, a former reporter for Seven Days and a proponent of KBTL, has done his own sleuthing into Schurz’s campaign donations and has concluded that Schurz is “a conservative media company from the Midwest whose owner Todd Schurz donates tens of thousands of dollars to some of the most conservative members of Congress who oppose gay marriage, raising the minimum wage (even opposed raising the federal wage to $7.25 an hour), In 2016 alone, the Schurz family gave to such illustrious Koch-brother backed candidates as: Sen. Todd Young, Sen. Mitch McConnell, Sen. Roy Blunt and many more.” Totten claims that he sounded this warning to city councilors, but to no avail. "What are its ties, if any, to Gray TV (which took over Vermont’s largest TV station, WCAX, earlier this year) and Sinclair Communications," says Dennett, "and does it share in their Trumpian conservative vision of buying up local and radio TV stations throughout the U.S.?"

Charlotte Dennett wrote an op-ed for vtdigger on December 12, 2017 about the chaos surrounding the last-minute offer by Schurz Communications to buy Burlington Telecom and about how it seems the councilors — and possibly even Mayor Miro Weinberger – had not fully vetted Schurz before choosing them. According to Dennett , since Schurz is privately owned and not publically traded, it is difficult to find information on its business dealings except through news stories and press releases but internet searches do reveal that Schurz is much bigger than a “family-owned business,” and has been flipping properties during the media acquisition craze of the last four years along with right-wing media companies that have come to be called “Trump TV.”

Shay Totten, a former reporter for Seven Days and a proponent of KBTL, has done his own sleuthing into Schurz’s campaign donations and has concluded that Schurz is “a conservative media company from the Midwest whose owner Todd Schurz donates tens of thousands of dollars to some of the most conservative members of Congress who oppose gay marriage, raising the minimum wage (even opposed raising the federal wage to $7.25 an hour), In 2016 alone, the Schurz family gave to such illustrious Koch-brother backed candidates as: Sen. Todd Young, Sen. Mitch McConnell, Sen. Roy Blunt and many more.” Totten claims that he sounded this warning to city councilors, but to no avail.

Dennett says that if the City Council wants to rectify the fiasco of Nov. 27 and regain the trust of Burlington voters, it should at the very least allow another public hearing before it votes on the final agreement with Schurz.

What, for instance, has Schurz been doing with the $430 million it gained from finalizing its 2016 sale to Gray TV other than offering $30 million to buy Burlington Telecom? What are its ties, if any, to Gray TV (which took over Vermont’s largest TV station, WCAX, earlier this year) and Sinclair Communications, and does it share in their Trumpian conservative vision of buying up local and radio TV stations throughout the U.S.? More questions should be asked of Councilor Hartnett, who, methinks (as Shakespeare would say) “protested too much” when Councilor Shannon began to ask questions about the last-minute deal. Did he, and Republican Kurt Wright (whose 2012 campaign for mayor Hartnett ran) know more about Schurz than either of them let on? Why were they, of all the councilors, the only holdouts for Schurz and seemed unconcerned about transparency in order to get the winning bid?^[61]

Read Answers needed about Schurz Communications by Charlotte Dennett December 12, 2017

December 11, 2017: Tucows Moves Auctions for Expired Domain Names Back to GoDaddy from NameJet

Domain Name Wire reported on December 11, 2017 that Tucows has moved its expired domain name inventory back to GoDaddy Auctions after previously moving its inventory to NameJet which Tucows co-owns after acquiring eNom earlier this year. "The only reason I can think for Tucows to move back to GoDaddy is if the performance was indeed significantly higher," wrote Andrew Alleman. "This is a bigger win for GoDaddy than its original pickup of Tucows’ domains. Winning a competitor back from its own platform is a testimonial to GoDaddy’s results."

GoDaddy has some advantages. Its large customer base means there are lots of bidders. It can also promote the domains when someone searches for an expired domain on GoDaddy.com. Also, it lets people bid on domains without placing a backorder, which leads to lots of last-minute interest. When Tucows moved its inventory to NameJet this year, GoDaddy VP Paul Nicks told Domain Name Wire, “…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.” "That was a bold statement to make after a company moved its inventory to a platform it co-owned," concludes Alleman. "But apparently, it was accurate."^[62]

December 7, 2017: Ting Begins Phase One Fiber Construction at Willow Creek in Centennial

Ting Begins Phase One Fiber Construction at Willow Creek in Centennial. Ting Fiber announces that they are officially ready to break ground in Centennial and that they will be building the network in phases, starting with Phase 1 Willow Creek.

The Ting Blog reported on December 7 2017 that Ting Fiber announces that they are officially ready to break ground in Centennial and that they will be building the network in phases, starting with Phase 1 Willow Creek. "If you’re not in Willow Creek 1 or 2, don’t worry. Phase 1 is just the start of our build. Once construction begins, we’ll continue to build neighborhood by neighborhood, and will announce our next phases as soon as we can."

If you’re located in Phase 1, you’ll see our crews out and about in your neighborhood. Bear in mind, we may have to take a break for inclement weather as well as the holidays, but we’ll be back to work as soon as possible.
We’ll be working in the City right-of-way, two to three feet onto the lawn in front of your house. While many utilities work at the back of properties, Ting fiber network construction will be happening in the front.
We expect to light up our first customers in Phase 1 about sixth months from the start of construction.
This is our first build in Centennial and there are a few infrastructure necessities we have to put in place to make fiber work on a large scale. While you’re waiting, we’ll be working.^[63]

According to the Denver Post Centennial residents voted in 2013 to opt out of Senate Bill 152, a state law that prevents municipalities from offering internet service. As of November, more than 100 cities and counties have voted to abandon the law. Centennial is further along than most of the more than 100 cities and counties that have voted to opt out of the law.

“We anticipate to light up our first customers in spring of 2018,” said Monica Webb, who handles Ting’s government relations. “Since Willow Creek is our first neighborhood, we’ll be a bit slower to light up customers than in subsequent neighborhoods where they’ll be able to sign up for service in just a couple months after construction.” Future neighborhoods are determined by the number of pre-orders, the ease of working with a neighborhood’s homeowners association and the proximity to the city’s internet backbone, which branches out from the city municipal building. Future fiber lines run along East Dry Creek, East Arapahoe and East County Line roads.^[64]

Ting is in the final stages of negotiating its connection deal with Centennial and is readying to start construction before year’s end, Webb said. The first of the three city fiber loops has been complete, and the remaining two are expected to be complete within a year. The company expects to announce in the first quarter of 2018 which Centennial neighborhood it will build its network in next, Webb said. Ting is looking at neighborhoods in proximity to where the city has completed its loop work, the ease of working with a neighborhood’s home owners association and the resident’s demand for service, she said.^[65]

Learn more about the Rollout of Fiber in Centennial

December 3, 2017: Tucows Director Allen Karp Sells 3,000 Shares of Tucows Inc. (TCX) Stock for 189,930.

The Dispatch Tribunal reported on December 3, 2017 that Tucows Director Allen Karp sold 3,000 Shares of Tucows Inc. (TCX) Stock for 189,930.^[66]

November 29, 2017: Elliot Noss Says "We love the community of Burlington but at this point it’s crystal clear that a small but powerful group did not want us there

Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 thanking Redditors for their support of the Ting initiative in Burlington:

I would like to say first that we really appreciated the BTV Redditors. You’ve been fair, and you’ve pushed us to explain our bid and our positions and asked forthright questions of us. In terms of further actions, there are none. Burlington is behind us. We love the community of Burlington but at this point it’s crystal clear that a small but powerful group did not want us there. It would not have made for a constructive relationship. At some point I imagine we will post something longer, but for now you have all our best wishes. Thank you Burlington!^[67]

November 28, 2017: Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom

Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

The Burlington Free Press, WCAX, Vermont Public Radio, NBC5, Seven Days, VT Digger, and MSN reported on November 29, 2017 that in a final vote in an 8 hour marathon session that ended at 2 am progressives voted in a Schurz Communications/ZRF partnership beating out co-op Keep BT Local by a vote of 8-2. ZRF and Schurz decided on a joint venture with ZRF as majority stakeholder after they were brought back into the process earlier this month, when the council couldn't decide between Ting Tucows and KBTL. In an 11th hour reversal Schurz became the majority stakeholder in a new joint proposal with ZRF that was presented to the council after it became obvious there were serious questions about ZRF's secret investors, who would make the decisions when ZRF chose to sell the utility after a few years, and whether Citibank would sue if the council chose ZRF's $25 million bid. The decision to go with Schurz followed a 90-minute public forum and hours of debate in which many spoke out in frustration over the process.

Faisal Nisar of ZRF Unable to Answer Questions About Secret Investors

During initial questioning of Faisal Nisar of ZRF, concerns emerged about secrecy around the investors who would be financially contributing to purchasing Burlington Telecom, who would make the decisions when ZRF chose to sell the utility in a few years, and whether Citibank would sue if the council chose ZRF's $25 million bid. Nisar was unable to give satisfactory answers to the questions put to him, prompting observers to conclude that the ZRF/Schurz bid might not prevail if it went to a vote.

Schurz and ZRF Switch Places in Backroom Deal

The City Council began the night with three bids. Keep Burlington Telecom Local, the cooperative that sprung up with the sole goal of buying the utility and Ting, the wireless services and fiber internet arm of Canadian-based internet services company Tucows, Inc. were the two finalists who the council deadlocked over at the beginning of November. Both ZRF and Schurz were eliminated earlier in the process, but were invited back after the council reached an impasse in deliberations between Ting and the co-op. Under a proposal submitted last week, ZRF, a private equity firm, would own and operate Burlington Telecom, with Schurz as a $10 million investor. There were two commercial bidders for Burlington Telecom in the final round: ZRF Partners with financial backing from the formerly independent bidder, Indiana-based Schurz Communications, and Toronto-based Ting. Ting offered $32 million, ZRF $25 million, and KBTL offered $12 million to $16.5 million.

Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. He said he believed it was the only way to avoid another deadlock.

Schurz and ZRF Switch Places in Backroom Deal. Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.

During a break at the meeting, ZRF and Schurz decided to flip their bid, making Schurz the primary owner and ZRF an investor in the cable and internet provider. This changed ZRF's $25 million offer to nearly $31 million. The winning offer, a hybrid of previous bids submitted to the city, did not exist when the meeting began on Monday evening, but was worked out in the hallways and backrooms of City Hall while the council was in recess. Some broad strokes of the deal were presented to councilors, such as the dollar amount of the cash offer: $30.8 million, and that Schurz would be the controlling partner while ZRF's promises of community investment would remain. Other details, like ZRF's exact role as a minority partner, were left unfinalized. The new letter of intent will be submitted later on Tuesday, said Ralphine O'Rourke, a lawyer representing the city, during the meeting.

During a recess, city attorneys worked with Faisal Nisar, founder of ZRF, and Todd Schurz, of Schurz Communications, to mark up a previously released proposal. It was posted online at 1:40 a.m. Tuesday.

The selection of the Schurz bid came as a surprise – especially since the bid that the council considered at the start of the meeting wasn’t the same bid that they ultimately voted on. At the start of the night, ZRF was offering $25 million, with $10 million coming from Schurz, who would be a minority partner. But after councilors raised concerns, ZRF and Schurz renegotiated their proposal in the halls of Contois Auditorium and presented a new proposal to the council. While Todd Schurz, CEO and President of Schurz, admitted that since the new deal had been worked out in about 15 minutes, there are still some details to nail down. But essentially, he said his company would make the same offer they had originally made to buy Burlington Telecom. “What we’re proposing is taking elements out of Schurz’s last LOI [Letter of Intent] and melding them with the LOI that you received from us Monday of last week and the updated one today," Schurz said. “So it would be the old Schurz price of $30.8 million… and all the elements of the ZRF bid.”

"I had to do the right thing," Nisar said after he decided to essentially "step aside" and give up his own bid to allow the city to reach consensus. Councilor David Hartnett said he approached Nisar and Schurz with the idea because he was concerned about the council reaching an impasse over Ting and Keep Burlington Telecom — again. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.

But some councilors did not agree with Hartnett's assessment. "I feel incredibly uncomfortable with this," said Councilor Max Tracy, speaking about the 11th-hour switch. "It’s just a slap in the face to the public process that’s happened here."

Ranked Choice Voting System Favored Schurz

Shortly before 2 a.m., the council voted twice. In the first round, councilors could cast two votes using a ranked choice voting system where the lowest vote-getter would be eliminated. The top two vote-getters moved on to the second round. The first round ended with 8 votes for Schurz, 7 votes for Keep Burlington Telecom Local, and 5 votes for Ting. "It was the ranked choice voting system," wrote poster on Reddit. "The Schurz voters on the Council had a bullet proof strategy provided that the ranked choice voting system remained intact. That's why two of the other Councilors abstained...they didn't think it was a fair method at that stage and they knew Schurz was already the winner. It sucks. It was more about spite than anything, as evidenced by Hartnett's manchild routine." All Schulz and KBTL's six supporters on the council had to do was vote for Schultz and KBTL to eliminate Ting even though progressives had no intention of voting for KBTL in the final round.

After Ting was eliminated, the final vote was 8-2 for Schurz. Councilors Sharon Bushor and Sara Moore, who have supported the co-op throughout the process and voted KBTL as their first choice and Schurz as their second in the first round, both chose Schurz in the final vote. Dieng and Tracy cast their votes for the co-op, while Deane and Shannon declined to cast votes for either option. Deane said he considered his vote a "No" vote, rather than abstaining. "I did not feel it was responsible on my part to vote for something I did not understand," he said, citing the lack of public support and his own lack of understanding of a bid that had come together only hours before. Shannon also characterized her vote as a "No," rather than an abstention.

"The outcome is a disappointment to me and those councilors who supported Ting or KBTL and believed that they were the best option for Burlington," wrote Councilor Chip Mason. "The winning bid represents a compromise as neither KBTL nor Ting were able to generate majority support from the City Council despite months of effort. I am committed to insuring that the final agreement and relationship with Shurz/ZRF is favorable to the City of Burlington, its taxpayers and BT customers and provides all of the protections we demanded, and they agreed to, on net neutrality, privacy, anti-monopoly future sale, right of first refusal and put right."

Dave Hartnett's Behavior Criticized

Dave Hartnett's Behavior Criticized. "The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."

Joan Shannon questioned Schurz's commitment to net neutrality, and ZRF's refusal to divulge the investors funding the purchase and the meeting grew testy when she raised questions about councilors who met individually or in small groups with Nisar and Schurz. "You're out of control, Councilor Shannon!" yelled Councilor Dave Hartnett, pointing her finger at her. At another point in the proceedings, Hartnett shouted an expletive and stormed out of Contois Auditorium during the first long break from public deliberation, with Councilor Chip Mason following close behind. Reporters could overhear the two talking in the hallway. Hartnett told Mason he did not want to vote for any of the three bidders. “This is crazy,” Hartnett said to Mason.

Shannon told reporters about a meeting between Nisar, City Council President Jane Knodell and Councilor Kurt Wright at the Burlington Airport last Wednesday. The rendezvous appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders, creating the impression that they were speaking for the whole council, and undermining the work of the city’s negotiator, Terry Dorman. When asked about the meeting, Wright said everything was on the level. “All we were ever told is we couldn’t meet individually,” Wright said. Wright explained that Dorman set up the meeting, and he checked with city attorney Blackwood. They met at the airport out of convenience, because Nisar was leaving town. They talked about potential problems with Nisar’s bid, Wright said. Later, when Nisar was in front of the council, Shannon asked him about the meeting. After initially dodging the question, he tepidly said he did not meet with councilors. Several councilors tried to interject, sensing Nisar was in hot water. “You’re out of control, Councilor Shannon. You’re going down the wrong path,” screamed Hartnett.

"The rendezvous (between Kurt Wright and Jane Knodell with Nisar) appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders," wrote Eileen Andreoli at VT Digger. "Yet Kurt Wright's response was, 'All we were ever told is we couldn’t meet individually.'"

"The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."

"It's not only the corruption of a secret, last-minute, unwritten, and unformed bid that Knodell, Wright, and Hartnett concocted," said one comment on Seven Days. "It's also the unhinged personal behavior of one councilor throughout the night -- yelling and storming out of the meeting; yelling at and berating the Mayor; interrupting and bellowing while Shannon had the floor (asking fair and appropriate questions about the brand new, secret bid), and accusing them both of lying. Shouldn't he have been ejected from the meeting for such behavior? But I guess Knodell needed his vote for Schurz so she did nothing."

Motives of Progressives Questioned

Motives of Progressives Questioned. "Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework."

"Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. "Pretty sad. Anti-Dems teamed up and pulled out all the stops from jigging the voting process to shameful verbal assault on Joan Shannon as she tried to do her job to vet the 12th hour orchestration last night. They chose to sacrifice BT to avoid allowing Dems to win a fight - that really wasn't theirs in the first place. While Progs selected their choice (before offers were even revealed), Dems as a Party did not choose anyone - it just appeared that way because a majority of Dems chose Ting. So for Anti-Dems, I guess its Party before City. We've seen this in Congress over the past 8 years of Obama, and here we see it in Burlington. Burlington is smart and engaged however. Those tactics are revealed in this environment, and they back fire. Just watch. We will not forget."

Later in the week, City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework." Knodell said she pushed for Schurz over Ting because Schurz is a family-owned company, and because it would allow "a locally-based, Burlington-centric telecom." Local control and ownership has been a major consideration, with many Burlington residents telling the Burlington Telecom Advisory Committee that it was their primary concern at a meeting at the start of the year. "It’s not the same as local control, it’s not the same as local ownership," Knodell said. But, she said, Schurz has a philosophy of decentralization.

Many Uncomfortable with Lack of Transparency in Process

Many Uncomfortable with Lack of Transparency in Process. "Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall.

Councilor Max Tracy said that he was uncomfortable with how the bid had been negotiated. “We came into this meeting thinking we were going to be debating one LOI and midstream, out of the view of the public, we got a completely different LOI that was negotiate out there in the hall,” Tracy said. “I think it’s incredibly unfair to the citizen of Burlington who have not had a chance to look at this LOI…it’s just a slap in the face to the public process that’s happened here.”

"Before highlighting the substantive and procedural outcomes from last night’s City Council meeting, I wanted to apologize for being unable to convince a majority of my fellow councilors to support what I believed to be the most viable of the bids for Burlington Telecom - the bid from Ting/Tucows," wrote Council Member Chip Mason. "I believe Ting offered the highest return for the Burlington taxpayers, a commitment to bringing jobs and investment to Burlington, a proven record of excellent customer service, competitive pricing and a commitment to net neutrality and privacy protections. I am disappointed that I was faced with the choice of voting in a flawed and opaque process, in a last minute setting, with little public vetting of a bid that changed several times over the course of the evening. My fiduciary and ethical responsibility to you obligated me to select an adequate but imperfect entity to purchase BT last night. Ultimately, I believe that I made the right fiduciary decision for Burlington, its residents, taxpayers, BT customers and employees. I am also sorry that the way we reached this compromise and the decision to move forward and vote was deeply flawed and confusing."

Councilors Max Tracy and Ali Dieng, who voted in favor of KBTL were uncomfortable with the lack of transparency in the process. “Burlington residents are going to wake up tomorrow morning and be furious that they did not get to weigh in,” Tracy said.

"I can't think of a less transparent process than coming up with-- after years of developing offers and months of bringing finalists to the table-- develop a new offer on the backs of envelopes and napkins after midnight," Shannon said.

"Keep BT Locals proposal was the weakest from the outset of deliberations this past spring, when I was still on the council. It was troubling to hear Councilors Tracy and Dieng imply that all for-profit entities are conspiratorial capitalists interested only in fattening up BT for Comcasts ultimate consumption. This was disingenuous on three counts: first, Ting/Tucows has a reputation in both Canada and the U.S. for being precisely the kind of successful, socially responsible company Vermonters have long championed. Second, the advocacy for KTBL was a slap in the face to the present employees of BT, who strongly preferred Ting. And third, the power-to-the-people rhetoric ignored the fact that it was a Progressive administration that got Burlington so deeply mired in the BT debacle in the first place," said former City Counciler Tom Ayres. " The reported failures of Schurz to commit to net neutrality and ZRF to reveal its investors should be subjects of grave concern for the City Council as it ponders a final BT purchase agreement in the coming days."

"Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall. Of all the sketchy political maneuverings I've seen the council engaged in my 20+ years here, this one takes the cake. The mayor and Shannon saw their pet privatization project blew up in their faces when the other Miro democrats chose expediency after the old guard Knodell, Wright, and Hartnett parlayed the public's genuine, and their own fake support for KBTL and Bushor's signature flippability to squeeze Ting out, scoring a political victory. Those four should really have their own party designation (the City Council OG, anyone?) At least Shannon stuck to her guns, Mason and Paul made a lot of noise about unfairness and how they couldn't, in good conscience, explain how all this is OK to their constituents, yet in the end voted for it anyways."

According to an editorial in the Burlington Free Press, Burlington residents have every right to wonder what happened to the promise of an open and public process for picking a buyer for Burlington Telecom. "By taking the vote before the revised Schurz offer could be fully vetted by residents and other stakeholders, the City Council essentially negated the months-long public process for the sale of the one-time municipal Internet telecom,"said the editorial. "The move was a power play – Schurz and its minority partner, ZRF Partners, had the money that gave them the financial nimbleness to revise their offer. Competing bidders were left with no time to cook up their own counter proposals." "Now this last minute back room deal brings a dark horse over the finish line," wrote Michael Long. "Revealing the feather weight of public input and of serving the public interest or of valuing democracy."

Progressives Dump KBTL

Progressives Dump KBTL. KBTL was the big loser in the process receiving only two votes in the final tabulation from Councilors Max Tracy and Ali Djang. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

KBTL was the big loser in the process. KBTL only received two votes in the final tabulation from Councilors Max Tracy and Ali Djang after Councilors Richard Deane and Joan Shannon abstained from the final vote after voting for Ting. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

Mayor to Sign Letter of Intent with Schurz

Council Chair Jane Knodell said Mayor Miro Weinberger will sign a letter of intent within the next week to finalize the sale. The city attorney said council must sign the agreement by Dec. 31. The vote authorized Mayor Miro Weinberger to enter into a purchase agreement with Schurz and Nisar. Weinberger promised he would not sign without a "very tight and well-written" document. "This is a surprise to me," he said. "I had no idea this was going to transpire." He called the process a spectacle and said he believed the people of Burlington deserved to weigh in, but said he believed the new Schurz/ZRF bid was a stronger offer. The council will vote to approve the signed purchase agreement next month according to the planned timeline.

Weinberger said this was the most challenging vote he's seen the council take. “While I was as surprised as anyone by last night’s outcome, I am relieved that after weeks of uncertainty, the City Council has finally selected a winner that does not breach prior Council-approved Burlington Telecom agreements that would have exposed the City and taxpayers to another round of lawsuits," he said. "With last night’s vote, we are now in a position to close the book on Burlington Telecom’s decade of financial challenges and achieve long-term benefits for BT customers, taxpayers and the City."

"In the coming days, I will be working hard on behalf of Burlingtonians and BT employees to negotiate in writing what Todd Schurz and Faisal Nisar verbally committed to at last night's City Council meeting" said the Mayor in a statement. "I will ensure that the final agreement includes clear provisions regarding internet affordability, customer service, net neutrality, bridging the Digital Divide, and other items that reflect our community's values." According to an editorial in the Burlington Free Press, the mayor, in essence, is saying that the city chose an offer without locking down the details and without knowing the details of the final agreement, there is no way of knowing the full impact on the community.

The final letters of intent — documents outlining promises Schurz is making to the city — aren't public yet, as the mayor's office and city attorney are negotiating with Schurz. Weinberger said his office on Wednesday received the documents — an amalgamation of previous bids. He said it's unrealistic to expect a sales agreement to come to a council vote by Dec. 18, the last scheduled meeting of the year, but is optimistic that unless something goes wrong, the city will find a way to make the end of year deadline. The city's share of the proceeds will drop from 50 percent to 35 percent if the purchase agreement is not signed by the end of the year.

Questions Remain about Schurz Offer

Questions Remain about Schurz Offer. According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. (Todd Schurz is sitting at table on left. ZRF head Faisal Nisar is on right.)

According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. Schurz said that under the bid, his company would pay cash to the city, retain existing BT staff, and allow 20 percent — or potentially higher — city equity. Schurz will not increase broadband costs for five years. "The last [deal] we didn't have all sorted out because it took us four days. This one was 15 minutes." Schurz told the council when he stumbled over questions.

Tuesday afternoon, Katie Vane, a spokeswoman for the mayor, said she did not expected Schurz and ZRF would provide updated documents to the city until the end of the week. She said, prior to releasing the documents publicly, the mayor and the city attorney planned to review the documents, which are expected to be a hybrid of already-submitted bids, to make sure what was conveyed at the council meeting is represented on paper.

According to Councilor Chip Mason the details of the Schurz bid were: (1) Schurz is the owner and ZRF an investor; (2) purchase price of $30.8 million with a potential increase based upon 2018 performance; (3) the City of Burlington has the right to roll over cash proceeds from the sale into a 20% ownership interest in BT; (4) committed to full buildout of Burlington and neighboring communities on same time frame as proposed by BT; (5) $250,000/year contribution for 7 years to create a technology innovation fund and $50,000/year contribution to basic technical skills education for workforce/high school students; (6) no price increases on broadband for 60 months; (7) greed to anti-monopoly future sales restriction (no sale to Comcast); (8) committed to net neutrality; (9) put right in favor of the City if it rolls over to equity; and (10) a right of first refusal in favor of the City on the future sale of BT.

Jess Aloe reported that Burlington Telecom will also have a local board who will play a role in financial and strategic decisions, Schurz said. Who will sit on that board has yet to be determined, although the midnight summary put together by the city's lawyers had as members Schurz himself, Nisar, possibly Gary Evans, the former CEO of Hiawatha Broadband and has consulted for Burlington Telecom, and an industry expert appointed by the city.

Questions remain about Schurz's policy on net neutrality. In 2015, Brian Lynch, who serves in a dual role as Schurz's senior vice president in charge of the broadband division, signed a letter as general manager of then-named Antietam Cable arguing that it would be too arduous for small rural telecommunications companies to be subject to the FCC's regulations, and that they supported a free and open internet without blocking content. In July 2017, Lynch sent another letter to the Federal Communications Commission recounting how pleased the company was that the commission was considering rolling back the regulations because being regulated had caused them to pull back on their expansion plans. In his September letter of intent that was submitted for the eliminated October bid, Todd Schurz said he was committed to net neutrality for Burlington Telecom. ^[68]^[69]^[70]^[71]^[72]^[73]^[74]^[75]^[76]^[77]^[78]^[79]

Reference

Youtube Video of 8 Hours Meeting of Burlington City Council Meeting November 27, 2017

November 27, 2017: Ting Sponsors Internship at McDaniel College

The Ting Blog reported on November 27, 2017 that Ting Internet is hosting Michael N. for a writing internship at McDaniel College, Writing for Main Street. "Michael had the chance to write for the Ting Westminster blog for the fall semester from September to December 2017. He covered local events as well as customer features, and assembled his work into fun blog posts to be distributed on social media." "“Before I started the internship, I was attracted to Ting because of the people who work here," said Michael. "My family has been a customer of Ting Mobile since 2013 and every interaction we have had with the company has been a very positive experience.”

Michael’s main takeaways from his internship were about the importance of creating compelling content as well as developing brand consistency. “In writing for the web, I learned about the importance of being clear, concise and accurate in the message I am trying to send. I learned that when people are reading a blog post, they want to stay entertained through the piece, and don’t want to read something that is unnecessarily long. In Writing for Main Street, I learned about the importance of having a brand identity for a business, and writing to consistently support that brand.”^[80]

November 22, 2017: Ting Sponsors Makerspace in Westminster

The Ting Blog reported on November 22, 2017 that Ting has opened their very own Ting Makerspace in Westmisnter, MD. At the Ting Makerspace grand opening, Adam Eisner, Ting VP of Networks raved about the implications of Makerspaces in communities like Westminster. “Having a Makerspace set up gets people really interested in technology. Once they’re really interested in technology they’ll want to use more if it in many different ways and really that all ties back to gigabit Internet.” The Ting Makerspace comes equipped with a mini 3D printer, a 3D scanner, a CNC router, a full spectrum laser, Arduino starter kits, a Dremel, a soldering iron and a photo booth. The Makerspace also has various designing tools and programs like SolidWorks, Inkscape, Easel, Meshmixer and more.^[81]

November 21, 2017: Tucows updates offer to acquire BT business

Reuters released a press release from Tucows reporting that "Nov 21 (Reuters) - Tucows Inc:

Says ‍on Nov 20, city of Burlington D/B/A Burlington Telecom released updated bid letter of co regarding co’s bid to acquire all assets of BT

Says ‍is offering to acquire BT business for a total consideration of $32.3 million - SEC filing Source text: click here to read official SEC documents"

November 20, 2017: ZRF and Schurz Team Up With Joint Venture

ZRF and Schurz Team Up With Joint Venture. According to Council Member Joan Shannon, ZRF/Schurz have not committed to operating Burlington Telecom for more than five to ten years. "The family biz was not looking to flip," said Shannon. "But this is not the 'family biz' offer. This is an investor offer from ZRF."

Seven Days, the Burlington Free Press, My Champlain Valley, and VT Digger reported on November 20, 2017 that Schurz Communications and ZRF Partners, previously eliminated in the bidding for Burlington Telecom, have gotten back in the running — this time as partners with a $25 million joint bid that would invest heavily in the local tech economy. Tucows put forward a $32.5 million proposal, up $2 million from its previous offer. And the co-op Keep BT Local raised its bid from $12 million to $18 million — though the co-op has yet to raise the $6 million difference.

Schurz and ZRF Joint Bid Finalized in a Week

Schurz CEO Todd Schurz and Faisal Nisar, founder of ZRF, met in Chicago for the first time last Tuesday, Schurz said in an interview in the Burlington Telecom offices. They agreed to move forward together last Friday. Under the proposal, ZRF which has no previous telecom experience and at this time has only one employee, would have full management control of the joint entity. Schurz would have a minority ownership. "Our strengths complement each other's weaknesses," Schurz said. "We've listened to what the community is saying," Nisar said. Nisar refused to answer questions about the conflict of interest on Monday. "We're trying to look forward, not backward," he said. "We don't think there will be any issues with the current proposal."

The joint proposal came about through Gary Evans, an adviser to Nisar and the retired CEO of Hiawatha Broadband Communications, which Schurz bought last month. Evans connected Nisar and Schurz last week, Schurz said, and the two men spoke for "hours" about their vision. Evans has served as a consultant for Burlington Telecom.

ZRF/Schurz Looking to 'Flip' Burlington Telecom in 5 - 10 years Says Joan Shannon

According to Council Member Joan Shannon, ZRF/Schurz have not committed to operating Burlington Telecom for more than five to ten years. "The family biz was not looking to flip," said Shannon. "But this is not the 'family biz' offer. This is an investor offer from ZRF."^[82]

New Bid from KBTL

KBTL submitted updates to its offer Monday, including increasing the price from $12 million to $18 million based on being able to raise $6 million. If the equity can't be raised, the co-op would offer notes or carried interest to each of the parties due to receive proceeds of the sale, but is willing to reduce the price back to $12 million if the parties are unwilling to accept.

Ting Has the Highest Bid

Ting's latest offer is the highest remaining bid. It is offering just over $32 million total and promising to make Burlington a regional hub for its business.

Net Neutrality

With the recent news that the Federal Communications Commission said it plans to repeal regulations that ensure equal internet access, commonly called net neutrality rules, critics worry that without these rules, internet providers will be able to speed or slow internet access, or charge extra fees for streaming services. Ting has pushed to retain net neutrality rules, and Keep BT Local has said it would retain them as well. The ZRF Partners and Schurz letter of intent released Monday did not directly address net neutrality.

City Council Will Vote on November 27

Councilors are grappling with getting all this new information to the public. “The real challenge I have is, does the community have enough time to digest it, or does the council have enough time to communicate it,” said Councilor Adam Roof. Councilor Karen Paul said that traditionally major proposals like the ones bidders released Monday are public for at least two weeks before the council acts on them. “Are people going to feel that too much was done too quickly? I’m sure people are going to feel that way,” Paul said.

The council is scheduled to vote on a final buyer on November 27. The meeting is scheduled to begin at 5:30 p.m., 90 minutes earlier than usual, according to the city council president. During Monday’s meeting, councilors will first vote for their two top bidders. The bottom vote getter will then be out, and in the second round each councilor will vote for one bidder until a winner is selected, Roof said. There will be no mechanism for a tiebreaker, Roof said. “We have to figure it out. There will be no delays, no games,” Paul added. “We have to stop doing this.”

Even After the Council Chooses a Buyer the Process is Not Over

Even after the council chooses a buyer the process is not over. The Mayor can veto a Council decision. Council could overturn a veto with a two thirds vote, but if the veto was sustained, the item would fail. The Mayor is thought to favor Ting. Blue Water can also reject a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom). That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.^[83]^[84]^[85]^[86]^[87]

Reference

November 14, 2017: Ting Works at 'The Haven' in Charlottesville

Ting Works at 'The Haven' in Charlottesville. Today all the phones at The Haven operate on a Ting gigabit fiber connection. "It was powerful to have a local business reach out to us and support the work we are doing by providing Internet for us. It’s a tremendous gift,” says Owen Brennan, The Haven’s Operations Director.

The Ting blog reported on November 14, 2017 that 'The Haven,' a day shelter and housing social service provider located in downtown Charlottesville, Virginia joined the Friends of Ting program in 2017 and Ting has helped 'The Haven switch over their phone system to operating entirely on an Internet connection. Today all the phones at The Haven operate on a Ting gigabit fiber connection. That means when housing case managers and day shelter staff members answer the phone or send an email, those communications are powered by Ting. “It was powerful to have a local business reach out to us and support the work we are doing by providing Internet for us. It’s a tremendous gift,” says Owen Brennan, The Haven’s Operations Director. Guests have access to reliable phones and can even provide family and friends with a phone number to reach them at. “For half of our guests, our phones are the only phone contact they have. And certainly guests make use of our computers.”

One especially important benefit of access, is the social connection the Internet helps people make when they are in a particularly vulnerable positions. “The other half of our guests, who do have phones, a lot of them do have smart phones. Access to Facebook helps people connect with family and friends and really helps them tap into the social networks, that for a lot of folks, end up being how they get out of homelessness, by reconnecting with family or finding a friend to stay with.” The Haven is there to help along the way and offer housing support to all, beginning with the most vulnerable. “We want people to feel welcome and feel like they’re coming into a home-type situation. If the staff members and volunteers on duty don’t have to worry about the phone line or Internet connection then that frees them up to have conversations with guests and to welcome guests that are coming in.”^[88]

November 13, 2017: Burlington City Council Makes Third Attempt to Decide Who Blue Water Holdings Will Sell Burlington Telecom to

Burlington City Council Makes Third Attempt to Decide Who Blue Water Holdings Will Sell Burlington Telecom to. In their third attempt to decide the buyer for Blue Water's Burlington Telecom, Burlington City Council has decided to allow all four original bidders for Burlington Telecom to resubmit their bids for consideration and has created a subcommittee to figure out how the voting process will work in the next round.

Seven Days, the Burlington Free Press, and NBC5 reported on November 13, 2017 that in their third attempt to decide the buyer for Blue Water's Burlington Telecom, Burlington City Council has decided to allow all four original bidders for Burlington Telecom to resubmit their bids for consideration and has created a subcommittee to figure out how the voting process will work in the next round. In addition to Ting/Tucows and KBTL, previously eliminated bidders ZRF and Schurz Communications are once again joining finalists Keep BT Local and Ting Tucows in this round and will have until Monday to resubmit their bids. The City Council hopes to make a final decision on who will buy Burlington Telecom by November 27, 2017.

Four Member Subcommittee Appointed

A four-member committee, composed of Jane Knodell (P-Central District), Kurt Wright (R-Ward 4), Chip Mason (D-Ward 5) and Adam Roof (I-Ward 8), is tasked with deciding by the end of the week how the council will narrow four finalists to one buyer at a meeting scheduled for November 27. Knodell voted for KBTL at the first City Council meeting on October 17, 2017, Mason and Roof voted for Ting, and Wright voted for Schurz.

Roof said many members of the public had reached out to express frustration with the twists and turns of the process. "The process undoubtably has had twist and turns," said Roof. “It calls for a group of four councilors to consider options of how the council will proceed with voting during our meeting on the 27th. It clarifies the roles and standards of negotiation from this point forward. It further clarifies under what circumstances councilors may interact with the bidders. It sets in a clear fashion items that will help this council and the public make a fully informed decision on the 27th. Looking forward I think this resolution lays out how and when we will get to the finish line.”

The resolution also directs councilors to refrain from contacting bidders individually. That decision follows a controversy last week when Joan Shannon (D-South District) criticized Knodell and Wright for communicating with bidders.

The council adopted the measure by an 11-1 vote. Councilor Ali Dieng was the only opposing vote.

City Council Can Perform Due Diligance on All Four Bidders

The city council will have the option to meet with Burlington Telecom staff, visit the headquarters of each bidder and get a legal and financial analysis of all bids. Some councilors already visited Tucows in Toronto. The bidder proposals will be made public soon after they are submitted.

KBTL Releases New Plan to Raise Funds

On November 13, 2017, KBTL released their new plan to raise additional funds by selling cooperative shares for $500 each, which co-op board member David Lansky said could increase the cash the co-op has and possibly could lead to the co-op's raising its $12 million bid. Half the share price would be granted to each Burlington account, while the remaining $250 would be payable at $5 per month. Customers using the subsidized lifeline program would pay $1 per month.

Ting Will See What Happens at Next Council Meeting

Monica Webb, Ting's director for market expansion and government affairs, declined to discuss whether the Canadian-based company would offer an updated bid or stay in the process and said the company would "see what happens" at Monday's council meeting. "Honoring the existing democratic process and the result it created would be ideal," she said.

Tucows CEO Elliot Noss told analysts and shareholders at Tucows' Third Quarter Earnings Conference Call on November 9, 2017 that "Burlington is a great example of the difficulty in predicting the flow of any potential transaction. There is always uncertainty. It is just in this case much of it happens publicly and the big decisions are shown live streams on YouTube. We have no update other than what was public in the City Council Meeting last Monday and we will see what happens next in the City Council Meeting this Monday. We remind that this is all available live streamed on the internet."

Schurz Will Have a Chance to Tell its Story More Clearly

Schurz Communications CEO Todd Schurz said in a phone interview with Seven Days' Katie Jickling that the company would improve its public relations campaign now that it's been given a second chance. Schurz praised the process as "robust" but said that earlier this fall, "half-truths and mischaracterizations" had circulated about his company's customer service, prices and the political affiliations of his family members. This time around, Schurz said he'd try to tell Burlingtonians the company's story more clearly. "We’d like to learn from our mistakes," he said.

Schurz received one vote out of 12 in the initial City Council meeting when the company was eliminated. "[Dave Hartnett] has preached the importance of local interests and yet somehow justifies an elaborate scheme to bring back Schurz, a cable company out of Indiana with an awful record on customer satisfaction," said Tucows executive Michael Goldstein speaking not for Tucows but as an individual. "[Hartnett] admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that 'public company' versus 'family owned' are just words that elicit emotional reactions, not valid, substantive concerns."

Corporate Transparency of Schurz and Ting/Tucows

Hugh Pickens, an analyst who owns stock in Tucows and follows the company closely, says that corporate transparency is one aspect of the contrast between Schurz and Tucows that does not appear to have received much attention from Burlington City Council. Corporate transparency describes the extent to which a corporation's internal actions, plans, and policies are observable by outsiders as a consequence of SEC disclosures and regulation and the set of information, privacy, and business policies concerning corporate decision-making and operations available to employees, stakeholders, shareholders and the general public. Tucows CEO Elliot Noss is on the record as saying that he always tries to provide as much transparency as possible into Tucows plans and operations to allow investors to track Tucows' business. "Tucows has a high degree of corporate transparency as evidenced by the information available on my web site Tucows Analysis," says Pickens. "Burlington residents, who have expressed a high degree of concern about the future of Burlington Telecom after the sale, will have much less insight into the policies and intentions of a privately owned business like Schurz which is not required to file reports with the SEC or provide quarterly earnings reports and conference calls for analysts."

ZRF Has No Comment

According to Seven Days, Faisal Nisar, head of ZRF Partners, did not respond to requests for comment. "Maybe the board goes back to a private equity firm that would just look to sell BT again in a couple of years (most likely, to a large cable company because that would be the richest possible buyer)," said Tucows excutive Michael Goldstein speaking for himself and not as a representative of Tucows in a comment on Reddit. According to the Burlington Free Press, the option of choosing a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom), is the 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.^[89]

December 31 Deadline Looms

The city's share of the proceeds will drop from 50 percent to 35 percent if the purchase agreement is not signed by the end of the year. Friday, Knodell said she expects there to be some wiggle room. Mayor Weinberger said he was concerned there will be no council decision to select a winning bidder until late November, but he added it is "premature to concede that we will miss this long-established deadline."^[90]^[91]^[92]^[93]

November 13, 2017: Tucows' Michael Goldstein Gives His Personal Opinion on how the Burlington Telecom Sale Process Has Gone So Far

Tucows' Michael Goldstein Gives His Personal Opinion on how the Burlington Telecom Sale Process Has Gone So Far. David Hartnett (above left) "admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that “public company” versus “family owned” are just words that elicit emotional reactions, not valid, substantive concerns." Hartnett voted for KBTL in both the council's previous votes and on November 6 said "Ting’s not the right partner for Burlington in so many ways and there are better partners including the two that we could add back into this.”

On November 13, 2017 Michael Goldstein, Ting's vice president for sales and marketing, posted a long comment on a Burlington message board on the website Reddit. In his message, Goldsten specified he was speaking on behalf of himself but said the negotiated deal would have been a great outcome for Burlington.

Hi. I am with Ting. I’m not sure if anyone is still following this thread. I think we’ve made all the public statements we need to make at this point. But I figured I would use this (relatively discreet) placement for just a few blunt, final thoughts. (By the way, I'm not sure if my colleagues here will even agree with how blunt I am about to get. So let's say formally that these opinions are my own!)
For me, there are two distinct objectives in the idea of local ownership: Ensure that local interests are served in the operation of the business Maintain a local investment in what seems to be a valuable asset with upside I truly believe that KBTL was a valiant effort to deliver on both those. (Truly. It’s pretty tough to root against the co-op even when you are bidding against the co-op.) In the end, they were not able to secure sufficient financing to deliver on that local investment. And I think the city should have always been wary that they would bring much to the table to improve operations of the business toward the goal of best serving those local interests.

Regarding those interests, it is so important to separate “local” as a romantic idea from “local” as a set of crucial, tangible needs. I have heard those needs to be:

Maintain reasonable pricing

Deliver an outstanding customer experience

Grow jobs

Contribute meaningfully to the city and the startup community

I have always believed that Ting’s track record long before this process started and everything we have said and done throughout the process has actually indicated that we are the best bet to deliver on all four. You maintain reasonable prices and grow jobs when you are able to operate the business successfully. It is partly an ethic and partly a competence. We bring both. You deliver an outstanding customer experience when you combine the values that BT and Ting share with infrastructure and tools that turn those values into great execution. We bring that and the folks at BT were thrilled at how much better they could do their jobs with our help. We are contributing meaningfully to the communities in which we currently operate and nobody even made us promise to do it! It’s just the right way to succeed in a local business. Having said that, we have made concrete promises to do just that in Burlington.

The idea of Ting and KBTL negotiating a deal was smart. You ended up with everything we would bring to the operations, an asset valued at $30.5 million and up to 40% local ownership of that asset (up to 20% for the city, up to 20% for local investors or members, starting with the co-op). I think it was a great outcome for Burlington. But it was not accepted by the co-op board.

Now you really have to ask yourself what game the progressives on council are playing and what they are really trying to achieve for Burlington. Heck, more specifically, you have to ask what Dave Hartnett is trying to achieve. He voted for two rounds for KBTL and then admitted that he never considered them viable. He has preached the importance of local interests and yet somehow justifies an elaborate scheme to bring back Schurz, a cable company out of Indiana with an awful record on customer satisfaction. He admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that “public company” versus “family owned” are just words that elicit emotional reactions, not valid, substantive concerns. Maybe the board goes back to a private equity firm that would just look to sell BT again in a couple of years (most likely, to a large cable company because that would be the richest possible buyer). Again, that would do nothing to serve local interests. You also need to ask yourself what the co-op really wants to achieve.

In fact, I think the process worked. You had eight solid bids. The co-op’s presence absolutely helped move all bidders, including us, on key points and helped you get to a great outcome. You got to a fair, market-driven value of $30.5 million, a strong operator, hard promises to deliver on your key interests and, perhaps most importantly, up to 40% ownership going forward. The co-op is prepared to lose (because at this point their voters have admitted that they didn’t manage to come up with a viable bid) rather than accept that compromise. The council is prepared to glorify bidders that were never in the city’s best interest to begin with just to deny the mayor a victory.
I think the idea of 100% local ownership was a great idea. But I think you have a pretty good fallback in Ting. You have a fair price and you have someone that has proven and promised that it would share your values and serve you well. I think folks should still be demanding that the council stop playing political games and deliver the responsible choice.^[94]

November 10, 2017: Ting and KBTL Fail to Reach Agreement on Joint Venture

NBC5 reported on November 10, 2017 that Ting and KBTL said they negotiated but could not come to an agreement on a joint venture after the Burlington City Council set a deadline of 5 p.m. November 10, 2017 for a deal. The two sides said they were open to the idea of operating the company together but were disappointed a deal could not be reached by the deadline. City council said if there could not be an agreement, it would invite the other two bidders, Schurz and ZRF, back into the process. A final decision could be made at the regularly scheduled meeting on November 27, 2017.^[95]

Mayor Miro Weinberger released a statement tonight saying he was disappointed. "While I'm dissapointed a Ting proposal to allow the co-op to own up to 20 percent of the new Burlington Telecom - in addition to the previously negotiated city ownership interest - narrowly failed to secure KBTL board approval, the effort speaks well of both organizations."^[96]

"We had a series of good meetings with Elliot Noss and Monica Webb about how Ting and KBTL might be able to work together to purchase and operate BT," wrote KBTL board member David Lansky in an email to Mayor Miro Weinberger and the city council, referring to Tucows' CEO Noss and Webb, its head of market development and government affairs. "Throughout these meetings we experienced the Ting representatives as generous with their time, thoughtful, sincere, respectful, and open to discussion and consideration of a broad collection of options. We were unable to reach agreement on a way to work together that is acceptable to both parties." In an interview with Seven Days, Lansky would not specify the sticking points in the negotiations. "We tried to do something incredibly ambitious — form a collaboration between two organizations that have very different structures, histories, cultures — in five days," he said. "There's no one to blame. There are no bad people here." Lansky would not completely rule out returning to the negotiating table with Tucows at some point. "I don't want to close the door on anything," he said. "Until there's a closed deal, everything is possible."^[97]

According to WCAX5, former Burlington Mayor Peter Clavelle was a key player in the negotiations. The Progressive is the city's longest-serving mayor and he led the charge to create Burlington Telecom 15 years ago. Current Mayor Miro Weinberger invited Clavelle to assist in talks this week. Clavelle was also key in landing an agreement to redevelop the Burlington Town Center mall.^[98]

November 8, 2017: Council Member Joan Shannon Criticizes Jane Knodell for Contacting Eliminated Bidder ZRF

Council Member Joan Shannon Criticizes Jane Knodell for Contacting Eliminated Bidder ZRF. Councilor Joan Shannon has criticized phone calls from City Council President Jane Knodell (above) to ZRF Partners over the past weeks, which, she said, "wreak havoc on the process." "Councilors should not be negotiating with anybody," Shannon said.

Seven Days Reported on November 8, 2017 that Councilor Joan Shannon (D-South District) has criticized City Council President Jane Knodell's phone calls to ZRF Partners over the past weeks, which, she said, "wreak havoc on the process." "Councilors should not be negotiating with anybody," she said. The council had hired the head of Dorman and Fawcett, Terry Dorman, as negotiator for a reason, Shannon said. Shannon said Knodell's conversations with other bidders were part of a political charade by councilors who voted for Keep BT Local but now are backing off that support. "President Knodell isn't exactly rooting for @KeepBTLocal & @TingBurlington to successfully negotiate," Shannon tweeted on Wednesday. "I hope KBTL supporters like Schurz because it looks like that's where we're headed."

Knodell acknowledged that she had several phone conversations with ZRF Partners over the last few weeks, but said she did not negotiate anything. "To characterize my conversations with anyone as negotiations is absolutely wrong and baseless," said Knodell. "The council has been very divided. I felt it was prudent to keep our options open."

While communications with bidders without council approval do not explicitly violate council rules, they obscure a process meant to take place in the public eye, Shannon said. Knodell had not told the council about her communications, Shannon added. In an interview last Friday, Mayor Miro Weinberger also said that he had discouraged councilors from reaching out to bidders. "That's not something I support," he said.

Councilor Kurt Wright Also Reached Out to Schurz

According to Seven Days Councilor Kurt Wright (R-Ward 4) also reached out to Schurz and defended those calls. "Obviously we should not be negotiating, but it's important to be prepared, because we know there's a timeline," Wright said. "If we sprung it on them, then we'd be getting criticism of, how are we going to do this on the tight timeline?" "I think we should stay on the high road here," Wright added, urging councilors to focus on the negotiations at hand.^[99]

Questions Remain About the Process

"Why was there a deadlock vote of 6-6 on Monday?" wrote Ken Grillo as a comment to the story in Seven Days. "If the vote was taken the week before, KBTL would have won 6-5 since Karen Paul had recused herself. Instead at least 3 of the 6 KBTL supporters chose to postpone what would have been their winning vote. Why did they do that? Maybe those KBTL supporters really didnt want KBTL to win. Why was Jane Knodell keeping the communication channel open with ZRF? She chose KBTL as her top candidate and could have voted them in on Oct 30. Instead she chose to postpone a winning vote for KBTL. I dont get it." "We need a new city council," added Ellen Joans. "What a mess."^[100]

November 8, 2017: David Provost, Chairman of Burlington Telecom Advisory Board, Says Bidding Process Has Simply Become Political

The Middlebury Campus reported on November 8, 2017 that David Provost, chairman of Burlington Telecom’s Advisory Board and Executive Vice President for Finance and Administration at Middlebury College, says the bidding process for Burlington Telecom has simply become political. “The piece that’s too bad about what’s going on now is it’s simply become political,” said Provost. “We sent forward KBTL with the key understanding that its bid didn’t meet the financial standards,” Provost said. “If we sent them to the council, that would give the co-op a longer chance.

Provost Says Benefits of KBTL Would Go to Maine Fiber

KBTL plans to borrow $10 million of its $12 million bid from Maine Fiber at a 14% interest rate. Although the supporters of the co-op think the city should own as much of Burlington Telecom as possible, according to Provost, over the next five years $25 million will go back to the firm. “The irony of them saying ‘keeping it local’ is that all of the money is going to Maine,” says Provost.

Knodell Says Selection of Ting/Tucows Would Benefit its Stockholders

Council President Jane Knodell doesn’t think that Ting’s proposal will be able to adequately provide the returns to Burlington that the people deserve. “What we’re giving up is local ownership and local control. Because that’s very valuable to me, I think we need to be compensated,” Knodell said. “We should get more of our returns.” According to Knodell, the co-op would directly provide returns to taxpayers in the form of dividend checks or, if the co-op were able to provide it, through lower prices. The caveat is that Burlington residents who don’t use BT as their provider won’t recoup the same benefits. Another concern of Knodell’s is the discrepancy in value of Ting’s earnings in Burlington as compared to those in the stock market. As a publicly shared firm, the majority of gains will thus end up with the shareholders, rather than Burlington residents. “The company is poised to have very strong growth in subscribers and growth in profits,” Knodell said. “They will benefit from that. Burlington taxpayers will not, because they will no longer be the owners.”

Stiff Time Pressure on City Council to Resolve the Impasse

There is stiff time pressure on the City Council to resolve the impasse over Burlington Telecom’s control. According to Provost, the city can control who purchases the telecommunications company only up until December 31. After that, the decision is transferred to the leadership of Blue Water. Blue Water also has the right to disapprove of a finalist under certain circumstances, such as the city choosing a first-time telecom operator as a buyer.^[101]

In the Burlington Telecom 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."

November 8, 2017: Burlington City Council President Jane Knodell Contacts Eliminated Bidder ZRF, Says ZRF and Schurz Are Willing to Re-Enter the Bidding Process

Burlington City Council President Jane Knodell Contacts Eliminated Bidder ZRF. ZRF Partners is a New Jersey Domestic Limited-Liability Company that was formed on April 1, 2016 by Faisal Nisar. A search of the internet does not show that ZRF has any prior experience operating a telecom. Before ZRF withdrew from the bidding process over concerns about a conflict of interest, ZRF's initial bid was $17 million while Ting is now offering $30.5 million, Schurz was offering $30.8 million at the time it was eliminated and KBTL is offering $10.5 million in cash with the city retaining a $1.5 million ownership.

The Burlington Free Press reported on November 8, 2017 that according to Burlington City Council President Jane Knodell, the two bidders for Burlington Telecom who have already been eliminated have been contacted and are willing to come back to the table and re-enter the bidding process if Ting/Tucows and KBTL are unable to develop a joint proposal that is acceptable to the City Council. Mayor Miro Weinberger said that he had concerns about extending the timeline to choose a buyer for Burlington Telecom. Burlington's share of the profits drops to 17.5 percent if a purchase agreement isn't signed by December 31, 2017. Weinberger, who has made comments supporting Ting, said that the fact that the co-op and Ting were having a conversation reflects the "common ground" between the two.

The two bidders who were already eliminated from the bidding process are Schurz and ZRF. ZRF Partners, an equity investment firm run by Faisal Nisar, withdrew days before the names of the four finalists were made public, after the mayor said he raised concerns about a conflict of interest. ZRF's initial bid was $17 million while Ting is now offering $30.5 million, Schurz was offering $30.8 million at the time it was eliminated and KBTL is offering $10.5 million in cash with the city retaining a $1.5 million ownership. "ZRF will make certain changes that address issues raised with them by the mayor in late September," said Knodell. Schurz was eliminated from the process on October 16, 2017 after if only received one vote by the City Council while KBTL received 6 votes and Ting/Tucows received 5 votes.^[102]

According to an article in Seven Days on November 8, 2017, Knodell acknowledged that she had several phone conversations with ZRF Partners over the last few weeks.^[103]

Some City Councilors Say the Appeal of ZRF's Proposal is its Community-Oriented Approach

According to some city councilors, the appeal of ZRF's proposal was its community-oriented approach. Faisal Nisar, the principal at ZRF, 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 at $17 million, wasn't the highest, but it attracted "significant interest" from some councilors, according to Councilor Kurt 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.

"I'm extremely disappointed; I was a huge supporter of ZRF," said Dave Hartnett after ZRF withdrew from the bidding. "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."^[104]

Risk of Choosing a First Time Operator Like ZRF or KBTL

According to Bizapedia, ZRF Partners is a New Jersey Domestic Limited-Liability Company that was formed on April 1, 2016 by Faisal Nisar.^[105] According to a Linkedin profile of Faisal Nisar, the founder of managing director of ZRF Partners, ZRF Partners is a private investment and advisory firm focused on building value through operational and strategic improvements. A search of the internet does not show that ZRF has any prior experience operating a telecom.^[106] According to the Burlington Free Press, the option of choosing a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom), is the 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.^[107]

November 6, 2017: Burlington City Council Deadlocks, Directs KBTL and Ting to Try to Negotiate Joint Venture

Burlington City Council Deadlocks, Directs KBTL and Ting to Try to Negotiate Joint Venture. Both sides seemed amenable to working together after the lengthy impasse. "There is some philosophical alignment about doing what's best for the community," said Monica Webb, Tucows' head of market development and government affairs. Webb said she wasn’t going to make a judgment on how long Ting/Tucows would stay in the sale process if the groups weren’t able to come to an agreement on how to move forward together.

The Burlington Free Press, Seven Days, VT Digger, WCAX3, MyNBC5, WAMC, and VPR reported that the Burlington City Council deadlocked twice in a 6 to 6 vote between KBTL and Ting and finally ended the impasse by directing the two companies by an 11 - 1 vote to spend the next week discussing a joint venture between the two companies to operate Burlington Telecom. The formal resolution was put forth by Ward 7 Democrat/Progressive Ali Dieng. “The city council hereby requests that the Keep Burlington Telecom board, KBTL local, and representative from Ting/Tucows develop a joint venture proposal and deliver it to the city council and mayor.” Councilor Karen Paul offered amendments to clarify some language in the clauses. Both companies were amenable to the changes.

Under the resolution, the joint venture proposal will be delivered to the City Council next week, where councilors will be able to vote on what's brought forth. If the council votes down the joint proposal, or if the two finalists can't come to an agreement, the Council "could resolve to re-open the Burlington Telecom sale process including and not limited to the four initial bidders; KTBL, Tucows/Ting, Schurz and ZRF."

Only one councilor – Dave Hartnett – voted against the resolution. Hartnett said he had mixed emotions and he had been prepared to flip his vote from Keep BT Local to Ting/Tucows. “Now the board of directors of KBTL sells themselves out to Ting, I find that very ironic I really do, Hartnett said. “I think it was a bad decision. Ting’s not the right partner for Burlington in so many ways and there are better partners including the two that we could add back into this.”

City Council Asks KBTL and Ting to Present Joint Venture at Next Council Meeting

The agreement passed the the City Council instructs the two bidders to come up with a proposal that would benefit the city of Burlington and BT subscribers, as well as create a governing structure for the combined group. Both sides seemed amenable to working together after the lengthy impasse. "There is some philosophical alignment about doing what's best for the community," said Monica Webb, Tucows' head of market development and government affairs. “We talked about some broad concepts that both parties would be agreeable to and we suggested that we work out more details over the coming week,” Webb said. Neither group made any firm commitments about what a joint venture would look like, but after the meeting Webb expressed optimism, mentioning that Ting/Tucows have public-private partnerships in other cities as well.

"Our view is to hold true to [the co-op model] as much as possible," said Andy Montroll, vice chair of the KBTL board. "We don't know whether there's a place to go with this," but he added that the group is "looking forward to attempting something." "What we're looking to do is what's best for our community and if there's a desire that Keep BT Local and Ting speak we're certainly happy to do that. We don't know what the end results would be but having conversations and trying to see if there's a mutual way to work through this is certainly an option that we'd be open to looking at.”

Montroll said KBTL and Ting are holding their first meeting Tuesday. City Council President Jane Knodell said last week that "given the condition of the bids to date, neither option in its current form” meets the needs of the city. "I personally feel the best outcome would be some model that combines the strength of these two options," she said, referring to the Tucows and KBTL bids. Councilors took out language ensuring that the Ting and KBTL joint proposal be a cooperative, a major feature of the KBTL proposal. “I’m disappointed that the language ‘through a co-op model’ was eliminated,” said KBTL supporter Max Tracy, P-Ward 2. “I wish you great luck in trying to reconcile these two very different proposals.” Councilor Kurt Wright says the council will have its final vote on who will buy the cable and internet provider on November 27th. “It boils down to...do they come up with framework for an agreement?” said Wright. “If they don’t, then we go to this new process, or we still go to this new process that the council doesn’t support.”

City Council President Knodell Makes Case Against Ting

The meeting began with lengthy monologues from each councilor defending their respective decisions. Council President Jane Knodell (P-Central District) relied on her background as a University of Vermont professor when she started the council meeting with a economics lecture on what she saw as the weaknesses of the Tucows offer. “We have before us two potential buyers of BT (Burlington Telecom) that are in many ways opposite of each other. Ting is a wholly is wholly owned by a publicly traded corporation based in Toronto called Tucows and KBTL (Keep Burlington Telecom Local) is a new consumer cooperative based in Burlington. There's a stark trade off here. Ting is reasonably well capitalized although not the strongest on this account that we have seen that Burlington loses control of the asset altogether. KBTL offers total local ownership and control of the asset but it lacks an upfront equity base on which to run the company.” She described the bid as creating inadequate returns for Burlington and a "loss of local control." “I just have to say, I am not feeling the love,” she concluded, to whistles and applause from the pro-KBTL crowd.

Councilor Adam Roof says Burlington Telecom Staff Have "a strong preference for Ting"

Councilor Adam Roof, I-Ward 8, said Burlington Telecom's staff had shared that they have "a strong preference for Ting" during a meeting last Thursday. "They also shared concerns about the KBTL bid and their ability to quickly execute a full build-out of Burlington and beyond," he wrote. The telecom's director of marketing and public relations, Abbie Tykocki, briefly addressed the council shortly before the meeting adjourned, stating that the sale process had been hard on her and her colleagues and asking that they not be made into political pawns. Tykocki, on Monday afternoon, said that while telecom employees were free to speak about their personal preferences, it would put the staff in an awkward position to make an endorsement of either finalist. "It’s inappropriate for us to state a preference for one bid or another," she said. "However the councilors interpret the information they got from us is entirely up to them."

South District Democrat Joan Shannon cited numerous concerns about the local coop’s bid including potential litigation. “KBTL was only advanced because of public interest. Moving KBTL forward will mean either it is vetoed by the mayor, vetoed by Bluewater or vetoed by the PUC (Vermont Public Utility Commission). The clear choice between these two options is Ting.”

Mayor Weinberger Meets With Representatives from Ting/Tucows and KBTL

Because of the resolution governing how the voting process worked after each of the votes the council had to take a recess. After the first tie vote, the council broke for a 15 minute recess and briefly returned only to have to break again when the vote was tie. During the break after the second vote – which was supposed to be only 10 minutes but lasted over 40 minutes – a group of city councilors, Mayor Miro Weinberger and representatives from both Ting/Tucows and Keep BT Local met behind the glass doors in the city hall lobby. The city attorney looked on to ensure there wasn't a quorum of councilors, thus triggering public meeting laws. After a few minutes, Knodell strode out, muttering: "There's some kind of bullshit going on in there." But in spite of Knodell's misgivings, the group reached an agreement. When the council reconvened, Tucows' Webb and KBTL's Montroll said they had agreed to work together. The councilors voted on the compromise, giving the two organizations four days with which to come up with the joint venture agreement. Knodell envisioned a Tucows proposal with some revisions based on KBTL's community-based model.

What Will the Joint Proposal Look Like?

What a final proposal will look like is unclear. According to Seven Days the two bidders seem to be diametrically opposed: KBTL has no telecom experience but strong local support, while the Toronto-based Tucows has experience operating a telecom — in addition to more secure financial footing. The council seemed resigned to compromise. "I'm strongly committed to the cooperative model, but we have to try to come to some mutually beneficial solution," said Council Member Max Tracy.

If the two groups cannot reach an agreement by Friday, two other bidders, Schurz Communications and ZRF Partners, will be invited back and the council will select a buyer from those four on November 27. But if the agreement is reached by Friday, the council will vote on the joint venture proposal next Monday. If the joint Ting and KBTL proposal is rejected during the next council meeting, the council will open the bidding process back up during the following meeting Nov. 27. Ting and KBTL will be back in the running, along with the two previous finalists, Indiana-based Schurz Communications and Faisal Nisar, who runs a private equity firm in New Jersey called ZRF Partners. However, Nisar has said he no longer wants to be considered as a potential purchaser of Burlington Telecom. Ting representative Monica Webb said she wasn’t going to make a judgment on how long Ting/Tucows would stay in the sale process if the groups weren’t able to come to an agreement on how to move forward together.^[108]^[109]^[110]^[111]^[112]^[113]^[114]

Reference

Youtube Video of Burlington City Council Meeting November 6, 2017

November 2, 2017: City Councilor Karen Paul Quits Job to Vote on Burlington Telecom Sale

Seven Days, the Burlington Free Press, and WCAX3 reported on November 3, 2017 that Burlington City Council member Karen Paul has resigned from her job and plans to vote on the Burlington Telecom sale at the Burlington City Council meeting on November 6, 2017 after recusing herself for an unexplained conflict of interest at the City Council meeting on October 30, 2017. According to WCAX3, with Paul back in the mix -- sources say the council is back to being evenly split between the bid from Ting and the bid from Keep Burlington Telecom Local.

Paul, a staff accountant with the accounting firm McSoley McCoy & Co., announced the decision in an email to other councilors and Mayor Miro Weinberger. "This morning, effective tomorrow, I have resigned my position with my employer which was the source of that professional conflict," Paul wrote in the email sent around 4 p.m. Thursday. "I intend to vote on the sale of BT assets on Monday evening." "After eight years of working to address Burlington Telecom’s challenges ... I never imagined that I would find myself in a position where I would not be able to cast a vote on this most important decision," Paul wrote in her email. "I have worked to identify ways to resolve the conflict and have determined that there is only one way I can resolve the conflict," she said, referring to the resignation. City attorney Eileen Blackwood "informed me that I may join the debate on this agenda item," Paul added.

When Paul recused herself during Monday's meeting, she said little about her conflict of interest. She did say it had come to light over the weekend and that the issue "has nothing whatsoever to do with the parties interested in purchasing Burlington Telecom." Councilors were unsure about the nature of the conflict, council president Jane Knodell (P-Central District) said on Thursday morning, before the news had been released. "It’s hard to know how serious the nature of the conflict is," Knodell said. "The timing of the discovery of the conflict is hard for me to understand." According to Knodell, councilors are not required to specify what the conflict is in order to recuse themselves.

Mayor Miro Weinberger lauded her decision. "Karen is an extremely hardworking and devoted City Councilor," Weinberger said in a written statement to Seven Days. "Her resignation shows just how committed she is to Burlington."

Paul joined McSoley McCoy & Co in January 2016 after running her own money management company, Paul Financial Services, for 20 years, according to her company bio.

City Attorney Eileen Blackwood said her office had reviewed votes Paul had cast regarding Burlington Telecom, both on the city council and the Burlington Telecom Advisory Board. When a person discloses a conflict of interest, the city's legal department looks if the person had cast any decisive votes. Blackwood said she was not aware of any times where Paul had cast a decisive vote on the telecom issue.^[115]^[116]^[117]

November 2, 2017: What Happens If There is Tie in Vote on Burlington Telecom Owner?

Vermont Biz reported on November 2, 2017 on what may happen on October 30, 2017 when the Burlington City Council votes on whether KBTL or Ting will operate Burlington Telecom. City attorney, Eileen Blackwood, answered the following questions for Vermont Biz:

Q: If the Council vote is a tie how is that resolved? (Does the mayor vote?)

A: “The Mayor cannot vote on a Council matter, as he is not a Councilor. City Council would have to determine the method for resolving a tie in keeping with Robert’s Rules of Order.”

Q: Can the mayor veto a council decision and then what happens?

A: “The Mayor can veto a Council decision. Council could overturn a veto with a two thirds vote, but if the veto was sustained, the item would fail.” (Blackwood during the Council meeting said if the veto were sustained, then the original vote would be as if it never happened)

Q: If a councilor recuses herself can a substitute be brought in and who decides on who that is (this happens on some boards and courts)?

A: “There are no substitutes.”

Q: If a councilor quits how is she replaced (would the mayor choose as the governor would)?

A: “We would have to determine what the Charter dictates with regards to Councilor resignation.”

Q: Does Blue Water have the right to refuse to go along with the Council's decision and under what conditions?

A: “Blue Water does have the right to disapprove of a finalist under certain circumstances, such as if the City were to choose a first-time telecom operator as a buyer.”^[118]

November 1, 2017: Tucows Reschedules Third Quarter Earnings Report

Tucows issued a press release on November 1, 2017 announcing that it has rescheduled its third quarter 2017 financial results conference call to Thursday, November 9, 2017 at 5:00 p.m. (ET). The Company expects to report is third quarter 2017 financial results via news release at approximately 4:05 p.m. (ET) the same day.^[119]

The earnings conference had originally been scheduled for November 6, 2017 but this evidently conflicts with the Burlington City Council Meeting on November 6, 2017 where the council will make its final decision on whether to go with Ting/Tucows or KBTL for Burlington Telecom.

November 1, 2017: Tucows Gets Personal in Bid to Buy Burlington Telecom

Katie Jickling, a reporter for Seven Days, a Burlington, VT based Independent Newspaper, traveled to Toronto with five members of Burlington City Council to sit in on meetings between Council members and Tucows to hear Tucows' sales pitch to choose a new owner for its municipal telecom company, Burlington Telecom. Following are some excerpts from the article which is well worth reading in its entirety:

With this reporter in tow, the Burlington contingent arrived at the former carpet factory just before 9 a.m. for a day of meetings and tours. About 200 of Tucows' 500 employees work in the two-story brick building on the west side of the city. Inside, whiteboards, rows of computers, potted plants and sleek office furniture give the place a hipster techy vibe. Company milestones are advertised on wall hangings that resemble championship sports banners. The coffee maker is programmed to tweet the news of each fresh brew. Councilors met with eight leaders from the company's various departments in a first-floor conference room. After introductions, small talk and coffee served in company mugs, the Canadians broke the ice.

An opening line from the vice president of sales and marketing, Michael Goldstein, revealed that the company has a good idea of what it's up against in Burlington. "We usually spend time thinking we need to dress more like grown-ups," he quipped. "Now we're trying to dress less like an evil corporation." Noss described the ideal Ting city as one with universities and plenty of bookstores and coffee shops. "So Burlington is perfect," he said. Over the next seven hours, company reps played up Tucows' "hyper-local approach."

Tucows was in sales mode. After lunch Friday, the group video-conferenced with the company's Oregon-based director of field operations. Other employees explained the nuts and bolts of fiber mapping and installation — tools they'd use to bring fiber to Burlington's most inaccessible homes. Noss sat at the head of the conference table, energetically presiding over events like a master of ceremonies. He highlighted a company ethos that he said would jibe with Burlington's culture: an appreciation for good coffee, an adherence to net neutrality, health food in the company kitchen and, of course, the cow theme. The councilors interviewed the Tucows leaders. They asked about the decision-making processes, local control, customer service and Burlington jobs. How was the company's relationship with its shareholders? Would Tucows end up selling BT to a large corporation such as Comcast? With the exception of a 2002 sale of an electronic library, "I've never sold anything," Noss assured them.^[120]

Reference

Seven Days. "Toronto-Based Company Gets Personal in Bid to Buy Burlington Telecom " by Katie Jickling. November 1, 2017

October 31, 2017: City Council Postpones Vote On New Burlington Telecom Owner

City Council Postpones Vote On New Burlington Telecom Owner. Tucows CEO Elliot Noss answered questions in front of the City Council and gave a two minute statement during the public comment session. He said he saw his company's bid as "stewardship" of Burlington Telecom. During questioning, Noss said that if Ting were to re-sell the utility, the new owner would have to abide by the full terms of the agreement between his company and the city.

Seven Days, the Burlington Free Press, NBC5, CBS3 and VT Digger reported on October 31, 2017 that in an anticlimactic ending to a four-hour meeting, the Burlington City Council decided in an 8-3 vote to wait another week to pick a new Burlington Telecom owner when councilors will skip public forum and pick up where they left off.

Karen Paul Recuses Herself from Voting

Councilor Karen Paul (D-Ward 6) recused herself from Monday's vote. Paul had previously backed Ting. Paul said as the meeting began that she had discovered "a professional conflict" over the weekend relating to her work as a CPA at McSoley McCoy & Co. Paul refused to describe the conflict, though she said that the issue "has nothing whatsoever to do with the parties interested in purchasing Burlington Telecom." Paul declined to comment further on the nature of her conflict of interest, or how long the conflict existed before coming to light. City Attorney Eileen Blackwood, when asked, said she does not believe that Paul's conflict could have impacted prior votes.

"To hear the news, that possibly there’s a city councilor that sat through this whole process that had a conflict of interest" raised concerns, said Councilor Dave Hartnet. He added later, "It's not responsible for the council to move forward tonight." In her remarks recusing herself, Paul said she has been working on Burlington Telecom for eight years and would have preferred to vote for the final choice. "This is not the position I would like to be in," she said. However, Hartnet said he still had concerns, saying that Paul could have influenced other councilors and that he was worried about voting without getting more legal information. "I don't feel good about that," Hartnett said.

Motion to Postpone Passes on Second Try

Councilor Dave Hartnett pushed to postpone the vote after two hours of public comment. Hartnett's motion came after Councilor Karen Paul recused herself, citing a professional conflict of interest. Paul voted for Ting in the preliminary round of voting two weeks ago and has served on the Burlington Telecom Advisory Board. Hartnett, who told the Burlington Free Press earlier Monday afternoon that he planned to vote in favor of selecting the co-op, Keep Burlington Telecom Local, said he would not cast a vote even if the council decided to move forward. During a recess, Hartnett said he was concerned after learning from Burlington's legal team that there was a possibility that councilors who voted for the co-op could be personally sued by Citibank. The lawyers tried to reassure councilors that they wouldn't be liable, Hartnett said, but he was still concerned.

Hartnett's motion failed on the first vote. But after councilors had the opportunity to ask Ting CEO Elliot Noss and the co-op's Chairman Alan Matson questions, Councilor Kurt Wright moved to reconsider postponing. The council voted 8-3 to adjourn the council meeting and postpone the vote on the second try. "I think it's wise to do this," City Council President Jane Knodell (P-Central District) said of the delay. "The council has done a lot of listening, but it hasn’t had the opportunity to do very much talking to each other. There are aspects of this decision that have not been explored, have not been fleshed out."

KBTL Supporters Address Council

Keep Burlington Telecom Local has gathered support from a vocal segment of residents and won the votes of six city councilors in a preliminary vote earlier this month. Ting, a subsidiary of Toronto-based Tucows, won five votes. KBTL supporters urged the need for local control of the telecom. "The number one criteria was local control," said David Lansky, a member of the KBTL board."I don't understand how Tucows and Ting can meet that criteria." "I don't support selling off our assets to the highest bidder," said state Rep. Brian Cina (P-Burlington). "Please don't let big business interests and out of state banks intimidate you. We need to protect what is ours." “Don’t sell our franchise, stay with democracy and don't let Citibank dictate what we do in Burlington Vermont,” said Joe Patalano.

Burlington Telcom Employees Urge Vote

In an emotional plea, Abbie Tykocki, director of PR and marketing for Burlington Telecom, urged the council to hold the vote. "We are not pawns on a political chess board," she said as she criticized the council for not actively seeking BT employees' input in the sale decision. "We are citizens of Burlington and we are stressed ... I ask you, I implore you ... to put this to a vote."

Mayor Weinberger Urges Vote

Mayor Miro Weinberger also asked for a final decision. "I believe the council has a fundamental responsibility and that is to vote," he said. "We have a chance tonight to end a long, long journey that has been very strained and very problematic." He noted that it was Ting supporters who were ready to vote and KBTL backers who were now questioning their initial decision. In a statement released ahead of Monday's meeting, he said that selecting Ting would "ensure a strong and affordable future for BT," pointing to the possibility of a credit rating increase and the promised economic investment. He called the co-op bid "well-intentioned but very weak." "The Council should not let slip away tonight's hard-earned chance to finish the job," Weinberger said. The mayor urged the council to vote on Monday night, saying that it was "time to see we have the political will" to make a tough decision. "Ting is committed really to regional, economic development that I think is quite exciting,” Weinberger said. “This proposal has a 10-year plan to invest $50 million in capital investment, building out the fiber network, not just in Burlington, but likely in other parts of Chittenden County."

Joan Shannon (D-South District) called for councilors to respect the public who had shown up, as well as Ting CEO and president Elliot Noss, who had traveled from Toronto for the meeting. Four members of the Burlington Telecom Advisory Board, led by chair David Provost, urged the council to adhere to the board's recommendation. In June, the board ranked KBTL as the weakest of eight proposals. "Just know that our guidance, suggestions and recommendations are not political," Provost said. "They were developed with the best interests of Burlington in mind."

Tucows CEO Elliot Noss Speaks

Tucows CEO Elliot Noss answered questions in front of the City Council and gave a two minute statement during the public comment session. He said he saw his company's bid as "stewardship" of Burlington Telecom. During questioning, Noss said that if Ting were to re-sell the utility, the new owner would have to abide by the full terms of the agreement between his company and the city.

Some Burlington citizens spoke in favor of Ting. "If KBTL were to advance tonight as the winning offer," said Burlington resident Russ Scully, " I think we know that there’s a number of events that are gonna ensue; starting with a lawsuit from Citibank.” “If Keep Burlington Telecom Local is my new management company, I'm done,” said Ted Adler, a Burlington resident. “It doesn't have the backbone. It doesn't have the experience.”

The Blame Game

After the city council meeting, the mayor and councilors traded recriminations. WCAX reported on the back and forth:

"A bomb dropped on the process," said Kurt Wright, R-Burlington City Council. Wright is on the Mayor's side in backing Ting, but he says the Mayor is going about breaking the council's deep divide all wrong. "I think this just taking the attitude of -- as it seems the mayor has done -- which is kind of my way or the highway attitude -- I don't think that's getting us to a good place right now," "I would say that unfortunately the mayor has participated in the process in a way that hasn't helped the process," said Council President Jane Knodell, P-Burlington. Knodell is in the Keep BT Local camp. She says this is the most divided she's seen the council -- and the public -- since Mayor Weinberger was first sworn in nearly six years ago. "I don't think it's productive to revisit the past because we are where we are, but I would hope the mayor would take some responsibility for how we got in this polarized place," she said.

"We are where we are because of a series of city council decisions," said Mayor Weinberger. He says councilors chose Ting and KBTL as finalists even though he pushed them to ditch KBTL from the final 2 and keep the bid from Schurz. Even councilors who are now complaining say if Schurz was in the mix now it could have brought consensus. "Unfortunately they chose not to do that, and at this point I think its very difficult to go backwards."

"You also have to know what went on behind the scenes," Wright said. He says councilors warned the mayor and his democratic allies that keeping Ting in the mix would only elevate support for KBTL among councilors because so many constituents support its local control message. And that's what happened. Wright says a meeting Sunday between some councilors and the Mayor before the vote should have been about finding a compromise. "Our thought was, lets try to work through that," Wright said. "The Mayor really didn't want to hear any of that." Wright says the meeting ended badly. The mayor agrees but says that is just because he told the councilors that he and the public expect the City Council to choose the next owner of Burlington Telecom from the two finalists the City Council selected. He calls this a long, strenuous and expensive process.^[121]^[122]^[123]^[124]^[125]^[126]

Reference

Youtube Video of City Council Meeting October 30, 2017

October 30, 2017: Citibank Threatens to Sue if Burlington Council Chooses KBTL

Citibank Threatens to Sue if Burlington Council Chooses KBTL. Citibank's legal counsel sent a forcefully worded email containing a threat to sue the city of Burlington if the city council selects Keep BT Local's bid to take over Burlington Telecom. The co-op's offer is "not even remotely commercially reasonable and not qualified," said Kevin Fitzgerald.

Seven Days, the Burlington Free Press, WCAX, and WPTZ reported that Citibank's legal counsel sent a forcefully worded email containing a threat to sue the city of Burlington if the city council selects Keep BT Local's bid to take over Burlington Telecom. The co-op's offer is "not even remotely commercially reasonable and not qualified," Kevin Fitzgerald wrote in an email Sunday night to city attorney Eileen Blackwood. A city council decision in favor of the KBTL bid would be "vigorously opposed by Citibank on several fronts including but not limited to immediate litigation." A representative of Citibank wrote to Burlington's lawyers over the weekend to say choosing the co-op's offer would "be a profound, willful and bad faith breach of Burlington's patent contractual, legal, equitable and fiduciary obligations owed to Citibank, including a breach of the implied covenant of good faith and fair dealing, and will be vigorously opposed by Citibank on several fronts including but not limited to immediate litigation."

Blue Water Expresses Concerns

The city has also received a communication from Michael Furlong, a lawyer representing Blue Water, expressing concerns about the co-op's bid, said Councilor Chip Mason, D-Ward 5. Furlong wrote that Blue Water, the local group that purchased Burlington Telecom and leased its assets back to the city in 2014, would not insert itself into the city's decision making process, but has serious concerns about whether the co-op can make it through the state's regulatory process. Blue Water has the right to disapprove of a finalist under certain circumstances, such as the city choosing a first-time telecom operator as a buyer. Mason said he believes Furlong's email confirms that they will use that right. "KBTL is a first-time operator of a telecom system, lacks management experience, and its proposed debt financing reflects junk bond credit or worse," Furlong wrote in an email. "The City’s comparison of bidders found KBTL does not meet four of the 13 criteria considered, and the City’s outside financial and technical consultants found KBTL’s bid proposal inferior to other remaining bidders."

KBTL Inaccurately Portrayed the Terms of Their Loan

KBTL inaccurately portrayed the terms of their loan in a final proposal the group submitted to the city last week. KBTL, which plans to borrow $10 million of its $12 million bid from the Maine Fiber Company, said in a new written offer to the city last Thursday that it secured its loan at 8 percent interest, significantly lower than the original 14 percent. But that's no longer true, KBTL board chair Alan Matson confirmed Sunday afternoon. "We were unable to reach an agreement with Maine Fiber on an 8 percent base interest rate that included contingent payments based on the future success of Burlington Telecom," Matson wrote in a Facebook post on Monday afternoon. "While Maine Fiber agreed in concept to this idea and worked hard to support the idea, we were never able reach an agreement on a structure that was materially different (in almost all scenarios) from the 14 percent loan that we have already committed to with them." The terms of the loan, he said, are the same as they were during October 16 council vote. Matson confirmed the information with Terry Dorman, head of Burlington Telecom operator Dorman & Fawcett, in a series of emails on Sunday morning.

"I have to admit, I am frustrated. This is exactly what I feared, Chip Mason (D-Ward 5) told Seven Days on Sunday afternoon. "We’re less than 30 hours away from a supposed vote and the terms are just now being determined. That’s not OK." City Councilor Adam Roof, I-Ward 8, who went to Toronto last week to research Ting's operation, said he has a "ton of respect" for the co-op and does not want to get into a finger-pointing match. But, he said, lowering the interest rate would have been a "material change." "Does it impact the assessment? Yes, it does," he said. Roof voted for Ting in the preliminary vote and said he plans to vote for Ting again on Monday night.

Some KBTL Supporters Still Adamant

Councilor Max Tracy, P-Ward 2, said he will be voting for the co-op and believes the local choice to offer the best long-term benefit for the city. He said his understanding of the settlement does not require the city to pick the highest offer. "We'd have a very strong case if Citibank brings litigation," he said. Tracy added that the language about Blue Water's right to refuse a buyer is "vague." Council president Jane Knodell (P-Central District) said she'd vote for KBTL and expected a 6-6 tie at Monday's meeting — meaning a winner may not be chosen then. What happens if that is the case is unclear, according to Knodell. "We have to look at our different options about what our next steps are," she said. The co-op's last minute change didn't affect her decision, she said, though she added, "They might have gotten a little bit ahead of themselves." "I think the city of Burlington needs to get its fair share of [Burlington Telecom's] future profits," Knodell said of her vote. "Ting does not provide that."

Outcome of October 30 Vote Still Unclear

It is not exactly clear what happens if there is no winner. Several councilors said they believed Monday's vote may result in a 6-6 tie, and it was unclear how the council will proceed in the case of a tie. The mayor supports the Ting bid but he does not get a vote, so he cannot break the tie. In a statement he said, "Delay, or selecting the well-intentioned but very weak KBTL offer, exposes the City to serious legal and financial risk." Although Weinberger does not cast a deciding vote, he could use his veto power.^[127]^[128]^[129]^[130]

October 28, 2017: Ting and KBTL Present Final Pitches for Burlington Telecom

VT Digger reported that Ting and KBTL released their final letters of intent on the eve of the Burlington City Council meeting on October 30 to select a buyer for Burlington Telecom. Mayor Miro Weinberger said Friday that he still believes KBTL has not done enough to address the financial, regulatory, legal and operational concerns he and others have raised and that Ting's bid had substantively improved, putting into writing a pledge to invest $50 million in Burlington Telecom over the next decade. Weinberger said in addition to having industry leading customer service and support, Ting’s plans to grow its business in Burlington will be a boon to the local tech economy. Ting will also make Burlington a hub for research and development on ambient connectivity, holding out the potential for more tech jobs in the future, helping city and state to retain skilled young people, including graduates of Champlain College’s cybersecurity program, said Tucows CEO Elliot Noss. The majority of Burlington’s business community is supporting Ting’s bid as well with the Lake Champlain Regional Chamber of Commerce saying that beyond the capital and experience Ting offers, there are legal and regulatory issues with the co-op bid that make it a risky proposition.

Meanwhile at a news conference and rally on the City Hall steps Friday, close to 40 co-op supporters urged councillors to go with Keep BT Local’s $12 million offer, over the $30.5 million final offer from Ting. They said the benefits of local ownership outweigh the larger sale price, arguing that Ting, which is a subsidiary of the publicly traded Canadian company Tucows, would manage Burlington Telecom in the interest of its shareholders — not local residents and subscribers. “They will bend and sway and blow in the wind in whatever direction their stockholders and equity investors demand, so that they can make more money,” said co-op backer Melinda Moulton, CEO of Main Street Landing. To shore up concerns raised by the City Council as to how KBTL would survive an economic downturn or pay unexpected costs while strapped with millions in debt, the co-op secured a lower 8 percent interest rate from Maine Fiber which was previously 14 percent. To secure the lower interest rate, KBTL agreed to make additional payments contingent on Burlington Telecom’s financial success that would essentially bring payments up to a 14 percent interest rate, but only if things are going well, said KBTL board chair Alan Matson.

Ting has committed in its letter of intent to put $250,000 annually into community benefit projects. KBTL has pledged to make a similar investment as co-op board member Andy Montroll said it would match Ting’s offer of $250,000 per year. That commitment isn’t explicitly reflected in the co-op’s letter of intent. Both Ting and KBTL said they would retain all current Burlington Telecom employees. Noss said one aspect of Burlington Telecom’s future is being “trivialized” in the sale process is the actual day-to-day operation of a fiber network. “People are acting like operating an ISP (Internet Service Provider) is just instant soup, like you just add water, but it’s more complicated. You need fresh vegetables and the right spices,” Noss said.^[131]

Reference

Letter of Intent From Ting
Bid from Ting
Letter of Intent from KBTL
Bid from KBTL
Email from Citibank Threatening Litigation October 29, 2017

October 25, 2017: Five Burlington Council Members Travel to Toronto to Visit Tucows

VT Digger reported on October 25, 2017 that in a trip has been in the works for weeks, five Burlington City Council Members. Adam Roof, Chip Mason, Karen Paul, Richard Deane, and Joan Shannon traveled to Tucows' headquarters in Toronto to perform due diligence to get a sense of the company’s culture and operations before casting their final vote on October 30. All of the councilors making the trip voted to advance Ting’s bid at the council’s Oct. 16 meeting. “I’ll be the first to say the optics aren’t ideal,” said Adam Roof adding that the trip is being paid for by Burlington Telecom. “There will be no inappropriate courting,” Roof said. “This is a due diligence trip through and through.” Mayor Miro Weinberger and members of the Burlington Telecom Advisory Board made a similar trip to the headquarters several weeks ago.

State Rep. Selene Colburn, who supports KBTL, said the trip was available to all city councilors but that the group going is essentially the Democratic caucus and a representative for the Democratic mayor — all of whom have publicly supported Ting over the co-op. “They didn’t create this dynamic, but now it’s the Democrats and the mayor’s office going to meet with Ting,” Colburn said. Brian Lowe, the mayor’s chief of staff, said such due diligence visits are typical when the city is negotiating a major transaction, and it was open to any member of the council. "The responsible step here is for all Councilors to see Ting's operations first hand," wrote Dave Gibson in a comment to the article. "I'm stunned to learn that they hadn't already. Meetings in Burlington with a select few cannot provide an accurate feeling for the culture of a company. How could any Councilor not choose to visit informally with employees in their space."^[132]

October 24, 2017: Namecheap Drops Lawsuit Against Tucows

Domain Name Wire reported on October 24, 2017 that Namecheap has dropped its lawsuit against Tucows voluntarily dismissing the case without prejudice, meaning that it can refile the claims at a later time. According to Andrew Alleman this suggests that the parties are working out their differences outside of the courtroom.^[133]

October 17, 2017: How Members of the Burlington City Council Voted in Narrowing Burlington Telecom Sale Candidates

How Members of the Burlington City Council Voted in Narrowing Burlington Telecom Sale Candidates. 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 minutes of the October 16, 2017 meeting of the Burlington City Council showed that members of the Council voted in narrowing the Burlington Telecom Sale Candidates as follows:^[134]

KBTL: Sara Moore, Sharon Bushor, Jane Knodell, Max Tracy, Dave Hartnett, Ali Dieng

Ting: Karen Paul, Adam Roof, Chip Mason, Joan Shannon, Richard Deane

Schurz: Kurt Wright

Democrats - 4 Members

Joan Shannon - South District - Ting - Member of Burlington Telecom Advisory Board (BTAB) - Shannon, who supported Ting, praised the company for advocacy regarding net neutrality and the commitments the company has made toward the community, such as BTV Ignite. "It's extremely important that we grow our tech economy," she said.

Karen Paul - Ward 6 - Ting - Member of Burlington Telecom Advisory Board (BTAB) - Paul said KBTL’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, said Paul. Paul requested an outside analyst to weigh the benefits and risks of the co-op bid that are "out of the realm of conventional economic analysis," including net societal benefits.

William "Chip" Mason - Ward 5 - Ting - Mason brought up that Citibank has indicated that it may sue the city again if it believes it hasn't received its share of profits. In a discussion on Facebook on October 14, Mason posted that "BT survived because: (i) the city settled with CitiBank for $10mm and agreed to give them 50% of the sale proceeds in an arms length sale; and (ii) because Bluewater agreed to purchase the equipment and lease it back to the city in exchange for 40% of the sale proceeds. The value of BT has been established by 2 independent bids of $28mm and $30.5mm. KBTLs offer is $12mm which nets those we agreed to share proceeds with much less. CitiBank has already indicated that they will bring suit against the City if it accepts the lower offer and intervene in the PUC proceeding. CitiBanks claim could be as high as $4.5mm and would have to be paid by the taxpayers which the PUC will not allow. We also have two different residents who have threatened to bring suit if we accept the lower offer. I, too, appreciate the decision of a prior council to lease to City Market but the vote on BT is not the same. There were not threats of litigation. Onion River had been in business for over 20 years and the city was not precluded by charter from helping. I would welcome the opportunity to speak to you or anyone else about these issues. The mediated settlement agreement with Citibank and the agreement with Bluewater are public and approved by City council after much debate. The threat of litigation arises because of the disparity in the bids which wasn’t known until offers were submitted. If KBTLs offer were twice as high this would be a non issue. We were months away from trial in federal district court facing a claim for $33 million and the loss of the assets. Absent the settlement BT would have been sold and we would have had no say and not the possibility of some return to the taxpayers. I am not patronizing any participant in this conversation or my constituents. The reference to the best interest of the city refers to the fiduciary duty each councilor has when taking action. Each councilor comes to that decision in his or her own way. The threat of litigation is not my opinion."^[135]

Richard Deane - East District - Ting - 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.”

Progressive Party - 3 Members

Jane Knodell - Central District (City Council President) - KBTL - 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. 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 [per year] 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

Max Tracy - Ward 2 - KBTL - Tracy voiced strong support of the bid, saying the community had long set forth a criteria for local ownership and adding that the city should support the co-op in overcoming any hurdles. Tracy said public input was what ended up tipping the scales in favor of Keep BT Local. Tracy read emails submitted by the public. According to Tracy, 186 support the co-op, compared to 20 for Ting and 16 for Schurz. Tracy posted on his Facebook page on October 16, 2017 that "We need lots of advocacy and big turnout for the next meeting on 10/30."^[136]

Sara Moore - Ward 3 - KBTL

Independent - 3 Members

Adam Roof - Ward 8 - Ting - 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.” Roof said he was disappointed that the discourse had, at moments, turned less civil. He wrote he has received calls that he characterized as political threats and harassment. "Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would 'have a target on my back' and that 'capitalist pigs will be slaughtered,'" he wrote in an email that went out to about 20 or 30 people shortly before the meeting. He blasted the threats as both tasteless and ineffective, but said he was encouraged that the "majority of Burlingtonians are kind and thoughtful people who realize that far more unites us than divides us."

David Hartnett - North District - KBTL - Hartnett cast a vote for the co-op while adding he had concerns about all three bids. "I was probably the first councilor to speak up and say they weren't financially viable," he said about the co-op. "I'm willing to give them one last chance." In spite of the "major hurdles" the co-op faces, "You’ve worked hard to earn my respect," said Hartnett. "I’m a hometown guy and I’m from Burlington."

Sharon Foley Bushor - Ward 1 - KBTL

Democrat/Progressive - 1 Member

Ali Dieng - Ward 7 - KBTL - During the proceedings Dieng, referring to the fact that one of Ting/Tucows 40,000 domain resellers had sold a domain name that was used for a neo-nazi web site, told the Council that "I hear members of this council supporting entities that are hosting white-supremacy web sites, that are hosting neo-nazi web sites." Dieng added that he had received threats from some members of the Burlington City Council. "I have received so many threats just because of this issue. When I was coming here I was so excited that I will join other people who are so excited about this city. How can we partner and make this happen for the residents of Burlington. I'm going to tell you the truth. I was disappointed by some members of this council, by some members at this table, who gave me some threats about this vote. If you vote this way, it will follow you in the next election in March. Think about that."

Republican - 1 Member

Kurt Wright - Ward 4 - Schurz - "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 and its $10 million loan with a 14 percent interest rate. "I don’t take those considerations lightly."

Reference

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

Over 200 emails and Letters of Support

Additional emails of Support

Letter from Mayor Miro Weinberger on Burlington Telecom Finalists October 10, 2017

Supplemental Memorandum from Tucows to David Provost and Terry Dorman October 13, 2017

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 Champlain 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.”

Discourse, at Moments, Turned Less Civil

Councilor Adam Roof said he was disappointed that the discourse had, at moments, turned less civil. He wrote he has received calls that he characterized as political threats and harassment. "Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would 'have a target on my back' and that 'capitalist pigs will be slaughtered,'" he wrote in an email that went out to about 20 or 30 people shortly before the meeting. He blasted the threats as both tasteless and ineffective, but said he was encouraged that the "majority of Burlingtonians are kind and thoughtful people who realize that far more unites us than divides us."

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.^[137]^[138]^[139]^[140]^[141]^[142]

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.^[143]

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.^[144] 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.^[145]

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.^[146]

October 13, 2017: Ting/Tucows Clarifies Some Points in its Burlington Telecom Offer

Tucows CEO Elliot Noss sent a letter to David Provost, Chairman of the Burlington Telecom Advisory Board and Terry Dorman on October 13, 2017 clarifying some points in their offer:

Re: Concerns about Tucows as a publicly-traded company

Over the last 24 years, Tucows’ has succeeded by providing our customers with a great experience for a fair price. Actions like suddenly raising prices, enacting data caps, selling customer information, or cutting back on service would damage the reputation our entire company is built on, and would be inconsistent with our actions for over two decades. We have simply never done these things. Treating customers and employees right leads to company success. Investor success follows, but does not lead our decisions. Our investors understand and value this choice, and would expect us to do nothing less for Burlington Telecom and the people of Burlington.

We also think it’s important to note that Ting does not follow a traditional cable or media model. We are a progressive Internet company, with a genuine customer-centric approach to running our business. We’re open to operating differently--and better--than cable, telecom, and media companies, and this model has won us devotion from customers in our other markets and in our mobile business, as well as awards for our city-friendly partnerships, from community broadband organizations. We fought for Net Neutrality before it became a discussion topic. We also worked against SOPA/PIPA and have been actively engaged in every issue to protect consumer interest and an Open Internet since the beginnings of the Internet, and we will continue to do so, in Burlington, if we are chosen.

Re: Burlington Telecom staff retention
We would need every current BT employee to continue running the operation, and we hope they stay. Our expectation is that the headcount and opportunities for Burlingtonians to grow over time as the network expands and gains more subscribers, and that employees would have access to expanded career options.

Re: Burlington Telecom’s importance within the Ting Internet family
Of Ting’s five cities, BT would immediately become our largest and most developed market. The comprehensive experience of the BT workforce, through both good times and lean ones, would bring significant insights to Ting, and underpin our ability to develop a winning model in Burlington for how ubiquitous gigabit fiber can transform a community through spurring entrepreneurship and innovation, and improving overall social and economic outcomes.

Re: Annual $250,000 community commitment
We would like to underscore that Tucows’ local commitment would be $250,000 per year to programs in Burlington that support municipal, economic development and entrepreneurship. This type of hyper-local community support is a signature strategy that Ting Internet is renowned for in all of our markets. The Burlington commitment includes:

$60,000 per year to BTV Ignite

$50,000 per year to free TV advertising for local startups and community events

The remainder would go to programs developed with local community involvement such as:

Free service to select, local non-profits

Sponsorship of local events and programs

Low-income Internet service subsidies

Internship programs

Zones offering free gigabit-powered, state-of-the-art Wi-Fi

Additional public, educational and government (PEG) access channels

Free co-working space

Small business challenges

Re: Lifeline support for low income households
In our community commitment, we cited low-income Internet service subsidies. That will absolutely include continuing BT’s support for the Federal Lifeline Broadband program. However, we do not think the Lifeline program is enough, and we have started to work on innovative approaches with local communities that provide more effective solutions to the digital divide, and we would expect to bring these lessons to Burlington.

Re: Assets and liabilities

Tucows’ offer is for all of the assets required for the current operations of Burlington Telecom. It assumes a zero cash balance at closing.^[147]

Reference:

Supplemental Memorandum from Tucows to David Provost and Terry Droman October 13, 2017

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.^[148]

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.

KBTL AMA

Alan Matson 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.^[149]

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.^[150]^[151]^[152]^[153]

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.^[154]

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.^[155]

Update: Here is how the members voted on October 16, 2017.^[156]

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. [Voted for Ting on October 16, 2017]

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.^[157] [Voted for Ting on October 16, 2017]

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. [Voted for Ting on October 16, 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. [Voted for Ting on October 16, 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.^[158] 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.^[159] 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.^[160] [Voted for KBTL on October 16, 2017]

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."^[161] [Voted for KBTL on October 16, 2017]

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."^[162] [Voted for KBTL on October 16, 2017]

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.^[163] [Voted for KBTL on October 16, 2017]

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."^[164] [Voted for Ting on October 16, 2017]

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.^[165] [Voted for KBTL on October 16, 2017]

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. [Voted for KBTL on October 16, 2017]

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. [Voted for Schurz on October 16, 2017]

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."^[166]

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."

Tucows Official Statement Regarding the Daily Stormer August 15, 2017

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!'^[167]

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.

Keep Burlington Local AMA October 12, 2017

Ting/Tucows AMA September 21, 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.^[168]

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.^[169]

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.^[170]

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.^[171]

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:

Burlington Telecom Advisory Board (BTAB). "Report to City Council on Prospective Buyers" Original report July 10th, 2017, Updated October 4, 2017

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.^[172]

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^[173]

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.^[174]

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.^[175]

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.^[176]

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.^[177]

Reference

Burlington Telecom. "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"

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.^[178]

Reference:

Independent Financial Analysis of Bidders by Jeffrey Small CPA September 25, 2017

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.^[179]

Reference:

Burlington Telecom. "Letter from Ralphine O'Rourke, Esq. Primmer Piper Eggleston & Cramer PC (PPEC)" October 2, 2017

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

Ting Video: 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. 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."^[180]

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!"^[181]

'Keep Burlington Telecom Local' Pre-AMA on Reddit

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.^[182]

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."^[183]

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.^[184]

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.^[185]

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.”^[186]

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."^[187]

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.^[188]^[189]^[190]

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."^[191]

September 28, 2017: Fourth Bidder on Burlington Telecom Has Chosen to Remain 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.”^[192]

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).^[193]

"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."^[194]

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.^[195] 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.^[196] "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."^[197]

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.^[198] 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.^[199]

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.^[200]

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.^[201]

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.^[202]

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.^[203]

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.^[204]

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.^[205]^[206]

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.^[207]

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.”^[208]

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."^[209] 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.^[210]

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.^[211]

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."^[212]

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.^[213]

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."^[214]

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."^[215]

Reference:

Original Motion filed in US District Court. "Namecheap versus Tucows and Enom" Filed August 30, 2017
Tucows Response to Namecheap September 18, 2017
Namecheap's Response to Tucows September 21, 2017

History of the Enom Acquisition by Tucows

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

September 1, 2017: Namecheap Files Suit For Bulk Transfer of 4 Million Domain Names
August 8, 2017: In Domain Services, the Integration of Enom is Going Well
May 9, 2017: Tucows CEO Elliot Noss Explains the Impact of the Enom Acquisition and Deferred Revenue on Q1 Earnings
May 9 2017: Enom Integration Has Gone Very Well This Quarter
May 2, 2017: Why Rightside Sold Enom to Tucows
February 20, 2017: Rightside Activist Investor Says Enom Was Sold to Tucows Too Cheap
February 9, 2017: Tucows CEO Says Acquiring Enom is Overwhelmingly about Generating Scale and Realizing Cost Efficiencies
January 25, 2017: Elliot Noss Says Combining Tucows with Enom Will Be Done Piece by Piece with Backwards Compatibility in Mind
January 20, 2017: Tucows Acquires Enom with its Network of over 28,000 Domain Name Resellers and 14.5 million Domain Names under Management

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.^[216]

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."^[217]

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.^[218]

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."^[219]

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.^[220]

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.^[221]

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.^[222]

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.^[223]

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."^[224]

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.^[225]

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.^[226]

Additional Information

Tucows 8-K Filing with the SEC disclosing their bid for Burlington Telecom September 20, 2017
Report of Development of Criteria for Sale of Burlington Telecom March 9, 2016
Tucows Letter of Intent to Bid on Burlington Telecom September 18, 2017
Ting's Presentation to the City of Burlington September 18, 2017
Summary of Proposals from the Three Finalists September 20, 2017
Comparison of Finalist's Offers September 20, 2017

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.”^[227]

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.^[228]

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.^[229]

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.

See the video.

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.'"^[230]

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.^[231]

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.^[232]^[233]

References

Motion filed in US District Court. "Namecheap versus Tucows and Enom" Filed August 30, 2017.

History of the Enom Acquisition by Tucows

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

August 8, 2017: In Domain Services, the Integration of Enom is Going Well
May 9, 2017: Tucows CEO Elliot Noss Explains the Impact of the Enom Acquisition and Deferred Revenue on Q1 Earnings
May 9 2017: Enom Integration Has Gone Very Well This Quarter
May 2, 2017: Why Rightside Sold Enom to Tucows
February 20, 2017: Rightside Activist Investor Says Enom Was Sold to Tucows Too Cheap
February 9, 2017: Tucows CEO Says Acquiring Enom is Overwhelmingly about Generating Scale and Realizing Cost Efficiencies
January 25, 2017: Elliot Noss Says Combining Tucows with Enom Will Be Done Piece by Piece with Backwards Compatibility in Mind
January 20, 2017: Tucows Acquires Enom with its Network of over 28,000 Domain Name Resellers and 14.5 million Domain Names under Management

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.”^[234]

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.^[235]

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.

Watch the Video here.

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:

Tucows' (TCX) Q2 2017 Results August 8, 2017
2017 Q2 Consolidated Balance Sheets August 8, 2017
Tucows' (TCX) CEO Elliot Noss on Q2 2017 Results - Earnings Call Transcript August 8, 2017

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.”^[236]

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.^[237]

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.^[238]

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."^[239]

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.^[240]

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.^[241]

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.^[242]

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."^[243]

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."^[244]

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." ^[245]

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."^[246]

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."^[247]

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."^[248]

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."^[249]

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."^[250]

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."^[251]

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."^[252]

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."^[253]

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." ^[254]

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.^[255]

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.^[256]

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."^[257]

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."^[258]

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.^[259]

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."^[260]

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."^[261]

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."^[262]

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."^[263]

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."^[264]

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."^[265]

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."^[266]

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."^[267]

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."^[268]

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.

Watch the Video here.

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^[269]

See also:

Ting Internet's Rollout of Fiber in Centennial

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."

Podcast of Elliot Noss on Intelligent Investing in a Changing 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.^[270]

Read more about Ting Fiber's Rollout in Holly Springs

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

Click here to watch Youtube video

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.^[271]

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.

Read more about Insider Activity at Tucows

Read Tucows and the Dog That Did Not Bark in the Night July 28, 2016

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

Should an Internet Provider Have a TV Product? What's Up with Ting TV? March 28, 2016

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.^[272]

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.^[273]

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."^[274]

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.^[275]^[276]

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."^[277]

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?"^[278]^[279]

See also:

Ting Internet's Rollout of Fiber in Centennial

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.^[280]

See also:

Intermax May Also Provide Fiber Service in Sandpoint February 19, 2017
Ting Rolls out Internet in Sandpoint

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."^[281]

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.^[282]

Read more about Insider Activity at Tucows

Read Tucows and the Dog That Did Not Bark in the Night July 28, 2016

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.”^[283]

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.”^[284]

September 29, 2016: Tucows Begins to Send Expired Domain Names to GoDaddy Auctions

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:

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:

Tucows' (TCX) Q1 2017 Results May 9, 2017
2017 Q1 Consolidated Balance Sheets May 9, 2017
Tucows' (TCX) CEO Elliot Noss on Q` 2017 Results - Earnings Call Transcript May 9, 2017

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.^[285]

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.^[286]

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.^[287]

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."^[288]

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."^[289]

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."^[290]

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." ^[291]

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."^[292]

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."^[293]

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."^[294]

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."^[295]

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."^[296]

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."^[297]

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."^[298]

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."^[299]

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."^[300]

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."^[301]

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."^[302]

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."^[303]

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."^[304]

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."^[305]

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."^[306]

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.^[307]

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."^[308]

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."^[309]

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."^[310]

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."^[311]

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."^[312]

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."^[313]

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."^[314]

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."^[315]

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.^[316]

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."^[317]

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.^[318]

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."^[319]

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.^[320]

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

February 20, 2017: Rightside Activist Investor Says Enom Was Sold to Tucows Too Cheap
February 9, 2017: Tucows CEO Says Acquiring Enom is Overwhelmingly about Generating Scale and Realizing Cost Efficiencies
January 25, 2017: Elliot Noss Says Combining Tucows with Enom Will Be Done Piece by Piece with Backwards Compatibility in Mind
January 20, 2017: Tucows Acquires Enom with its Network of over 28,000 Domain Name Resellers and 14.5 million Domain Names under Management

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.

See Historical Quotes for TCX

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.^[321]

Learn more about Ting's rollout in Westminster

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.

See Historical Quotes for TCX

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.

Learn more about Ting Fiber's Rollout in Charlottesville

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.^[322]

See Historical Quotes for TCX

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.^[323]

Learn more about Ting's Fiber Rollout in Centennial

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."^[324]^[325]

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.”^[326]

Learn more about Ting Fiber's Rollout in Charlottesville

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.^[327]

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.^[328]

Read more about Ting's Internet Privacy Policy

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.^[329]

See Historical Quotes for TCX

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.^[330]

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.^[331]

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.^[332] 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.^[333]

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.

Learn more about Ting Fiber's Rollout in Centennial

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.^[334]

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.^[335]

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.^[336]

Read more about Insider Activity at Tucows

Read Tucows and the Dog That Did Not Bark in the Night July 28, 2016

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.^[337]

"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."^[338]

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."^[339]^[340]

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.”^[341]

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.”^[342]

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.^[343]

Learn more about Ting Fiber's Rollout in Holly Springs

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."^[344]

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.^[345]

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."^[346]

Learn more about Ting Fiber's Rollout in Centennial

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.^[347] 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."

Read Tucows Annual Report with the SEC March 8, 2017

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.^[348]

Read more about Ting Fiber's Rollout in Charlottesville

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.”^[349]

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.^[350]

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.

Learn more about Ting Fiber's Rollout in Centennial

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."^[351]

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.”^[352]

Learn more about Ting Fiber's Rollout in Holly Springs

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.”^[353]

Read more about Ting Fiber's Rollout in Holly Springs

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.^[354]^[355]

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.^[356]

Learn more about Ting Fiber's Rollout in Sandpoint

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.^[357]

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."^[358]

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.^[359]

Learn more about Ting Fiber's Rollout in Sandpoint

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.^[360]

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.^[361]

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.^[362]^[363]

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."^[364]

"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."^[365]

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."^[366]^[367]

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.^[368]

* January 12, 2017: Brad Burnham at Union Square Venture Joins Tucows Board of Directors

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.”^[369]

Learn more about Ting Internet's Deployment in Westminster

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.^[370]

Learn more about Ting Internet's Deployment in Holly Springs
February 8, 2017: Hugh Pickens Projects The Number of Ting Internet Customers and Gross Margins Resulting from the 2017 CapEx Spend

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:

Tucows' (TCX) Q4 2016 Results February 7, 2017
2016 Q3 Consolidated Balance Sheets February 7, 2017
Tucows' (TCX) CEO Elliot Noss on Q4 2016 Results - Earnings Call Transcript February 7, 2017

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.^[371]

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.^[372]

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. ^[373]

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.^[374]

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."^[375]

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.^[376]

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.^[377]

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.^[378]

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."^[379]

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."^[380]

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."^[381]

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."^[382]

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."^[383]

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."^[384]

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. ^[385]

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."^[386]

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."^[387]

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."^[388]

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.^[389]

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."^[390]

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.^[391]

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."^[392]

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.^[393]

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.^[394]

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.^[395]

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."^[396]

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. "^[397]

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.^[398]

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"^[399]

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."^[400]

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."^[401]

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."^[402]

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.^[403]

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."^[404]

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."^[405]

Learn more at:

February 8, 2017: Hugh Pickens Projects The Number of Ting Internet Customers Resulting from the 2017 CapEx Spend

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."^[406]

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."^[407]

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."^[408]

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."^[409]

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."^[410]

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."^[411]

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%."^[412]

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.^[413] 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.^[414]

"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!"^[415]

January 12, 2017: Brad Burnham Joins Tucows Board of Directors

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.^[416] "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."^[417]

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."^[418]

According to Fortune Magazine RingPlus has 90,000 wireless customers.^[419]

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.^[420]

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."^[421]

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.^[422]

Learn more about Ting Fiber's Rollout in Centennial

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.”^[423]

Learn more about Ting Fiber's Rollout in Holly Springs

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.^[424]

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.^[425]

Learn More about Ting Fiber in Sandpoint

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.”^[426] 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."

Learn More about Ting Fiber in Centennial

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.^[427]

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.^[428]

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."^[429]

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."^[430]^[431]

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."^[432]

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

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.

Learn More about Ting Fiber in Holly Springs

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.^[433]

Learn More about Ting Fiber in Holly Springs

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.^[434]

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."^[435]

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.”^[436]

“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.”^[437]

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.^[438]

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.^[439]

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.”^[440]

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.”^[441]

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.^[442] 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.^[443]

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."^[444]

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.).^[445]

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.^[446]

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.”^[447]

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:

October 20, 2015: Holly Springs is Set to be the Next Ting Internet Town
November 5, 2015: Ting Internet Hopes to Start Servicing Customers in Holly Springs in Summer 2016
November 18, 2015: Ting Internet is now assessing demand in Holly Springs and the expects the first customers to come online around early summer.
January 14, 2016: Ting Fiber Begins Pre-Orders for Holly Springs
February 9, 2016: Ting Fiber is Active in Holly Springs NC
May 9, 2016: Ting Internet Has Launched a Campaign to Measure Demand in Charlottesville and Holly Springs
June 1, 2016: Fiber Network Construction in Holly Springs to Begin in August 2016. The initial roll-out plans include Holly Glen, Holly Pointe, Autumn Park and Morgan Park.
August 8, 2016: Ting Internet Expects to Have Homes in the neighborhood of Holly Glen in Holly Springs Connected by the end of 2016
November 7, 2016: Ting Internet Expects to Light Up the First Customers by the End of 2016 and get to around ten thousand serviceable addresses throughout Holly Springs by the end of 2017
January 17, 2017: Ting Connects First Fiber Customer in Hollys Springs
January 17, 2017: Phase 1 construction is now complete in the neighborhoods of Holly Glen, Braxton Village and Holly Pointe and construction is underway in the Phase 2 neighborhoods of Oak Hall, Windcrest, Morgan Park, Windward Pointe.

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.^[448]

"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.”^[449]

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.^[450] Burnham currently serves on the boards of Indeed, Pinch Media, Tumblr, Wesabe, Adaptive Blue, SimulMedia, UpCompany, Meetup, and Bug Labs.^[451]

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.^[452]

"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."^[453]

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."^[454]

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.^[455]

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.^[456]

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.^[457]

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.'”^[458]

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.^[459]

See also:

Tucows' (TCX) Q3 2016 Results November 7, 2016
2016 Q3 Consolidated Balance Sheets November 7, 2016
Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript November 7, 2016

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.^[460]

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.^[461]

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.^[462]

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.^[463]

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."^[464]

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.^[465]

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.^[466]

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."^[467]

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."^[468]

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."^[469]

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."^[470]

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."^[471]

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."^[472]

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."^[473]

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."^[474]

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."^[475]

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.^[476]

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."^[477]

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."^[478]

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."^[479]

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."^[480]

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."^[481]

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."^[482]

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."^[483]

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."^[484]

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."^[485]

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."^[486]

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."^[487]

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." ^[488]

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."^[489]

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%."^[490]

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. "^[491]

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."^[492]

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."^[493]

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.^[494]

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.^[495]

"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."^[496]

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."^[497]

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.

Learn More about Ting Fiber in Holly Springs

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.

Learn More about Ting Fiber in Holly Springs

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^[498]

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.^[499]

Read Tucows and the Dog That Did Not Bark in the Night July 28, 2016

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."^[500]

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.^[501]

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."^[502]

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.^[503]

Potential Impact of Fiber Penetration in Centennial on Tucows' Quarterly Earnings October 10, 2016

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.^[504]

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.

Learn more about Ting Fiber's Rollout in Centennial

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."^[505]

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.^[506]

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.^[507]

Read Tucows and the Dog That Did Not Bark in the Night July 28, 2016

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.^[508]

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.^[509]

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.”^[510]

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.^[511]

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.”^[512]

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.^[513]

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:

Tucows' (TCX) Q2 2016 Results August 8, 2016
2016 Q2 Consolidated Balance Sheets August 8, 2016
Tucows' (TCX) CEO Elliot Noss on Q2 2016 Results - Earnings Call Transcript August 8, 2016

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.^[514]

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.^[515]

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.^[516]

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."^[517]

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.^[518]

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. "^[519]

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^[520]

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."^[521]

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.^[522]

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."^[523]

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. "^[524]

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.^[525]

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."^[526]

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. "^[527]

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."^[528]

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."^[529]

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.^[530]

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.^[531]

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.^[532]

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.^[533]

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.^[534]

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."^[535] 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."^[536]

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."^[537]

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.^[538]

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."^[539]

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."^[540]

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. "^[541]

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."^[542]

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.^[543]

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."^[544]

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.^[545]

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."^[546]

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.^[547]

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.^[548]

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."^[549]

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.^[550]

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."^[551]

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."^[552]^[553]

"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.^[554] 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."^[555]

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.^[556]

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."^[557]

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."^[558]^[559]

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."^[560]

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.

Learn more about Ting Fiber's Rollout in Westminster

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."^[561]

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.^[562]

“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.^[563]

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.^[564]

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"^[565]

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?"^[566]

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.^[567]

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.^[568]

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.^[569]

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:

Tucows' (TCX) Q1 2016 Results May 9, 2016
2016 Q1 Consolidated Balance Sheets
Tucows' (TCX) CEO Elliot Noss on QQ1 2016 Results - Earnings Call Transcript May 9, 2016

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.^[570]

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. ^[571]

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.^[572]

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."^[573]

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."^[574]

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.^[575]

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."^[576]

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.^[577]

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."^[578]

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."^[579]

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."^[580]

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."^[581]

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."^[582]

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."^[583]

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." ^[584]

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.^[585]

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."^[586]

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."^[587]

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."^[588]

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."^[589]

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."^[590]

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."^[591]

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.^[592]

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."^[593]

May 9, 2016: Domains Had a Steady Quarter

Tucows Continues to See Steady Performance in the Domains Business

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that Tucows continues to see steady performance in our domains business. "Our retail channel Hover turned in another strong quarter, with revenue up 19% year-over-year and net cash contribution up 32%. The Hover customer base grew another 15% from the end of Q1 last year. The renewal rate at 82% is very strong relative to the industry and remarkable for a pure-play domain service. In our wholesale channel, average margin remains strong in Q1, up 6% from Q1 of last year, as we continue to benefit from our shift in sales mix to higher margin registrations. We are also quite pleased with how our reseller base has evolved and our volumes have endured, despite what could have been unfavorable trends in the web hosting industry."^[594]

There Are Two Unfavorable Trends in the Web Hosting Industry

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that there are two unfavorable trends in the web hosting industry. "First, traditional web hosts, which have been the core of our reseller base, since the launch of OpenSRS have lost market share to new website building services. Second, many of those traditional web hosts among our resellers have been acquired by large registrars. At the same time, however, we have refreshed our reseller base and replace that volume by landing some of the most successful brands in that class of site building services, including company's like Squarespace and Shopify. These services and others like them have made it dead simple to build a website and conduct online. They continue to gain share and to welcome new users into the category, and we're thrilled to be along for the ride. Our renewal rate was a bit lower again this quarter, as few large resellers that had left us continue to transfer domains away upon renewal. This is not representative of our larger base and our overall renewal rate remains strong relative to the industry. We added 16 new gTLDs in Q1. This is fewer than we had added in recent quarters, and we do expect the quantity of new gTLD launches to slow as the program matures. That said, we expect the quality of the new adds to pick up, as some of the most anticipated TLDs under contention are resolved. The number of resellers who have registered at least one new gTLD expanded to more than 2,500. That's up about 7% from the end of Q4 and 30% from Q1 last year."^[595]

The Acquisition of Melbourne IT Was an Excellent Opportunity

Elliot Noss told analysts during the 2016 first quarter earnings conference call on May 9, 2016 that the acquisition of Melbourne IT was an excellent opportunity to acquire a loyal profitable base of resellers that share the same core needs as our existing wholesale customers. "The quarter saw us take advantage of our leadership in our wholesale domains business through acquisition of the international reseller channel of Melbourne IT. To be clear, by international I mean everything outside of their domestic markets of Australia and New Zealand," said Noss. "This was an excellent opportunity to acquire a loyal profitable base of resellers that share the same core needs as our existing wholesale customers. In total, the deal added 1.6 million domain names under management that generate $13 million in annual revenue and $2 million in gross margin, for which we paid $6 million. We expect to generate a little bit of operating synergy from the acquisition. But given that we didn't acquire any operations, there isn't much more on the expense side than a few hundred thousand dollars. There are some additional service opportunities that we will explore in that we offer a much broader range of ccTLDs and new gTLDs."^[596]

May 3, 2016: Tucows Bans Ads, Phony Download Buttons from Software Download Site

Tucows reported on May 3, 2016 that they have banned deceptive ads, hidden download buttons, pop-ups, flypaper, toolbars and other such Internet nastiness from the the nearly 40,000 software titles it hosts for users on it's download sites. “On the Tucows downloads site today, you’ll find no flashing ads. No toolbars. No pop-ups,” said Elliot Noss, CEO of Tucows. “You might see a few plugs for other Tucows services, but nothing too egregious… and certainly not anything that’s pretending to be a download button.” With Tucows’ success in wholesale and retail domain names and more recently with mobile phone service (Ting) and fiber Internet (Ting Internet), tucows.com/downloads has become less relevant when looking at the balance sheet. “We don’t lightly walk away from opportunities or revenue,” said Noss. “In the end, though, we’d rather have the Tucows name associated with good; with a belief in the power of the Internet to affect positive change. An ad-heavy site that packages browser toolbars along with every download isn’t something we want people to think of when they hear ‘Tucows,’."^[597]

April 14, 2016: Google Working on Technology to Beam Wireless High Speed Internet Directly to the Home

Re/Code reported on Apri 14, 2016 that Google is working on a plan to beam wireless broadband directly into homes. If Google can figure out how to make the technology work, it would solve the expensive “last mile” problem that broadband companies usually tackle by stringing a web of wires directly into homes and giving Google’s parent, Alphabet, which runs Fiber, a plausible path to build out a nationwide network that could go head to head with broadband incumbents like AT&T, Verizon, Charter and Comcast. Access CEO Craig Barratt, who oversees Fiber, said the company is working on connecting wireless towers to existing fiber lines, and that it is “experimenting with a number of different wireless technologies” to make that happen.

Barratt said that wireless high speed internet would not displace fiber but would complement fiber in low density environments where it is too expensive to run fiber. "One of the things that is intriguing about wireless is that it allows you reach houses and users that are in lower density settings — where fiber becomes too expensive. So providing fixed wireless services using some of the technologies we think are ways of accelerating our deployments. We think, over time, there will be a sort of heterogeneous mix of technologies that we can use, depending upon the type of problem we’re trying to solve."

Barratt added that Google is serious about fiber as a business. "Overall, it’s a space that’s really ripe for innovation, both in terms of the core technology and also different approaches to the business model. And I think that will have long-term impact on the fundamentals of the business and help us shape how we invest going forward," says Barrat. "There’s huge interest among the cities because they see such a profound benefit of having cutting-edge Internet in their city. The cities are very important partners to us — they can help private sector investment create benefit for the city and the residents.^[598]

April 9, 2016: Google Fiber Drops Free Basic Service in Kansas City

Consumers in Kansas City can get $70 gigabit internet access from Google, but there has usually been a far more frugal option: you could get free 5Mbps service if you were willing to pay a construction fee. John Fingus wrote in Engadget on April 9, 2016 that Google has quietly dropped that free tier in Kansas City, its first Fiber area, and has replaced it with a 100Mbps option that costs $50 per month. Anyone using the free tier has until May 19th to say they want to keep it. According to Endgadget, this could reflect a broader change in Google's fiber strategy. "Simply put, Google has fiercer competition from incumbent carriers -- it may have to offer a fast-but-affordable selection to get those customers for whom the gigabit option is either too costly or sheer overkill," says Fingus. "Whatever the motivations, Google is clearly beyond the days when Fiber was merely an experiment in very high-speed internet access -- it has to be a money-maker."^[599]

April 5, 2016: Elliot Noss: Ting Fiber is Looking for a Few Good Mayors

Peter Nowak published an interview with Tucows CEO Elliot Noss at Alphabeatic on April 5, 2016 where Noss talks about bringing super-fast fiber broadband to underserved U.S. cities focusing on smaller towns like Charlottesville, Virginia (population: 44,000), Westminster, Maryland (population: 18,000), Holly Springs, North Carolina (population: 29,000), and Sandpoint, Idaho (population: less than 10,000). Noss says Ting decided to get involved in a hundred-billion-dollar market because "everybody hates the competitors." "The internet is today being serviced by old retrofitted telephone or television infrastructure and nobody will build proper infrastructure."

Noss says that as far as finding markets to go into, it’s a seller’s market for Ting Fiber because there are not a lot of companies for cities and towns to partner with. "We’re partnering only with cities and towns that have already decided they want a gig [network], their business model and are kind of at the point of ready-to-go," says Noss. "We’re only dealing with cities and towns that have made the decision – the enlightened decision – that they want gigabit and they understand what business model they’re going to go with."

Noss says that Ting isn't getting involved in providing fiber in Canada because "there aren’t the people screaming who had to engage in self help from the bottom up like there are in the U.S. In the U.S. you have much more noise and political action on a municipal level on this issue. We have loads of mayors talk about their citizenry complaining about their internet access all the time." According to Noss the U.S. has had a burgeoning municipal fibre movement for six to eight years but in Canada, there is nothing and that no mayor in Canada has ever contacted Tucows about fiber broadband. "I try to say whenever I can that no mayor [in Canada] has contacted me and I hope that gets in print enough that a mayor contacts me."^[600]

March 29, 2016: Elliot Noss: Does Building Fiber Internet in a Small Town Make Economic Sense?

Tucows CEO Eliot Noss has a new "Ask an Exec" video on the Tucows Web site where he discusses whether building fiber internet in a small town like Sandpoint makes economic sense. Sandpoint is a smaller market that anything Tucows has looked at before and anything that any commercial provider has looked at. But according to Noss, Sandpoint has some reasonable density with over 1,000 per square mile density. "The experiment is a simple one," says Noss. "Sandpoint has one other characteristic that no other market that Google Fiber or any of the other fiber providers have ever gone into. The best internet connection you can buy in Sandpoint today is about 11 MB/sec. That is extremely slow. We have been told by people in Sandpoint that their internet connectivity is slow, unreliable and expensive. The task is a simple one. You are going into a market where obviously the overhead will be a little higher than in another market but building costs should be similar at the per home level. Does that extra take-up rate that you get by having that dearth of competition make up for that bit more overhead in operating?"

Noss says that there are efficiencies in operating in the four current Ting Internet towns and that the number one efficiency is that Ting Fiber is learning more lessons. "We need to be a learning machine. We are getting better at how to do a roll out, how to do a build. Holly Springs is the first Ting town where we are going at it in the way we will for the next four or five years. We are doing a bunch of marketing before we are live in the market. We are doing pre-orders. This is the right way to roll out in a town. The efficiencies are just around the general learning operationally."

Noss says that Ting Fiber will continue to do customer service out of Ting's two customer service centers. All of the back office operation is all very centralized. In a local operation Ting will have a town manager, Ting will have a local retail presence and Ting will have some local presence around installation and maintenance. After that what we do will be idosyncratic to every town.

Noss says that it is a trueism that the first person to build fiber in a community is probably the last person to build fiber and that we are really in the early days of bringing fiber to North America. There is basically "Google Fiber and Ting Fiber - where is everybody else? We think there will be tens and maybe hundreds of companies like us bringing fiber across North America. There are 20,000 towns. This is not a land rush. It is going to take place over 15 or 20 years and there is lots of room for hundreds of competitors."^[601]

March 29, 2016: Elliot Noss: Ting Fiber Expects to Have a TV Product by the End of 2016

Tucows CEO Eliot Noss has a new "Ask an Exec" video on the Tucows Web site in which he says that Ting Fiber expects to have a tv product on the market by the end of the year. "The reason we want that is to increase the take rate of the internet product. We don't view it as product in and of itself. Customers say I am not happy with my current provider. I don't really want to deal with them at all."^[602]

March 28, 2016: Does Building Fiber Internet in a Small Town Like Sandpoint Make Sense?

By population, Sandpoint, ID and the Greater Sandpoint Area makes for the smallest potential Ting town that we've considered.

Learn more about Ting Fiber's Rollout in Sandpoint

March 28, 2016: What's to Stop Another Provider Trying to Take Over a Ting Town?

Incumbents are taking notice in some Ting towns. What's to stop them trying to lay fiber and compete on a more even playing field?

March 28, 2016: Does Ting prefer to own the network? Or light the network?

Should a city or town own the fiber networks? Or should they look to the private sector to bring better Internet to its people.

March 28, 2016: Where Does Ting Internet Find Efficiencies Between Towns?

When you're laying and lighting geographically separated fiber networks, you learn a thing or two along the way.

March 28, 2016: Should an Internet Provider Have a TV Product? What's Up with Ting TV?

People are used to getting TV service from the same people that provide them Internet.

March 28, 2016: How Can a Town Make Itself More Attractive to a Fiber ISP?

Fiber infrastructure is the new major highway project, connecting smaller cities and towns to the world and levelling the playing field. Stands to reason, cities and towns across the US want it.

March 15, 2016: Tucows to Acquire Melbourne IT’s International Wholesale Domain Reseller Channel

Globalnewswire reported that Tucows announced on March 15, 2016 that it has entered into a definitive agreement to acquire the international wholesale domain reseller channel of Melbourne IT Limited (ASX:MLB). The acquisition will add hundreds of resellers and approximately 1.6 million domains under management to Tucows’ OpenSRS wholesale domain business. Tucows will not acquire any of Melbourne IT’s operations and the transaction will be immediately accretive to earnings. “This acquisition represents an excellent opportunity to acquire a loyal, profitable base of resellers that have the same core needs as our existing wholesale customers. Importantly, the scalability of our OpenSRS platform allows us to meaningfully expand our base of domains under management while adding minimally to our operating costs,” said David Woroch, Tucows’ EVP Domains. “Wholesale domain services for web hosting companies and ISPs has been a core component of the Tucows business for more than 16 years. Today, we are one of the largest wholesale domain name registrars in the world and the step function growth from this transaction will allow us to even better leverage our platform as we continue to invest in the business.”^[603]

March 11, 2016: Elliot Noss Says the Long March to Fiber Will Take Many Roads

Tucows CEO Elliot Noss wrote on the Ting Blog on March 11, 2016 that the United States is a long way from a truly competitive market for broadband but how cities get "fibered up" depends a lot on local variables. "I speak with mayors and city leaders all over the country. Most prefer a private partner to provide the capital and engage in the construction project required to build a fiber network. It is simply easier politically, economically and bureaucratically" says Noss. "I tell every mayor I speak with that if I were them, I would build it myself and have the city own this most important piece of infrastructure. This would allow them to ensure that their citizens receive high levels of Internet service, both speed and reliability, and customer service." But building a municipal fiber network sufficient to provide Fiber-to-the-home (“FTTH”) is rare, expensive and takes a long time to build. "It is also worth it and should be done everywhere! But it won’t be and I think it is important that we respect and understand the different choices that will be made. For most cities today, having a private partner will be their only choice and getting that symmetrical gigabit fiber network is more important than how they get it."

According to Noss all the talk of competition and open access is nice, but is unlikely to happen in the US for a long (long) time. "There are currently tens of markets with true symmetrical gigabit fiber connections broadly available. There are nearly twenty thousand who will have them available over the next twenty years. Ting Internet, and others who will follow us, will rightly look at unserved markets before going into a market like Huntsville and competing. What IS truly important is the spectre of competition, which a network owned by the city provides. This will serve to keep suppliers on their toes and, in and of itself, should be enough to create much higher service levels than the abyssmally low ones we find today. When we at Ting Internet are entering a new market, of course we look at the existing cableco and telco situation in a city or town, but we do not consider it truly competitive any more than a horse drawn carriage is competitive with a car."

Noss concludes that solutions to creating fiber infrastructure are as unique as the cities and towns they will inhabit. And most importantly, there is unlikely to really be any competition inside of markets until much later in this long march to fiber. "For now, let’s those of us who view the fiberization of North America as a mission [...] focus on what we can do to get as many cities and towns fibered up as we can. Then let’s turn our mind towards competition."^[604]

March 9, 2016: Tucows Files 10-k for FY2015

Tucows 10-K for FY2015 March 9, 2016

Analysis to come

March 7, 2016: Joichi Ito Resigns from Tucows Board of Directors

Tucows filed a Form 8-K with the SEC on March 7, 2016 for a Change in Directors or Principal Officers stating that on March 1, 2016, Tucows Inc. (the "Company") received a written letter of resignation from Joichi Ito stating that Mr. Ito resigned, effective immediately, from his position on the Board of Directors (the "Board") of the Company. Mr. Ito's resignation from the Board is not a result of any dispute or disagreement with the Company.^[605]

Ito is a Japanese-American activist, entrepreneur, venture capitalist and Director of the MIT Media Lab who has received recognition for his role as an entrepreneur focused on Internet and technology companies and has founded, among other companies, PSINet Japan, Digital Garage and Infoseek Japan. He maintains a blog, a wiki and an IRC channel. Ito is the chairman of the board of PureTech Health. Ito is a board member of Sony Corporation, The New York Times Company, the John S. and James L. Knight Foundation, the John D. and Catherine T. MacArthur Foundation, and General Partner of Neoteny Labs.^[606]

Ito joined Tucows' Board of Directors on December 15, 2008.^[607]

March 2, 2016: Ting to Bring Fiber to Greater Sandpoint, Idaho

Sandpoint, Idaho. Ting Fiber has announced plans to bring crazy fast fiber Internet to the Greater Sandpoint, ID area including the towns of Sandpoint, Dover, Ponderay and Kootenai. Comsumers in those towns can pre-order Ting Internet at ting.com/sandpoint as part of the initial “demand assessment” phase. Assuming there is sufficient demand for fiber, network construction would begin later in 2016. Photo: Wikipedia

Nasdaq reported on March 2, 2016 that Ting Fiber has announced plans to bring crazy fast fiber Internet to the Greater Sandpoint, ID area including the towns of Sandpoint, Dover, Ponderay and Kootenai. Comsumers in those towns can pre-order Ting Internet at ting.com/sandpoint as part of the initial “demand assessment” phase. Assuming there is sufficient demand for fiber, network construction would begin later in 2016.

“Internet speed and infrastructure is an issue that is on the national agenda,” said Elliot Noss, CEO of Ting and its parent company Tucows. “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’re always happy to team up with towns and cities that get it,” said Adam Eisner, Director of Networks for Ting. “Gigabit fiber is the next generation of Internet access and it will power the next generation of ideas.”

“If there’s one industry that needs Ting perhaps even more than mobile, it’s cable and Internet access,” said Noss. “For too long, people and businesses have had no choice, or at best the illusion of choice, as to who provides them with access. They have been held hostage by contracts and forced under bandwidth caps. We’re changing that.”^[608]

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that entering three to five new markets in 2016 is still possible but there are two caveats. "One, sometimes municipal processes move a little slower than one would like and I think that as we get further incidence we see more of that, but two, and probably more importantly, it’s going to be about the number of homes we pass as much as it's going to be about the number of markets. So we’ve got a couple slightly larger markets that were looking at and we might do little bit less in terms of number of markets but the same amount of kind of fiber in the ground. So I do want to put that caveat out there as well."^[609]

Sandpoint (Ktunaxa: kamanqukuǂ[4]) is the largest city in, and the county seat of, Bonner County, Idaho.[5] Its population was 7,365 at the 2010 census. Sandpoint lies on the shores of Idaho's largest lake, 43-mile-long Lake Pend Oreille, and is surrounded by three major mountain ranges, the Selkirk, Cabinet and Bitterroot ranges. It is home to Schweitzer Mountain Resort, Idaho's largest ski resort, and is on the International Selkirk Loop and two National Scenic Byways (Wild Horse Trail and Pend Oreille Scenic Byway). Among other distinctions awarded by national media in the past decade, in 2011 Sandpoint was named the nation's "Most Beautiful Small Town" by Rand McNally and USA Today. Interesting enough, Sandpoint is the birthplace of Sara Palin, the controversial Republican vice-presidential nominee in 2008. Sandpoint is also the birthplace of Ben Stein, lawyer, writer, political commentator and actor, who had a major supporting in the 1986 classic John Hughes comedy, Ferris Bueller's Day Off.^[610]

March 1, 2016: Ting Mobile Slashes International Call Prices

Telecompaper reported on March 1, 2016 that Ting Mbile has announced improved international calling rates for all of its customers, offering much lower rates to call over 150 countries. Pricing is identical on both the GSM and CDMA services and international calling is now enabled by default on all Ting accounts. The prices start at USD 0.01 a minute to Canada and Mexico, down from USD 0.15 and USD 0.20 respectively. Examples of other popular destinations include China, the Philippines and the UK, which now all cost USD 0.02 a minute, compared to USD 0.10, USD 0.52 and USD 0.52 respectively.^[611]^[612]

March 1, 2016: Centennial City Council Approves Fiber Master Plan

The City of Centennial, Colorado reported that in March, 2016, the Centennial City Council approved a Fiber Master Plan and allocated $5.7 million for its implementation. Today, that plan is taking shape and includes the build-out of approximately 50 miles of new backbone fiber. Construction is expected to start before the end of 2016; with an estimated 18 to 24 months until the City’s entire fiber backbone build is complete. The City is continuing discussions with our community anchor institutions, such as fire districts, the Sheriff’s Office, the school districts, and Stormwater Authority, among others, who will have the option to use the City’s backbone fiber as the project moves forward.

Access to high capacity, affordable Internet is considered a key economic driver in today’s economy, and a necessity for business productivity, attraction and retention. It can also result in better public services such as traffic management, enhanced public safety, and telehealth opportunities. Creating this fiber backbone will enhance the connectivity of our community; meaning that any interested party can connect to our fiber backbone via a non-exclusive lease arrangement in order to provide high-speed Internet and telecom services to its customers.^[613]

February 28, 2016: Ting Fiber Expects to Finish Wiring Charlottesville Within the Year

Charlottesville Tomorrow reported on February 28, 2016 that Ting Fiber expects to have the infrastructure in place to serve the entire city of Charlottesville within the year. “We are moving into Fifeville, [Jefferson Park Avenue] and the Fry’s Spring neighborhoods,” said Baylor Fooks, co-founder of Blue Ridge InternetWorks which was acquired by Ting Fiber in 2014. “We have coverage in those neighborhoods; we are just waiting for the rest of the poles to be permitted.” To serve a new neighborhood, Ting must string fiber-optic cables to existing utility poles, a process that requires permitting. “We spent a great deal of our first 12 months getting permits and essentially upgrading utility poles so they are ready for us to attach to,” Fooks said. “That process took a little longer than we had hoped.” Getting the fiber-optic cables required for Ting’s service installed across town has been challenging, thanks to deteriorating utility poles and other utilities getting priority, Fooks said.

Once a neighborhood has the requisite infrastructure, Ting still must run fiber-optic cables to individual houses before service can start. That process is not cheap: the services come with a $399 setup fee. For North Downtown customer Ricardo Padron, the initial expense has been worth it. “The install was $400, and we got it for $200 through a special offer,” he said. “I think it should pay for itself inside a year, but that was my one issue, the expense.” Once the house has been wired, customers pay $89 a month for the gigabit service, according to Ting’s website. With Ting installed, Padron and his family canceled their Comcast cable service and have not looked back. In the absence of cable TV, the Padrons rely on streaming services such as Netflix. “We realized that we didn’t watch a lot of cable, we were mostly streaming, and we weren’t satisfied with Comcast Internet,” he said. “The streaming is beautiful. We have noticed that the picture quality is markedly better.”

With citywide availability about a year away, Ting has its sights set on eventual expansion into Albemarle County. Making the leap from urban to rural service provider promises bigger challenges, Fooks said. “It definitely becomes a more difficult problem the less dense the community is,” he said. Without help from the Albemarle government, expansion much past the urban ring will be tough. “The rural communities that have been successful in attracting fiber companies like Ting have made all these resources available to the private sector,” Fooks said. Albemarle has issued a request for proposals for a plan to extend high-speed Internet to the more remote parts of the county, and fiber-optic will be a crucial part of the infrastructure.^[614]

February 16, 2016: Ting Fiber is Finalizing its Plan for Holly Springs

The Triangle Business Journal reported on February 16, 2016 that Elliot Noss says Ting Fiber is in the middle of a “demand generation exercise” to figure out if there’s sufficient interest in Holly Springs. "For the next few weeks, not only is the company gauging Holly Springs’ interest, but it’s also evaluating which neighborhoods are most interested in fiber," writes Lauren K. Ohnesorge. "Should there be a roll out as planned, it’s likely those neighborhoods would be targeted first." Noss says the Ting Fiber plans to invest between $3 million and $6 million in Holly Springs in 2016. “That will allow a significant portion of the city to have access to fiber,” says Noss. “Most of that will go toward network engineering and construction, which we’re hoping to start shortly.” Ting Fiber plans to invest in local staff, facilities and network equipment in Holly Springs. The number of staff hired will depend on what the final plan is, he says – “and what skills and people we can find locally.”^[615]

February 9, 2016: Tucows Announces Strong Growth in Fourth Quarter

Chart 1: Stock Price Chart for TCX from January 1, 2012 through February 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 498% since January 1, 2012. The S&P 500 has risen 44% 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 Ting (Before Taxes and Other Expenses) (Click on chart to expand.)

Tucows EBITDA Per Quarter (Click on chart to expand.)

See also:

Tucows' (TCX) Q4 2015 Results February 9, 2016
2015 Q4 Consolidated Balance Sheets
Tucows' (TCX) CEO Elliot Noss on Q4 2015 Results - Earnings Call Transcript February 9, 2016

Quarterly Revenue Increased 16% YOY

Tucows announced on February 9, 2016 that revenue for Q4 surpassed the $45 million mark for the first time bringing the total for the year to almost $173 million, representing year-over-year growth of 16% and 17% respectively. "Over the course of the year, we saw steady growth in the gross margin contribution of Ting Mobile as the customer base expanded," said Tucows CEO Elliot Noss. "In fact, the fourth quarter marked the milestone of sorts as, for the first time, the gross margin contribution of our network access business exceeded that of our domain services business."^[616]

Net Income for the Year Increased 82% YOY

Tucows announced on February 9, 2016 that net income for the full year came to $11.4 million or $1.04 per share, an 82% increase from $0.57 per share in Q4 of 2014. Net income for the fourth quarter of 2015 increased to $3.1 million or $0.29 per share from $1.9 million or $0.16 per share in Q4 of 2014.^[617]

Adjusted EBITDA for the Year Increased 70% YOY

Tucows announced on February 9, 2016 that adjusted EBITDA for the year came in at $25.6 comfortably above Tucows' increased guidance of $25 million and representing year-over-year growth of 79% for the quarter and 70% for the year.^[618]

Tucows Provides Guidance of $30 million Adjusted EBITDA for 2016

Tucows announced on February 9, 2016 that the company is providing adjusted EBITDA guidance of $30 million, up from the $25 million achieved in 2015. "We note that this includes a roughly $2.5 million benefit from the continued decline of the Canadian dollar as well a roughly $2.5 million operating investment in the Ting Internet business as it gets off the ground.," said Noss. "We feel good about this number as striking nice balance between growth and investing in the future."^[619]

Tucows Had a Decrease of $4.1 Million in Cash Flow from Operating Activities

Michael Cooperman reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows had a decrease in cash and cash equivalents of $4,175,107 from the end of the previous quarter. "Turning to the balance sheet, cash and cash equivalents at the end of Q4 2015 was $7.7 million compared with $11.9 million at the end of Q3 2015 and $8.3 million at the end of Q4 2014. The decrease relative to the end of Q3 is primarily the result of our using $5.4 million during the most recent quarter to repurchase just over 231,000 shares under our open market share buyback program," said Cooperman. "We also used $1.3 million for payment of withholding taxes on the net exercise of stock options by employees and directors. In addition, we invested just over $900,000 to acquire additional property and equipment, the majority of which was invested in expanding Ting's Internet fiber footprint. These uses of cash were partially offset by positive cash flow from operating activities of approximately $1.5 million."^[620]

Tucows Invested $0.9 million, Primarily in Ting Fiber

Michael Cooperman reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows invested just over $900,000 to acquire additional property and equipment, the majority of which was invested in expanding Ting's Internet fiber footprint.^[621]

Tucows Repurchased 231,000 Shares in Q4 for $5.4 million

Michael Cooperman reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows spent $5.4 million during the most recent quarter to repurchase just over 231,000 shares under our open market share buyback program.

Elliot Noss added that "that brought the total number of shares repurchased under the open market program to just shy of 850,000. With another 194,000 purchased under the Dutch Tender earlier in the year. In total, in 2015, we repurchased a little over 1 million shares or a little more than 9% of shares outstanding at the end of 2014 for a total investment of $23.6 million."^[622]

Tucows Board Approves Up to $40 million for Stock Buybacks in 2016

Tucows announced on February 9, 2016 that its Board of Directors 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 February 10, 2016 and will terminate on or before February 9, 2017. The Company’s previous buyback program, which commenced February 16, 2015 and was scheduled to end on or before February 15, 2016, has been terminated as the Company has repurchased approximately $20 million of its common stock, the maximum dollar amount permitted under that program. 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.^[623]

In answer to a question from Patrick Retzer, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows has raised their stock buybacks to $40 million because this year Tucows topped out of our number. "You can see just by doing the math on what we’ve announced that we missed out on some real value in the last couple of weeks or the open window of this year. I think the best answer I could give you, Pat, is EBITDA went up 60% this year and the stock is up less than 2%. I think if I’m not mistaken it closed today at less than we were tendering for in January of 2015 and we got less than 20% of that tender. So we kind of felt that markets are somewhat irrational, and if they choose to be we want to be ready. One of the things that I said in the last couple of calls and certainly talked about with the number of investors, it’s a balance and the choice between how much money we put in the ground in fiber, how much money we spend on the stock, how much money we look at other opportunities with is really about the specific opportunity that we’re looking at, at that specific time. So I just -- I can tell you about it if the stocks stayed around these prices all of next year and that could be because of the exogenous global factors, we could spend that much money."^[624]

February 9, 2016: Ting Mobile Continues to Grow

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 6,000 Accounts and 10,000 Devices in Q4 2015

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Ting Mobile added 6,000 accounts and 10,000 devices in Q4. "That brings our total to 128,000 and 202,000 devices, again, impressive numbers from zero just four years ago and 5% sequential growth in the base in a quarter is good in any business but still a disappointing finish to the year considering our stronger rate of growth up to this point."^[625]

Ting Mobile's Churn Rate Rises to 2.73%

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Ting Mobile had an uptick in churn to 2.73% for the quarter. Previous quarters had reported churn of 2.5%. "As we’ve discussed before this is partly the product of our growing and slightly more transient customer base in the GSM service. It might also reflect some ongoing follow-up from our travails with customer support following the spread changes in Q1 and likely also reflects a more difficult competitive environment as has been noted by the incumbents over the last couple of quarters in their conference calls. Importantly, we are now large enough to see meaningful gains in any small improvements to our retention."

"So we are diving deep into every bit of data at our disposal both structured and unstructured to find the drivers and predictors of churn and to launch tactics against them. We have plenty of arrows in our quiver. We have a support team now that is not only staffed to answer every call quickly and handle every issue capably but one that has started taking on proactive outbound initiatives to welcome, nurture and save. We can extend ourselves further to help customers switch devices or networks to improve their experience. We can do more to help our customers manage their usage and realize the kind of savings we know they would not be able to get with any other provider."^[626]

Tings Average Monthly Customer Spend is $37, Gross Margins Are a Little Above 50%, and Acquisition Costs are Under $100 Per Customer

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that key customer metrics on the business remain the same, average customer revenues about $37 a month, a phone bill of $23 to $24 per device, gross margins are just north of 50% and average cost for acquisition is still comfortably under $100.^[627]

Net Adds for Q1 Will Increase to 11,000 With One-Time Influx of Customers from T-Mobile MVNO PTel

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that net adds for Q1 2016 will be comfortably over 11,000 due to a one-time influx of customers from another key T-Mobile MVNO PTel that closed its doors after 15 years in the business. "Those customers will help give us the best quarter of gross adds we have ever had and likely put our net adds comfortably over 11,000. So good news for sure and it is just great to have that recurring margins starting right at the beginning of the year but we do not wanted to distract from a base line net adds trend but that we are determined to improve. As always, we will keep you apprised as we engage in the work."

In response to a question from Huberk Mak, Noss added that aside from the one time influx of customer from PTel, future net adds will be closer to Q4 than it was for the fourth quarter previous of 9,000. "But again, as is always our practice, we are going to look to know next quarter what worked and what didn't. I don’t mind unpacking because we didn’t do it in the remarks and there is a lot of stuff there that with retail we’ve seen a little bit of kind of a little ray of positivity there. We found a little bit in pile of things we’re trying that looks like it is a keeper. Now we got to keep out it, I don’t want to be too specific about it but so we’re it obviously did blow the doors off the numbers but we do see some stuff that looks it is worth keeping in the mix."

In answer to a question from David Tomljenovic, Noss added that "the PTel thing was fairly one off. We’ve always looked for customer basis on the mobile side, any banker who asks me what they can find for me in terms of assets, so if there is any banker listing out there, I always talk about mobile customer basis but it’s not only that there is a mobile customer basis that only that they want to set but it’s also that they have a pricing paradigm that allows us to migrate pretty quickly. We‘re not really super eager to run a bunch of multiple brands or leave at different price point. That kind of complexity as we got the -- is what has gotten in the incumbents in such trouble with their billing and back office and their whole customer service, and we will avoid that. So I think PTel is a little bit one off."^[628]

Ting Mobile Will Be Shifting Its Marketing Approach to Gathering Leads and Nurturing Those Leads to Conversion

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Ting Mobile will be shifting from a pure marketing approach to acquisition with a focus on driving awareness and traffic to the site, to a sales approach that includes greater effort to gather leads and nurture those leads to conversion. "So much of what we’ve done over the past four years has been intended to break the mold of how carriers typically operate including how they acquire customers because we believe there is a lot there but it’s inefficient and ineffective. We’ve been incredibly successful in this regard. Now we’re just taking a peek back at both and identifying some tactics that particularly when done in our voice and with our customer driven approach could make growing this business a bit easier."

Noss added in answer to a question from David Tomljenovic that the marketing strategy should not impact the customer acquisition cost. "We think that -- so everything we are looking at tends to come in at the margin at similar levels to what we are paying now. So when I say paying now, remember I always gear as anybody does a blended number. So what we are paying for that marginal customers certainly more expensive than that. And what we’re seeing in the things that we’re trying doesn’t really blow that number up much. Probably most importantly, David, there is such a gap in the economics of customers for us, there's such a gap between the long-term value of the customer and the customer acquisition cost that, frankly, if I could ramp it up significantly I would happily double my CAC."

In answer to a question from Hubert Mak, Noss added that "we want to kind of take some more traditional approaches but do them in our way, in a slightly different way. I don’t want to hear market better have a more clever television commercial or they’re doing the NFL Halftime Show and we'll at the NBA Halftime Show. It’s not at all like that. I think you’ve heard about some specific approaches and we think inside of those specific approaches we can do that in our voice and in our way, and really hopefully get some traction out of that."^[629]

Ting Mobile's Gross Margins Are About Right

In answer to a question from David Tomljenovic, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that gross margins in the long-term range of 45% to 50% which we think strikes a nice balance. "We are a little bit at the top end of that range. I think if we were convinced today that materially dropping price would something that would really change move the needle, we might look at it. I would note that sadly for us the place where we would most want to address price is in data pricing, and that’s the place where we have the lowest margins. So we really have the least flexibility there unless we want to start to play the breakage gate and that gets a little bit more dangerous or little bit more risky. So we think today that there is so much value still in the packages that we’re offering that we’re really looking at other things to try and sort of move the needle."

In answer to a question from Hubert Mak, Noss added that Ting Mobile does not have the absolute lowest price although for a significant portion of users we do. "I think that there is enough savings and you could still just look at the fact that the vast majority of the market I want to say high 80% of the U.S. market is with the big four carriers and we are absolutely less expensive than they are for the vast majority of users. So there is enough value in the pricing."^[630]

Ting Mobile is Extending Their Distribution Through Krogers, Staples, and Amazon.com

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Ting Mobile is extending their product distribution beyond their website for the first time with Ting SIM cards on the shelves of Kroger and Staples locations nationwide and an Amazon.com. "Now, we will seek to expand and promote these partnerships more aggressively. The early returns show that there is some potential and we have to see what this can become with some nurturing. We are also pursuing channel partnerships that we know are a big part of the acquisition mix for the major carriers. These include affinity and advocacy groups, trade associations and large employers that routinely secure special offers for their members."

In answer to a question from Pete Lanctot, Noss added that "we were lucky to get in stores just on the sell in time for the holiday season but we weren't able to do any in-store promotion or end-caps and we were able to do some of that in January. If you had been in the right Kroger you might have seen on the floor in front of the Tucows -- sorry, from the Ting SIM cards in front of all the SIM cards on that floor a big kind of team sticker I guess I'd call it on the floor. And it's things like that that we think can start to help and contribute or at least determine what the potential of these really sort of push on the potential these opportunities. And I think the other element of that is longer term, Pete, and that one of the things that we hear from our customers all the time is this version of, "I love you guys, I tell my friends about you, they have never heard of you and don’t have a clue who you are," and that hurts. And they’re telling us this because it is hurting their ability to kind of hurt their friends. So we think that things like these in-store retail displays will help that, if there is just a credibility in that, all I saw that on the aisle, on the floor that must be real. And so that’s something that really takes a fair bit of time in the oven to contribute."^[631]

Ting Mobile Is Fully Staffed At Their Call Center

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that their support team is now not only staffed to answer every call quickly and handle every issue capably but has started taking on proactive outbound initiatives to welcome, nurture and save customers. "We can extend ourselves further to help customers switch devices or networks to improve their experience. We can do more to help our customers manage their usage and realize the kind of savings we know they would not be able to get with any other provider."^[632]

Ting Mobile Is Finding that GSM Customers Are More Transient

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that GSM customers are more transient causing greater churn. "ecause GSM is a global standard, you can find phones more easily than you can with CDMA or phones with the Sprint Network, and so people tend to come and go little easier. One of the things that I talked about on earlier calls is that there is a certain percentage of the user base, for instance, Snowbirds from Canada or people who are coming over from Europe to work for a year, those people who used to potentially use CDMA now would be much more like when you use GSM phones. So we just see this higher churn level on the GSM side, we’re trying to put as fine a point on it as we can, but that’s the best way of understand it."

However Noss added that the long term value of CDMA and GSM customers is pretty similar. "When you start to sort of throw all the costs into the file, the long-term value of customers looks pretty similar and we still think the more important sort of product variable is to not confuse people by making them do things like too arbitrarily have to choose a network, people don’t understand things like that. So really what we’ve done historically we've been seeing product experience through the purchase is have the device drive it. Now we have identified a couple of places where we might be confusing people a little more than we hope and we’re in the process of cleaning those up."^[633]

February 9, 2016: Ting Fiber is Moving Ahead

Ting Fiber is Active in Westminster MD, Charlottesville VA, and Holly Springs NC

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Ting Internet continues to build both networks and brand awareness in our current towns and talk to perspective new towns. "We're now servicing business in residential gigabit Internet customers in a couple of neighborhoods in Westminster, Maryland, and are leading the next phase of the municipal fiber build there. We’re also serving customers in most parts of Charlottesville, Virginia where we are building the fiber network ourselves. We announced in Q4 and discussed here on the Q3 call that we would begin demand assessment in Holly Springs, North Carolina, a potential third Ting town. This process of demand assessment represents a simple but profound change in the way we are now managing our Ting Internet business."

"So just to run through some basic parameters in the Ting Internet business we’re now in three towns including Holly Springs with the total of roughly 35,000 potential serviceable addresses. That is addresses that we could eventually build to and service in these towns. We expect to add at least that many potential serviceable addresses again this year with new towns. We continue to benchmark the cost of building and connecting a home at roughly $2,500 and the gross margin from connecting a whole and roughly $1,000 per year." ^[634]

Tucows has Invested $900,000 in Ting Fiber this Quarter and Expects Capex Investment in Ting Fiber to be Around $15 to $20 million in 2016

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows has invested just over $900,000 to acquire additional property and equipment, the majority of which was invested in expanding Ting's Internet fiber footprint.

Noss said that he expects CapEx investment in fiber to be in the range of $15 million to $20 million. "There is some variability in this number and it really is just a best guess at this point. It should not be looked out with the same precision at EBITDA guidance. It is unlikely to be much more than that and it could possibly be less. I also note that CapEx investment in fiber is beneficial from a tax perspective."^[635]

In answer to a question from Hubert Mak, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that "the one caveat he wants to put on the $15 to $ 20 million investment is that "I did say that’s something that’s really going to evolve it’s going to depend on the speed of the builds, it’s going to depend also on the type of builds. So there is some markets that we look at as you saw in Charlottesville where we bought some fiber going in. So you could see some of that money actually spent potentially on small acquisition of a fiber network just as easily as laying fiber in the ground."^[636]

Ting Fiber Will Refine the Pipeline in 2016, Break Even in 2017/2018, and Contribute in a Real Way in 2019

In answer to a question from John Lewis, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that "in 2016, we are really sort of refining the pipeline elements. I don’t think we’re really good at it yet, but that’s what you got to do in business and get out there and iterate and learn. I think that we see all the time we watch Google fiber very closely, we see them learning lessons with every market they go into, and they're a great learning machine, so we watch them pretty closely. And there is really nobody else engaged in a similar exercise that kind of working through a pipeline, willing to go coast to coast, and willing to do gigabit fiber like that. So we think as more people come in to the market that we more learning to have."

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows investors should think about investment in 2016 and most of 2017 and that Ting Fiber should start to swing to breakeven late in 2017 or early in 2018 and contribute in a real way in 2019. "We see the investment through that time period being a reasonable one, not one that will cause EBITDA to stop consistently growing. As is our practice we will continue to share visibility as we learn and experience more and as the first markets start to ripen."^[637]

Tucows is Using a 15 year Amortization Period for Hardware in Ting Fiber

In asnwer to a question from David Tomljenovic, Elliot Noss said in the fourth quarter earnings report conference call on February 9, 2016 that Tucows is using an amortization period of "typically 15 years with some significant acceleration in the first year."^[638]

It is Still Possible Ting Fiber May Enter 3 to 5 New Markets in 2016 - With Two Caveats

In answer to a question from Patrick Retzer, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that entering three to five new markets in 2016 is still possible but there are two caveats. "One, sometimes municipal processes move a little slower than one would like and I think that as we get further incidence we see more of that, but two, and probably more importantly, it’s going to be about the number of homes we pass as much as it's going to be about the number of markets. So we’ve got a couple slightly larger markets that were looking at and we might do little bit less in terms of number of markets but the same amount of kind of fiber in the ground. So I do want to put that caveat out there as well."^[639]

Comment on January 7, 2017: Nasdaq reported on March 2, 2016 that Ting Fiber has announced plans to bring crazy fast fiber Internet to the Greater Sandpoint, ID area including the towns of Sandpoint, Dover, Ponderay and Kootenai. Comsumers in those towns can pre-order Ting Internet at ting.com/sandpoint as part of the initial “demand assessment” phase. Assuming there is sufficient demand for fiber, network construction would begin later in 2016.

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."^[640]

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.^[641]

Tucows Says There are Lots of Target Markets for Ting Fiber

In answer to a question from David Tomljenovic, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that there are lots of target markets for Ting Fiber and that that's only going to increase. "There's nearly 20,000 cities and towns in the U.S., some have political issues, many, many, many don’t. So when I talked earlier about municipal politics small p, getting in the way it’s really just about decision making processes and information flows and things like that. So we’re not in any way feeling opportunity constrain, we think there is loads of target out there and that that's only going to increase."^[642]

It is Too Early To See if Ting Fiber Will Have a Cross Branding Effect on Ting Mobile

In answer to a question from Patrick Retzer on whether Ting Fiber has seen any cross selling benefit for the Ting mobile, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Tucows has not even begin to actually market in that way and we won’t probably until Charlottesville will is the first market that’s going to ripen for us. "t will take another year or two before we are through just building out the town addressing all the MDUs of the great opportunities, we haven’t even -- there is so much turn our mind to there and what inevitably happen is you start to get some contiguous opportunities. And so, we've got a lot of need on the brand before were turning our mind to that I think. So it's naturally the case and we looked at some of the data, people are markedly with the brand, people have a good experience, they want to know about it."^[643]

Investing in Infrastucture Like Fiber Is a Very Safe and Positive Return Play

In answer to a question from Mark Miller, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that when you’re talking to banks about infrastructure and construction it’s a lot more comfortable for them. "So what I can tell you, Mark, is that what I’ve seen out in the market and by this I mean some of the other fiber builds and fiber companies and their relationships with lenders, it’s quite encouraging. There is a lot of money looking, as you know, lot of money looking for good consistent return and boy investing in infrastructure like fiber is just – it’s a very safe and positive return play."^[644]

The Current Demand for Ting Fiber in 2016 is About 7,000 Homes

In answer to a question from John Lewis, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that the current demand for 2016 for fiber is something like 7,000 homes.

John Lewis: I think the read is the current demand for 2016 for fiber is something like 7,000 homes; is that approximately right?

Elliot Noss: What did you do to get to that 7,000, was that a 20% of 35,000?

John Lewis: Yes, basically, and then I tied kind of your CapEx number.

Elliot Noss: So remember that you’re going to be based on two things there, one, that 35,000 is being finished in all three of these towns, right, and in one of these three towns it’s not our build, it’s city build. So exactly not all of these towns are going to be built; certainly Holly Springs will not be completed in 2016, we would love to get to a nice piece of it if everything checks out there. Charlottesville we will start to get pretty close but would probably spill into 2017 somewhat. And the second thing is is in the early stages of builds and Holly Springs are starting de novo. In the early stages of build, you’re also building a fair bit of mile, right, you’re not kind of -- it is tough to kind of take the CapEx spend and then just turn it into serviceable addresses. I think that as we kind of continue vary I wanted to sort of layout couple of important things here is what 2016 looks like, here's what the longer term look at the fiber business looks like, it is going to sometime in the next couple of quarters when I start to give some visibility some penetration in Charlottesville.^[645]

The Most Important Factor for Ting Fiber to Enter a New Market is the Willingness of a City to Work Together

In answer to a question from John Lewis, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that "at the very top of the list is a city willingness to kind of work closely with us, their engagement and excitement around fiber itself and so is the right infrastructure mix whether that's access to poles or conduits, whether that's sort of a preexisting fiber builds there is things like that really can make the whole exercise much, much easier. And we’re getting better at that, I think I’ve said in the last call that in '15 we were kind of learning how do I deal with the blocking and tackling and actually lighting up a customer, getting the install process down, getting the core elements of customer service."^[646]

February 9, 2016: Domain Services are Steady

Another Quarter of Solid Performance in Domain Services

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that there was 2015 was another year of solid performance from our domain services business and Q4 was no exception.

Retail was the primary growth driver there with revenue up 18% for both the quarter and the year. We continue to see contribution growth well in excess of 20% as a result of the operating leverage in the business. We expect continued solid numbers out of retail going forward based on our outstanding customer service and experience. This was once again underscored by year-over-year customer growth of more than 14% as well as the renewal rate that was well into the 80s.

In our wholesale channel increased margins per domain and reduced cost resulted in a strong year of business results. Driven by the shift in sales mix the higher margin registration, average margin for domain in Q4 was 13% year-over-year and bested the Q3 number which was the highest we’ve seen in years.

Our renewal rate on wholesale dipped just a bit in Q4 to 76%, still an outstanding rate relative to the industry. This was driven by a few large resellers that had already left our service transferring your domain names away upon renewal and is not representative of the larger base.

We added another nine new gTLDs in Q4 more importantly we now have nearly 2,400 resellers who have registered at least one new gTLD. Adoption of multiple TLDs by resellers tends to bring three distinct benefits to our business, incremental registration, increased margin per domain, and greater loyalty to our service. Contribution from our international resellers continues to grow with market outside of North America and Western Europe accounting for 28% of new registration in Q4.^[647]

Tucows Released an Additional Batch of Domain Names

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that "an additional batch of domain names acquired with the June 2006 acquisition of Mailbank.com should not be renewed and were allowed to expire. Accordingly, these domain names with a book value of $137,000 have been written off and reported as an impairment of indefinite life intangible assets."^[648]

Tucows is Not Actively Exploring the Sale of Its Domain Portfolio

In answer to a question from John Lewis on whether there is some number that Tucows would consider for the sale of its domain portfolio, Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that "we don’t think it’s a likely for us."

John Lewis: GoDaddy is gotten more active in buying domain portfolios and I went to your site and saw if you add up your 70,000 dotcoms I think the asking price is about $90 million. I know obviously it's a illiquid asset and you only sell a tiny fraction of that every year, but I know you have a lot of attractive opportunities to invest capital including aggressive share repurchases. How do you think about what rate or what discount you would take for, I mean, obviously, it's all theoretical but is there some number here that you would consider exploring a sale of that domain portfolio?

Elliot Noss: Yes, so I think that, what would I say? Probably, two things. One, we always talk to everybody. I mean, you've known us long enough to know that we're a relationship organization and so we’re always talking to everybody. Other than GoDaddy there are a not a lot of buyers for the very high end of that market. I think the second thing I'd share, Is we look at that as of practical not a strategic asset. And so the number is probably somewhere between what you trade at and what we can get today.

John Lewis: Sorry, wait just to understand what you said there. Do you mean the carrying value and what you’re asking for it?

Elliot Noss: No, no, it’s not like we have an asking price for the portfolio, it's -- we probably wouldn’t need it to be accretive at an EBIDTA level in a sale, but it’s not we haven’t seen a price that we like at all. We don’t think it’s a likely for us.

John Lewis: Okay, just for simplicity is it, I mean would you have to take is it $0.40 on the dollar of the asking price, ballpark or can you any give any kind of range on what it’s could work is it fairly significant asset?

Elliot Noss: Yes, it’s a significant asset probably to give you a range I would be compromising my ability to do the best for you with.^[649]

February 4, 2016: MVNOs: The Phone Companies People Actually Love

Bloomberg published a story on February 4, 2016 that says that MVNOs now account for 36 million (1 in 10) U.S. wireless subscriptions, roughly double their 2009 numbers while during the same time period, subscriptions at the Big Four rose 28 percent. According to Bloomberg in the old days, the US had 150 U.S. MVNOs but even with brands like Walt Disney and ESPN backing them, many failed in a matter of months, often squeezed by the cost of network capacity. Today the U.S. has about 300 MVNOs, 60 percent of them profitable, estimates Alex Besen, chief executive officer of consulting firm Besen Group. However the success of the new generation of MVNOs imposes a ceiling on how much each can grow. The Besen Group estimates that 50 to 60 MVNOs will be launched in 2016 making it tough to make new MVNOs stand out.

Driving their rise are two fundamental changes in the way the wireless industry operates. First T-Mobile led an industrywide push away from the two-year service contracts familiar to U.S. wireless customers, making it easier for people to comparison shop and change providers. Second phone companies stopped the practice of “locking” their phones, meaning that for the first time you could move your iPhone from Sprint’s network to AT&T’s without having to buy a new one. “The shift in how handsets are purchased has been hugely beneficial for MVNOs,” says Susan Welsh de Grimaldo, an analyst for Strategy Analytics.

Three MVNO brands sit at the top of Consumer Reports’ latest industry rankings for customer service satisfaction—Consumer Cellular, Ting, and Republic Wireless. "Good customer service and low prices have a pretty broad audience," says Michael Goldstein, a vice president at Ting, which claims about 200,000 subscribers. “Those of us who are hungry and are doing back flips are doing a better job pleasing people.”^[650]

January 14, 2016: Ting Fiber Begins Pre-Orders for Holly Springs

The Ting Blog announced on January 14, 2016 that residents of Holly Springs can express interest in Ting Fiber by pre-ordering - "plunking down $9 to commit to installation of gigabit fiber Internet from Ting early in the process." The $9 pre-order commitment will help Tucows gauge where the most serious interest lies and Ting expects to have some firm network plans to share by the end of this calendar quarter "It’s a complex process and requires a lot of work before any fiber is laid. That said, it’s a process we have experience with and that we are comfortable navigating."^[651]

Elliot Noss reported in the fourth quarter earnings report conference call on February 9, 2016 that Ting Fiber has added a $9 million preorder option to its website for prospects that are not yet serviceable in towns that we are doing this work. "This allows us to measure interest and secure adoption in towns and neighborhoods before ever investing to build there. It will be a crucial part of our process now as we compare respective towns and plan our builds in existing towns."^[652]

December 21, 2015: Elliot Noss Discusses Ting Mobile and Fiber Strategy During Podcast with 'Domain Name Wire'

Tucows CEO Elliot Noss had a 34 minute podcast with Andrew Alleman of 'Domain Name Wire' on December 21, 2015 where he talked in detail about Ting's strategy in both mobile and fiber and why these businesses are particularly suited to Tucows.

Ting Business Processes Are a Natural Extension to Hover

Noss said that one of the things that he habitually overestimated in the domain name business was service providers' ability to upsell and cross sell and that Tucows had this experience with its reseller network and that was the idea they brought to Ting Mobile. "My original conception of it and the way I was able to sell my board and then Sprint was that we had this fantastic distribution network and that was how we were going to be different as an MVNO because I had to answer lots of 'MVNO has never worked before, why should this be different questions.' Luckily for us, the retail offering used a lot of the same approaches as Hover and it really did take off and it's really a very successful business."

Noss said that the original idea of Ting Mobile was "Let's design a mobile phone service that you would want to be a customer of." According to Noss there really wasn't any great prescience other than looking at what Tucows was doing at a business process level with Hover and identifying that Tucows could be in the MVNO space with essentially the same set of business processes. "When I took [the Ting Mobile idea] to the original engineer that I engaged with and asked 'Here is Sprint's API and is there any reason this can't just look like a registry under our (Hover) platform. And he said, No, that's not a problem.' Because if we would have had to do what others did which was outsource the billing system, outsource the customer interface we wouldn't have been able to innovate around pricing and service design in the same way."

"It is even less of a logical leap [to go into internet service]. Almost from the time we first launched Ting Mobile we were getting tweets and comments on Facebook. 'Now I love my phone company, can you please replace my cable company.' There was kind of a natural clamoring. Obviously the business systems are even less of a leap."

Tucows Likes to Compete Against Large Entrenched Monopolies and Oligopolies

Noss said that he thinks that his business career has been defined by being a tiny little guy taking on large incumbents and monopolies and he would much rather compete against a cable company than GoDaddy.

Ting Fiber Uses the Capex That Ting Mobile Throws Off

Noss said that Ting Mobile has fantastic unit economics but because of the way Ting Mobile engages in marketing there are scalability challenges. "We can't spend twice or three times, or ten times as much and keep our customer acquisition metrics the same. There are kind of natural limits."

But according to Noss Ting Mobile is spinning off loads of cash which Ting Fiber can use because it is a very capital intensive business. "You flip over to the fixed internet business. Very different. Tons of Capex. But that is good because we have capital to deploy as long as the returns are good."

Ting Fiber is More of a Local Business Which Aligns with Tucows' Strengths

Noss said that if you look Ting Mobile, it is a national business but Ting Fiber is deeply local. "It couldn't be more of a local business. It's about going to the local festivals, the local media, billboards. And that suits us. We find out that that is more aligned with the way we do business than this big national business."

Ting Fiber Has a Tremendous Long Term Opportunity

Noss said that Tucows deeply believes there is a tremendous opportunity with fiber because North America has slow expensive internet and the US especially just has swaths that are just way underserved. "The internet today essentially sits on retrofit infrastructure that was originally created for first telephone and then television. End to end fiber is the first purpose built infrastructure for the internet. We have no doubt that 15 years from now the vast majority of connections will be end to end fiber."^[653]

December 3, 2015: Ting Gets Top Marks From Consumer Reports for Value and Customer Satisfaction for Second Consecutive Year

ABS News reported on December 3, 2015 that Consumer Reports asked 90,000 of its subscribers to rate their cell service and gave Consumer Cellular and Ting top marks for value and customer service. "We asked them about data, texting, voice and customer service. Then we asked them if they got good value for the money," said Karen Jaffe, Consumer Reports. "People who use Consumer Cellular and Ting gave top marks for value and customer service, but they were also quite pleased with the data and voice." Ting customers like Scott Yules are billed for the service they use rather than paying a flat rate. "What made me switch was the bill. My bill literally cut in half," Yules said. Ting uses both the Sprint and T-Mobile networks. It offers a variety of phones, including the Samsung Galaxy S6 and the Apple iPhone 6s. Ting also makes it easy to check and see whether you can use your old phone.^[654]

Consumer Cellular came in first place out of 10 postpaid carriers with an overall score of 89 out of 100, followed by Ting, which scored 88. The next four carriers were GreatCall/Jitterbug, Credo Mobile, Virgin Mobile, and US Cellular, which all scored in the 70s. These smaller carriers beat the big ones with "lower costs and responsive, knowledgeable staff members" and innovative offerings. "Some of them compensate subscribers who use less service than they've planned for," Consumer Reports wrote. "For instance, Republic Wireless and Ting Wireless charge customers only for the minutes, texts, and data actually used—not what consumers signed up for."^[655]

In November, 2014 Ting came out on top as the best mobile wireless provider in Consumer Reports' 2014 survey with a company rating of 91 out of 100 because of their excellent service and customer support. 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.”^[656]

November 23, 2015: Tucows Participates in Fourth Annual Carroll Biz Challenge

The Ting Blog reports that Michael Goldstein, VP of Sales and Marketing, represented Ting as one of the judges at the fourth annual Carroll Biz Challenge sponsored by by the Chamber of Commerce in Carroll County where Ting Internet is rolling out fiber in Westminster. The contest offers local entrepreneurs an opportunity to pitch new business ideas, make connections, and compete for valuable prizes – "think American Idol meets Shark Tank!"^[657]

November 18, 2015: Fiber Construction in Holly Springs Could Begin In Early 2016 Depending on Demand

The News Observer reported on November 18, 2015 that Ting Internet is now assessing demand in Holly Springs in order to bring its gigabit download and upload speeds to the town and it is now it is up to residents to let Ting know about their interest to ensure these faster Internet speeds reach their homes and businesses. “Wherever the interest is shown on their maps is the area that they’ll target first,” said Jeff Wilson, town information technology director. “(So far) there’s been a lot of interest, and Ting has been very pleased with the demand generation.” Construction could begin as soon as early 2016, and Wilson said the company expects the “first customers to come online around early summer.”

Holly Springs built their own 13-mile fiber network in mid-2014 for $1.5 million to serve town facilities. It is now about 17 miles. Ting will be granted a license to access unused town-owned fiber and build the “last mile” to homes and businesses. “The businesses really crave it, the bandwidth that they will need for what they do,” Mayor Pro Tem Tim Sack said. “It will be a big business attractor.” But details of the fiber license agreement are still being worked out. “The town has got the fiber optic (network) in the ground that any company can come in and lease strands from us,” Sack said. A lease agreement between the Town of Holly Springs and Ting Internet would not prevent other Internet providers from leasing town fiber. “(Residents) need to be aware that they need to show interest,” Sack said. “It’s going to be up to that interest spurring Ting on to put it in the neighborhoods.”^[658]

According to Triangle Business Journals, Ting joins Holly Springs’ current providers of broadband Internet service – CenturyLink, AT&T, Time Warner Cable and Clarity Communications. While some Holly Springs residents do have access to fiber through other services, town officials say it’s “only a small percentage.” “The town has received numerous requests from homeowner associations, residents and businesses asking what we have been doing to attract additional providers in Holly Springs,” Wilson says.^[659]

November 14, 2015: Ting Plans to Expand in Charlottesville in 2016

Samantha Baars reported on November 14, 2015 at C-ville that just five months after Ting launched its high-speed Internet network in Charlottesville, the company has given almost half the city access to "crazy fast" fiber internet. “We’re very pleased with the subscribers that we’ve received so far based on our coverage,” says Baylor Fooks, a general manager at Ting and cofounder of Blue Ridge InternetWorks. Ting has targeted downtown and several neighborhoods including Belmont, Martha Jefferson, Jefferson Park Avenue and Rugby Road and plans to expand to more homes in the city by the beginning of 2016 and into Albemarle County shortly thereafter.

According to Fooks feedback has been overwhelmingly positive. Grit Cafe, a food and coffee shop with several locations including one on the Downtown Mall, has used Ting for about two months and advertises it on the sandwich board outside its door. “Internet access is obviously a huge part of our offering,” says owner Brad Uhl, adding that some customers use the cafe as a secondary office location. Grit employee Anthony Fitzgerald says that while he’s on the job, customers often praise the service and say it’s faster than theirs at home.^[660]

November 5, 2015: Tucows Announces Strong Growth in Third Quarter

Tucows Adjusted EBITDASince Q1 2014. Tucows announced on November 5, 2015 that Adjusted EBITDA for the third quarter of 2015 increased 43% to $7.0 million from $4.9 million for the third quarter of 2014. "Adjusted-EBITDA grew 42% to a record $7 million," said Noss, "and brought our total for the first nine months of 2015 to just over 19 million, which is already well in excess of the 15 million we generated for all of 2014."^[661]

See also:

Tucows' (TCX) Q3 2015 Results November 5, 2015
2015 Q3 Consolidated Balance Sheets
Tucows' (TCX) CEO Elliot Noss on Q3 2015 Results - Earnings Call Transcript November 5, 2015

Net Revenue Increased 15% YOY

Tucows announced on November 5, 2015 that net revenue for the third quarter of 2015 increased 15% to $44.6 million from $38.9 million for the third quarter of 2014.^[662]

Net Income Increased 18% YOY

Tucows announced on November 5, 2015 that net income for the third quarter of 2015 increased to $3.2 million, or $0.29 per share, compared with $2.7 million, or $0.24 per share, for the third quarter of 2014.^[663]

Adjusted EBITDA Increased 43% YOY

Tucows announced on November 5, 2015 that Adjusted EBITDA for the third quarter of 2015 increased 43% to $7.0 million from $4.9 million for the third quarter of 2014. "Adjusted-EBITDA grew 42% to a record $7 million," said Noss, "and brought our total for the first nine months of 2015 to just over 19 million, which is already well in excess of the 15 million we generated for all of 2014."^[664]

Tucows Reiterates Guidance of $25 million Adjusted EBITDA for 2015

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "EBITDA for the first nine months of 2015 was just over 19 million, 19.3 million to be exact. As I’ve discussed in the past, our fourth quarter historically tends to be a little softer than the third, despite that we are comfortable reiterating the guidance we provided last quarter of $25 million for the year."^[665]

Tucows Generated $6.8 million in Cash Flow from Operating Activities

Michael Cooperman reported in the third quarter earnings report conference callon November 5, 2015 that Tucows generated 6.8 million in cash flow from operating activities. "Cash and cash equivalents at the end of the third quarter of this year were 11.9 million compared to 15.3 million at the end of Q2 and 13.6 million at the end of Q3 of last year. The decrease relative to the end of Q2 of this year was primarily related to our using nearly $10 million during the quarter to repurchase 390,000 shares under our ongoing share buyback program. We also invested approximately 700,000 to acquire additional property and equipment almost all of which was increasing our fiber footprint. These uses of cash were partially offset by generating 6.8 million in cash flow from operating activities. Deferred revenue at the end of the third quarter was 74.4 million up 2% from 73 million at the end of the third quarter of last year and less than 1% from 74.3 million at the end of the second quarter of this year."^[666]

Tucows Invested $0.7 million, Primarily in Ting Fiber

Michael Cooperman reported in the third quarter earnings report conference call on November 5, 2015 that Tucows "invested approximately 700,000 to acquire additional property and equipment almost all of which was increasing our fiber footprint."^[667]

Tucows Repurchased 390,000 Shares in Q3 for $10.0 million

Michael Cooperman reported in the third quarter earnings report conference call on November 5, 2015 that Tucows spent "nearly $10 million during the quarter to repurchase 390,000 shares under our ongoing share buyback program."

Elliot Noss added that "that brings our total repurchases for 2015 to just over 637,000 shares for a total spend of $14.5 million or $22.76 a share. It is worth nothing that as our share price and trading volume continues to increase, so is our ability to spend more capital through our open market buyback program. In general this probably means, slightly more open market and slightly less such options. We continue to analyze conditions each quarter and assess the variables that we’ve talked about so many times in making the determination as to what to do."^[668]

November 5, 2015: Ting Mobile Continues to Grow

Gross Adds in Ting Mobile. Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "net adds have essentially stayed the same over the past few quarters, but we’re comforted that gross adds continues to grow. Q3 was the biggest quarter for gross adds in the history of Ting."^[669]

Churn in Ting Mobile. Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "our growing cancels are still mostly just a product of a growing base. We did see a slight uptick in our churn rate in Q3 to just under 2.5%. This appears to be partly the result of a more transient customer base on the GSM service, which makes sense given the increased device portability on that side. These customers typically make less effort and investment to come to Ting, generally bringing their own phones and seem a bit more likely to leave as well."^[670]

Net Adds in Ting Mobile. Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that this was "the biggest quarter for new visitors and total traffic to the Web site. This indicates that our brand awareness continues to grow and that we continue to convert well on that awareness. Brand awareness is by far the metric with the greatest upside in this business. Our acquisitions suggest that more people are hearing about us every day and that our message is as compelling and our offering is competitive as ever."^[671]

Ting Mobile Added 9,000 Accounts and 14,000 Devices in Q3 2015

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "Ting Mobile grew its customer base by another 8% in Q3 adding 9,000 accounts and 14,000 devices. That brings our total at the end of the quarter to 122,000 accounts and 192,000 devices."^[672]

Ting's Churn Rate is 2.5%, Average Monthly Customer Spend is $37, Gross Margins Are a Little Above 50%, and Acquisition Costs are Under $100 Per Customer

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "the other key metrics on the Ting Mobile business remained strong and our financial contribution continues to improve. Average customer revenue has ticked up a couple of dollars in recent months to about $37 a month, a phone bill of $23 to $24 per device. Gross margins right now are a little higher than the top-end of our range, thus north of 50%. Average cost per acquisition is still comfortably under $100. Even at a churn rate of 2.5%, we’re paying under $100 to acquire customers that are providing great cash-on-cash returns."^[673]

Net Adds Have Essentially Stayed the Same Over the Past Few Quarters

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "net adds have essentially stayed the same over the past few quarters, but we’re comforted that gross adds continues to grow. Q3 was the biggest quarter for gross adds in the history of Ting. Was also the biggest quarter for new visitors and total traffic to the Web site. This indicates that our brand awareness continues to grow and that we continue to convert well on that awareness. Brand awareness is by far the metric with the greatest upside in this business. Our acquisitions suggest that more people are hearing about us every day and that our message is as compelling and our offering is competitive as ever."^[674]

Ting Mobile Expects Net Adds in Future Quarters to Be Steady

In answer to a question from Hubert Mak of Cormark Security about how net adds are looking out over the next three years, Elliot Noss answered in the third quarter earnings report conference call to "ask me next year about two years, but for now we’re pretty comfortable with steady as she goes."^[675]

Growing Cancels Are a Product of a Growing Base

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "our growing cancels are still mostly just a product of a growing base. We did see a slight uptick in our churn rate in Q3 to just under 2.5%. This appears to be partly the result of a more transient customer base on the GSM service, which makes sense given the increased device portability on that side. These customers typically make less effort and investment to come to Ting, generally bringing their own phones and seem a bit more likely to leave as well."^[676]

Ting Mobile Is Still Seeing Some Lagging Issues From Prior Quarters

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "we’re perhaps also seeing some lagging followed from our customer service issues of the prior quarters. In fact this shows up on both the acquisition side and the retention side. Customer referrals which have always been the centerpiece of our acquisition efforts have been down since the Sprint change in Q1 and resulted in support shortfalls. I'm relieved to report that we’re once again staffed ahead of our most optimistic projected support volumes and I'm hopeful that this will restore customer referrals and suppress churn a bit in quarters to come.

"The Sprint changes in February took a bite out of our conversion and challenged our reputation. Our customer support team got hit hard, which necessitated months without marketing, comprised our services levels, depressed referrals and provoked churn. It also fundamentally changed some of our customer service ratios, leading to understaffing which exacerbated the problem. We realized that the recovery is not quite a switch from off to on, but a process that takes time and effort to regain the momentum. We are well into that now and I believe our greatest assets are intact. We have a pricing plan that can save the overwhelming majority of Americans hundreds of dollars a year on those telephone bills.
We still offer the greatest customer experience and support in the industry as validated by our consistently strong net promoter scores. And in the midst of that adversity and that quite period, we actually added a second network that gives our customers even greater choice of devices and coverage. Plus, we are coming into this holiday season with an opportunity we’ve never had before. We have just entered into partnerships with Krogers, the supermarket giant and Staples the nationwide office supply and technology chain to distribute Ting sim-cards in nearly 2,000 stores across the country. We have no idea how this program will perform or what volume of new customers these deals would contribute to our business. But I am proud to be keeping that sort of company, I am thrilled about what that sort of presence does for our mainstream awareness and credibility and I am confident now that we will discover more opportunities like these in 2016.
Interestingly on the Mobile business, neither the problems that I implemented nor the opportunities that I have deemed about which show up in our financial performance anytime soon; first of all, we never stopped growing it what we tend to measures ourselves on is growth in our growth; second, more importantly, we have a large enough base now contributing recurring revenue each month. But the difference between our best and worse projections in net customer adds made very little difference in our 2015 or in our 2016 projected financials. The game we are playing now on Mobile is for results in 2017 and 2018 and of course to generate the cash we need to better capitalize on the fiber opportunities."^[677]

Gross Margins Are a Managed Variable

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that Tucows looks at Gross Margins "as a managed variable. So, the trade off there is always going to be one between price and growth. So, going back to February of ’14 I want to say when our margins drifted up a little bit we dropped our price and when we drop price, we drop it typically just on our rate chart across our whole base. So, if margins were to continue to climb upwards we’ll always be considering whether we want to shave their price. We like that 45%-50% range as a good balance of profitability and growth."^[678]

Price Competition Will Probably Not Be As Aggressive in 2016

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "based on what we’re seeing on the ground and what we’re kind of interpolating from various CFO comments we think that probably the price competition in 2016 will not be as aggressive as it has been perhaps in the last year or two in Mobile from the incumbents."

"I think it’s not going to be as aggressive downward as it’s been in the past. I think that the move downward is typically been led by Sprint and T-Mobile and each of them have good reasons, both balance sheet and income statements to perhaps to take a pause."^[679]

Ting Mobile Has Just Entered Into Marketing Partnerships with Kroger and Staples

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "just entered into partnerships with Krogers, the supermarket giant and Staples the nationwide office supply and technology chain to distribute Ting sim-cards in nearly 2,000 stores across the country. We have no idea how this program will perform or what volume of new customers these deals would contribute to our business. But I am proud to be keeping that sort of company, I am thrilled about what that sort of presence does for our mainstream awareness and credibility and I am confident now that we will discover more opportunities like these in 2016."

"We don't know what to expect from this but we know that it's either not going to help much it's going to help a little or it's going to help a lot, but at a minimum it could have increased the brand presence and awareness and we think that that’s a positive. So I think you're going to see sort of things like that, so think of that as a whole different type of initiative and there might be sort of another one or two of those through the course of ’16. And things like that materially change the arch? So when it comes to looking two to three years out to us we’re not stopping trying to be creative or nor do we believe we’re out of opportunities to ramp growth."^[680]

GSM Appears to be a More Transient Customer Base

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that Ting Mobile saw "a slight uptick in our churn rate in Q3 to just under 2.5%. This appears to be partly the result of a more transient customer base on the GSM service, which makes sense given the increased device portability on that side. These customers typically make less effort and investment to come to Ting, generally bringing their own phones and seem a bit more likely to leave as well."^[681]

November 5, 2015: Ting Internet is Moving Ahead

Tucows Is Finding that Fiber Is a Business That Plays to Tucows Strengths

In answer to a question from Patrick Russo from Venture Capital about whether in general Ting Internet has met Tucows' expectations, exceeded them or fallen short, Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "we’re comfortable with demand. It is as complex as we thought it was and it's probably exceeded our expectations a little bit in how it plays to our strengths. We really think that it's a business that we’ll be very natural in being great at."^[682]

Adoption in Westminster and Charlottseville Has Been Encouraging

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "in both Westminster Maryland and Charlottesville Virginia our first two markets, awareness and consideration of the service are growing every month and adoption so far have been encouraging. In both markets, the greatest limiting factor so far has really been the expansion of the network. In the Westminster, we’re waiting for the town to build out the second phase of the network in 2016 to reach beyond the current 500 or so serviceable addresses. In Charlottesville, where we’re building the network ourselves and currently pass about 4,000 addresses, we tend to wait for the required pool permits and partnerships in order to expand further and we’re only starting in earnest to deal with multiple dwelling units or MDUs in the last few weeks."

"In Westminster there is a really pretty small group of addresses there no more than 500 that we can service and the town is planning the next phase of the build where we really -- that will take it all a lot deeper."

"In Charlottesville things are going really well. We’re continuing to build we now are collecting demand aggregation data for Charlottesville which we hadn’t been doing up until a few weeks ago. We’ve also started to take all of the people that have expressed interest previously and to map those and with a little bit more granularity. Just the operating processes and systems on the ground continue to improve every week. The numbers continue to tick up. So I think it’s doing what we would want it to do."^[683]

Ting Internet Hopes to Start Servicing Customers in Holly Springs, NC in Summer 2016

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that Ting Fiber has "announced the Holly Springs, North Carolina would be our third Ting town. Holly Springs invested in the core fiber network in 2014 and had been seeking a provider to lease that fiber, expand that network and service the entire city. They were disappointed when Google Fiber announced that they were bringing gigabit Internet to Raleigh, Zuru and other nearby cities and we’re delighted that Ting was ready and willing to fill that gap. Surrounded by world-class universities, the thriving research triangle and again other higher profile fiber initiatives, Holly Springs’ businesses and residents are as gigabit ready as any community we've seen. We've begun demand assessment which has gone quite well so far and if all continues this well, we’ll start building out the network in early 2016. We hope to start servicing customers there by this summer."^[684]

Ting Internet Is Still Looking at Additional Markets in 2016 in the Range of 25,000 to 100,000 Population Areas

In answer to a question from Patrick Russo from Venture Capital about new markets Ting Internet is getting into for fiber that Ting Internet hasn't announced, Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "in terms of larger so sort of materially larger we’re viewing that as opportunistic there are opportunities we’re pursuing them. They may or may not come to fruition. So I think larger we’re opportunistic -- that what you’re seeing around these population sizes when I comfortably kind of make a range of 25,000 to 100,000 there it’s likely to be the sweet spot at least through ’16 as we learn. And then as I noted last quarter we are likely to try an experiment in 2016 in a smaller geography. We’d really love to see if we can make it work at an even smaller level because we believe that if we can there is a tonne of opportunity there. And it’s again something we think can play to our strength because we’re pretty nimble and probably more nimble than a lot of the people we might be competing with. So being able to do something like that we think could be very interesting. So we’re probably going to have one experiment and like all experiments it may or may not work."^[685]

Comment on January 7, 2017: Nasdaq reported on March 2, 2016 that Ting Fiber has announced plans to bring crazy fast fiber Internet to the Greater Sandpoint, ID area including the towns of Sandpoint, Dover, Ponderay and Kootenai. Comsumers in those towns can pre-order Ting Internet at ting.com/sandpoint as part of the initial “demand assessment” phase. Assuming there is sufficient demand for fiber, network construction would begin later in 2016.

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."^[686]

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.^[687]

External Trends Are Moving in Ting Fiber's Favor

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "external trends [that] continue to move in our favor, first customers are increasingly cutting the cord moving away from large traditional television packages to get more of their video entertainment over the top, that is from the Internet."

"Research from MoffettNathanson estimates the pay TV providers lost 566,000 video subscribers in Q2 2015, compared to 321,000 in Q2 2014, and that the number pay TV households is now shrinking at an annual rate of 0.7% compared with 0.1% a year ago. The customers are no longer dependent on bundled TV and Internet packages, they’re free to choose the Internet service that offers the greatest access and customer experience, and that landscape obviously favors Ting. Second, the most popular content providers continue to move towards direct subscription models that make cable TV packages even less necessary. HBO and Showtime have now both taken that step, and ESPN continues to be rumored that it will there soon. Finally, thanks to Google Fiber’s campaign and perhaps broad dissatisfaction with the incumbents, more and more towns all over the country are prioritizing their own fiber initiatives and soliciting providers like us to come service their communities. Holly Springs is a great example of this. Just a year ago, we were aggressively hitting the phones trying to get our foot in the door of municipalities. This year almost all of our pipeline is inbound. As I have said before, I do not expect the returns on Ting Internet to be material in 2016 and I do not intend to provide specific results on subscribers or financials for a while. But I am quite confident that both our internal efforts and these external forces are putting us in a great position to have a strong, profitable, sustainable business for years to come."^[688]

Ting Internet Has Invested $700,000 in Property and Equipment

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that Ting Internet has "invested approximately 700,000 to acquire additional property and equipment almost all of which was increasing our fiber footprint."^[689]

Ting Internet Looks at Google Fiber as a Positive, Creating a Halo Effect in Communities Around Google Fiber

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that Ting Internet "looks at Google Fiber as a net positive. What you see with Holly Springs is as we described. They missed out on Google Fiber and they become hungrier and more eager, they are spurned and I don’t mean Holly Springs in particular but in general communities around Google Fiber cities. It creates a halo, so we would not be surprised if there were other Google Fiber halo towns that we add to the 2016 roster."^[690]

Ting Internet Sees a $2,500 CapEx to Hook up a customer and a Yearly Gross Margin of $1,000

In answer to a question from Kaycee Ryan from Lyon Street Capital about how the Ting Internet model is shaping up, Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "a $2,500 CapEx to hookup a customer of $1,000 in gross margin a year from a customer, and that’s continuing to play out like we see more reinforcements of that data. So that’s feeling pretty good at a high level and I should note that build costs really do vary market-to-market, in Charlottesville we are actually probably doing better than that, but Charlottesville has reasons why it's probably a little bit less expensive to build but then in other ways it is more complicated to build, it is all -- I will keep going back to the head originating but it's the highest level that’s sort of the core of the model."^[691]

Ting Internet Is Finding that Gross Margins Are Extremely High and There is Much Greater Stickiness Than in Ting Mobile

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "gross margins are extremely high in this business. We do expect lifetime value to be a lot higher. Both because of the gross margin and because there is much greater stickiness it's really with fiber to a house in a market like this you're really going to have to sort of either move or die to be getting rid of the service and of course I'm exaggerating, but we think it's a lot stickier."^[692]

Ting Internet Will Have to do Some Aggressive Local Marketing

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "in terms of the business model is that the tactic is a much different creature with mobile because we’ll be doing so you think about we’re going to be going into a town the people of Holly Springs have never really heard of us. There sure we have a few phone customers there, but generally our unaided awareness is relatively low and if you think about going in with a business like this you really want to get on the radar, so you have to do some aggressive local marketing that’s a lot more traditional."^[693]

November 5, 2015: Domain Services Delivered Another Quarter of Solid Performance

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "our Domain Services business delivered another quarter of solid performance in Q3"^[694]

Wholesale Registrations Are Up 2% YOY and Margins Are up 10% YOY

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that in the "wholesale channel, total registrations were up 2% year-over-year. We were thrilled to see our renewal rate of 79% in Q2 hold through the third quarter, while the renewal rate on new gTLDs ticked up a couple of points to 72% from an already impressive level. During the quarter, we added another 46 new generic top level domains which took the total number of TLDs we support including country codes to just over 600. The number of resellers who have registered at least one new gTLD grew to 2,260 as of the end of September, up from 2,100 at the end of June and 1,900 at the end of March. It’s worth noting that the average margin per domain in our wholesale channel in Q3 was up 10% year-over-year, and 25% compared to Q3 two years ago. This is the product of a continuing shift in our sales mix to higher margin registrations. While margin per domain will vary from quarter-to-quarter, the longer term number is trending in the right direction. And in fact Q3 saw its highest level in several years."^[695]

International Resellers Are An Important Driver in Wholesale Channel Growth

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that "international resellers continue to be an important driver of our wholesale channel growth with markets outside of North America and Western Europe once again accounting for a quarter of new registrations. The retail component of our domains business Hover delivered another quarter of strong growth with revenue and gross margin up 17% and 16% year-over-year respectively. Hover’s customer base continued its strong growth as it expanded 13% from a year ago."^[696]

Hover Delivered Strong Growth With Revenue and Gross Margin Up 16%

Elliot Noss reported in the third quarter earnings report conference call on November 5, 2015 that the "retail component of our domains business Hover delivered another quarter of strong growth with revenue and gross margin up 17% and 16% year-over-year respectively. Hover’s customer base continued its strong growth as it expanded 13% from a year ago. "^[697]

October 22, 2015: CenturyLink Responds to Ting's Gigabit Launch in Holly Springs With Phantom Gigabit Service

Karl Bode reported in DSL Reports on October 22, 2015 that Ting's announcement of gigabit service in Holly Springs has already nudged CenturyLink to begin offering gigabit service of its own in the area. "Just a day after I let Karl know that Ting is launching FTTH service here in Holly Springs NC, I get an email from CenturyLink announcing 1Gpbs service as well," notes DSLReports.com reader Shaun (see his e-mail, left). "Before this, there was zero mention that they were going to upgrade to Gbps. I currently have CenturyLink 100/50 FTTH service." However upon further inquiry CenturyLink reps admitted that the service is a bit over-marketed, and his address can't actually get gigabit service after all. According to DSL Reports CenturyLink had to apologize to Seattle residents earlier this year after the company's marketing for gigabit service wasn't reflective of actual gigabit service availability.^[698]

October 20, 2015: Holly Springs is Set to be the Next Ting Internet Town

Ting announced on October 21, 2015 that Holly Springs, NC will be the next town to get symmetrical gigabit (1,000 Mbps download and upload speed) “crazy fast fiber Internet.” Holly Springs will join Charlottesville, VA and Westminster, MD where Ting Internet is already available. Demand assessment will begin in Holly Springs in the last quarter of 2015. That demand will guide construction, which could then begin as soon as the first half of 2016.^[699]

Michael Goldstein wrote on the Ting Blog on October 20, 2015 that Ting is grateful for the reception and the partnership they have established with the folks in city hall in Holly Springs, NC (population 24,661) and know that it will be a productive relationship and that citizens of Holly Springs will relish faster Internet and better service. "An important first step in the buildout and delivery of Ting Internet service will be gauging where there is greatest interest." writes Goldstein. "So please take a moment to leave us your contact information here (and even pre-order when that option is available) so that we can potentially count you as raring to go and keep you posted on our progress."^[700]

“We’re very happy that Ting chose Holly Springs as the next place to bring crazy fast fiber Internet. In the past 25 years, Holly Springs has grown over 2,600%. Young families with school-aged children are driving that growth. World-class Internet access will help us continue our forward progress and inspire the next generation of great ideas,” said Mayor Dick Sears. “The need for faster, more reliable Internet access across the US has been recognized by the highest levels of government,” said Tucows CEO Elliot Noss. “The problem of slow, expensive and unreliable Internet access is national but agreements like the one reached with Holly Springs further demonstrate that the solution is local.” “While Google Fiber and other providers race to get started in big cities, we’re finding that there’s also a lot of interest from, and opportunity in, smaller cities and towns that might otherwise get passed over,” Noss said.^[701]

October 20, 2015: Tucows Offers New Three Day Promotion to Bring ATT Customers to Ting

Marketwatch reported on October 20, 2015 that for three days running through October 22, AT&T customers are invited to check their active phones, one per customer, at ting.com/byod_coffee to see if they are Ting compatible and for each phone checked, whether they prove to be compatible or not, Ting will provide a unique promo code worth $5 at any Starbucks location. "If you can bring your phone to Ting, the calculation gets very simple. You are going to have a better customer experience and you are likely going to spend less," explained Michael Goldstein, Ting VP of Sales and Marketing. "But sometime people need a more immediate incentive to take that first step. Until a better incentive comes along, we're going to stick with coffee."^[702]

October 18, 2015: Baltimore Sun Highlights Ting Fiber in Westchester

Scott Dance published a front page story in the Baltimore Sun on October 18, 2015 on fiber initiatives around the Baltimore area highlighting how Westminster is joining a growing number of communities investing in networks capable of carrying a gigabit of data each second, an accomplishment that Baltimore appears eager to follow. "It was clear nobody else was going to do it for us," said Dr. Robert Wack, City Council president for Westminster, which lit up a fiber-optic network it has begun building for its residents and businesses this summer. According to Dance, Westminster's decision to invest in a fiber network was not an easy sell. "It took us a while to get traction because, frankly, we couldn't get people to take it seriously," said Wack, the City Council president. But now, the most frequent question and concern about the gigabit service — which costs residents $89 a month plus a one-time $399 installation fee — is, "Can't you get to my house sooner?" said Valerie Bortz, Westminster manager for Ting, a Canadian company that is leasing the fiber from the city. The city has spent $1.6 million to build the first 7 percent of the network, connecting about 400 homes and businesses. Officials secured a $21 million bond to cover the rest, Wack said, with strong support from city leaders and residents. "At the end of the day, it's just like any other infrastructure project we undertake," Wack said. "I think that's how every municipality and local government should approach this. This is just another type of infrastructure in the 21st century."^[703]

October 9, 2015: What are the key factors in choosing a Ting Internet town?

Director of Ting Networks Adam Eisner discusses a few different factors we consider while making plans to expand to new communities and cities.

October 8, 2015: Short Interest Increases in Tucows

Nasdaq's biweekly report on short interest shows that Tucows short interest increased to 718,536 shares on September 15, 2015 from 573,265 one month before, an increase of 25%.^[704]

Settlement Date	Short Interest	Avg Daily Share Volume	Days To Cover
09/15/15	718,536	80,635	8.910969
08/31/15	648,746	150,047	4.323619
08/14/15	573,265	215,356	2.661941
07/31/15	510,134	142,961	3.568344
07/15/15	459,756	132,057	3.481497
06/30/15	283,367	144,477	1.961329
06/15/15	218,845	157,296	1.391294

September 25, 2015: Two Tucows Insiders Sell Shares

Insider Trading Report reported on September 25, 2015 that David John Woroch , EVP Wholesale sold 2,000 shares on September 25, 2015 at $24.21 per share for a total value of $48,414.60.^[705] Insider Trading Report reported on September 15, 2015 that Tucows CFO Michael Cooperman sold 30,279 shares on Sep 11, 2015 at $25.06 per share for a total value of $758,782.19.^[706]

See also: Insider Activity at Tucows

September 23, 2015: How is Ting balancing the Ting Internet expansion and the customer experience?

Adam Eisner, Director of Ting Networks, explains how Ting is managing staffing levels to ensure all of their customers, whether mobile or Internet, will get the same great Ting experience.

September 8, 2015: Tucows Holds Annual Shareholders Meeting

Tucows filed Form 8-K on September 9, 2015 confirming that they had held their annual shareholders meeting on September 8, 2015. Three matters were addressed at the annual meeting:

The Company's shareholders re-elected Allen Karp, Elliot Noss, Erez Gissin, Jeffery Schwartz, Joichi Ito, Rawleigh Ralls, and Robin Chase to serve on the Company's Board of Directors for a term of one year expiring at the 2016 Annual Meeting of Shareholders.

Shareholders gave their approval to amend and restate the 2006 Equity Compensation Plan

Shareholders voted upon and ratified the appointment of KPMG LLP as the independent auditors of the Company and its subsidiaries for the fiscal year ending December 31, 2015^[707]

September 8, 2015: Ting Fiber Announces Roll-Out Plans for Charlottesville

Ting Fiber plans to cover as much ground as possible during 2015 in North Downtown, Belmont, Martha Jefferson and Locust Grove.

The Ting Blog reported on September 8, 2015 that from now until the end of 2015, Ting Fiber plans to cover as much ground as possible in North Downtown, Belmont, Martha Jefferson and Locust Grove. In the coming months, Ting Fiber will be unveiling a tool to help gauge interest in gigabit Internet in other neighborhoods.^[708]

August 31, 2015: Michael Goldstein Writes About the Difference Between the Ting Mobile and the Ting Fiber Markets

Michael Goldstein, Executive Vice-President for Marketing at Tucows, wrote on the Ting Blog on August 31, 2015 that some folks have understandably questioned what seems to be a contradiction between Ting's mobile offering and Ting's Internet offering: On Ting Mobile, customers save hundreds of dollars a year because they pay just for what they use while with Ting Fiber customers pay a fixed price for unlimited high speed data.

"We never thought of Ting as the “pay for what you use” company. We think of ourselves as providing services that make sense. We offer what we believe is sorely lacking in a market. We look for situations where people are in some way underserved by the incumbents. Maybe they are underserved because there is a lack of competition. Maybe it’s because there isn’t enough money to be made for larger companies. Maybe it’s because everybody has been solving a problem one way for so long that they had stopped considering others."

"In mobile, the problem we saw was that too many people were just paying too much for service. Carriers had fixed costs and wanted to pile as much revenue as they could on existing networks so they pushed everyone to unnecessarily large amounts of usage at unnecessary prices."

"On fixed Internet for homes and small businesses, the problem we see is that existing networks are inadequate for the amazing things people can do online now and the speed at which people want to do them. These existing networks were never meant to stream video, upload and download huge files to the cloud or host meetings. But the incumbents are generating so much revenue on those existing networks and face so little competition, there really is no incentive for them to invest in anything new."

Goldstein writes that his own life fits with exactly the sort of usage our two services provide. "I use my phone quite tactically, enjoying some streaming music here and there, navigating on Google maps when I need to and checking my email and our real-time website analytics way too often. But I am generally between Internet at home and Internet at the office. I am very willing to do smart little things to keep my cellphone usage down," says Goldstein. "At home, on the other hand, I want to swim in a sea of Sonos, Rdio, Netflix, Skype, iTunes, Dropbox, ESPN3 and other glorious services." Goldstein concludes that the one thing Ting Mobile and Ting Fiber have in common is that they are both solving a problem and are not aiming to please everyone. "Of course, I am also confident that any service we offer at any price brings with it our unique ethic and our unique commitment to fairness, honesty and customer satisfaction. We are desperate to make people happy, which will always be our greatest point of difference."^[709]

August 25, 2015: Three Tucows Insiders Sell Shares

Marketbeat reported on August 25, 2015 that Tucows Director Erez Gissin sold 18,750 shares on August 25, 2015 Ar $22.29 for a total value of $417,937.^[710] Insider Trading Report reported on August 21, 2015 that Elliot Noss, Chief Executive Officer of Tucows sold 50,000 shares on August 20, 2015 for a total value of $1,247,765.00.^[711] Insider Trading Report reported on August 20, 2015 that Tucows Director Joichi Ito sold 6,250 shares on Aug 19, 2015 at $25.52 per share for a total value of $159,533.75.^[712]

See also: Insider Activity at Tucows

August 18, 2015: Sprint to Phase Out Two-Year Contracts

CNN reported on August 18, 2015 that Sprint has announced that it will phase out two-year contracts for its customers by the end of the year joining Verizon who abandoned its contract program this week, and T-Mobile who stopped more than two years ago. Sprint customers will either have to pay full price for their smartphones upfront, pay off the phone over the course of two years, or lease their phone from Sprint. The new no-contract plans lets customers comparison-shop more easily as they're no longer locked into a long-term deal.^[713]

Abraham Seidmann says at Motley Fool that forcing people to pay for phones upfront could have unintended consequences for the carriers. "In the long run, we do wonder though, since users will have to pay for their phone outright, will providers (Sprint, AT&T, or Verizon) be forced to stop locking their phones so users can move them to other carriers," says Seidmann. "It will be the next logical step after providing for phone numbers portability about 15 years ago." According to Seidmann, no contracts and unlocked phones would be good for consumers, but it creates extreme volatility for the carriers because customers would be able to switch on a whim between providers that their phone is compatible with and there would be nothing stopping them from jumping from deal to deal. Seidmann says the rise of MVNOs is forcing lower monthly prices on an industry that has been able to avoid that for so long. As that is happening consumers are becoming used to the idea that those lower recurring fees come with a catch -- you must pay for your phone upfront.^[714]

August 17, 2015: Ting Internet Is Now Available in Westminster, MD

Jesse Simms writes on the Ting Blog that Ting's gigabit fiber is now officially available in Westminster MD. According to Simms, Ting has been busy since the fiber lighting ceremony on June 26, 2015 installing all the necessary equipment to light up the whole network and bring fast fiber Internet all across town. "If you live in the City of Westminster and are looking to get connected, simply run your address at the top of the Ting Westminster page," writes Simms. "If we haven’t yet made it to your home or business, don’t worry, we’re coming. Just hit the “Sign up for updates” button and we’ll keep you in the loop."^[715]

August 11, 2015: Short Interest in Tucows up 11% in Last Two Weeks

Nasdaq reported on August 11, 2015 that short interest in Tucows increased from 459,756 shares on July 15, 2015 to 510,134 shares on July 31, 2015, and increase of 11%.^[716]

Settlement Date	Short Interest	Avg Daily Share Volume	Days To Cover
7/31/2015	510,134	142,961	3.568344
7/15/2015	459,756	132,057	3.481497
6/30/2015	283,367	144,477	1.961329
6/15/2015	218,845	157,296	1.391294
5/29/2015	123,846	180,110	1.000000
5/15/2015	17,266	64,995	1.000000
4/30/2015	17,900	24,705	1.000000

August 10, 2015: Why does Ting Internet Installation Cost $400?

Adam Eisner, Director of Networks explains the reasoning behind the Ting Internet installation fee.

August 6, 2015: Tucows Announces Strong Growth in Second Quarter

Chart 1: Stock Price Chart for TCX from January 1, 2012 through August 6, 2015. 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 676% since January 1, 2012. The S&P 500 has risen 62% 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.

See also:

Tucows' (TCX) Q2 2015 Results August 6, 2015
2015 Q2 Consolidated Balance Sheets
Tucows' (TCX) CEO Elliot Noss on Q2 2015 Results - Earnings Call Transcript August 7, 2015

Net Revenue Increased 21% YOY

Tucows announced on August 6, 2015 that net revenue for the second quarter of 2015 increased 21% to $42.9 million from $35.6 million for the second quarter of 2014. Adjusted EBITDA for the second quarter of 2015 increased 64% to $5.4 million from $3.3 million for the second quarter of 2014.^[717]

Net Profit Increased 77% YOY

Tucows announced on August 6, 2015 that net income for the second quarter of 2015 increased to $2.3 million, or $0.21 per share, compared with $1.3 million, or $0.12 per share, for the second quarter of 2014.^[718]

Adjusted EBITDA Increased 64% YOY

Elliot Noss reported in the second quarter earnings report conference call that "adjusted EBITDA of Q2 increasing 64% year-over-year to 5.4 million bringing our total for the year-to-date to 12.3 million."^[719]

Tucows Increases Guidance for Adjusted EBITDA from $20 million to $25 million

Elliot Noss reported in the second quarter earnings report conference call that Tucows "had a strong first half and now feel it appropriate to increase guidance for 2015 from $20 million of EBITDA to $25 million of EBITDA. This is a strong performance and one that bodes well for the future. In many ways their current performance reminds of 2012 - 2013 when we were investing in Ting Mobile. We were able to continue to grow the business well investing in and launching a completely new revenue stream in a way that made the investment seem invisible and painless to investors."^[720]

Tucows Generated $2.2 million in Cash Flow

Tucows announced on August 6, 2015 that cash and cash equivalents at the end of the second quarter of 2015 were $15.3 million, up from $8.3 million at the end of the fourth quarter of 2014 and $14.2 million at the end of the second quarter of 2014. During the second quarter of 2015, Tucows generated cash flow from operating activities of $2.2 million.^[721]

Tucows Invested $1.1 million, Primarily in Ting Fiber

Tucows announced on August 6, 2015 that the company invested $1.1 million to acquire additional property and equipment, primarily investing $0.8 million in expanding Ting Internet’s fiber footprint.^[722]

Tucows Repurchased 25,000 Shares in Q2

Tucows announced on August 6, 2015 that the Company used $0.5 million in cash to repurchase 25,413 shares of its common stock under its ongoing share buyback program.^[723]

August 6, 2015: Ting Mobile Continues to Grow

Ting Mobile Added 10,000 Accounts and 16,000 Devices in the 2nd Quarter

Elliot Noss reported in the second quarter earnings report conference call that "Ting Mobile saw continued growth in Q2 and a bit of rebound, averaging over 10,000 accounts and 15,000 devices bring our total at the end of the quarter to more than 113,000 accounts and a 178,000 devices" compared to 9,000 additional accounts in Q1.^[724]

Ting's Churn Rate is 2.5%, Average Monthly Customer Spend is $35, Gross Margins Are at 50%, and Acquisition Costs are Under $100 Per Customer

Elliot Noss reported in the second quarter earnings report conference call that "the key metrics of the Ting Mobile business remained consistent." According to Noss, churn is about 2.5% of Ting's base each month, customers spend about $35 a month, gross margins are around 50% and cost per acquisition continue at under a $100.^[725]

Ting Mobile is Still Recovering from the Sprint FED Issues

Elliot Noss reported in the second quarter earnings report conference call that "we’re still not at levels that we are satisfied with" after the issues with the Sprint FED in the first quarter. "Coming into the second half of this year, we have a great opportunity with Ting Mobile to get additional returns on incremental operational improvement. We have clear consistent requirements and processes now for Sprint devices to come to the service. It is more complicated than it was, [but] at least it is settled. We have a choice of two nationwide networks and we can now accept a far greater of a percentage of owned devices."

"We have a much better handle on the drivers of customer support interactions with the redesign of the business processes and we have a staffing plan to keep us out in front of it. Perhaps most importantly we now have a greater abundance of prospects to convert. In our first three years just about any improvement we made to our offering or our conversion produced relatively small returns while very few people knew who we were."

In answer to a question from Hubert Mak of Cormark Securities Noss added that "hold times are too long [so] the customer service experience is not what we want it to be and we think that impacts conversion and referrals. So we think that’s still a drag and that’s primarily because the changes that we have had to make to both the changes in the Sprint supply chain and new policies with the introduction of GSM have changed our customer service ratios. We had to internalize a lot more of the supply chain and it's just changed the customer service ratios and the amount of customer service we have to put into conversion."^[726]

Ting Mobile Has Turned Marketing Back on

Elliot Noss reported in the second quarter earnings report conference call that in Q1 Ting Mobile's customer support team was struggling to keep up with call volume and shut down all marketing and promotional activities until Tucows could get back to the level of service that has defined and propelled the Ting brand. However Noss added that Ting Mobile has now caught up sufficiently to the increased demand brought up by changes in Sprint and that by the end of May "we started marketing the service again and by the beginning of June we’re at full throttle."

"With the Consumer Reports rating in December, the interest in our fiber initiative over the past couple of months, and a growing customer base spreading the word to their friends every day, we appear to have muscled our way into millions of daily discussions of cell phone providers. We see it in our website traffic and our support interactions both of which reached all-time highs in Q2. What that means to us is that we can get significant returns on improvements to our user experience, before, during and after activation. We have a long backlog of screws to be tightened on our website, in our programs that generate leads, and in our sales and support processes and we see those as ways to turn more of this demand into customers."^[727]

Ting Mobile Expects to Add 10,000 New Customers in the 3rd Quarter and Quarters Ahead

Elliot Noss reported in the second quarter earnings report conference call that "June was our second largest month of gross adds ever following this past December, it brought us back over the 10,000 net add benchmark that we had slipped below briefly with the events of Q1 and hope to stay above in quarters' ahead."

In answer to a question from Hubert Mak of Cormark Securities Noss added that "right now Q3 probably looks similar to in the range of Q2. Q4 is always a funny one because it's got the Christmas season in it. We’re still dealing with changes in the way we have had to do business that have caused the customer service performance to not be what it was. So yes there was a chunk of Q2 where we weren't marketing and yes we have started to turn it back on but if you gave me a choice between no marketing and customer service where we want it to be or full marketing and customer service performing at a mediocre level I will take the former over the latter. Ting is very, very driven by the customer experience and so we’re pretty heads down around that and so until we see that come clean, we’re not trying to push too hard."^[728]

GSM Is Now a Solid Part of Business But Ting Mobile Does Not Plan to Break Out Sprint versus GSM Service

Elliot Noss reported in the second quarter earnings report conference call that Tucows is signing up a lot of people on the GSM side, but "we’re making a conscious decision not to provide break outs between the two services but I'm comfortable saying that GSM is a lot of what people thinking about."

"GSM is now just a solid part of the business. If you go through our purchase path you will see that we really let the choice of the phone that you have in your hand drive which network you’re using for that phone. Over time we may start to see geography figure into some of that as our customers help get smarter in particular markets." Noss added that Tucows is not yet seeing a willingness from either of our partners to let Ting Mobile do some of the things that Google is doing but "we will keep pushing."^[729]

August 6, 2015: Ting Fiber is Growing

Ting Fiber Launched in Charlottesville and Costs Are in Line With Assumptions

Elliot Noss reported in the second quarter earnings report conference call that Ting Fiber's costs so far seem to be in-line with assumptions and "we’re increasingly confident that we can scale this service."

"Ting Internet launched in Q2 in Charlottesville, Virginia. We lit up our first beta gigabit customers in May allowing customers to start signing themselves in early June and they are operating at or near capacity ever since. Meanwhile we’re rapidly building up fiber network to cover the entire city and have already reached over 3000 serviceable addresses. In our other launch market Westminster, Maryland where the city is building the network and playing the dual roles of network operator and service provider, we co-hosted a fiber lighting ceremony in late June and expect to start signing up customers in mid-August. We continue to receive praise for our unique public private partnerships there, the National Association of Telecommunications Officers and Advisors or NATOA recently recognized Westminster and Ting as innovative partnership of the year as part of their 2015 community broadband awards. At this stage our focus is on optimizing our processes from network build-out in Charlottesville to scheduling and reforming a high volume of customer installs to tracking and managing customers actual internet usage. We’re also identifying opportunities to improve the user experience and minimize support. All of that is going well."^[730]

The Right Way to Look at Ting Fiber is That They Are Nice Small Profitable Businesses

Elliot Noss reported in the second quarter earnings report conference call that the right way to look at Ting Fiber in Charlotesville and Westminster is they are nice profitable small businesses, each in and of themselves. "So if we can pull 1 million, 2 million, 3 million, 4 million in EBITDA a year out of the market we think that’s fantastic and it's fantastic relative to the investments, relative to the effort." The financial models for these businesses look good. The small population markets in Charlottesville and Westminster are in the sweet spot of our population size and each of those markets will be profitable on their own.^[731]

Tucows Is Experimenting with Ting Fiber and is Comfortable Looking at Smaller Markets

Elliot Noss reported in the second quarter earnings report conference call that Ting Fiber is "very comfortable looking at smaller markets than Google is." According to Noss, Tucows thinks there are potentially some very interesting opportunities in smaller towns and cities and is testing some core assumptions and experimenting. One of the things Ting Giber wants to do is experiment with how small we can feasibly operate. "If we can take on small bites of profitability that’s just a fantastic opportunity both from a competitive standpoint and from a sort of number of opportunity standpoint."

"One of the things that fundamentally separates us from Google is that we are willing to work with cities in a number of different ways, across a different models and cities like that. They like to be able to be able to consider a public private partnership but I can tell you that the cities that have gotten excited for Google and we have subsequently spoken to they have been well primed and the discussions tend to be a little bit smoother."^[732]

Tucows Wants to Grow Ting Fiber in a Measured Way While Limiting Downside Risk

Elliot Noss reported in the second quarter earnings report conference call that by the end of 2016 Ting Fiber could be in up to 7 to 8 fiber markets. According to Noss, Ting Fiber's limiting factor is not finding cities that want to work with us and have us come and build fiber or build fiber themselves and partner with us but our limiting factor is that we want to continue to crawl, walk, and run as we learn how to run this business profitably. "This business is a complicated business so that feels like the right size of ramp and in addition the right amount of capital to deploy as we’re starting to put some bones on what 2016 might look like. We don’t want to go from a current level of capital deployment and just all of a sudden start spending like crazy. We want to do this in a measured way and one of the things we’re very attentive to is downside risk." According to Noss that's something that’s very important to Tucows "because as you know we pride ourselves around capital allocation and return on equity."^[733]

August 6, 2015: Domain Business is Steady and In-Line With Expectations

Elliot Noss reported in the second quarter earnings report conference call that the domain services side of the business performance was in-line with expectations solidly in Q2 especially outside of the declining expiring stream business with particularly promising results in email^[734]

Hover Shows Strong Growth

Elliot Noss reported in the second quarter earnings report conference call that Hover continues to show "strong growth with increases in both revenue and gross margin of over 18% year-over-year and growth from the customer base of 14%. We launched an exciting new initiative in Q2 called Hover Connect that will enhance the customer experience and has the potential to ultimately drive more customer acquisitions through partnerships. Hover Connect allows our users to easily connect their Hover domains to their favorite web services without DNS modifications, the users simply choose it's which site building service he is using or she is using from a menu of popular choices of Hover and Hover automatically points the domain to the appropriate website. It highlights one of Hover's greatest competitive advantages that we do not attempt to lock users into our own site building or hosting service. It also simplifies the trickiest aspect of the domain name experience, the link to the webhost. In addition to improving the Hover experience we’re hopeful this feature will be appealing to the site building services as they consistently identify connecting with domain registration as perhaps their greatest pain point."^[735]

OpenSRS Shows Flat Growth

Elliot Noss reported in the second quarter earnings report conference call that "registration on OpenSRS were up 2% driven by an outstanding renewal rate of 79%, once again our highest renewal rate outdoor [ph]. Perhaps even more impressive that included a 70% of new gTLDs with a large percentage in their first year of renewal. We added 52 more gTLDs in Q2 and by the end of the quarter 2100 resellers had registered at least one new gTLD up from 1900 at the end of Q1 and in addition to the promise of incremental revenue from these resellers this adoption across more services ultimately fosters key relationships and secures the revenue on our core gTLDs. OpenSRS continue to find growth in all corners of the world in Q2, new registrations from outside North America and Western Europe were up 16% year-over-year and represented a new high of 25% of all new registrations in the quarter."^[736]

Tucows Has an Opportunity for Growth in email Services

Elliot Noss reported in the second quarter earnings report conference call that there is "some growth coming back to our email business primarily the result of Google no longer supplying Gmail to ISPs. Long time investors will remember that years ago we lost big pieces of business to Google as they got into this market. They have now effectively exited."^[737]

July 31, 2015: Ting Fiber Looking at Five or Six New Markets for 2016

Triangle Business Journals reported on July 31, 2015 that Ting Fiber plans to expand its high-speed fiber Internet as Elliot Noss hinted in an interview that North Carolina's Research Triangle could be under consideration for Ting expansion. “I think the safest thing to say is that we are interested, we are in the process of working through our 2016 pipeline,” says Noss. “We’re looking at where we’re going to bring fiber in 2016. We are probably looking at going forward with five or six markets, and North Carolina is one of the leaders in the country in fiber to the home. I think that’s been true since Wilson in the early days, and now Google coming to a couple of markets and AT&T is responding, so there’s certainly a lot happening." Ting is looking to move on its fiber expansion quickly, and a decision on the pipeline for 2016 should happen “in the next few months,” says Noss.

“The first thing we look for when we’re engaging with a city or town is an understanding that this is something they deeply want to do,” says Noss. “We don’t take meetings with cities who want to hear about why they should have fiber or gigabit connectivity.” “North Carolina might be the first state in the union that has moved from where cities and towns are looking at fiber as a way to differentiate and to lead,” adds Noss. “(North Carolina) is seeing it almost defensively: We need it for our survival because we’re surrounded by it.”^[738]

July 15, 2015: Where next for Ting Internet?

Director of Ting Networks Adam Eisner responds to a question from Nicholas K, who wonders if Ting is planning on expanding Ting Internet outward from Charlottesville or looking into regions all across the US.

July 15, 2015: Short Interest in Tucows Doubles in Last Thirty Days

Nasdaq reported on July 15, 2015 that short interest in Tucows doubled from 218,845 shares on June 15, 2015 to 459,756 shares on July 15, 2015.^[739]

Settlement Date	Short Interest	Average Daily Volume	Days to Cover
07/15/15	459,756	132,057	3.48
06/30/15	283,367	144,477	1.96
06/15/15	218,845	157,296	1.39
05/29/15	123,846	180,110	1.00
05/15/15	17,266	64,995	1.00
04/30/15	17,900	24,705	1.00
04/15/15	22,660	23,076	1.00
03/31/15	22,813	28,070	1.00
03/13/15	21,644	31,106	1.00
02/27/15	5,555	24,936	1.00
02/13/15	8,584	41,265	1.00
01/30/15	8,777	34,167	1.00
01/15/15	14,421	34,980	1.00
12/31/14	8,903	47,205	1.00
12/15/14	7,602	23,796	1.00
11/28/14	5,877	45,592	1.00
11/14/14	9,055	24,857	1.00
10/31/14	17,927	20,120	1.00
10/15/14	32,537	28,828	1.13
09/30/14	41,433	29,234	1.42
09/15/14	31,630	20,791	1.52
08/29/14	35,647	16,929	2.11

July 23, 2015: Tucows is Hiring in Toronto

YongeStreet reported on July 23, 2015 that Tucows is adding developers to its team. "According to Tucows' job posting, the majority of the position involves the design and development of backend applications. Given that, knowledge of coding languages like PHP, Perl and Python is considered an asset. Check out the company's posting on the Ladies Learning Code job board for more information. The company is also hiring a senior user experience designer."^[740]

June 27, 2015: Short Interest Increases on Tucows Stock

The Daily rover reported on June 27, 2015 that short interest in Tucows stock (TCX) on June 15, 2015 is at 218,845 shares, 2.4% of floated shares. This is an increase of 94,999 shares from the short interest on May 29, 2015. With a average daily trading of 157,296 shares, the days to cover are between 1 and 2.^[741] According to Investopedia, short interest provides one measure of whether there is weaknesses in a stock price "that the market may not have discounted yet or a company that is simply overvalued."^[742] "Short interest gives you a sense of how pessimistic, or "bearish," the market is toward a particular stock's price. Investors who think the price of a stock is going to fall can bet money on their belief, and short interest tells you the extent to which they have done so."^[743]

June 15, 2015: Ting Fiber Network Now Available to Thousands of Charlottesville Homes

Tucows announced on June 15, 2015 that starting last week thousands of Charlottesville, Virginia residents signed up for Gigabit Internet service putting Charlottesville on par with other pioneering US cities with Gigabit Internet service like Chattanooga, Tennessee and Lafayette, Louisiana, along with world-leading cities like Seoul, Stockholm and Tokyo. According to Tucows gigabit service creates a huge competitive advantage for Charlottesville businesses allowing every member of a Charlottesville household to be streaming, gaming, video conferencing and browsing at the same timeand facilitating healthcare and fosters education. Ting's network now reaches about 3,000 homes and businesses, with a plan to cover the neighborhoods of North Downtown, Martha Jefferson, Locust Grove and Belmont in 2015 and the entire City in 2016. The service is available at ting.com/internet for $89/month. "I estimate that fewer than 50 of the nearly 20,000 towns and cities in the country currently have an affordable gig available to a reasonable amount of residents," says Christopher Mitchell, Community Broadband Networks Director, Institute for Local Self-Reliance.

“I am thrilled with how the network and the service are coming along and delighted for the people of Charlottesville, but I am not at all pleased with the timing of this press release,” grumbled Elliot Noss, CEO of Tucows and Ting. “AT&T and Comcast have managed to get press releases out years before their Gigabit services have come to market. Ours comes over a week after launch. We clearly need to pick it up a notch.”^[744]

May 29, 2015: Tucows Breaks the MicroCap Barrier

According to Tucows 10-K as of March 6, 2015 the number of shares outstanding of Tucows common stock was 11,081,390. Using this number and the closing prices for TCX, Tucows Market Cap exceeded $300 Million for the first time on May 29, 2015.

Date	Closing Price	Shares Outstanding	Market Cap
May 26, 2015	25.42	11,081,390	281,688,934
May 27, 2015	26.37	11,081,390	292,216,254
May 28, 2015	26.75	11,081,390	296,427,183
May 29, 2015	27.26	11,081,390	302,078,691
June 1, 2015	27.68	11,081,390	306,732,875

The term microcap stock (also micro-cap) refers to the stock of public companies in the United States which have a market capitalization of roughly $50 million to $300 million.^[745]

May 7, 2015: Tucows Announces First Quarter Financial Results

On May 7, 2015 Tucows reported strong financial results for the first quarter of 2015. “Continuing our momentum of last year, the first quarter was an excellent start to 2015,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc. “With each quarter, the growth in Ting Mobile is having a greater impact on our financial results as we benefit from the operating leverage in our business. That impact is evident in the continued expansion of our gross margin percentage, which grew to 28%² from 24%² for the same quarter last year, while Adjusted EBITDA more than doubled to $6.9 million positioning us to come in comfortably above our previous guidance of $20 million for the full year. We look forward to continued growth in Ting Mobile alongside solid performance from our domains business as we ramp towards the launch of Ting Internet, our fiber-to-the-home initiative, later this year.”^[746]

May 7, 2015: Tucows Announces Growth in Ting Mobile

Ting Mobile is Becoming the Engine for Growth at Tucows

Elliot Noss reported in the first quarter earnings report conference call that it is clear that "Ting Mobile is providing the financial leverage we had hoped and expected. The additional cash generation combined with the consistent contribution of the Domains business, should make for continued strong results."

"With each quarter, the growth in the Ting Mobile business is having a greater impact on our financial results as we benefit from the operating leverage in the business as a whole."^[747]

Ting's Average Monthly Customer Spend is $35, Gross Margins Are at 50%, and Acquisition Costs are Under $100 Per Customer

Elliot Noss reported in the first quarter earnings report conference call that "the financial results are as healthy as ever, with customers spending about $35 a month, gross margins at around 50% and cost per customer acquisition under $100."^[748]

Ting's Churn Rate is Just Above 2%

Elliot Noss reported in the first quarter earnings report conference call that Ting's churn rate "has dropped to just above 2%, our lowest level since tracking and reporting that metric."

"Most importantly, our customers have stuck by us through a difficult time. Our forums and social media are filled with appreciation for our effort and honesty in addressing the issues, and our customer satisfaction surveys reinforce that approval."^[749]

Note: This is a big improvement over previous quarters where the churn rate has been reported as 2.5%.

Ting Added 9,000 Customers and 16,000 Devices in the First Quarter

Elliot Noss reported in the first quarter earnings report conference call that "Ting Mobile added over 9,000 accounts and almost 16,000 devices in Q1, bringing us to 103,000 active accounts and 163,000 active devices."^[750]

Growth in Number of Customers Was Disappointing As the Result of a One Time Event

Elliot Noss reported in the first quarter earnings report conference call that "while that represents an impressive 10% growth in our base, it is disappointing, compared to the 10,000 to 12,000 accounts and 16,000 to 18,000 devices, we've added over each of the last several quarters. The good news that it's the result of a single lamentable but addressable event. On February 15th, Sprint changed the criteria for devices that are eligible to activate with Ting Mobile and other Sprint MVNO's. The intent was to deny devices that are tied to an obligation to Sprint. While we were told that the change was coming, neither we nor our customers were given visibility to which devices or how many devices would be rejected until the moment the change went live. When it did, an alarming 70% of devices that people were trying to activate on Ting Mobile were rejected, including many devices that were perfectly eligible by all stated criteria. We worked hard with sprint over the next several weeks to identify errors in the process and correct them, leading to the number of rejections falling to 30%. There are still a couple of outstanding issues and we continue to work with sprint to address them."^[751]

Ting Moved Quickly to Address the Problem

Elliot Noss reported in the first quarter earnings report conference call that Tucows "quickly moved to procure both temporary and permanent to address the volume. We quietly launched our GSM service on March 1st to give customers another option to activate devices. Meanwhile, we shut down all marketing and promotional activities until we could give every prospect and customer that reaches out to us the outstanding level of services that has defined the Ting brand as this continues to be how we expect to win long term, both in mobile and fixed internet."

"We had to bring people in to step up around a bit of a crisis and there is both with what we went through with some of the financial eligibility stuff and the launch of GSM, there's been a bit of a change in the sort of in the level of support that's needed and nothing there that long term fusses us, in terms of the cost model. In fact, I'd say, at a sort of all-in costs perspective, I was quite pleased at how we've been able to scale both from an operational perspective and from a cost perspective and that's not to say this wasn't a real bump. There's no question that it was. We've put our customer satisfaction it's the most important thing in the building. We were unhappy with what went on, but I really was quite pleased with the way we were able to come through."^[752]

Ting is Getting Back to Acceptable Service Levels and Conversion Rates

Elliot Noss reported in the first quarter earnings report conference call that Tucows is "just getting back to those acceptable service levels and back to acceptable conversion rates on our activation process and we are cautiously just starting to trumpet the Ting Mobile service again, and there was plenty to trumpet about our service and our business. Our GSM offering has made it more appealing, affordable and convenient than ever to give Ting Mobile a try. Customers are popping Ting GSM SIM cards into unlocked iPhone 6s, new mid-range Android devices, like the OnePlus One and every imaginable used market device that they already had or bought in the secondary market. Our net device ads per account in Q1 were the highest we've ever had, as our efforts to core families and businesses appear to be bearing fruit, and our GSM offering makes it easier than ever to bring multiple devices or add more."^[753]

Ting Has Not Yet Turned Marketing Back On and the Marketing Team is Chomping at the Bit

Elliot Noss reported in the first quarter earnings report conference call that Ting has not yet turned back on marketing. "We hope that as we turn marketing back on, we'll start to see some pick up there. We don't know what the lag is going to be like and that's one of the things that'll be interesting to learn through this process and we're also and have been working on improving the process around GSM. So, we certainly felt that when we launched it, it was a little sub-optimal. We've been refining it and we think we'll see some pickups going forward, but all of that, so sort of the impact of re-launching the marketing, the impact of reworking around GSM, it'll all be things I'll be able to talk about in a lot more detail next quarter."

"I've got a marketing team that's kind of chomping at the bit right now and, as you can imagine, they've had both refinements on it with the good thing marketing and new ideas to play around with. So, I mean, I'm always encouraging them to conduct intelligent experiments and I don't mind them having those experiments cost money."

"There's some portion of the marketing effort that I would describe as steady state. It's the podcast sponsorships, the YouTube sponsorships, the referral fees, the coupon codes. The stuff we generally do from Facebook, AdWords et cetera and then you're going to have other things we're trying. Now, you can have two very different types of efforts. We could be experimenting with television and then contrast that with experimenting with some channel efforts, one is very cash intensive, the other costs almost nothing. So, they'll have very different profiles. So, it's almost going to depend more on the nature of the experimentation in that quarter."^[754]

Ting Is Not Seeing More Aggressive Pricing from Competitors

In answer to a question from Hubert Mak of Cormark Securities, Elliot Noss reported in the first quarter earnings report conference call that Ting is not seeing more agressive pricing from competitors and that the launch of Google's MVNO has actually brought awareness to Ting. "In the quarter, we haven't seen anything new. So, it's as it was. I mean, my reset on that, which I think, I'd spoken some length about last quarter is it's a lot more competitive now than it was a year or two years ago, but we saw nothing change in the quarter, and I'd include in that, is the launch of Google which actually brought some awareness to us and we think it's a very interesting for a couple of reasons primarily around what they've done with multi-home SIMs and global roaming, we think those are just sort of positive impacts on the industry as a whole and we think that, it's a creative offering, but not one that we're much worried about competitively."^[755]

Ting Is Not Worried About Google

In answer to a question from Alex Rackwitz of Samphire about what percentage of Ting customers have Nexus 5 and Nexus 6 phones, Elliot Noss reported in the first quarter earnings report conference call that "at its peak, the Nexus 5, was kind of 15%, 17% of our adds. The Nexus 6 is a lot more expensive of a phone. So, we're seeing Nexus 6 way below that. And that was in a run rate basis."

"By the way, if you're looking at sort of -- if you're worried about Google -- Nexus 5 does not currently work with Google. So, I know there's some talk that they could turn it on for the 5, knowing what I think they want to accomplish strategically, I don't know that they'll do that, but in any event, combined, boy those will comfortably be sub-10%. Michael Goldstein who runs acquisition is sitting here. He was guessing 8, I would probably guess, but it's really that more 5%, 6% and that's 5 and 6 combined with the majority of that being 5."^[756]

May 7, 2015: Ting Internet Is Just Getting Started

Elliot Noss reported in the first quarter earnings report conference call that "Ting Internet now enters the stage where there is a lot to do and not a lot to report. In Westminster, Maryland the town is building out the fiber network, starting with four core neighbourhoods. In Charlottesville, Virginia where we acquired local internet service provider, Blue Ridge InternetWorks, we have integrated those people into the broader company and are now working together to leverage, upgrade and expand the fiber network there."

"At the same time, we've been developing the Ting Internet service that will provide access to these networks, including an eligibility check to determine whether an address is serviceable and processes for sign-up, installation, activation and monthly billing. Both the product and customer support will be deeply integrated with our mobile service, leveraging the same interfaces, processes and people."

"You're not going to see the Ting Internet business get to even a portfolio level of revenue this year. We're going to keep you apprised because we think obviously long term strategically very important business. So, we want to be thoughtful about the operating metrics we put out and allow you to follow along and home as we always like to do, but in terms of meaningful for this year, I wouldn't think twice about it."^[757]

May 7, 2015: Domain Services Continues to Perform Well

Elliot Noss reported in the first quarter earnings report conference call that domain services continues to perform well. "On OpenSRS, domain transactions were flat year-over-year, yet our Domain gross margin grew by over 6%. In fact, our gross margin for Domain here in Q1 was the highest it's been in seven years. The results of a continual shift in mix towards higher margin products including country code TLDs and new generic TLDs. The contribution of this business after expenses is up even more year-over-year, as we continue to be more efficient and effective. We also continue to be more focussed on servicing the unique need for webhosting companies and ISPs all over the world than any of our competition. We added another 32 new gTLDs to our offering in Q1. More than 1,900 resellers have registered at least one new gTLD by the end of the quarter, up from 1,700 at the end of 2014."

"OpenSRS also produced a remarkable renewal rate of 77% in Q1, our highest renewal rate ever. That is well above the 73.5% that Verisign has predicted for all of.Com/.Net in Q1. We hope to get a chance to compare to that of GoDaddy when they report their Q1 earnings next week. This speaks to the inherent quality of our resellers end users. The biggest retail services tend to have a larger segment of customers that never use the domains they register and thus let them go upon expiration. Our domains are more consistently attached to hosting and other Internet services. They're powering businesses and organizations that are built to last."^[758]

May 7, 2015: Tucows Repurchased 408,000 shares in Q1

Elliot Noss reported in the first quarter earnings report conference call that Tucows repurchased a total of just over 408,000 shares for a total spend of $7.7 million. "At the time of our last call in mid-February we announced the renewal of our open market stock buyback programs, under which we have the ability to repurchase up to 20 million of our common shares until February 15th of next year. As Mike had noted, we were quite active with the program during the first quarter, repurchasing 214,089 shares for a total of $4.1 million. This is in addition to the approximately 194,000 shares we repurchased under the modified Dutch tender that closed in early January for just under $3.6 million."^[759]

May 7, 2015: Tucows Maintains Guidance of $20 Million in Adjusted EBITDA for 2015

Elliot Noss reported in the first quarter earnings report conference call that "we said last quarter that we expected adjusted EBITDA for this year to be in the $20 million. With the first quarter now in the books, it does look like we will be comfortably above that number."

"I wanted to take a moment to provide some clarity around our adjusted EBITDA metric. We have long relationships with a majority of our shareholders and it's been some time since we've provided a definition of adjusted EBITDA. As some of those shareholders have to varying degrees taken some of the profits off the table, we've seen new shareholders come into the stock, who've asked about how this metric is calculated. We have thus included a reconciliation of adjusted EBITDA to net income in the financial statements attached to our news release this quarter. We use this metric because we believe, adjusting for certain non-cash and other items enhances understanding of the performance of the business. The primary measure that we use for planning and budgeting purposes, incentive compensation and to monitor and evaluate our financial and operating results. It's the metric we use when we think about ourselves as owners of the business."^[760]

April 23, 2015: Google MVNO Announcement Coincides with Highest Traffic in Months to Ting Site

Michael Goldstein wrote on the Ting Blog on April 23, 2015 that Google's announcement of a new mobile service coincided with the most traffic Ting has had in months to their site. Every web site in the world covered the Google news but "Ting customers commented under half those stories that “Ting did (this or that) first” or “I’m only spending $23 a month” or “The best part about Ting is their customer service," writes Goldstein. "So the opportunity for us just mathematically dwarfs the threat."

Goldstein says that Google's entry into the MVNO space with Sprint and T-Mobile as partners will also benefit Ting because Google will push "our mutual carrier partners to develop all sorts of wholesale capabilities that we will now swoop in and leverage." "In many ways, Google (with their buying clout) offers a great hint of benefits that more providers and end users should soon enjoy. International roaming rates should keep getting lower for all of us. VoIP functions and features (originating with the carriers) should keep getting better."

According to Goldstein, Google has offered a great vision for network agnosticism but you have to buy a $649 phone to use the service while Ting might be the only provider that is absolutely indifferent between networks, operating systems, devices and activities that you perform on your device. "Ting offers complete unimpeded choice. For Ting customers, that often means activating a three-year old smartphone that they bought off their brother-in-law for a song. It also means that when we eventually launch an integrated VoIP solution (with what we need at the carrier level), it will be one that Ting customers can use on absolutely any phone they want. That’s simply our vision and we’re sticking to it."^[761]

April 23, 2015: How is Ting Internet coming along?

Michael Goldstein, VP of Marketing at Ting, gives the latest news around our gigabit fiber Internet service.

April 8, 2015: Things Are Getting Back to Normal at Ting After Problems with Sprint's FED

Andrew Moore-Crispin wrote on the Ting Blog that after the problems with Sprint’s financial eligibility date (FED) check that was announced on February 15, 2015, the situation at Ting is coming under control and customer service at Ting is starting to get back to normal.

Sprint’s financial eligibility date (FED) check put a serious crimp in the bring your own device to Ting program and pushed a lot of people to call us to find out what was going on. We pushed the Ting on a GSM network beta release up a little in order to offer some different options. The end result was us breaking our promise of no hold customer service. Marketing went into stealth mode while we sorted things out. We stopped most of the things we do to try to get new customers and instead jumped into the ticket and email queue to lend a hand there. The ship has been righted and it’s just about anchors aweigh. In keeping with the nautical theme, it will soon be steady as she goes.^[762]

Financial Eligibility Date Check

"When FED first hit, around 70% of devices that tried to come to Ting were being blocked by Sprint and only 30% made it past the gatekeeper. FED was casting too wide a net and catching devices it shouldn’t. Nexus and iPhone devices purchased directly from Google or Apple without any kind of carrier subsidy, for example," writes Moore-Crispin. "We’ve been working closely with Sprint to narrow FED’s focus and now, the numbers are reversed. 70% of devices that people attempt to activate on Ting pass FED check and 30% fail."^[763]

Ting on a GSM Network

"Ting on a GSM network is ready for prime-time," writes Moore-Crispin. "The beta label will be pulled off Ting on a GSM network soon. Ting on a GSM network is now ready for primetime."^[764]

Customer Service

"We broke our promise of no hold customer service. If you called us and didn’t get a real person on the line right away, we’re sorry. We take our customer service promises very seriously. We are on the road to recovery," writes Moore-Crispin. "Call volumes spiked to a level higher than we predicted in even our most dire of predictions as a result. Add to that the launch of Ting on a GSM network into open beta (in large part, an attempt to stop people getting rejected by FED from being left in the lurch) and the customer experience team was overrun."^[765]

Ting Plans to Soon Begin to Actively Recruit New Users

"We slowed down to fix the issues that lead to this broken promise and to mitigate the risk of it happening again. We stopped any initiatives to get new people in the door until we’re sure we’re meeting this promise once more," writes Moore-Crispin. "Very soon, we’ll be in a position to start turning the tap back on full blast, inviting and welcoming new people to Ting. We’re looking forward to looking forward."^[766]

March 20, 2015: How Tucows Went From Sharing Free Software in the 90s to Pioneering Municipal Broadband in the 21st Century

Jordan Pearson reported in Motherboard on March 20, 2015 that Tucows started out sharing free software in the 1993 on its founder's personal website. In 1995, it merged with a Toronto-based internet service provider. Since then, it's risen to prominence as one of the largest domain name registrars in the world, and in 2012 launched a scrappy startup mobile carrier in the US called Ting, which piggybacks on the Sprint network and is lauded by its customers for its transparent, pay-for-what-you-use pricing. Now, Tucows is going head to head with the biggest telecommunication companies in America by bringing Ting-branded gigabit fiber internet to the municipalities that want it. So far, that's amounted to two networks, one in Charlottesville, Virginia, and one Westminster, Maryland. "We were always very much in that service provider space," Tucows CEO Elliot Noss said of the company's long and winding history. "We took a lot of what we did in retail spaces, and we just applied it to mobile. For us, there's real commonality across all of those businesses. And underneath all of it is a deep love and respect for the internet."

Tucows is committed to a free and open internet. Tucows's website declares its support for pro-net neutrality organizations like Fight for the Future. The company has also spoken out against mass surveillance, raised money for digital rights group Electronic Frontier Foundation (EFF), and participated in the EFF's 2014 day of action against mass surveillance. Bunton was an original member of the Toronto-based digital rights think tank Citizen Lab. "Who are the world's most prolific hackers right now? They are a huge array of cybercriminals, and a huge array of state actors; it's like the political spectrum is a circle and it's bent upon itself," said Noss. "The internet is not broken. It is amazingly self-healing, and what it needs, and what we need, is more openness, more transparency, and more honesty, and not more secrecy and more control."

Tucows' focus on internet freedom has gotten it in trouble with US regulators. Tucows landed on the US Trade Representative's annual list of notorious markets due to the company's practice of not responding to takedown requests from companies alleging that Tucows registers domains for sites selling illegal goods. This is despite the fact that a domain name registrar has essentially no say in the content of the websites on its roster. "We get a ton of spurious complaints," said Graeme Bunton, the company's manager of public policy. "So, we take a very careful and considerate approach to every complaint we get, and that doesn't make everyone happy all the time."

Tucows was responsible for a legal first when Renner, a Brazilian retailer, filed an internal ICANN dispute against Tucows for buying the domain name renner.com, along with 30,000 others in a wholesale domain sale. Renner claimed that Tucows had purchased the domain name in bad faith—cybersquatting, basically. Tucows responded by taking the issue to open court in Ontario, a case which resulted in a legal first: the judge decided, for jurisdictional reasons, that domain names are personal property in the province and ruled in Tucows' favour. "When you file a [dispute], you're limited in the amount of evidence you can bring and there's no downside to taking that action," Noss explained. "If you wanted an extremely valuable domain name, and it's worth $200,000 to you, and it costs $5,000 to do a [dispute], then you might as well try your luck. We were trying to take away their lottery ticket to a cheap domain name."

According to Pearson, Tucows talks the talk, and up until now have walked it, too. But if the company becomes the major player it wants to be one day, it's going to be subject to the pressures faced by bigger companies when the feds come knocking for customer information. Will Tucows be able to hold the line? "There seems to be something in the DNA of the company that cares about a free and open internet—that's core to the company, and we will hold to that going forward," said Bunton after sighing and reminding me that it's been a long time since he was at Citizen Lab. "I can't imagine being in a world where we're rolling over." "The only thing I'd add to that is that we always do have to obey laws, and sometimes there are limits," said Noss. "Being creative in the way that you deal with those situations is important and often constrained."

Noss said that in five years, he expects Ting mobile and gigabit fiber internet to be the company's bread and butter, completing the transition from software distributor in the 90s to full-on internet service provider in the 21st century.^[767]

March 11, 2015: Tucows Files 10-K for FY2014

See also: * Tucows 10-K Filing for FY2014 March 11, 2015

Tucows Paid $3.6 Million for Their 70% Interest in BRI

"On February 24, 2015, Ting Fiber, Inc., one of our wholly owned subsidiaries, acquired a controlling ownership interest in the newly formed Ting Virginia, LLC and its acquired subsidiaries, Blue Ridge Websoft, LLC (doing business as Blue Ridge InternetWorks), Fiber Roads, LLC and Navigator Network Services, LLC (the BRI Group) for a consideration of approximately $3.6 million. Ting Virginia, LLC is an independent Internet service provider in Charlottesville, Virginia, doing business primarily as Blue Ridge InternetWorks. The BRI Group provides high speed internet access, Internet hosting and network consulting services to over 3,000 customers in central Virginia. We will satisfy the purchase price through an advance under our 2012 DLR Loan facility."

"In January 2015, we borrowed $3.5 million under our Amended Credit Facility in order to fund the acquisition of a controlling ownership in Ting Virginia, LLC. This borrowing is subject to the terms and conditions described in note 8 to the Consolidated Financial Statements."^[768]

Tucows Has Repurchased 108,605 Shares Since February 16, 2015 Buyback Program Was Announced

"On February 11, 2015, we announced that our Board of Directors had approved a stock buyback program to repurchase up to $20 million of our common stock in the open market and privately negotiated transactions. Purchases will be made exclusively through the facilities of the NASDAQ Capital Market. The stock buyback program commenced on February 16, 2015 and will terminate on or before February 15, 2016. As of March 6, 2015, we have spent a total of $2.0 million to repurchase 108,605 shares under this stock buyback program, and therefore, the remaining repurchase authorization is $18.0 million. All shares purchased by us under the stock buyback program will be retired and returned to treasury."^[769]

Tucows Has $26.2 Million Of Outstanding Foreign Exchange Forward Contracts Which Will Convert To CDN $29.3 Million

"As of December 31, 2014 the Company has $26.2 million of outstanding foreign exchange forward contracts which will convert to CDN $29.3 million. Of these contracts, $22.3 million met the requirements for hedge accounting. As of December 31, 2013 the Company had $26.5 million of outstanding foreign exchange forward contracts which will convert to CDN $27.8 million. Of these contracts, $20.6 million met the requirements for hedge accounting."

"We have performed a sensitivity analysis model for foreign exchange exposure over the year ended December 31, 2014. The analysis used a modeling technique that compares the U.S. dollar equivalent of all expenses incurred in Canadian dollars, at the actual exchange rate, to a hypothetical 10% adverse movement in the foreign currency exchange rates against the U.S. dollar, with all other variables held constant. Foreign currency exchange rates used were based on the market rates in effect during the year ended December 31, 2014. The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a decrease in net income for the year ended December 31, 2014 of approximately $2.4 million. There can be no assurances that the above projected exchange rate decrease will materialize. Fluctuations of exchange rates are beyond our control. We will continue to monitor and assess the risk associated with these exposures and may take additional actions in the future to hedge or mitigate these risks."^[770]

Beneficial Ownership of Tucows Stock by Officers and Board Members at Tucows

Tucows Officers and Directors	Transaction Type	Last Price	Elliot Noss (CEO)	Michael Cooperman (CFO)	David Woroch (EVP, Sales and Support)	Allen Karp (Co-Chair Board of Directors)	Rawleigh Ralls (Co-Chair Board of Directors)	Robin Chase (Director)	Erez Gissin (Director)	Joichi Ito (Director)	Jeffrey Schwartz (Director)	Carla Ann Goetz (EVP Human Resources)	Kenneth Derrick Schafer (EVP Retail)	Michael Goldstein (VP Marketing)
Shares Beneficially Owned per 10-K Filing on March 5, 2015	NA	NA	764,833	325,831	173,250	69,375	513,750	4,375	50,000	13,750	60,625	21,275	25	12,913

Salary, Bonus, Stock Owned, and Stock Options of Tucows' Major Officers

Major Officers	Salary	Bonus	Total	Shares of Common Stock Owned	Exercisable Stock Options	Unexercisable Stock Options
Elliot Noss – President and CEO	343,589	182,754	526,343	702,146	62,687	21,563
Michael Cooperman - Chief Financial Officer	269,206	128,121	397,327	260,082	65,749	13,751
David Woroch – Vice President, Sales	224,143	134,834	358,977	110,001	63,249	13,751

March 3, 2015: Sprint's New Financial Eligibility Date (FED) is Frustrating for New Ting Users

Andrew Moore-Crispin reported on the Ting Blog that the Ting support team is overrun due to circumstances outside of their control and there are several things happening all at once that are driving call volumes higher than anyone could have anticipated. Sprint’s new “financial eligibility date” (FED) check is driving the majority of the calls. "We still don’t have all the answers yet and so our project and development teams can’t design around it. As it stands, it’s a real pain point. We know all too well how frustrating it is and we sincerely apologize," writes Moore-Crispin. "The sheer volume of calls coming in is the root cause of us not picking up the phone as quickly as we want to. Our customer service team doesn’t follow a script and instead works on the mandate of helping people find actual solutions to problems. This as compared with the customer support norm of trying to get people off the phone as quickly as possible. That’s an exacerbating factor. To be clear, though, that mandate doesn’t change, even in times of stress like this."

"For the past couple of weeks it has been all hands to the pump. The various other Ting teams are helping the support team whenever we can. We’re jumping in to answer help requests as they come in. We’re not jumping in on the call queue and getting on the phones because we’d probably end up more a hinderance than a help," concludes Moore-Crispin. "This temporary spike in calls is just that, temporary. We just need to dig out from under the pile of calls and emails before we’re back to delivering on our promise of no hold customer service. In the interim, though, we’re very sorry if you get put on hold. This isn’t something we’re about to make a habit of."^[771]

February 24, 2015: Ting's GSM Offering Now in Open Beta

The Ting Blog announced on February 24, 2015 that Ting on a GSM network is now in open beta so anyone with a Ting GSM SIM card can activate it, slip it into an unlocked phone and get started with Ting. The biggest things that are missing on GSM at this point are international roaming and international long distance.^[772]

February 18, 2015: New Sprint Handset Policy Tangles Up 'Bring Your Own Device' Program

Phil Goldstein reported on Fierce Wireless that some customers are experiencing difficulties in bringing their phones over to Ting and other Sprint MVNOs because of Sprint's new policy that Sprint will block your device from being reactivated until they check if a customer still owes the carrier money.^[773] "The bad news is that some devices that previously would have had no trouble coming to Ting are now being blocked from making the move, basically because the owner hasn’t paid his or her final bill… most likely because they haven’t actually received that final bill," writes Andrew Moore-Crispin at Tucows. "We strongly urge our customers not to interrupt their devices’ active state for the time being. There is a chance that only by deactivating your device would you / we learn that it is considered by Sprint to be “financially ineligible,” i.e. is connected in some way to an account that owes Sprint some money. If a device is considered “financially ineligible” by Sprint, they will block any attempt to reactivate it until any outstanding balance is cleared."^[774]

February 11, 2015: Tucows Announces Fourth Quarter Financial Results

“The fourth quarter was a solid finish to a strong year for Tucows,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc. “The continuing growth in contribution from Ting Mobile, combined with steady performance of our Domains business, enabled us to deliver net earnings per share of $0.16 for the fourth quarter, bringing EPS for the year to a record $0.57, an increase of 43% over 2013. Importantly, we continue to realize the benefit from the operating leverage in our business as consolidated gross margin for the quarter grew to 26% from 23%, excluding the Portfolio Group, for the same period last year.”^[775]

Tucows Beat EBITDA for 2014 with $15 Million

"We finished the year above the top end of our guidance of 14.5 million to 15 million in adjusted EBITDA," said Elliot Noss during the 4th quarter conference call.^[776]

Tucows Expects EBITDA to rise in the Range of $20 Million for 2015

"We expect EBITDA to be in the $20 million range which is a fine outcome balancing growth in the business in short-term with creating greater opportunities for growth in the long-term," said Elliot Noss during the 4th quarter conference call.^[777]

Tucow Expects Ting to Be Tucows Largest Contributor in 2015

"As we look out to 2015 we expect to see continued strong performance from Ting Mobile which will become the largest contributor to and drive the bulk of growth in adjusted EBITDA," said Elliot Noss during the 4th quarter conference call.^[778]

There is Increased Price Competion in the Mobile Sector

"There is this headwind of increased price competition and frankly there is just a headwind of consistent churn on a growing base and then we have the tailwinds around the great customer experience, the strong order and performance in referral program, the scrappy marketing we do, the new opportunities that we uncover every quarter," said Elliot Noss during the 4th quarter conference call.^[779]

February 11, 2015: Tucows Announces Growth in Ting

Ting has 94,000 Customers at the End of Q4 Adding 11,000 Net Customers

"We added just over 11,000 accounts and 17,000 devices in Q4, 43% of those in December," said Tucows CEO Elliot Noss. "In 2014 we added 47,000 accounts and 73,000 devices, almost exactly doubling our totals to 94,000 active accounts and 147,000 active devices. Those net ads include churn that remains in the range 2% to 2.5% monthly."^[780]

Customers Spend $35 a Month on Their Phone Bills, Gross Margins are 45 to 50%, Acquisition Costs Are Under $100 Per Customer, and Churn is Between 2 and 2.5%

Customers spend about $35 a month on their phone bills, gross margins are still in the range of 45% to 50%, we spend under $100 to acquire a customer, we’re now adding about 18,000 new customers on a gross basis each quarter and continue to churn between 2% and 2.5% of our base each month.^[781]

With GSM over 80% of Phones Will be Able to Come to Ting Up From 10% Previously

Elliot Noss said during the fourth quarter confrence call on February 11, 2015 that offering service on a GSM network will have a significant impact on device portability and choice because up until now only about 10% of existing phones could come to Ting. "Until now, only about 10% of existing phones could come to Ting. When we launched the GSM service, over 80% of phones will be able to come to Ting for just $9 investment in Ting’s new SIM card. For those wanting to bring a device of their own this just makes the total savings calculation that much more favorable, for those who wanting to buy a new device it greatly expands the options."^[782]

February 11, 2015: Tucows Announces $20 Million Stock Buyback Program

CNN Money reported on February 11, 2015 that Tucows announced that its Board of Directors has approved a stock buyback program to repurchase up to $20 million of its common stock in the open market. The stock buyback program will commence February 16, 2015 and will terminate on or before February 15, 2016. All shares purchased by Tucows under the stock buyback program will be retired and returned to treasury.^[783]

February 11, 2015: Ting No Longer Has to Wait for iPhone 6/6 plus on Sprint Network

9to5mac reported on February 11, 2015 that sources say Sprint is dropping a requirement that made the mobile virtual network operators (MVNOs) using its network—such as Ting, FreedomPop, Straight Talk, Boost, and Virgin—wait a certain period of time, usually at least a year, before offering support for the latest devices. For Ting, the moves comes just as it’s about to land support for almost all devices anyway as it makes a deal with T-Mobile to offer support for GSM devices on its network. In the past, Ting required customers to bring a Sprint supported, CDMA device when signing up with its plans, but in the coming weeks the carrier will also support GSM devices through the new deal with T-Mobile.^[784]

January 21, 2015: Google to Start an MVNO?

Paul Lily writes at Hot Hardware that according to subscription site The Information and the "three people with knowledge of the plans," Google will soon tap into networks belonging to Sprint and T-Mobile for its new service, buying wholesale access to mobile voice and data in order to make itself a virtual network operator. According to Lily, Google's interested in expanding its business outside of its core to "spur broader industry change." "Google's already doing this with its Google Fiber initiative, and since it's already a major player in mobile, offering cellular service isn't exactly a stretch," writes Lily adding that the project will be known as "Nova," and is reportedly being led by Google's Nick Fox, a longtime executive with the company.^[785] According to Mikey Campbell Google first reached out to Sprint over a potential MVNO partnership 18 months ago and employees have already beta tested the service. Campbell adds that the carriers have reportedly taken a wary approach to the proposed deal. Sprint, for example, is said to be inserting contract terms that trigger new negotiations if Google's customer base hits a certain level.^[786]

Ting Welcomes Google to the Fray

Andrew Moore-Crispin wrote on the Ting Blog of January 22, 2015 that Ting welcomes Google to the fray. "There are more than enough disenfranchised customers of the major carriers to go around. With three years in the game, we’re available to chat—to hangout, as it were—but it seems only fair that you buy whatever drinks will be had when we do." Moore-Crispin says that Google’s entry into the market will be the first a lot of people will hear about “MVNOs” as an alternative to the majors and just adds more legitimacy and helps to dispel the myth that MVNO customers get second-rate service. "We’ll put odds on our approach of putting customers in control of their devices and ultimately, their bills and of having real, human beings pick up the phone when it rings."^[787]

January 21, 2015: Ting Announces Beginning of GSM Rollout

Tucows announced on January 21, 2015 that Ting is on track to launch Ting on a GSM network in late February and is slowly inviting people into the early beta phases. "Our first batch of X1 SIM cards has arrived in Starkville, Mississippi. We’ve been testing Ting service across a wide array of devices since early December."^[788]

January 13, 2015: Ting to Be Network Operator of Internet Service to City-Owned Fiber Optic Network in Westminster, Maryland

The Whir reported that Tucows announced on January 13, 2015 that Ting has been selected to be the network operator of the city-owned fiber optic network in Westminster, Maryland that will initially reach around 9,000 homes and 500 businesses. “They believed that superfast Internet could bring and grow businesses, create jobs, increase property values and improve the quality of life for all residents,” said Ting VP of marketing Michael Goldstein. “They also realized that infrastructure that is crucial to the city, and likely will be for the next hundred years, should rightly be owned by the city.” “If a smaller, more customer-focused company player like Ting can pull off a win-win in a community like Charlottesville, it bodes really well for small towns and providers all over the country," said Ting senior content manager Andrew Moore-Crispin. "For the record, we’re confident we can pull off just that, otherwise we wouldn’t start down the path."^[789]

January 8, 2015: Tucows Dutch Auction Ends with Purchase of 193,907 shares at $18.50

Tucows announced in a press release on January 8, 2015 that their modified “Dutch auction” tender offer had ended with the purchase 193,907 shares of its common stock at a purchase price of $18.50 per share, for a total cost of $3,587,280, excluding fees and expenses related to the tender offer. The 193,907 shares accepted for purchase in the tender offer represent approximately 1.7% of Tucows’ currently issued and outstanding common stock. Following the payment Tucows will have approximately 11,135,825 shares issued and outstanding.^[790]

December 16, 2014: Ting Acquires Majority Stake In Blue Ridge InternetWorks, an Independent Internet Service Provider

Tucows Launches Ting Fiber. In December, 2014 Tucows launched Ting Fiber, a wholly owned subsidiary of Tucows, announcing that Tucows had entered into an agreement to acquire 70% ownership of an independent Internet service provider in Charlottesville, Virginia doing business primarily as Blue Ridge InternetWorks, a company that provides high speed Internet access, Internet hosting and network consulting services to over 3,000 customers in Central Virginia. “The expansion from mobile to fixed access is almost obvious for us,” said Tucows CEO Elliot Noss. “The only customers in the world more starved for great service and fair pricing than mobile phone customers are cable customers." This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who 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 issued a press release on December 15, 2014 reporting that Ting Fiber, a wholly owned subsidiary of Tucows, has entered into a definitive agreement to acquire 70% ownership of an independent Internet service provider in Charlottesville, Virginia doing business primarily as Blue Ridge InternetWorks, a company that provides high speed Internet access, Internet hosting and network consulting services to over 3,000 customers in Central Virginia. “The expansion from mobile to fixed access is almost obvious for us,” says Tucows CEO Elliot Noss. “The only customers in the world more starved for great service and fair pricing than mobile phone customers are cable customers. They deserve that. But we have an opportunity with BRI in Charlottesville to offer even more than great service at a low price. The step up to gigabit, or ultra high-speed, access is profound.” The founders of the BRI Group will remain with the company. The price and terms of the acquisition were not announced. The acquisition is subject to regulatory approvals and other customary closing conditions and is expected to close during the first quarter of 2015. “For shareholders, this is a rare opportunity," concluded Noss. "In one deal, we get customers, revenue, prospects, infrastructure and a wealth of fiber expertise. We get an inside track on a game changing technology.”^[791]

December 15, 2014: eWeek Says Sprint Won't Seek T-Mobile Merger Again

Todd R. Weiss reported on eWeek on December 15, 2014 that Sprint's parent company, Japan's Softbank, is no longer considering a rumored second attempt to acquire T-Mobile U.S., less than four months after the first merger attempt was dropped in August. According to Weiss, following the aborted merger attempt, Sprint shook up its executive ranks by replacing its CEO, Dan Hesse, with Marcelo Claure, the founder and CEO of Brightstar, a subsidiary of Softbank. Then in December, Sprint Chief Financial Officer Joe Euteneuer announced at an investor conference that things have been getting back on track at Sprint with huge progress made in getting the company's wireless network updated. Sprint had been experiencing network problems and customer losses due to service dissatisfaction in the recent past, but the company's network build-out is now "substantially complete" and will help drive a push for more subscribers, Euteneuer said. Sprint has also started some serious attempts to increase its customer base, thanks to a half-price wireless service offer it made recently to existing customers of competitors Verizon Wireless and AT&T if they move their service to Sprint.^[792]

December 9, 2014: Fiercewireless Says Ting Will Be Adding T-Mobile Support in February 2015

Phil Goldstein reported at Fiercemobile that Ting Director Scott Allan told FierceWireless that he could not say which GSM carrier Ting is working with due to contractual obligation however, a coverage map Ting provided to FierceWireless mirrors the national coverage footprint of T-Mobile. Customers will be able to bring unlocked GSM phones to Ting and purchase a GSM SIM card to work with the phone. Ting's GSM SIM cards will cost $9 or less, according to Allan. Allan said Ting only began discussing adding a GSM partner within the last six months but that the move fits with what Ting offers to customers. "It aligns with our brand," he said. "We want consumers to have choices. And we want consumers to have freedom. And we want to provide innovative services. GSM really ticks all those boxes for us."^[793]

December 9, 2014: Ting Will Support Latest Devices Including iPhone 6 in February 2015

The Ting Blog reported on December 9, 2014 that when Ting on GSM is live in February 2015, there will be no more waiting for the latest iPhone or Android device to be allowed on Ting. If it can be purchased unlocked, or if it can be carrier unlocked, it can come. What’s more, better than 80% of smartphones made in the last couple of years will be compatible with Ting. That will include the unlocked iPhone 6 or iPhone 6 Plus.^[794]

December 9, 2014: Ting to Add Service on a GSM Network

Tucows announced on December 9, 2014 that Ting has an agreement with a major US network provider to offer service on a GSM network that is slated to go live in February 2015 and will operate in concert with the existing CDMA service. Once live, CDMA and GSM devices can coexist under a single Ting account, sharing a single pool of minutes, messages and megabytes of data. “This is an industry first,” said Elliot Noss, CEO of Tucows and Ting. “Our goal has always been a mobile market where customers and their devices can move between carriers as they see fit. We think the power balance in the mobile industry is all off. Customers, not service providers, should hold the cards.”^[795]

December 8, 2014: Tucows Announces Dutch Auction Tender Offer

Tucows announced on December 8, 2014 that that it is commencing its "modified Dutch auction Tender Offer" (the "Tender Offer") to repurchase a number of its common stock not to exceed an aggregate purchase price of $8.0 million. Under the Tender Offer, shareholders will have the opportunity to tender some or all of their shares at a price within the range of $16.50 to $18.50 per share. Assuming that the offer is fully subscribed, if the Purchase Price is determined to be $16.50 per share, the minimum Purchase Price under the Tender Offer, the approximate number of shares that will be purchased under the offer is 484,848. Assuming that the Tender Offer is fully subscribed, if the Purchase Price is determined to be $18.50 per share, the maximum Purchase Price under the offer, the approximate number of shares that will be purchased under the offer is 432,432. Shareholders whose shares are purchased in the offer will be paid the determined purchase price per share net in cash, without interest, after the expiration of the offer period at 5:00 P.M., New York City Time, on Wednesday, January 7, 2015. ^[796]

December 7, 2014: Brian Nichols writes: Is 2015 Make or Break for Sprint?

Brian Nichols writes in an opinion piece in Seeking Alpha that Sprint has consistently lost customers for several years because of the poor quality the Sprint Network which recently was rated worst of the big four large telecoms by a survey in Consumer Reports. Sprint has recently announced an aggressive price cuttting plan, vowing to cut AT&T and Verizon customers' bills in half, in exchange for their business in the hope that aggressive pricing will lead to renewed interest in the carrier's services.

"The problem is that Sprint has lost 336,000 and 181,000 post-paid subscribers in its last two quarters, respectively," writes Nichols. "Not to mention, Sprint was recently voted the worst carrier in the U.S. by Consumer Reports. This means Sprint has to overcome quite a bit of negative consumer sentiment in its attempt to grow its subscriber base larger." According to Nichols if Sprint fails to attract new customers with its price cutting plan, it's tough to find a scenario where Sprint comes out on top. "As a result, I think a share price below $3 by the end of next year is very possible, and that a long-term price target of $0 is not out of the question. Needless to say, I would not invest in Sprint at any price, as I see no value based on the most likely of scenarios."^[797]

November 20, 2014: Consumer Reports Rates Ting Highest Among Wireless Providers

Consumer Reports Rates Ting Highest Among Wireless Providers. In Consumer Reports' annual cell-phone service comparison in November 2014, Ting came 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. 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.”. This web site is not affiliated in any way with Tucows. This web site is operated by a private investor who 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.

Justin Diaz reported at Android Headlines on November 20, 2014 that as part of Consumer Reports annual cell-phone service comparison Ting came 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. 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.”^[798]

“If you haven’t heard of the company before, there’s a reason for that: The service’s parent company, Tucows, is a domain name registrar and has made a business decision to not spend a lot on Ting-related advertising, instead choosing to offer lower-priced services. Considering they received the top spot on value, it appears they are performing well here."^[799]

November 20, 2014: Consumer Reports Rates Sprint as Worst Mobile Network

Brian Nichols reported at Motely Fool on December 1, 2014 that according to Consumer Reports. Sprint is the nation's worst cell phone service provider. Consumer Reports surveyed approximately 63,352 people across 26 major metropolitan areas. It found that Sprint received "dismal" marks in value, voice, text messaging, and 4G reliability. "That said, there are a few areas where Sprint's results may have been altered by consumer perception, rather than reality. For example, Sprint's wireless service plans are mostly all cheaper than the equivalent plans from AT&T and Verizon. So Sprint's "dismal" value ranking is a bit odd," writes Nichols. "Not to mention, Ting, a small carrier that ranked number one nationally in the survey actually uses Sprint's network. Ting is a mobile virtual network operator, further supporting the notion that consumer perception may be driving the results in this study."^[800]^[801]

Consumer Reports reached out to several of the carriers in their survey for comment. Elliot Noss, CEO of Ting, was ecstatic. "What we do is actually sort of obvious," he said. "We offer fair, honest pricing that doesn't penalize customers for using too much or too little. Our customers seem to appreciate it and we certainly appreciate this recognition from them."^[802]

According to Consumer Reports, Ting has perhaps the simplest plan of all—you pay a monthly fee for each device on the plan, then you are billed at the end of the month for the voice minutes and data that you use. The less you use, the less you pay. Both carriers scored high in our Ratings.^[803]

November 12, 2014: Tucows Announces Third Quarter Results

"In the third quarter we again saw the growing contribution from Ting in our financial results as our Domain Services businesses continued to deliver consistent, reliable performance," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "We achieved net earnings of $0.24 per share, bringing net earnings for the year-to-date to $0.40 per share, surpassing our total for the entire 2013 year. Consolidated gross margin increased to 26% from 21% a year earlier, excluding the Portfolio group, which benefited from atypical contributions in both quarters."^[804]

Ting has 82,000 Customers at the End of Q3 and Added 11,000 New Customers This Quarter

"I want to note, that while we added 11,000 accounts in Q3 we are now counting our total of active accounts at just over 82,000, which is only 9,000 more than the 73,000 we reported last quarter," said Tucows CEO Eliot Noss. "This is the result of a one-time change in how we measure active accounts."^[805]

"Ting continued its strong customer growth in the third quarter. We had a roughly 11,000 accounts and 17,000 devices, that represents a 15% increase in our customer base in the quarter, healthy growth for just about any business. But for Ting, it is in fact a bit of a slowdown," said Tucows CEO Eliot Noss. "Absolute net adds were slightly below both Q2 of this year and Q3 of last year. This is partly above the success of the iPhone 6 and 6 Plus launches during the quarter, devices we do not yet support on Ting. It is also partly about the climbing perception of the Sprint network relative to other major networks. And it also appears to be about aggressive new price promotions for major carriers to retain and acquire customers. Looking ahead, we believe each of these areas, device, network and price bring more opportunities for Ting growth than threats."^[806]

Ting Has 130,000 Devices at the End of Q3 and Added 17,000 New Devices This Quarter

"As I last quarter I will quickly summarize the Ting business for easy modeling. We finished the quarter at 82,000 customers with 130,000 devices," said Tucows CEO Eliot Noss. "Customers are spending about $35 a month on their phone bills. Growth margins are 45% to 50%. We spent under $100 to acquire a customer. We are adding about 16,000 new customers on growth basis each quarter and continue to churn about 2.5% of our base each month."^[807]

"Ting continued its strong customer growth in the third quarter. We had a roughly 11,000 accounts and 17,000 devices, that represents a 15% increase in our customer base in the quarter, healthy growth for just about any business. But for Ting, it is in fact a bit of a slowdown," said Tucows CEO Eliot Noss. "Absolute net adds were slightly below both Q2 of this year and Q3 of last year. This is partly above the success of the iPhone 6 and 6 Plus launches during the quarter, devices we do not yet support on Ting. It is also partly about the climbing perception of the Sprint network relative to other major networks. And it also appears to be about aggressive new price promotions for major carriers to retain and acquire customers. Looking ahead, we believe each of these areas, device, network and price bring more opportunities for Ting growth than threats."^[808]

Customers Are Spending About $35 a Month on Their Phone Bills

"Customers are spending about $35 a month on their phone bills," said Tucows CEO Eliot Noss.^[809]

Gross Margins are 45% to 50%

Gross margins are 45% to 50%," said Tucows CEO Eliot Noss.^[810]

Customer Acquisition Costs are under $100

We spent under $100 to acquire a customer.

Ting Expects to Add 16,000 New Customer Per Quarter

We are adding about 16,000 new customers on growth basis each quarter and continue to churn between 2.0 and 2.5% of our base each month.

Average Ting Customer Saves $60 per Month

"A recent audit of the Ting base revealed that our average customer has saved $37.57 per device a month since switching, that’s an average of nearly $60 per account," said Tucows CEO Eliot Noss. "Meanwhile McKinsey just completed an annual survey, revealing that for the second year in a row price is the number one consideration for customers changing mobile providers and the percentage for whom that is true has grown considerably."^[811]

Ting is No Longer Appealing to Just Early Adapters

"For the past couple of years, we’ve been fighting for our share of a small population of early adopters that are just satisfied and venturous enough to look beyond the major carriers for savings," said Tucows CEO Eliot Noss. "We believe the most important trend over the next year, will be more and more people joining that population recognizing that they can be paying less, looking beyond the four major carriers and discovering services like ours."^[812]

Survey Shows Price Is The Number One Consideration For Customers Changing Mobile Providers

Meanwhile McKinsey just completed an annual survey, revealing that for the second year in a row price is the number one consideration for customers changing mobile providers and the percentage for whom that is true has grown considerably," said Tucows CEO Eliot Noss. "That means price ranks above network coverage or device choice. And we know that last year was the first time that that was true in this McKinsey study.^[813]

Ting Made a One Time Accounting Change in How Tucows Measures Active Accounts

"This is the result of a one-time change in how we measure active accounts," said Tucows CEO Eliot Noss. "Specifically we have now removed all accounts going back throughout our history that we proactively suspended for nonpayment.^[814]

Tucows Will Go into 2015 Unhedged Against the US Dollar Which Could Add $1 to 1.5 Million Yearly EBITDA

"With the movement in the Canadian dollar over the past six or so months, I wanted to take this opportunity to provide an update on our hedging program. As a reminder, we generate revenue in U.S. dollars, but the majority of our operating expenses are in Canadian dollars and therefore, we engage in foreign exchange hedging to provide certainty around future costs. 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.^[815]

November 12, 2014: Tucows Announces Intention to Commence Dutch Auction Tender Offer

Tucows announced on November 12, 2014 that it expects to commence within 30 days of this announcement a "modified Dutch auction" tender offer to repurchase a number of shares of its common stock not to exceed an aggregate purchase price of $8.0 million. Tucows will select the lowest single per-share purchase price that will allow it to buy up to $8.0 million of its outstanding common stock at completion of the Tender Offer. The specified range is yet to be determined but is expected to be in the range of $16.00 to $18.00 per share. ^[816]

August 12, 2014: Tucows Announces Second Quarter Results

Ting Added 12,000 Accounts and 18,000 Devices

"Q2 was another solid quarter of customer growth for Ting," said Tucows President Elliot Noss. "On our last call, we projected that Q2 net adds would land somewhere between those of Q3 and Q4 of last year, or between 11,000 and 12,000 accounts. We ended up matching Q4, adding just over 12,000 accounts and 18,000 devices. That represents a 20% growth in our customer base in total, bringing our totals to over 73,000 accounts and 112,000 devices."^[817]

Ting Now Has 73,000 Accounts and 112,000 Devices

This has brought "our totals to over 73,000 accounts and 112,000 device" said Noss.^[818]

Churn Rate Was Between 2 and 2.5 Percent

"Churn for Q2, and in fact pretty consistently for the past year, was in the 2% to 2.5% range per month," said Tucows President Elliot Noss. "We provide this number for two main reasons. First, this is the number one data request from investors as they build out their financial models. We always try and provide as much transparency as possible in order to allow investors to track the business."^[819]

Customers are Spending $35 Per Month on Their Phone Bill

"Customers are spending about $35 a month on their phone bills," said Tucows President Elliot Noss. "Gross margins are 45% to 50%. We spend under $100 to acquire a customer. We’ve added 15,000, 16,000 new customers on a gross basis each of the last three quarters and have churned between 2% and 2.5% of our base."^[820]

Cost to Acquire a Customer if $100

We spend under $100 to acquire a customer," said Tucows President Elliot Noss.^[821]

Gross Margins Are 45 to 50 Per Cent

Gross margins are 45% to 50%," said Tucows President Elliot Noss.^[822]

Ting is the Primary Driver on Gross Margins

"Yes, but I think that the primary driver on gross margins will continue to be Ting’s percentage of the business," said Tucows President Elliot Noss. "So Ting is growing so much faster than the domain side of the business and has appreciably better margins. So that will be the primary impact. You’ll see margin continue to pick up, but slowly and on a decreasing percentage of the total business."^[823]

May 14, 2014: Tucows Announces First Quarter Results

Ting Had 61,000 Accounts and 94,000 Devices at the End of the Quarter

"Q1 was another record quarter for customer loyalty," said Tucows President Elliot Noss. "We added nearly 13,000 in accounts net and more than 20,000 devices, bringing our totals to more than 61,000 accounts and 94,000 devices at the end of March."^[824]

Ting Added 13,000 Accounts and 20,000 Devices

"Q1 was another record quarter for customer loyalty," said Tucows President Elliot Noss. "We added nearly 13,000 in accounts net and more than 20,000 devices, bringing our totals to more than 61,000 accounts and 94,000 devices at the end of March."^[825]

Ting's Gross Margin is Between 45 and 50%

Importantly, even after lowering our data pricing in February, our gross margin percentage remained in our targeted 45% to 50% range," said Tucows CEO Elliot Noss.^[826]

Churn Rate Was Not Given

"One, I'll be a lot more comfortable putting out a churn number when the Sprint network hopefully settled down in terms of having an impact over the next couple of quarters. I listened to their calls with great interest and I am looking forward to the call where they say, our network's no longer having an impact on churn because when impacts them, it impacts us," said Tucows CEO Elliot Noss.^[827]

May 6, 2014: What does Ting hope to accomplish in the next five years?

Director of Ting Networks Adam Eisner discusses what Ting would like to do in the next five years. "We changed things a lot for people using mobile carriers who aren't even with our service."

February 12, 2014: Tucows Announces Fourth Quarter Results

Ting Had 48,000 accounts and 74,000 devices at the End of the Quarter

Moving to Ting metrics, Q4 was another outstanding quarter. We added more than 12,000 accounts and more than 18,000 devices beating Q3’s record numbers and bringing our totals to 48,000 accounts and 74,000 devices at the end of December.^[828]

Ting Added 12,000 accounts and 18,000 devices During the Quarter

Moving to Ting metrics, Q4 was another outstanding quarter. We added more than 12,000 accounts and more than 18,000 devices beating Q3’s record numbers and bringing our totals to 48,000 accounts and 74,000 devices at the end of December.^[829]

Gross Margin and Churn Not Given for This Quarter

Importantly gross margin percentage, annual customer contribution and customer acquisition costs continue to be right where we would like them. Last quarter I talked about our rate of growth leveling off subsequent for the launch of iPhone 5C and 5S and iOS 7.^[830]

Ting Towns Get Fiber

Potential Ting Fiber Households by Community. This graph shows the number of households in each of the five 'Ting Towns' plotted against the earliest date that Tucows announced their contact with the community. Graph: Hugh Pickens

This section shows the chronology of Ting Fiber deployment in the cities Tucows has contracted with to provide FTTH services.

Other sections of this report on Tucows include:

December 2014: Chronology of Ting Fiber Rollout in Charlottesville (17,778 households)

Following is the chronology of Ting Fiber rollout in Charlottesville from the initial acquisition of Blue Ridge Interent in December 2014:

December 16, 2014: Ting Acquires Majority Stake In Blue Ridge InternetWorks, an Independent Internet Service Provider in Charlottesville
June 15, 2015: Ting Fiber Network Now Available to Thousands of Charlottesville Homes
August 6, 2015: Ting Fiber Lit up First Customer in Charlottesville in May and Costs Are in Line With Assumptions
September 8, 2015: Ting Fiber Announces Roll-Out Plans for Charlottesville for North Downtown, Belmont, Martha Jefferson and Locust Grove
November 5, 2015: Adoption in Charlottseville Has Been Encouraging with 4,000 Servicable Addresses
November 14, 2015: Ting Plans to Expand in Charlottesville in 2016 targetting Belmont, Martha Jefferson, Jefferson Park Avenue and Rugby Road
February 9, 2016: Ting Fiber is Active serving customers in most parts of Charlottesville
February 28, 2016: Ting Fiber moving into Fifeville, (Jefferson Park Avenue) and the Fry’s Spring neighborhoods and expects to have citywide availability within a year
May 9, 2016: The Backbone of the Buildout in Charlottesville Will Be Completed by the End of 2016
May 9, 2016: Ting Internet Has Launched a Campaign to Measure Demand in Charlottesville and Holly Springs
August 8, 2016: Virtually all Residents of Charlottesville Will be Able to Order Ting Fiber by the End of the Year
September 27, 2016: Ting Fiber Hosts Hiring Event in Charlottesville
November 7, 2016: Ting Internet has Doubled its Install Team
November 7, 2016: Ting Internet Now Passes Over 10,000 Potential Customers in Charlottesville
January 18, 2017: Ting Fiber Used Aerial Deployment in Charlottesville
February 7, 2017: Ting Internet Now Passes Over 12,000 Potential Customers in Charlottesville
February 7, 2017: Ting Internet Is Getting a 90% Converstion Rate in Charlottesville with Pre-Orders
March 3, 2017: Ting Considers Bringing Fiber-optic Internet Service from Charlottesville to Crozet
April 14, 2017: Elliot Noss Speaks about “What Can the Gig Do For Your City” at Hometown Summit in Charlottesville
April 20, 2017: Tucows CEO Elliot Noss Talks about Gigabit Fiber at Charlottesville's Tom Tom Founders Festival
May 9, 2017: Ting Internet Continues to See Growing Adoption in Serviceable Neighborhoods in Charlottesville
August 8, 2017: Tucows Has Spent a Lot of Time Re-auditing Charlottesville to Make Sure it Could Accept all the Growth that it Could
August 8, 2017: Charlottesville is Really Only Limited by How Many Customers we can Install in a Week

January 2015: Chronology of Ting Fiber Rollout in Westminster (7,161 households)

Following is the chronology of Ting Fiber rollout in Westminster from the initial acquisition of the contract to be network operator in January 2015:

January 13, 2015: Ting to Be Network Operator of Internet Service to City-Owned Fiber Optic Network in Westminster, Maryland
August 17, 2015: Ting Internet Is Now Available in Westminster, MD
November 5, 2015: Adoption in Westminster Has Been Encouraging with no more than 500 addresses that we can service
February 9, 2016: Ting Fiber is Active in Westminster MD, Charlottesville VA, and Holly Springs NC
May 20, 2016: Maryland Senator Ben Cardin Visits Ting Internet in Westminster
May 27, 2016: First Ting Makerspace Goes Live in Westminster
June 15, 2016: Why are You so Invested in Bringing Fiber into Westminster?
June 28, 2016: Clinton Campaign Praises Ting's Westminster Broadband Project
October 28, 2016: 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
November 7, 2016: There are about 300 serviceable addresses right now in Westminster. The city projects another 2,700 addresses finished by this time next year
February 7, 2017: The City Is Nearly Finished with Its Next Wave of Construction in Westminister and Ting Is Now Lighting Up Customers in These New Neighborhoods
February 12, 2017: The Future of Ting Internet at McDaniel College in Westminster
April 28, 2017: Ting's Project in Westminster is One of the Nation’s Most Closely Watched Public-Private Fiber Partnerships
May 9, 2017: Ting Internet Has Been Giving Westminster and Holly Springs a Lot of Attention in Recent Months
August 8, 2017: The Combination of Westminster and Holly Springs More than Doubled Our Customers and Operational Capacity
August 8, 2017: Growth in Westminster Is Limited by How Quickly the Town can Expand the Network
September 19, 2017: ADTRAN Teams with Ting Internet to Provide In-Home Healthcare Monitoring in Westminster

October 2015: Chronology of Ting Fiber Rollout in Holly Springs (8,147 households)

Following is the chronology of Ting Fiber rollout in Holly Springs from the initial announcement of the contract in October, 2015:

October 20, 2015: Holly Springs is Set to be the Next Ting Internet Town
November 5, 2015: Ting Internet Hopes to Start Servicing Customers in Holly Springs in Summer 2016
November 18, 2015: Ting Internet is now assessing demand in Holly Springs and the expects the first customers to come online around early summer.
January 14, 2016: Ting Fiber Begins Pre-Orders for Holly Springs
February 9, 2016: Ting Fiber is Active in Holly Springs NC
May 9, 2016: Ting Internet Has Launched a Campaign to Measure Demand in Charlottesville and Holly Springs
June 1, 2016: Fiber Network Construction in Holly Springs to Begin in August 2016. The initial roll-out plans include Holly Glen, Holly Pointe, Autumn Park and Morgan Park.
August 8, 2016: Ting Internet Expects to Have Homes in the neighborhood of Holly Glen in Holly Springs Connected by the end of 2016
October 17, 2016: Video of How Ting's Fiber Network in Holly Springs is Being Built
November 7, 2016: Ting Internet Expects to Light Up the First Customers by the End of 2016 and get to around ten thousand serviceable addresses throughout Holly Springs by the end of 2017
January 17, 2017: Ting to Connect First Fiber Customer in Holly Springs
January 17, 2017: Phase 1 construction is now complete in the neighborhoods of Holly Glen, Braxton Village and Holly Pointe and construction is underway in the Phase 2 neighborhoods of Oak Hall, Windcrest, Morgan Park, Windward Pointe.
January 18, 2017: Ting Fiber Uses Existing City Networks in Holly Springs to Accelerate Fiber Builds
January 18, 2017: Ting Fiber Used Blown Fiber to Accelerate Fiber Deployment in Holly Springs
January 18, 2017: Ting Fiber Used Underground Deployment in Holly Springs
January 25, 2017: Ting Fiber Connects First Customer in Holly Springs
January 25, 2017: Video of Ting's First Installation in Holly Springs
January 25, 2017: Ting Fiber Now Online in Holly Springs with 2,000 servicable addresses
February 1, 2017: Google Fiber Debuts Raleigh Service Near Ting's Holly Springs Location
February 7, 2017: Ting Internet Lit Up the First Customers in Holly Springs
February 7, 2017: Blowing Fiber During Construction Has Received a Good Response with Customers in Holly Springs
February 10, 2017: How Ting Has Expanded into Holly Springs
February 21, 2017: Ting Purchases Naming Rights For Holly Springs Athletic Complex
February 21, 2017: Holly Springs Mayor Appreciates How Unobtrusive Ting Fiber's Installation Practices Have Been Relative to Other Fiber Service Providers
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
May 9, 2017: Ting Internet Has Been Giving Westminster and Holly Springs a Lot of Attention in Recent Months
May 9, 2017: Perhaps Ting Fiber Will Expand Out to Neighboring Communities to Holly Springs
July 20, 2017: Welcome to Ting Park — Holly Springs Activates $300K Naming Rights Deal with Tucows
August 8, 2017: The Combination of Westminster and Holly Springs More than Doubled Our Customers and Operational Capacity
August 8, 2017: Growth in Holly Springs is Limited by How Quickly We Ourselves can Expand the Network

March 2016: Chronology of Ting Fiber Rollout in Sandpoint (3,215 households)

Following is the chronology of Ting Fiber rollout in Sandpoint from the initial announcement in March 2016:

March 2, 2016: Ting to Bring Fiber to Greater Sandpoint, Idaho
May 9, 2016: Ting Internet Has Announced a Fourth Market for Consideration in Sandpoint
March 28, 2016: Does Building Fiber Internet in a Small Town Like Sandpoint Make Sense?
August 8, 2016: Ting Internet Expects to Be Taking the Next Steps in Sandpoint Soon
August 12, 2016: Sandpoint Makes Great Strides on Fiber Internet
August 30, 2016: Installation of Fiber Infrastructure Continues in Sandpoint
December 22, 2016: Sandpoint Officials Are Finalizing Fiber Lease Rates to Ting
January 27, 2017: Sandpoint Sets Hearing for Proposed Fee Structure for Leasing Fiber to Ting
February 7, 2017: Ting Internet Expects to be Servicing the First Customers in Sandpoint Later This Year
February 19, 2017: Sandpoint City Council Passes Resolutions on Dark Fiber Fees and a Lease Agreement with Ting Fiber
February 19, 2017: Intermax May Also Provide Fiber Service in Sandpoint
May 9, 2017: Sandpoint and Centennial Are Still Hard at Work on Their Municipal Core Fiber Networks
June 2, 2017: Intermax Becomes “First to Fiber” in Sandpoint
August 8, 2017: Ting May Not Get a Shovel in the Ground This Year in Centennial or Sandpoint
August 20, 2017: Fatbeam Provides Fiber to Two Businesses in Sandpoint

September 2016: Chronology of Ting Fiber Rollout in Centennial (36,200 households)

Following is the chronology of Ting Fiber rollout in Centennial from the initial announcement in September 2016:

March 1, 2016: Centennial City Council Approves Fiber Master Plan
September 21, 2016: Ting to Bring Fiber to Centennial, Colorado (Pop 107,000)
September 21, 2016: Why Centennial for Ting Internet?
September 22, 2016: Ting Looking for 20 Per Cent Fiber Penetration in Centennial in the First Year
October 5, 2016: Three Years Ago Centennial Voters Approved a Measure to Allow the City to Create a Nonexclusive Broadband Fiber-Optic Network
November 7, 2016: Ting Internet Hopes to Begin Construction in Centennial in Q2 2017 and Start Lighting Up Customers in Summer 2017
November 19, 2016: Ting Sponsors Annual Holiday Lighting Event in Centennial Center Park
December 21, 2016: Some Say Paying Centennial Councilmen to Oversee Fiber May Violate City Charter
January 26, 2017: Neteo Explores Competing with Ting to Provide Gigabit Internet Service to Centennial
February 1, 2017: Chair of Centennial’s Fiber Steering Committee Runs for Mayor
February 7, 2017: Ting Internet Expects to be Servicing the First Customers in Centennial Later This Year
March 1, 2017: Centennial, CO - A Great Town Deserves Great Internet
March 10, 2017: Ting Team Holds Community Information Night About Fiber Internet in Centennial
March 22, 2017: While Shooting a Commercial in Centennial, the Ting Team Enjoyed the Experience of Flying Over the Mountains in a Chopper
April 19, 2017: Centennial Seeks Voting Members for Fiber Commission
May 9, 2017: Sandpoint and Centennial Are Still Hard at Work on Their Municipal Core Fiber Networks
June 2, 2017: Ting Moves Ahead in the Race for Fiber in Centennial
August 1, 2017: Tucows Announces Ting Events Around Centennial
August 8, 2017: Ting May Not Get a Shovel in the Ground This Year in Centennial or Sandpoint
November 7, 2017: Ting Begins Phase One Fiber Construction at Willow Creek in Centennial

What Analysts Say About Tucows and Ting

Other sections of this report on Tucows include:

April 16, 2019: Zacks Equity Research Gives Three Reasons Why Tucows is a Great Growth Stock

Zacks Equity Research published an article on April 16, 2019 on the three important factors that make the stock of this internet services company a great growth pick right now: (1) The company's EPS is expected to grow 26.4% this year, crushing the industry average, which calls for EPS growth of 15.4%. (2) Right now, year-over-year cash flow growth for Tucows is 11.9%, which is higher than many of its peers. In fact, the rate compares to the industry average of 7.9%. (3) The current-year earnings estimates for Tucows have been revising upward. The Zacks Consensus Estimate for the current year has surged 1.5% over the past month.

According to Zacks "Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration."

Zacks concludes that "Tucows is a potential outperformer and a solid choice for growth investors."^[831]

April 9, 2019: Echelon Wealth Sets $97 Price Target for Tucows

Cantech Letter reported on April 9, 2019 that Echelon Wealth has set a $97 US Dollar price target for Tucows. In a research update on April 8, 2019, Echelon Wealth Partners analyst Gianluca Tucci reiterated his “Buy” rating and $130.00 target price for Tcx, representing a projected return of 18 per cent at the time of publication. Tucows announced that Fullerton, California, will be the next to receive gigabit fibre Internet through the company’s Ting division, in partnership with international fibre-optics network developer SiFi Networks. Tucci says there are pros and cons to the partnership with SiFi Networks. SiFi will handle the construction, ownership and operation of the fibre infrastructure while Tucows will provide the Internet service and customer support. The analyst adds that TC can scale more quickly this way and focus on its core business strengths in service provision but he notes that Tucows will not control the build speed or quality, that there will be competitors and that gross margins will be tamed as TC pays its builders a circuit cost.

Tucci says he expects Tucows to continue to add strategic Ting towns as the company pursues the next growth leg of fibre Internet access to the home. The analyst says that TC is currently trading at multiples of 2.5x, 16.8x and 40.9x of his 2019 estimates for EV/Sales, EV/EBITDA, and P/E, respectively, which compares to its Domain peers at 8.5x, 19.6x and 62.9x and its Internet peers at 2.4x, 6.8x and 35.9x, respectively. Tucci expects Tucows to generate 2019 revenue and Adjusted EBITDA of $369.6 million and $56.3 million, respectively, and 2020 revenue and Adjusted EBITDA of $403.6 million and $76.2 million, respectively.^[832]

April 8, 2019: Does Tucows Have Too Much Debt?

Tucows Debt A report by Simply Wall Street concludes that although TCX’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet debt obligations which means its debt is being efficiently utilised. "However, its lack of liquidity raises questions over current asset management practices for the small-cap."

Simply Wall Street published an interesting analysis of Tucows' debt on April 8, 2019 that concludes that although TCX’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet debt obligations which means its debt is being efficiently utilised. "However, its lack of liquidity raises questions over current asset management practices for the small-cap."

"With a debt-to-equity ratio of 81%, TCX can be considered as an above-average leveraged company. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses," says the report. "We can check to see whether TCX is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In TCX's, case, the ratio of 8.02x suggests that interest is appropriately covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback."^[833]

February 14, 2019: Echelon Wealth Sets Price Target of $90.60 for Tucows

Cantech Letter reported on February 14, 2019 that Echelon Wealth Partners analyst Gianluca Tucci has rated TCX as strong, changed his rating for TCX from a “Hold” to a “Buy” and raised his price target for Tucows from C$75.00 to C$120.00 ($US 90.60), implying a return of 30 per cent.

“As noted at the time of our Q318 note, we believed the inflection point to TC’s next leg of growth via its fibre initiatives could be two or three quarters away. Today’s 7K fibre customers add roughly $7.0 million in run-rate gross profit. We believe we could see fibre customers and homes passed of approximately 15-20K and 50-60K, respectively, by 2019-end, which would yield $15-20 million in incremental annual run-rate gross profit,” says Tucci.

“For context, fibre customers and homes passed ended 2017 and 2018 at 4.5K/16.0K and 7.0K/28.1K, respectively, showing impressive growth. We believe TC will continue to add strategic Ting towns that fit its profile and grow the addressable opportunity and resulting visibility in its next growth leg of fibre internet access to the home,” he says. Tucci says that while Tucows’ domain registration business will remain a cash generating machine, it’s the expansion of Ting Mobile and Ting Internet (currently live in six cities in the US with one more city to come online this summer) that will be the next major growth initiative for TC.^[834]

November 8, 2018: Now is Not the Time to Buy Tucows Stock Says Echelon Wealth

Cantech Letter reported on November 8, 2018 that Gianluca Tucci of Echelon Wealth Partners, says that the inflection point for TC’s next leg of growth is still two or three quarters away. Tucci points out that while Tucows’ fiber Internet rollout is costly, over time it’ll provide a “robust risk/reward with its de-risking techniques,” while the company’s health cash position of $10.8 million and up to $140-million credit facility gives Tucows more than enough financing to carry out its Ting Mobile and Internet expansion plans.

Tucows third quarter beat Tucci’s estimates for revenue ($83.5 million versus Tucci’s $79.3 million) and Adj. EBITDA ($11.9 million versus Tucci’s $9.6 million). The analyst says that TC is currently trading at an EV/Sales, EV/EBITDA and P/E valuation of 1.8x/14.6x/37.0x which compares to its Domain peer average of 6.7x/20.2x/24.8x and Internet peer average of 2.5x/7.1x/14.9x.

“We remain a Hold, however we believe the inflection point to TC’s next leg of growth via its fibre initiatives could be two or three quarters away, at which point we would be biased to adjust our estimates, rating and PT accordingly,” says Tucci.^[835]

April 30, 2018: Motley Fool Columnist Brian Feroldi writes: Tucows Has the Potential to Become a 100-plus Bagger Some Day

Brian Feroldi wrote at Motley Fool on April 30, 2018 that for a company to hold 100-plus bagger potential, it needs to meet a few important criteria: Must be a small-cap company today (under $1 billion market cap); Attempting to service a massive market opportunity; Rock-solid financial statements; Talented leadership with skin in the game. Tucows passes all these criteria. "Tucows has grown like a weed over the last 20 years under the skillful guidance of CEO Elliott Noss. Long-term shareholders have benefited hugely from his leadership, and he owns about 7% of the entire business. That aligns his incentives perfectly with shareholders," writes Feroldi. "While it is far from certain that Tucows will ever produce the kind of gains that Netflix shareholders have enjoyed, I wouldn't rule it out, either."^[836]

February 14, 2018: Motley Fool Columnist Joseph Solitro writes: It was a phenomenal quarter overall for Tucows

Here’s a breakdown of six notable financial statistics from Tucow’s 12-month period ended December 31, 2017, compared with the same period in 2016.

Motley Fool Columnist Joseph Solitro wrote on February 14, 2018 that "it was a phenomenal quarter overall for Tucows, highlighted by growth across all of its key financial metrics, and it capped off an incredibly strong year for the company, so I think the market should have responded by sending its stock significantly higher; that being said, I think the weakness represents a very attractive entry point for long-term investors, because the stock is now wildly undervalued based on its growth, as it trades at less than 25 times fiscal 2017’s EPS of US$2.12 and less than 17 times the consensus analyst estimate of US$3.19 for fiscal 2018."^[837]

Here’s a breakdown of six notable financial statistics from Tucow’s 12-month period ended December 31, 2017, compared with the same period in 2016.

January 29, 2018: TGV Partners Says Tucows Price Performance and Operating Results Are Spectacular in Annual Shareholder Letter

Seeking Alpha posted a link on January 29, 2018 to TGV Partners Annual Letter to Stockholders discussing their holdings.

In 2017, Tucows contributed most to the performance of the TGV Partners Funds. Operationally, Tucows was also a bearer of very positive news. Even with the price performance being as spectacular as it is, the operating results are in no way inferior.

Operationally, the acquisition of eNom as described in the semi-annual letter was most likely an excellent bargain. As expected, the domain business is stagnating, but it generates very stable cash flows. The mobile business is growing profitably, and the number of users is expected to increase by around 15% in 2017. Furthermore, it is becoming increasingly clear that Ting Fiber, the high-speed fiber optic internet access service in selected US cities, is well received. If Ting manages to supply the selected cities swiftly and comprehensively, there is a unique chance of gaining a lasting foothold in other US cities as well. Even if Ting did not win a tender in Burlington, Vermont at the end of last year, it is likely that more cities will follow.

As if all that were not already enough, the US tax reform will have a positive impact on the value of the company. This is mainly due to lower corporate tax rates and a preferential treatment of investments in fiber optic networks.^[838]

TGV grew its position in Tucows by 1.1% in the 4th quarter, according to its most recent disclosure with the SEC. The fund owned 904,292 shares of the information services provider’s stock after buying an additional 10,000 shares during the period. Tucows makes up about 9.5% of TGV’s investment portfolio, making the stock its 4th largest holding. TGV owned about 8.55% of Tucows worth $63,346,000 at the end of the most recent reporting period.^[839]

January 19, 2018: Should Your City be in the Broadband Business?

Forbes published an interesting article on January 19, 2018 about the wisdom of those cities building their own muni broadband and whether a town should own and operate a local broadband network. The discussion is between economists Robert Seamans, Associate Professor of Management and Organizations at the Stern School of Business at NYU, and the author of Fighting City Hall: Entry Deterrence and Technology Upgrades in Cable TV Markets; George Ford, the Chief Economist at the Phoenix Center for Advanced Legal and Economic Public Policy Studies, and the author of The Impact of Government-Owned Broadband Networks on Private Investment and Consumer Welfare; and Kyle Wilson, Assistant Professor of Economics at Pomona College, and the author of Does Public Competition Crowd Out Private Investment? Evidence from Municipal Provision of Internet Access.

Some interesting excerpts include:

Ford: More generally, muni broadband systems, on average, lose money and are heavily cross subsidized, which further complicate price comparisons. For instance, the Berkman study says that the utility in Opelika-Alabama charges $139 per month less than the cable system (for an unlike service by the way). But the utility increased its electric rates in 2015 by $66 a year per account to cover losses from the broadband network, which is about a $200 per year subsidy per broadband line since only one-third of Opelikans buy communications services from the city. In all, the Opelika system loses about $900 per year, per communications customer. A $3 million loss on just over 3,000 customers.

Singer: There’s another muni-broadband study making headlines this week—sorry for the competition, Kyle—and it’s from Harvard’s Berkman Klein Center. The Berkman study concludes that muni broadband was cheaper than a comparable offering from the private sector in the same geographic market. Before offering our nits, I’ll note as an interesting aside that while Kyle finds that “a noteworthy feature of this [pricing] data is that for a given plan, a firm prices it identically in all markets,” the Berkman study suggests that ISPs are engaging in rampant price discrimination across markets for the same product. What could explain that difference?

Wilson: It’s important to consider the effect of muni networks on the decisions made by existing private firms. It’s likely that there are cases where a private provider would have invested in improving its network in the future. But once a municipality installs its own network, the private provider no longer finds it profitable to upgrade its network. This is the “crowding out” effect.

Read the original article Forbes. "Your City Wants To Be In The Broadband Business: We Asked Three Economists For Their Advice" January 19, 2018.

January 14, 2018: Hugh Pickens Writes: How the 2015 Short Thesis on Tucows Panned Out

Recent Incremental Contribution from Domain Services (Before Taxes and Other Expenses) (Click on chart to expand.)

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.

How the 2015 Short Thesis on Tucows Panned Out On the day the StreetSweeper article appeared in August, 2015 Tucows was trading at about 24. Tucows stock stagnated until July 2016, dipping about 20% to low of about 19. The stock reached a high of 70 and has since fallen to about 55.

The recent piece by Copperfield making a vigorous short case for Tucows, reminds us that in August 2015, StreetSweeper published a piece about Tucows setting a $13 price target. At the time the article was written, Tucows was trading at about $24 per share. "Tucows faces growing challenges in all areas," concluded Colberg. "So Tucows can hype the promise of tomorrow until the cows come home… but we think the market valuation will drop well below the current $293 million. We’re slapping a $13 price target on this little ol’ bovine."

Read Sonya Colberg's 2015 short thesis and read how each of Colberg's predictions panned out:

Original Article: "Tucows: Why Its New Internet Business Will Hand Investors A Cow Patty" by Sonya Colberg. August 3, 2015

The Short Case on Domain Names: According to Colberg, Tucows’ core Internet domain name business was flat and poised for further decline.

What Really Happened. See the chart for the Recent Incremental Contribution from Domain Services (Before Taxes and Other Expenses) to see what really happened.

The Short Case on Ting Mobile: According to Colberg, Ting Mobile's growth was slowing and that a Sprint policy-change hurt Ting and promises long-term negative consequences even as wireless becomes commoditized. "We believe Sprint’s change in policy constitutes more than a temporary setback. Frustrated customers will throw up their hands over Ting Mobile. Word will spread," writes Colberg. "The time is right for well-heeled giants in the mobile phone and services field who will happily scoop up Ting’s old customers, as well as potential future customers."

What Really Happened. At the time Colberg's article was written, Ting Mobile had 113,000 accounts and a 178,000 devices. See Chart.^[840] At Tucows most recent earnings conference, Ting Mobile had 171,500 accounts and 281,000 devices. See the Chart. ^[841]

The Short Case on Ting Fiber: According to Colberg, Tucows lacked the multi-millions to build a fiber network and her research shows the Ting fiber business probably won’t ever produce meaningful revenue. "Despite Tucows’ braggadocio, AT&T and Comcast resources easily stomp Tucows’ resources into the dirt," writes Colberg. "Inadequate bucks means Tucows can’t develop significant fiber networks or market the service."

What Really Happened. At the time Colberg's article was published, Ting Internet had contracts in Charlottesville (17,778 households) and in Westminster (7,161 households). Since Colberg's article was published Ting Internet has added contracts in Holly Springs (8,147 households), Sandpoint (3,215 households), and Centennial (36,200 households).

Insider Sales: According to Colberg, there were "26 sells in the last year including 14 in the last three months, company officers and directors have been selling their stock in Tucows. Co-chairman of the Board Rawleigh Ralls sold 65,000 shares in May alone."^[842]

Reference: Original Article

"Tucows: Why Its New Internet Business Will Hand Investors A Cow Patty" by Sonya Colberg. August 3, 2015

About Sonya Colberg

Sonya Colberg, the author of the above article making the short case for Tucows, says in her online bio that she has worked more than two decades as a reporter and editor for two major newspapers, including the recent Warren Buffett acquisition, Tulsa World. While this statement is technically true, Colberg suggests a relationship with Buffett that does not exist. Colberg left the Tulsa World in 2000 - Buffett acquired the Tulsa World in 2013.^[843]

January 8, 2018: Copperfield Research Alleges Financial Irregularities at Tucows, Sets Fair Value of Stock at $20 per share

Seeking Alpha reported on January 8, 2018 that a report from Copperfield Research points to "three structurally broken business segments" at Tucows and a "laundry list of accounting shenanigans and financial irregularities" which Copperfield says sets Tucows' fair value at $20, about one-third of its current price. "We believe Tucows’ business model and economics have been severely misrepresented by management and are grossly misunderstood by shareholders. The history of this former Canadian penny stock is littered with red flags, dubious accounting gimmicks that inflate EBITDA, financial reports that fail to reconcile from one quarter to the next, and a promotional management team who recently resorted to infomercials. Based on our deep dive forensic analysis, we believe Tucows intrinsic value is closer to $20.00 per share, at best, or nearly 70% below its current trading price. And this price target generously ignores material risks from Tucows’ UNDISCLOSED litigation with its largest domain reseller."^[844]^[845]

About Copperfield Research

According to Seeking Alpha, Copperfield Research is the pseudonym of a research organization focusing on publicly traded equities. Copperfield Research has previously published three articles on Seeking Alpha, all three written on March 24, 2011 about a company called Ebix operating in China titled "Ebix: Not a Chinese Fraud, But a House of Cards Nonetheless, Part I, II, III".^[846] At the time Copperfield wrote its expose, Ebix was trading at about $24 per share. In January, 2018 Ebix was trading at about $80 per share.^[847]

Enom Lawsuit

According to Copperfield, NameCheap's lawsuit filed September 1, 2017 should result in the loss of 11% of the Company’s revenue producing domains. Domain Name Wire reported on December 21, 2017 that a court has ordered Tucows to transfer 3.2 million .com and .net domain names to Namecheap, and an appeals court has denied Tucow’s motion for an emergency stay. According to Copperfield, Tucows’ nondisclosure is a violation of SEC Regulation S-K Item 103, which requires disclosure of pending litigation if the possibility exists that the litigation will have a material effect on financial results. "Worse than failing to disclose material litigation and business risk to investors, Tucows has been reporting revenue and EBITDA from domains that should have already been transferred," says Copperfiield.^[848]

History of the Namecheap Lawsuit

Read more about the history of the Namecheap Lawsuit at:

December 21, 2017: Court Orders Tucows to Transfer 3.2 million Domains to Namecheap
September 25, 2017: Tucows Responds to NameCheap Lawsuit
September 1, 2017: Namecheap Files Suit For Bulk Transfer of 4 Million Domain Names

Ting Mobile Has an Ill-Concieved Strategy of Strategy of Acquiring Customers from Failed MVNOs

According to Copperfield Research, Ting Mobile has an ill-conceived strategy of acquiring subscribers from failed MVNOs. "Despite offering a $35 credit to defunct RingPlus’ 85,000 subscribers, only 45,000 accounts chose to migrate to Ting in 1Q’17, with just 6,000 remaining through 3Q’17. Said differently, of the 45,000 RingPlus subscribers that migrated to Ting Mobile in 1Q’17, nearly 85% churned off within eight months."

Tucows Presents Highly Deceptive Assumptions for Ting Internet

According to Copperfield Research, Elliot Noss has repeatedly said during his quarterly earnings conference calls that it costs Ting Internet $2,500 to connect a home, that each customer will generate $1,000 of annual gross margin, and that Tucows expects a take-up of 20% in year one. According to Copperfield Research, Tucows’ "misleadingly excludes the $200 cost of the internet box from their assumptions, as well as the estimated $400 of installation costs and truck rolls. Priced at $89 per home, which is a premium to incumbents, revenue per year is expected to be $1,068 per residence. Tucows’ public marketing material claims that each subscriber will generate $1,000 of gross profit per year, which implies an inconceivable 94% gross margin."

Ting Internet Has Non-Competitive Pricing

According to Copperfield Research, Ting Internet competes with larger, well established incumbents in every market. "At $89 per month, Ting Internet is the highest priced 1Gbps service offering in every market - higher than Comcast Xfinity, Centurylink and AT&T, which are priced between $70 and $80 per month for 1Gbps of service."

Insider Sales

According to Copperfield Research, (See original document)

Accounting Irregularities

According to Copperfield Research, (See original document)

Two Executive Officers Resign a Week Apart

According to Copperfield Research, (See original document)

Tucows Compliance Officer Posted Inappropriate Pictures on Social Media

According to Copperfield Research, (See original document)

Another Tucows Compliance Officer Has a Second Job as a Disk Jockey

According to Copperfield Research, (See original document)

NameJet May Have Manipulated Bidding on Domain Sales

According to Copperfield Research, (See original document)

Tucows Hosts Neo-Nazi and Child Porn Web Sites

According to Copperfield Research, web sites that "Tucows knowingly hosts, include: North American Man/Boy Love Association (NAMBLA), which is a pedophile and pederasty advocacy organization in the United States whose mission is to abolish age-of-consent laws criminalizing adult sexual involvement with minors and campaigns for the release of men who have been jailed for sexual contacts with minors."

Tucows is a domain name wholesaler and does not host any web sites. Tucows has made its policy regarding website content issues very clear.

Tucows and its domain-related brands (OpenSRS, Enom, and Hover) are Registrars. It’s important to understand what a Registrar is, and what it can and cannot do. Registrars manage the technical infrastructure, which enables the buying and management of domain names. Domain names are not websites; they are strings of characters (such as ‘example.com’) and act as a human-friendly layer that points to a website. Web-hosting companies, rather than Registrars, provide the services that allow website content to be available online, making that content accessible to Internet users.
Tucows cannot exercise control over the content of a website pointed to by a domain registered via our platform.
Because we’re not a web-hosting company, we cannot remove specific pages or content on a website. The tools available to a Registrar to address content issues are very blunt; we can only suspend a domain, or force the registrant (owner) to move it elsewhere.
We don’t consider forcing a registrant to transfer domains off our platform to be a compelling solution for multiple reasons:
1. It resolves nothing with transgressive website content. Forced transfers only push domains pointing to problematic website content elsewhere, which is both unfair to our competitors and devoid of actual resolution.
2. Multiple domains from multiple registrars may be pointed at a single website, limiting the efficacy of suspending any one single domain. If a domain is suspended, a replacement domain may be registered, pointed, propagated, and socialized in minutes, leading to an endless game of whack-a-mole.
To be clear, asking a Registrar to suspend a domain is an ineffective method of resolving content issues. The content can be relabeled, quickly and easily, with a new domain name, or accessed by use of an IP address.
Web-hosting companies are in a better position to address content issues. Web-hosts have the ability to provide a much more granular response and almost always have a direct relationship with their users and content.

"While, as an organization, we may vehemently disagree with the values and ideas a given website aims to disseminate, we feel the power to decide what types of content should and should not be online must rest with the people, rather than in the hands of a select group of corporations,"concludes Tucows.^[849]

December 23, 2017: Hugh Pickens writes: Tucows Dodges Bullet, Loses Burlington Telecom Bid

Tucows Dodges Bullet, Loses Burlington Telecom Bid Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 thanking Redditors for their support of the Ting initiative in Burlington and noting that "it’s crystal clear that a small but powerful group did not want us there. It would not have made for a constructive relationship."

Tucows stock has risen 13.47% since losing Burlington Telecom "It looks like the market is saying that Tucows dodged a bullet when they lost the bid," says Hugh Pickens, a long term investor in Tucows who closely follows the stock noting that the stock has risen 13.47% since losing the Burlington Telecom contract and has closed at a new high of 68.60 "Tucows will have other opportunities in the future. The market is saying that Tucows is better off not allowing themselves to become permanently entangled in the overpoliticzed atmosphere in Burlington."

Hugh Pickens wrote on December 23, 2017 that it now appears that Tucows dodged a bullet when they lost the bid for Burlington Telecom on November 28, 2017. Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 noting that " Burlington is behind us" and thanking Redditors for their support of the Ting initiative in Burlington. "It’s crystal clear that a small but powerful group did not want us there.," said Noss. "It would not have made for a constructive relationship."^[850]

In the four weeks since Tucows lost the competition, Tucows stock rose 13.47% closing at a new high of 68.60. "It looks like the market is saying that Tucows dodged a bullet when they lost the bid," says Hugh Pickens, a long term investor in Tucows who closely follows the stock. "Tucows will have other opportunities in the future. The market is saying that Tucows is better off not allowing themselves to become permanently entangled in the overpoliticized atmosphere in Burlington."

October 9, 2017: Motley Fool Columnist Brian Feroldi Says Tucows is a Wonderful Buy and Hold Candidate

Brian Feroldi, who owns shares of Tucows, wrote in Motley Fool on October 9, 2017 that some businesses are so strong that they can create wealth for generations and Tucows may be one of them. "I'm a firm believer that a company needs to be capable of growing for decades in order to be considered a potential brag-worthy investment. For that reason, I think that Tucows is worth consideration. Tucows is three businesses wrapped up in one," writes Feroldi. "When added together, Wall Street projects that these businesses will allow Tucows' profits to grow in excess of 29% annually over the next five years. Given the huge runway ahead for Ting mobile and internet, I could easily see this company maintaining an above-average growth for decades to come."^[851]

Hugh Pickens comments: I agree with Mr. Feroldi that there is a huge runway for Ting Fiber. As Tucows CEO Elliot Noss recently said when he spoke to MOI Global community at the Latticework 2017 Summit on "Disrupting the Communications Industry — Implications for Investors" on September 26, 2017. "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."^[852]

With respect to Tucows' Mobile (MVNO) market, I honestly don't see outsize growth in Ting Mobile's future. "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," said Noss at the Latticeworks Summit. "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."^[853] I see mobile services becoming even more competitive but I believe as long as Tucows continues to use its first class customer service as their key differentiator, Ting Mobile can be a cash cow that can provide Tucows with a steady stream of income for many years to come that they can invest in their high growth segment - Ting Fiber.

Read what Mr. Feroldi has previously written about Tucows at:

Motley Fool Columnist Brian Feroldi Says Tucows Has Amazon-Like Growth Potential June 19, 2017:

October 3, 2017: Motley Fool Columnist Andy Gould Writes: Tucows Makes a Bid for a Vermont Telecom

Andy Gould wrote a good summation at Motley Fool on October 3, 2017 about Tucows' bid for the Burlington Telecom fiber network. On its existing fiber contracts, Tucows estimates that its fiber buildout costs an estimated $2,500 to $3,000 to connect each customer to the network, with each customer expected to contribute $1,000 or so per year in gross margin. According to Gould, this means that "Tucows would be able to gain customers for far less than it would cost to build a new network. Additionally, within five years, if its gross margin and uptake rates hold, Tucows could be realizing $8 million in annual gross margin from BT alone."^[854]

Hugh Pickens comments: I agree that if Tucows wins the contract and reaches their goal of a 50% penetration rate they will have 8,000 customers who will contribute $8 million in annual gross margin. I am not in agreement that "Tucows would be able to gain customers for far less than it would cost to build a new network." Exhibit 99.3 attached to Tucows 8-K filing with the SEC dated September 20, 2017 states that Burlington Telecom currently has "more than 6,600 active customers."^[855] Burlington Mayor Miro Weinberger stated on September 27, 2017 on The Mayor's Show that Burlington Telecom currently has over 7,000 subscribers.^[856]

Taking the worst case scenario, multiplying 6,600 existing customers times $3,000 per installation gives $19.8 million so Tucows, with their $28.8 million offer, is paying a 45% premium over what what it is costing them per customer hookup on their other contracts. Using the 7,000 figure for the number of existing customers results in a 33% premium. "The premium is justified because Tucows will be gaining new paying customers by the end of 2017 and will be able to recoup the cost of the premium sooner," says Pickens. "The other advantage is that Tucows will own the Burlington fiber backbone which is not the case on their other contracts. This will save them the usage costs for the backbone that they pay on their other contracts."

Background on the Burlington Telecom Bid

October 2, 2017: 'Keep Burlington Telecom Local' to do Reddit AMA
October 2, 2017: Burlington City Council Discusses Burlington Telecom at Public Forum
September 29, 2017: Burlington Free Press Says City Hall Stumbled during Burlington Telecom Bid Process
September 28, 2017: Ed Adrian Says Local Sounds Awesome and It Is, Until It Isn’t
September 28, 2017: Fourth Bidder on Burlington Telecom Has Chosen to Remain Stay Out of the Bidding Process
September 28, 2017: Mayor Miro Weinberger and City Councilor Joan Shannon Discuss the Bidding Process on 'The Mayor's Show'
September 26, 2017: Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids
September 26, 2017: City of Burlington Considers Inviting Telecom Bidder Who Withdrew His Proposal Back to the Table
September 21, 2017: Ting Hosts Reddit AMA to Discuss Burlington Offer
September 20, 2017: Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network

Additional Information

Tucows 8-K Filing with the SEC disclosing their bid for Burlington Telecom September 20, 2017
Report of Development of Criteria for Sale of Burlington Telecom March 9, 2016
Tucows Letter of Intent to Bid on Burlington Telecom September 18, 2017
Ting's Presentation to the City of Burlington September 18, 2017
Summary of Proposals from the Three Finalists September 20, 2017
Comparison of Finalist's Offers September 20, 2017

September 25, 2017: Echelon Wealth Discounts Possible Burlington Telecom Acquisition, Says Tucows is Fully Valued

Cantech Letter reported on September 25, 2017 that Echelon Wealth Partners analyst Ralph Garcea says that although there is a possibility Tucows' bid to acquire all the assets of city-owned Burlington Telecom for $28.8-million might go through, he doesn’t count it as enough to change his view that Tucows is fully valued. “Burlington Telecom indicated that on October 2 it will narrow the field to two bidders and announce the winner on October 16,” Garcea notes. “We suspect TC will have no issue getting to the final two. It has been revealed in recent media publications that the final three bidders in the running are Ting (Tucows), Schurz Communications, and Keep Burlington Telecom Local (KBTL) — Ting is offering $28.8M, Schurz is offering $30.8M, and KBTL is offering $12M. The city of Burlington, Vt, is required to sell Burlington Telecom as part of a settlement with Citibank and a local investor. During the former city Mayor’s administration, $17M of taxpayer money was used to keep the Company afloat. We would view this possible acquisition as accretive in the medium term, as it would immediately add another Ting Town for the fiber business. While there are no subscriber statistics, the 2016 Census population estimate of Burlington, Vt, is 42,260.”

Garcea thinks Tucows will post Adjusted EBITDA of $38.6-million on revenue of $328.1-million in fiscal 2017. He expects those numbers will improve to EBITDA of $56.7-million on a topline of $359.3-million the following year.^[857]

Hugh Pickens comments: Exhibit 99.3 attached to Tucows 8-K filing with the SEC dated September 20, 2017 states that "with Burlington Telecom, we would be acquiring a fiber network that already passes 85% of all possible serviceable addresses and a customer base that already represents more than 40% adoption. That is currently 16,000 serviceable addresses and more than 6,600 active customers.^[858] According to the FAQ on the Keep BT Local web site, Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.^[859] Alan Wagener, a member of the board of directors for Keep Burlington Telecom Free Cooperative, wrote in an op-ed in VTDigger "‘Debt free’ isn’t really free" on September 14, 2017 that Burlington Teleco has 7,000+ subscribers.^[860] The 40% adoption rate is in line with Tucows statements in several of their previous quarterly earnings reports where they say that they are confident of having 50% penetration after five years on their other fiber contracts which would equate to 8,000 subscribers in the case of Burlington Telecom. Addendum: Burlington Mayor Miro Weinberger stated on September 27, 2017 on The Mayor's Show that Burlington Telecom currently has over 7,000 subscribers.^[861]

August 14, 2017: Motley Fool Columnist Andy Gould Says that Tucows reported Eye-Popping Growth in the Domain Segment

Andy Gould wrote at Motley Fool on August 12, 2017 that Tucows' Q2 results showed strong top-line growth in domains and continued gains in its mobile business, although it didn't yield much in the way of tangible progress for its internet service segment. According to Gould, Tucow's three businesses all appear to be performing admirably, although investors are no doubt eager to hear about more concrete progress on the Ting Internet front in the coming quarters. For the second quarter, Tucows reported strong year-over-year growth across the board, driven mainly by the Enom acquisition and to a lesser extent by the growth in Ting Mobile. "In the first full quarter with consolidated results that include Enom, the domain segment achieved a gross margin of $15 million, up 76% from last year," wrote Gould. "CEO Elliot Noss noted that the integration of Enom is going well and that the company's legacy domain business exceeded expectations for a second consecutive quarter."^[862]

August 10, 2017: Comark Expects FY2017 Earnings Per Share of $2.24

The Cerbat Gem reported on August 10, 2017 that stock analysts at Cormark reduced their FY2017 earnings per share estimates for Tucows in a research report issued on August 9, 2017. Cormark analyst H. Mak now anticipates that the company will post earnings per share of $2.24 for the year, down from their previous estimate of $2.40. Cormark also issued estimates for Tucows’ Q3 2018 earnings at $0.84 EPS and Q4 2018 earnings at $0.84 EPS.^[863]

Hugh Pickens comments: Cormark has a good record of forecasting TCX earnings. On May 12, 2017 Stock analysts at Cormark decreased their Q2 2017 EPS estimates for shares of Tucows to $0.53 per share for the quarter, down from their prior forecast of $0.63. Tucows actual Q2 earnings came in three months after Comark's May 12 forecast at 0.50.^[864]^[865]

See also:

May 12, 2017: Comark Reduces Tucows EPS Estimate for Q2 from $0.63 to $0.53
February 9, 2017: Comark Forecasts Tucows 2018 Earnings
January 25, 2017: Comark Raises Earnings Estimates for Tucows
August 9, 2016: Comark Cuts Q1 2017 EPS Estimate to $0.57
May 11, 2016: Comark Raises Tucows' Earnings Per Share Projections to $2.26 for FY2016, $2.55 for FY2017
August 7, 2015: Comark Securities Reiterates Tucows 'Buy' with $34 Price Target

August 4, 2017: Motley Fool Columnist Andy Gould Writes: What I'll Be Watching When Tucows Reports Earnings on August 8

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.

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.

Motley Fool Columnist Andy Gould published his fourth article about Tucows this year on August 4, 2017 and this article is about three key factors Gould says investors should watch when they set expectations for quarterly results that will be discussed in Tucows upcoming Quarterly Report on August 8, 2017.

First let's understand Gould's strategy in his trade. Gould says in his financial disclosure statement along with the article that he is short August 2017 $55 puts on Tucows. According to one financial analyst who is experienced in trading options, the best way to understand Gould's position is that when you sell a put like the August $55s, you immediately get the premium. According to the analyst the best outcome from that point is that the stock goes and stays about $55, so that at expiration the put expires worthless, your obligation to buy the stock at $55 goes away and the premium you received upon selling the put is all profit. "If the stock is below $55, the shares can be put to you, i.e. you are forced to buy them, at $55," said the analyst. "Your net cost is $55 less the premium received up front upon selling the put. Bottom line, Gould is bullish (or positive) on Tucow's.""^[866]

Here are Gould's three factors to watch for.

Gould's first factor to watch is the acquisition of enom and how it is going. Gould says that "the acquisition will obscure some of Tucows' growth metrics for a while, as it makes year-ago comparisons quite complicated." Enom generated around $15 million in adjusted EBITDA, and Noss said that he expected to grow that to $20 million by the end of 2018, as Tucows integrates the two systems and wrings out inefficiencies in the combined businesses. Gould says he advises investors to listen for Elliot Noss to talk about any change in adjusted EBITDA guidance that is related to the enom acquisition and integration.

Gould's second factor to watch for is strong subscriber growth in Ting Mobile's customers. Gould says that "Ting Mobile, grew 11.5% to $18 million. Ting -- which provides discount phone service without contracts -- added 5,500 accounts and 12,000 devices in the first quarter, bringing it to a total of 175,000 accounts and 280,000 devices." Gould advises to look for additional Ting Mobile growth when Tucows reports their second quarter on August 8, 2017.

If there was a way to post a comment to Mr. Gould's story at the Motley Fool Web Site, I would leave the following post for Mr. Gould.

Hugh Pickens writes: "I am going to disagree with Mr. Gould slightly on this factor. First I think Mr. Gould inadvertently sets up expectations that are too high for subscriber growth in ting mobile. The first quarter was an anomoly. There was a one-time influx of new customers from another MVNO that went broke. If you look at the two charts to the right you will see the "bump" in the first quarter and also see that the actual long term trend in net customer ads is declining. Subscriber growth in 2016 Q2, Q3, and Q4 were all under 5,000. With the new competition in the mobile market, I would be happy if Ting Mobile has 4,000 net ads in the second quarter. There is a good chance it will be lower."

"Looking long term, I really don't see outsize growth for Ting Mobile in the future but if they continue to focus on customer service as their key differentiator, Ting Mobile could be a cash cow for many years to come."

Gould's third factor is growth in ting high speed fiber and by growth Gould is talking about new contracts. "Noss has stated that Ting will most likely announce two to three new fiber towns in 2017," writes Gould. "Look for how many additional serviceable addresses this would create, as well as any updates on Ting Internet's path to profitability. The current target date for profitability is late 2018 or early 2019."

For reference here is what Elliot Noss told analysts in answer to a question from Patrick Retzer 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."^[867]

Previous Articles about Tucows by Motley Fool Columnist Andy Gould

Motley Fool Columnist Andy Gould Writes Is Tucows the Best Small-Cap Growth Stock You've Never Heard of? April 22, 2017

Motley Fool Columnist Andy Gould Writes: What to Watch When Tucows Reports Earnings on May 9 May 8, 2017

Motley Fool Columnist Andy Gould Writes Three Key Takeaways From Tucows' Latest Earnings Report May 31, 2017

July 18, 2017: Gizmodo Says Things Just Got Worse at Google Fiber

Adam Clark Estes wrote at Gizmodo on July 18, 2017 that things have been looking bleak at Google Fiber as incumbent telecom giants like AT&T, Comcast, and Verizon have been making strides on gigabit infrastructure in recent months while Google Fiber has been flailing. "Providing internet is hard, and it’s really expensive," writes Estes. "There’s a maze of local, state, and national regulations to wade through, and at the end of the day, the telecom giants have armies of lawyers who have a lot of practice in gaining an advantage and stopping competition." On top of that, Greg McCray, who took the helm of Google Fiber only five months ago, just stepped down and according to Estes while the reasons why are unclear, but they appear to be embarrassing on a number of fronts.^[868]

"We have pulled back. We looked at the approach we were taking," Alphabet CFO Ruth Porat recently said. "We said there’s got to be a better way through technology to meaningfully enhance both deployment and delivery. And we want to pause what we’re doing to see how much we can do with technology before we ramp what we’re doing again. At the end of the day this isn’t going to be the transformative play that we believe. Let’s spend the time. And Larry’s spending a lot of time with the Fiber team on that. We brought in a great new leader from the industry. We’re excited about the work they are doing. So, that was a pause."^[869]

July 12, 2017: Cabot Wealth Says Tucows Has Done a Very Good Job Controlling Costs Over the Years

Tyler Laundon wrote at Cabot Wealth on July 12, 2017 that one reason Tucows stock is up more than 100% over the past twelve months is because the company has done a very good job controlling costs over the years and has been gaining scale with its products. "The company has repurchased 50% of outstanding shares since the beginning of 2007 (who does that!?)," adds Laundon. "It’s a compelling stock, not least because it trades at only 15-times 2018 expected earnings of $3.61."^[870]

July 6, 2017: Motley Fool Columnist Rich Duprey Says Tucows is a Stock that Could See Fantastic Growth

Rich Duprey wrote on Motely Fool on July 6, 2017 that Tucows has branched out from its original domain registration business to also encompass low-cost mobile services and high-speed fiber internet access. Duprey says that Tucows is three businesses in one with the domain business as Tucows' cash cow whose profits are used to finance the growth of its other two segments: Ting Mobile and Ting Fiber. According to Duprey Ting Mobile offers deeply discounted services that have resonated with customers with subscribers growing from 94,000 at the end of 2014 to 151,000 at the end of 2016, and by the end of the first quarter Tucows had added an additional 24,000 subscribers to the rolls. Ting Fiber service is still in the early stages of growth says Duprey and it has begun offering services in a handful of U.S. cities -- but it is rolling it out to more areas this year. "While some businesses are smaller than others -- the domain name business accounts for 61% of total revenues -- all of them are doing well," concludes Duprey. "[making] Tucows a stock that could see fantastic growth beyond the phenomenal gains it's already registered."^[871]

June 19, 2017: Motley Fool Columnist Brian Feroldi Says Tucows Has Amazon-Like Growth Potential

Motley Fool Writes that Tucows Has Amazon-Like Growth Potential. Since 2012 when Tucows started Ting, Amazon and Tucows have been on a similar growth trajectory with Amazon rising 449% since January 2, 2012 and Tucows increasing 1,822% over the same period. (Click on the graphic to expand.) Graphic: Hugh Pickens

Brian Feroldi wrote at the Motely Fool on June 19, 2017 that investments like Amazon come along very rarely with shares of the internet shopping giant rising an incredible 50,850% since going public. Feroldi says that one reason Amazon has kept its revenue growth rate so high for years is that it has rapidly reinvested its retail profits to develop its other business opportunities just like Tucows - albeit on a much smaller scale. "Tucows is three businesses in one," says Feroldi. "Its cash cow is its domain name registry. The company earns a fee each time a consumer or business registers a domain name on its platform. Tucows currently services more than 29 million domains worldwide thanks to its recent Enom acquisition, which provides a recurring stream of cash flows. Tucows then uses those profits to fund growth in its two other businesses -- high-speed internet and mobile phone services."

Since 2012 when Tucows started Ting, Amazon and Tucows have been on a similar growth trajectory with Amazon rising 449% since January 2, 2012 and Tucows increasing 1,822% over the same period.^[872]

May 31, 2017: Motley Fool Columnist Andy Gould Writes Three Key Takeaways From Tucows' Latest Earnings Report

Andy Gould wrote on Madison.com on May 31, 2017 about the results of Tucows Q1 2017 earnings report. The is the third article Gould has written about Tucows in the past two months and shows a lot of insight into the company's future. Gould begins by saying that "judging just by the numbers, results didn't look so great" but correctly notes that the addition of Enom significantly muddies a lot of Tucows' growth metrics for the remainder of 2017 and that acquisition-related accounting impacts to deferred revenue and adjusted EBITDA have complicated an analysis of Tucows numbers. Gould is mistaken when he says that the video CEO Elliot Noss planned to create to walk analysts and investors through all the details is not yet available. Actually Noss created the video on May 9, 2017, the same day that he had the Q1 earnings conference conference and the video is available at:

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

Gould notes that Ting Mobile is doing well with their best quarter of net adds in a year and that Tucows has brought their churn down to 2.27%. But the big takeaway is the continued growth of Ting Internet where Q1 revenue grew 25% to $1.14 million as Ting continued to build out its fiber network in the three towns where it's already broken ground.

With plans to begin expansion to Sandpoint, Idaho, and Centennial, Colorado, later this year, these first five Ting towns will ultimately provide the company with 85,000 serviceable addresses. And the company continues to expect a 50% adoption rate within five years of launching in each community. While the company says it will most likely announce two to three new fiber towns later this year, that estimate also came with a big disclaimer -- with Noss saying that they could announce anywhere from zero to five towns.

Gould concludes that "over the long term, the integration of Enom should substantially boost revenue and adjusted EBITDA, and the company says it remains on track to hit its target of $50 million in adjusted EBITDA for the year. Ting Mobile continues to generate solid organic growth. And while it's very early days for Ting Internet, the company remains committed to reinvesting its formidable cash flows in what could eventually be its largest growth engine."^[873]

See these other articles by Gould about Tucows:

What to Watch When Tucows Reports Earnings on May 9 May 8, 2017

Is Tucows the Best Small-Cap Growth Stock You've Never Heard of? April 22, 2017

May 21, 2017: Hugh Pickens Writes: Analysis of Tucows Gross Margin and Net Income

Gross margin and net income have an indirect, but strongly connected, relationship in a company's profit structure. While optimized net income is the bottom-line financial objective of for-profit companies, strong gross margin is a signal of financial health that contributes to ongoing profitability.^[874]

According to general accounting practices, gross income equates to gross margin, which is sales minus the cost of goods sold. Thus, gross income is the amount that a business earns from the sale of goods or services, before selling, administrative, tax, and other expenses have been deducted. For a company, net income is the residual amount of earnings after all expenses have been deducted from sales. In short, gross income is an intermediate earnings figure before all expenses are included, and net income is the final amount of profit or loss after all expenses are included.

For example, a business has sales of $1,000,000, cost of goods sold of $600,000, and selling expenses of $250,000. Its gross income is $400,000 and its net income is $150,000.

The main flaw in the use of gross and net income for a business is that the gross income figure is more likely to be closely related to the results of operations, while net income can include a variety of non-operational expenses, gains, and/or losses. Thus, the two calculations are based on different sets of information, and are used in different types of analysis.^[875]

Table of Earnings Results

The information in the following table was compiled from Tucows Quarterly Earnings Reports since 2014.

	2014 Q1	2014 Q2	2014 Q3	2014 Q4	2015 Q1	2015 Q2	2015 Q3	2015 Q4	2016 Q1	2016 Q2	2016 Q3	2016 Q4	2017 Q1
Net Revenue	34,402	35,588	38,874	38,802	40,468	42,889	44,268	44,707	45,610	47,466	49,064	48,805	69,568
Gross Margin	8,759	9,533	11,577	10,683	12,221	12,852	13,792	13,814	15,169	15,850	16,638	16,423	16,944
Net Income	477	1,347	2,691	1,859	2,834	2,285	3,159	3,095	4,438	4,071	4,741	2,817	2,446
Adjusted EBITDA	3,314	3,275	4,920	3,531	6,777	4,348	5,800	5,508	7,486	7,112	8,575	7,333	6,196
Net Cash Provided by Operating Activities	-39	1,135	5,014	2,768	2,938	2,236	6,783	1,389	5,553	2,173	5,001	8,923	2,402
Net Income to Gross Margin	5%	14%	23%	17%	23%	18%	23%	22%	29%	26%	28%	17%	14%

Analysis of Gross Margin and Net Income for 2016 Q4

Graph of Tucows Gross Margin and Net Income. (Click on the graphic to expand.) Graphic: Hugh Pickens

Gross Margin and Net Income should move in the same direction and that is what occurred from 2014 Q1 through 2016 Q3 as Tucows' Gross Margin and Net Income consistently increased quarter-over-quarter.

However in 2016 Q4 the Gross Margin stayed about the same as the previous quarter while the Net Income fell almost $2 million from the previous quarter. According to Michael Cooperman, speaking during the Tucows Quarterly Earnings Conference Call on February 7, 2017 this was due to two incremental costs, mainly in support of our network access initiatives. "First, I will note that during the quarter we incurred some one-time expenditure totaling approximately $1 million related to the Enom acquisition and the Ting Mobile business. In addition I would note for you that we are still expecting to incur approximately $0.5 of additional Enom transaction related costs during the first quarter of 2017. Second, 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."^[876]

$1,000,000 in non-recurring costs related to the Enom acquisition in Q4 2016. There will be an additional non-recurring cost of $500,000 in Q1 2017 related to the Enom acquisition.

$500,000 in recurring costs due to an Increase in marketing expenses year-over-year

$200,000 in recurring costs due to an increase in credit card processing fees, primarily to support the growth of Ting Mobile and Ting Internet, and contact and outside services

$200,000 in non-recurring costs due to depreciation and amortization primarily as 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

Analysis of Enom Acquisition in 2017 Q1

For Q1 the situation is much more complicated with the Enom acquisition, the treatment of deferred revenue, purchase price accounting, the way that deferred revenue is treated with acquisitions, and a change in SEC policy with regard to the calculation of adjusted EBIDTA for subscription services.

Learn more at:

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

May 15, 2017: Hugh Pickens Writes: Tucows' P/E Ratio Has Been Expanding

Tucows' P/E Ratio Has Been Expanding. Since October 31, 2016 Tucows' PE Ratio has increased from about 20 to 40. Graph of Tucows' PE and EPS since 2012 (Click on the graphic to expand.) Graphic: Hugh Pickens

A graph of Tucows' Rolling EPS and PE Ratio since 2012 shows that the EPS has been steadily increasing over the past 6 months. Since October 31, 2016 Tucows' PE Ratio has increased from about 20 to 40. "The Price-to-Earnings ratio will be higher if investors expect earnings to increase in the future," says Thomas Dalton. "Anything that increases investor confidence in higher future earnings will increase the P-to-E ratio they'll be willing to pay."^[877]

May 12, 2017: Comark Reduces Tucows EPS Estimate for Q2 from $0.63 to $0.53

The Markets Daily reported on May 12, 2017 that Stock analysts at Cormark decreased their Q2 2017 EPS estimates for shares of Tucows. Cormark analyst H. Mak now anticipates that the company will earn $0.53 per share for the quarter, down from their prior forecast of $0.63. Comark anticipates that the company will post earnings of $0.73 per share for the quarter, up from their prior estimate of $0.65. Cormark also issued estimates for Tucows’ Q4 2017 earnings at $0.82 EPS.

Cormark also issued estimates for Tucows’ FY2017 earnings at $2.40 EPS, Q1 2018 earnings at $0.93 EPS, Q2 2018 earnings at $0.96 EPS, Q3 2018 earnings at $0.97 EPS and Q4 2018 earnings at $0.99 EPS.^[878]^[879]

See also:

February 9, 2017: Comark Forecasts Tucows 2018 Earnings
January 25, 2017: Comark Raises Earnings Estimates for Tucows
August 9, 2016: Comark Cuts Q1 2017 EPS Estimate to $0.57
May 11, 2016: Comark Raises Tucows' Earnings Per Share Projections to $2.26 for FY2016, $2.55 for FY2017
August 7, 2015: Comark Securities Reiterates Tucows 'Buy' with $34 Price Target

May 11, 2017: Hugh Pickens Writes: How Much Does Tucows Pay to Acquire Wholesale Registrars

In the past ten years Tucows has acquired three wholesale registrars:

On July 27, 2007, Tucows acquired ItsYourDomain.com (IYD), a privately held ICANN-accredited wholesale registrar offering domain services through a network of over 2,500 affiliates with over 700,000 domains under management, paying US$10.35 million.^[880]

Tucows announced on March 15, 2016 that it entered into a definitive agreement to acquire the international wholesale domain reseller channel of Melbourne IT Limited adding approximately 1.6 million domains under management to Tucows’ OpenSRS wholesale domain business.^[881] Tucows 10-K for 2016 reported on "the acquisition of the international reseller channel of Melbourne IT for total consideration and transaction costs of $6.2 million."^[882]

Tucows announced on January 20, 2017 that the company had 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. Enom has approximately 14.5 million domains under management^[883]

Following is an analysis of how much Tucows paid for each acquisition:

Date	Company	Domains Under Management	Price Paid	$ per Domain Acquired
July 2007	ItsYourDomain.com	699,951	$10,350,000	$14.79
March 2016	Melbourne	1,600,000	$6,200,000	$3.88
January 2017	Enom	14,500,000	$76,700,000 (1)	$5.29

Notes:

1. When Tucows purchased Enom from Rightside they also purchased Rightside's half interest in Namejet. NameJet is a domain name aftermarket auction company that consolidates an exclusive inventory of expired and deleted domains from top domain name registrars and makes them available for auction. NameJet provides solutions for customers who are attempting to acquire the domain name registration rights to expiring domains or domains that have not been registered again by their current registrant.^[884] It is unknown how much of the $76.7 million Tucows paid Rightside is for Enom and how much is for the half interest in Namejet.

Gross Margin

According to Tucows' Summary of Revenues and Gross Margin for 2016, its Gross Margin for Total Wholesale Domain Services was 6,217,000 for Q4.^[885], 5,785,000 for Q3^[886], $5,911,000 for Q2^[887], and $5,451,000 for Q1^[888] for a total Gross Margin for Wholesale Domain Services of $23,364,000 for FY2016.

According to Tucows, before the acquisition of Enom, the company had 13,000,000 domains under management.^[889] so for 2016 the Gross Margin per wholesale domain name under management is $1.79.

May 8, 2017: Motley Fool Columnist Andy Gould Writes: What to Watch When Tucows Reports Earnings on May 9

Andy Gould wrote at Motley Fool on May 8, 2017 that there are three areas that analysts should look at in Tucows when they report their first quarter earnings on May 9, 2017:

How the Integration of Enom is Progressing: The acquisition of Enom doubled Tucows' number of domains under management to 29 million. Enom was generating roughly $15 million in annualized EBITDA and Tucows says it should be able to grow that to $20 million by the end of 2018 by streamlining the combined operations. Watch for any signs of hiccups with the Enom integration that could throw off Tucows' efforts to meet its EBITDA growth target.

Growth of Ting Mobile and Ting Internet: Watch for continued strong subscriber growth, plus any updates on how the company's marketing and advertising efforts are performing. Also, keep an eye on the company's churn rate, which was 2.5% in the fourth quarter. With part of Ting's appeal being its top-rated customer service, any uptick in that number could indicate that the competition is beginning to catch up.

More Rapid EBITDA growth ahead: Tucows has provided 2017 guidance for adjusted EBITDA of $50 million, which would reflect around 66% growth over last year. Watch for whether Tucows is on track to meet its 2017 goal.

"Tucows has been on an amazing run as of late," concludes Andy Gould. "As for any company growing through acquisitions, the results here will probably be lumpy from quarter to quarter. But Tucows' long-term strategy of using the steady cash flows from its domain segment to fund growth in its Ting businesses and large share buybacks appears to be a recipe for continued market-beating returns."^[890]

April 22, 2017: Motley Fool Columnist Andy Gould Writes Is Tucows the Best Small-Cap Growth Stock You've Never Heard of?

Andy Gould wrote at Madison.com on April 22, 2017 that with a market cap $600 million, Tucows doesn't generate a lot of headlines, but with its shares rising 140% over the last 12 month, more people are starting to notice it. "Ting Internet is tiny at only 2% of revenue, but it's also just getting started," writes Gould. "Ting plans to add service to Centennial, Colorado, and Sandpoint, Idaho, in 2017, and it expects to announce plans for additional towns later this year. In its first year of launching Ting Internet in a community, the company expects 20% uptake, growing to 50% uptake within five years. And while Ting Internet is not yet profitable, the company is targeting late 2018 or early 2019 as its breakeven point."^[891]

April 7, 2017: Fox Business Columnist Anders Bylund Explains Why Tucows Inc. Stock Soared in March

Anders Bylund wrote on Fox Business on April 7, 2017 that the reason that Tucows stock rose 12.1% from an opening price of 45.90 on March 1, 2017 to a closing price of 51.05 on March 30, 2017 is that the announcement that Dave Singh is taking over as vice president of finance will ensure a smooth learning curve and transition. "The simple CFO transition removed a cloud of uncertainty from Tucows' horizon. Singh's background in telecom operations ensures that Tucows will continue its full-court press on the Ting-branded fiber-optic and mobile services," wrote Bylund. "If that weren't preparation enough, Cooperman will also stay on in an advisory role for an unspecified period."

Bylund also notes that Tucows announced a $40 million share buyback program, "a strong vote of confidence, especially since it expires in early 2018." "Tucows shares have gained a spine-tingling 130% over the last 52 weeks," concludes Bylund, "but management is betting a downright audacious amount of money on further gains."^[892]

March 30, 2017: Christopher Mayer Says Elliott Noss at Tucows is Going to be Somebody People Write about in the Future

Christopher Mayer, Investment Director with Bonner Family Office, talked about what he looks for in an investment in a podcast on March 30, 2017 and how he identifies CEOs who create great value for investors. When asked about present day founders, Mayer said that "I’d include Steven Udvar-Hazy at Air Lease, Thomas Peterffy at Interactive Brokers, Vincent Bollore at Vivendi and Bollore SA… I think Elliott Noss at Tucows is going to be somebody people write about in the future." Mayer says that one thing he looks for is insider ownership with CEOs who own significant stakes in their own businesses. A second thing is to look at the compensation. "The fact is, most of these outsider CEOs that we love, they don’t pay themselves outrageous sums of money. Look for the fingerprints of a shareholder mentality – things like timely buybacks, or behaving in a counter cyclical manner, dutch tenders."^[893]

Note: Tucows latest annual report filed with the SEC on March 8, 2017 shows that Tucows CEO Elliot Noss owns 699,579 shares of Tucows equivalent to 6.7% of the company's outstanding shares. Noss' base salary was $304,075 in 2016 with bonuses and option awards bringing his total compensation to $595,629.^[894]

February 18, 2017: Fox Business Columnist Leo Sun Says Tucows is a Hot Stock

Leo Sun wrote at Fox Business on February 18, 2017 that Tucows is a hot stock because it is gaining momentum for a solid reason and trading at reasonable valuations. According to Sun, Tucows recently announced that it will acquire wholesale domain registrar Enom for $83.5 billion making it the second-largest domain registrar in the world and be "immediately" accretive to its earnings growth and Ting Internet's fiber plans are making inroads into smaller towns and cities across the U.S causing Tucows' stock to surge 35% since the beginning of the year. "Analysts expect Tucows' revenue to rise 85% this year, thanks to the additional revenue from Enom, and grow another 10% next year after year-over-year comparisons normalize. Its earnings are expected to grow 28% this year and another 52% next year."^[895]

February 9, 2017: Comark Forecasts Tucows 2018 Earnings

The Cerbat Gem reported on February 9, 2017 that investment analyst Hubert Mak at Cormark issued their Q1 2018 earnings estimates for shares of Tucows in a note issued to investors.

Q1 2018	0.84
Q2 2018	0.95
Q3 2018	1.02
Q4 2018	1.03
Total	3.84

On Janaury 25, 2017 Comark estimated Tucows earnings for 2017:

Q1 2017	0.66
Q2 2017	0.67
Q3 2017	0.68
Q4 2017	0.71
Total	2.72

February 8, 2017: Hugh Pickens Projects The Number of Ting Internet Customers Resulting from the 2017 CapEx Spend

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 he expects to spend $30 million to $35 million in Capex in Ting Internet in 2017 and 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."

Noss added that "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. Again, just these first five towns should represent about 85,000 serviceable addresses at completion."^[896]

Customers = Take Rate * Serviceable Addresses

The difference between "servicable addresses" and customers is that the “take rate” is the percentage of potential subscribers who are offered the service that actually do subscribe. With a 50% percent "take rate" after five years, it costs $1,500 per serviceable address and $3,000 per customer. With a $30 million Capex for 2017 this will provide 20,000 serviceable addresses in 2017 resulting in 4,000 customers after one year and 10,000 customers after five years.

Noss has previously stated that each customer will generate about $1,000 in annual gross margin for following years. Assuming the number of customers increases linearly the following table shows the Number of Customers, the Annual Gross Margin, and the Annual Gross Margin per Share of TCX stock that will be realized with the $30 million Capex investment in Ting Internet in 2017.

	Serviceable Addresses	Customers	Annual Gross Margin	Additional Annual Gross Margin per Share
After Year 1	20,000	4,000	$4,000,000	$0.38
After Year 2	20,000	5,500	$5,500,000	$0.53
After Year 3	20,000	7,000	$7,000,000	$0.67
After Year 4	20,000	8,500	$8,500,000	$0.81
After Year 5	20,000	10,000	$10,000,000	$0.96

January 30, 2017: MSA Capital GmbH Says Tucows is Now One of the Largest Portfolio Items in Their TGV Partners Fund

MSA Capital GmbH, located in Bonn Germany, reported in their annual investor newsletter in January, 2017 that Tucows is now one of the largest portfolio items in their TGV Partners Fund. "The company meets all the requirements of the TGV Partners Fund for a potential investment, and with CEO Elliot Noss, it has a business leader who does not only outperform in terms of operational and strategic decisions, but also when it comes to the subtleties of capital allocation. In addition, Elliot is substantially invested in Tucows. An excellent combination, that rarely occurs in such a pronounced manner." The newsletter notes that in the past, Tucows was enthusiastic when it came to testing and introducing business models close to its own business, but also in terminating them in the event of non-success.

"Since its inception in 2012, Ting Mobile has now around 250,000 devices/their users under contract. A tiny drop in an ocean, which is estimated at over 400 million devices, but fantastic success for a relatively small company, which is now as valuable to the company as the old core business with the service around the registration and handling of Internet domains. More satisfied customers will hopefully follow." The annual newsletter concludes that "given that Ting is negligibly small compared to the overall market in the US, the chances are good that Ting has found a profitable niche. Hopefully, it can be expanded while the original business continues to generate stable earnings to fund future growth."^[897]

February 8, 2017: David O Comments on Tucows EBIDTA Guidance

David O wrote on the Yahoo Conversation Board for TCX that Tucows' EBIDTA Guidance for 2017 of $50 million equates to $31.68 Million in income for 2017 assuming a tax rate of 36.62% from Tucows 2016 financials for an EPS in 2017 of $2.98. A P/E of 20 would yield a price target of $59 while a P/E of 25 would yield a price target of $74. In addition, while Elliot Noss confirmed an annual run rate of $155 million for Enom, David O noted that under GAAP rules Tucows won't have the revenue on its income statement until customers renew their domain names so it is possible that Tucows will have $355 million in revenue from domain names in 2018.^[898]

January 26, 2017: Shark Trader Writes That Cost Control Measures Have Increased Profitability of Tucows' Wholesale Domain Business

Stock in Tucows Has Increased Almost 40% Since the Enom Acquisition and Tucows' Market Cap Now Exceeds $500 million. Graph of Tucows' Stock Price Increase over the last month: Hugh Pickens

'Shark Trader' wrote at "Seeking Alpha" on January 26, 2017 that Tucows' wholesale domain business segment operates in a small margin industry due to the homogeneous nature of the key products. However, by taking some stiff cost cutting measures since the start of 2015, Tucows' management was able to increase their net income to match their growing revenues. "Domain and web hosting industry was once a growth industry, where investors were ready to wait to get any profits back," wrote Shark Trader. "However, the whole industry is maturing and saturating. However, Tucows Inc. managed to deliver both top line growth and increased their gross profit margin over the last two years, and investors rewarded the company by bidding up the stock price."

Shark Trader concludes that with the acquisition of Enom which will double Tucows' domain business from 14.5 million domains under management to 29 million domains under management "we believe that Tucows Inc. management would be able to further increase profitability because of added economies of scale."^[899] Confidence in Tucows' growth potential has already been reflected in TCX's stock increase from $36 to $49 since the acquisition - a 36% increase.

January 25, 2017: Comark Raises Earnings Estimates for Tucows

BBNS reported on January 25, 2017 that investment analyst Herbert Mak at Cormark raised FY2016 earnings estimates for Tucows for $2.18 to $2.20 for the year. Cormark also issued estimates for Tucows’ Q1 2017 earnings at $0.66 EPS, Q2 2017 earnings at $0.67 EPS, Q3 2017 earnings at $0.68 EPS and Q4 2017 earnings at $0.71 EPS for a total of $2.72 for FY2017.^[900]

Q1 2017	0.66
Q2 2017	0.67
Q3 2017	0.68
Q4 2017	0.71

January 14, 2017: Hugh Pickens Looks at the Chronology of Rollouts and the Number of Households in each 'Ting Town'

Following are permanent links to the chronologies of Ting Fiber entry to each 'Ting Town':

December 2014: Chronology of Ting Fiber Rollout in Charlottesville (17,778 households)

Following is the chronology of Ting Fiber rollout in Charlottesville from the initial acquisition of Blue Ridge Interent in December 2014:

December 16, 2014: Ting Acquires Majority Stake In Blue Ridge InternetWorks, an Independent Internet Service Provider in Charlottesville
June 15, 2015: Ting Fiber Network Now Available to Thousands of Charlottesville Homes
August 6, 2015: Ting Fiber Lit up First Customer in Charlottesville in May and Costs Are in Line With Assumptions
September 8, 2015: Ting Fiber Announces Roll-Out Plans for Charlottesville for North Downtown, Belmont, Martha Jefferson and Locust Grove
November 5, 2015: Adoption in Charlottseville Has Been Encouraging with 4,000 Servicable Addresses
November 14, 2015: Ting Plans to Expand in Charlottesville in 2016 targetting Belmont, Martha Jefferson, Jefferson Park Avenue and Rugby Road
February 9, 2016: Ting Fiber is Active serving customers in most parts of Charlottesville
February 28, 2016: Ting Fiber moving into Fifeville, (Jefferson Park Avenue) and the Fry’s Spring neighborhoods and expects to have citywide availability within a year
May , 2016: The Backbone of the Buildout in Charlottesville Will Be Completed by the End of 2016
May 9, 2016: Ting Internet Has Launched a Campaign to Measure Demand in Charlottesville and Holly Springs
August 8, 2016: Virtually all Residents of Charlottesville Will be Able to Order Ting Fiber by the End of the Year
September 27, 2016: Ting Fiber Hosts Hiring Event in Charlottesville
November 7, 2016: Ting Internet has Doubled its Install Team
November 7, 2016: Ting Internet Now Passes Over 10,000 Potential Customers in Charlottesville

January 2015: Chronology of Ting Fiber Rollout in Westminster (7,161 households)

Following is the chronology of Ting Fiber rollout in Westminster from the initial acquisition of contract to be network operator in January 2015:

January 13, 2015: Ting to Be Network Operator of Internet Service to City-Owned Fiber Optic Network in Westminster, Maryland
August 17, 2015: Ting Internet Is Now Available in Westminster, MD
November 5, 2015: Adoption in Westminster Has Been Encouraging with no more than 500 addresses that we can service
February 9, 2016: Ting Fiber is Active in Westminster MD, Charlottesville VA, and Holly Springs NC
May 20, 2016: Maryland Senator Ben Cardin Visits Ting Internet in Westminster
May 27, 2016: First Ting Makerspace Goes Live in Westminster
June 28, 2016: Clinton Campaign Praises Ting's Westminster Broadband Project
October 28, 2016: 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
November 7, 2016: There are about 300 serviceable addresses right now in Westminster. The city projects another 2,700 addresses finished by this time next year

October 2015: Chronology of Ting Fiber Rollout in Holly Springs (8,147 households)

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:

October 20, 2015: Holly Springs is Set to be the Next Ting Internet Town
November 5, 2015: Ting Internet Hopes to Start Servicing Customers in Holly Springs in Summer 2016
November 18, 2015: Ting Internet is now assessing demand in Holly Springs and the expects the first customers to come online around early summer.
January 14, 2016: Ting Fiber Begins Pre-Orders for Holly Springs
February 9, 2016: Ting Fiber is Active in Holly Springs NC
May 9, 2016: Ting Internet Has Launched a Campaign to Measure Demand in Charlottesville and Holly Springs
June 1, 2016: Fiber Network Construction in Holly Springs to Begin in August 2016. The initial roll-out plans include Holly Glen, Holly Pointe, Autumn Park and Morgan Park.
August 8, 2016: Ting Internet Expects to Have Homes in the neighborhood of Holly Glen in Holly Springs Connected by the end of 2016
November 7, 2016: Ting Internet Expects to Light Up the First Customers by the End of 2016 and get to around ten thousand serviceable addresses throughout Holly Springs by the end of 2017
January 17, 2017: Ting Connects First Fiber Customer in Hollys Springs
January 17, 2017: Phase 1 construction is now complete in the neighborhoods of Holly Glen, Braxton Village and Holly Pointe and construction is underway in the Phase 2 neighborhoods of Oak Hall, Windcrest, Morgan Park, Windward Pointe.

March 2016: Chronology of Ting Fiber Rollout in Sandpoint (3,215 households)

Following is the chronology of Ting Fiber rollout in Sandpoint from the initial announcement in March 2016:

March 2, 2016: Ting to Bring Fiber to Greater Sandpoint, Idaho
May 9, 2016: Ting Internet Has Announced a Fourth Market for Consideration in Sandpoint
August 8, 2016: Ting Internet Expects to Be Taking the Next Steps in Sandpoint Soon
August 12, 2016: Sandpoint Makes Great Strides on Fiber Internet
August 30, 2016: Installation of Fiber Infrastructure Continues in Sandpoint
December 22, 2016: Sandpoint Officials Are Finalizing Fiber Lease Rates to Ting

September 2016: Chronology of Ting Fiber Rollout in Centennial (36,200 households)

Following is the chronology of Ting Fiber rollout in Centennial from the initial announcement in September 2016:

September 21, 2016: Ting to Bring Fiber to Centennial, Colorado (Pop 107,000)
September 22, 2016: Ting Looking for 20 Per Cent Fiber Penetration in Centennial in the First Year
October 5, 2016: Three Years Ago Centennial Voters Approved a Measure to Allow the City to Create a Nonexclusive Broadband Fiber-Optic Network
November 7, 2016: Ting Internet Hopes to Begin Construction in Centennial in Q2 2017 and Start Lighting Up Customers in Summer 2017
November 19, 2016: Ting Sponsors Annual Holiday Lighting Event in Centennial Center Park
December 21, 2016: Some Say Paying Centennial Councilmen to Oversee Fiber May Violate City Charter

December 5, 2016: Stock Newsweek Calculates that Tucows Has a Piotroski Score of Seven

Tucows currently has a Piotroski Score of 7. The Piotroski Score (or F-Score) is named after its creator Joseph Piotroski who developed a ranking scale from 0-9 to help determine the financial strength of a company. Graphic: Forbes

Stock Newsweek reported on December 5, 2016 that according to their analysis Tucows currently has a Piotroski Score of 7. The Piotroski Score (or F-Score) is named after its creator Joseph Piotroski who developed a ranking scale from 0-9 to help determine the financial strength of a company. To arrive at this score, Piotroski gave one point for every piece of criteria met out of the nine considered. In terms of profitability, one point was given if there was a positive return on assets in the current year, one point if operating cash flow was positive in the current year, one point for higher ROA in the current period compared to ROA for the previous year, and one point for cash flow from operations greater than ROA. In terms of leverage and liquidity, one point was given for a lower ratio of long term debt in the current period compared to the previous year, one point was given for higher current ratio compared to the previous year, and one point if no new shares were issued in the last year. In terms of operating efficiency, one point was given for higher gross margin compared to the previous year, and one point was given for a higher asset turnover ratio compared to the previous year. In general, a stock with a score of 8 or 9 would be considered strong while a stock with a score from 0-2 would be considered weak.^[901]^[902]

According to an article in Forbes on July 8, 2016, the distribution of current Piotroski F-scores for the S&P 500 is roughly normal with a mean of 5.54 and a standard deviation of 1.52. The F-scores range from 2 to 9; 11 companies have an F-score of 2 while five have the maximum possible F-score. The distribution of current F-scores suggests that most companies have strong business outlooks based on their F-scores. About 52% of the companies have an F-score between 5 and 6, which is typical for stable companies. Additionally, 131 companies have an F-score greater than or equal to 7. Joseph D. Piotroski, who introduced the F-score, targets companies with high F-scores. On the other hand, 37 companies, which represents less than 6% of all S&P 500 companies, have F-scores less than or equal to 3. These companies make good sell targets, according to short-seller James Montier.^[903]^[904]

October 10, 2016: The Motley Fool writes: "Why Tucows Inc. Gained 16.8% in September"

Anders Bylund wrote at The Motley Fool on October 10, 2016 that shares of Tucows rose 16.8% in September 2016 ignited by the announcement that Tucows subsidiary Ting Fiber will be expanding to Centennial, Colorado, the fourth and largest local market for its high-speed fiber network services. Tucows CEO Elliot Noss telegraphed the Centennial expansion in a couple of ways. In August's second-quarter earnings call, he said the "pipeline of new cities is full, and we expect to be sharing additional locations before the end of the year."

According to Bylund, it was already pretty obvious that Ting Internet was going places. "This business will be of central importance to Tucows' future prospects," concludes Bylund, "and investors have plenty of reason to rejoice when Ting Internet breaks into spacious new territories like Centennial."^[905]

October 10, 2016: Hugh Pickens Estimates Potential Impact of Fiber Penetration in Centennial on Tucows' Quarterly Earnings

Google Fiber Costs. In 2013 Bernstein analyst Carlos Kirjner issued a report on how much Google paid for Fiber installation in Kansas City. Google charges consumers $70 monthly for high speed fiber. Kirjner's table breaks down where the money goes. Graphic: Costquest, Berstein Analysis

According to Hugh Pickens, an investor in Tucows who follows the stock closely, it is possible to estimate the potential impact of household and business fiber penetration in Centennial on Tucows' quarterly earnings by using the following process:

Step 1: Estimate Ting's Gross Margin in Centennial Using an analysis by Berstein Analysis of Google Fiber Installation Costs in Kansas City as a Baseline

Step 2: Estimate Ting's Penetration in Centennial

Step 3: Calculate Potential Impact of Fiber Penetration in Centennial on Tucows' Quarterly Earnings

Step 1: Estimate Ting's Gross Margin in Centennial Using Google Fiber Installation Costs in Kansas City as a Baseline

In 2013 Bernstein analyst Carlos Kirjner issued a report on how much Google paid for Fiber installation in Kansas City. Bernstein’s Carlos Kirjner and Ram Parameswaran put a price tag on Fiber installation in Kansas City: They say it will cost $84 million to pass (but not actually connect) 149,000 homes — Google’s first phase of buildout for Kansas City. Some $38 million will go into Kansas City, Kan., and $46 million into Kansas City, Mo., with the cost per home respectively at $674 and $500.

Bernstein estimates that to connect up a broadband-only service, it will cost Google $464; those taking double-play of broadband and pay-TV services will cost $794 to connect. “To reduce labor costs, Google will connect homes in waves within each neighborhood, taking advantage of the pre-subscription process it ran asking customers to express interest in its services as it deployed the network,” Bernstein writes. That first wave, of 12,000 homes on “day one” of the service equates to an 8 percent penetration and will cost an additional $10 million for Google, making for a total cost of $94 million for the Kansas City project — $42 million in Kansas and $52 million in Missouri.^[906]

Google charges consumers $70 monthly for high speed fiber. Kirjner's table breaks down where the money goes.^[907]

Using Google Fiber's costs as a baseline, the comparable figures for Ting Fiber's Centennial contract are shown in the following table:

	Google Monthly Fiber Gross Margin per Household (Bernstein Analysis 2013)	Ting Centennial Estimated Gross Margin (15 Year Amortization)
Revenue	$70.00	$89.00
Sales and Marketing	4.00	5.09
G&A	7.00	8.90
Bad Debt	1.00	1.27
High Speed Data	2.00	2.54
Customer Service	1.00	1.27
Billing	1.00	1.27
Network Opex	7.00	8.90
Amortization (15 Year)	not given	16.67
Gross Margin	$47.00	$43.09

Notes:

1. The model uses Bernstein Analysis of Google Fiber in Kansas City as a baseline.

2. Monthly Revenue for Google Fiber in Kansas City is $70 per household.

3. Monthly Revenue for Ting Fiber in Centennial will be $89 per household.

4. The model assumes that costs comparisons between Google Fiber and Ting Fiber are proportional to revenue.

5. Ting estimates that the cost to wire each household in Centennial is $2,500 - $3,000.

6. The model amortizes Ting Fiber's $3,000 cost of installation over 15 years.

7. Gross Margin is almost 50% under these assumptions.

Step 2: Estimate Ting's Penetration in Centennial

According to door-to-door survey Google conducted in Kansas City, Mo. in 2015, Bernstein estimates Google Fiber has gained a penetration of nearly 20 percent of homes passed since launching the service, giving it a path to surpass 40 percent of homes and gain attractive return on investments. Kirjner says AT&T and CenturyLink could be "particularly vulnerable to Google targeting" due to the size of their wireline footprints and the challenging of scaling further 1 Gbps deployments. Further, Bernstein said that Google Fiber could take between 40 to 50 percent market share in the markets where it currently offers service. This is a factor that could impact the nearly dozen cities and towns where it wants to bring the service. Bernstein said it could see the Google Fiber "experiment" scaling to 15 million to 20 million homes within six to eight years.^[908]

Mark Bergen, writing in Recode in May, 2016 says that people familiar with Fiber say Google has hit its initial customer targets in its first three markets — selling broadband to about 30 percent of the homes it has hooked up for service, the industry standard for feasibility. Fiber brought in roughly $100 million in revenue last year, according to sources. According to Bergen at Fiber's onset, Google saw a clear economic upside in smaller cities. Sources said Milo Medin, an internet and telecom expert, would demonstrate this with a simple chart: Population density on the X axis; cost on the Y. He then drew a smiley face. Fiber's sweet spot was the bottom of the lip, mid-sized cities where installation was not too expensive and national ISPs did not have major operational focuses.^[909]

Kirjner, writing in October, 2015 says he believes Google Fiber could reach 40% to 50% market share in the markets it currently is in – Kansas City, Provo, Utah, Austin, Texas – and the markets it’s currently begun deployments in, or announced plans to deploy in -- Salt Lake City; Nashville; Atlanta; Charlotte and Raleigh-Durham, N.C.; San Antonio, Texas and several cities it’s considering, Irvine and San Diego, Calif., and Louisville, Ky. Although the service has seen only limited success in its deployments thus far, Google could easily ramp it up and warns competitors not be “too complacent,” especially as Google Fiber continues to get rave reviews from current subscribers who routinely rate it a “9” on a scale of 1-10 in terms of satisfaction with the service. Kirjner wrote that although many pundits have dismissed the service as a tool to prod service providers to upgrade broadband speeds or as a platform to push broadband policy with regulators, he believes it has “a better-than-good chance to build a profitable local-access competitor.”^[910]

A survey conducted for The Wall Street Journal in 2014 found that 42% of the residents surveyed in five middle- and higher-income neighborhoods in Kansas City signed on to Google Fiber. An additional 11% took the slower version. Both surveys were conducted door-to-door by research firm Haynes & Co.; the one involving middle- and higher-income neighborhoods was commissioned by brokerage firm Sanford C. Bernstein. The Bernstein survey polled areas west of Troost, where the median household income is just over $57,000, according to U.S. Census data.^[911]

Step 3: Calculate Potential Impact of Fiber Penetration in Centennial on Tucows' Quarterly Earnings

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, while businesses pay $139 a month. Tucows CEO Elliot 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.^[912]

Fiber Optic Household Penetration in Centennial, Colorado

Household Penetration (Per Cent)	Centennial Fiber Households (37,000 total)	Annual Gross Sales at $89 per household (dollars)	Annual Gross Margin (dollars)	Additional Earnings per Share per Quarter before taxes and other expenses (cents)
10%	3,700	$3,951,600	$1,911,864	4.78
20%	7,400	7,903,200	3,823,728	9.56
30%	11,100	11,854,800	5,735,592	14.34
40%	14,800	15,806,400	7,647,456	19.12
50%	18,500	19,758,000	9,559,320	23.90
60%	22,200	23,709,600	11,471,184	28.68
70%	25,900	27,661,200	13,383,048	33.46
80%	29,600	31,612,800	15,294,912	38.24
90%	33,300	35,564,400	17,206,776	43.02
100%	37,000	39,516,000	19,118,640	47.80

Notes:

1. Model uses 37,000 households in Centennial, Colorado.

2. Model does not consider 4,500 businesses in Centennial, Colorado.

3. Model uses a gross margin of $43.09 per month per household.

4. The model includes the costs of connecting a home for $3,000 amortized over fifteen years.

5. The rows in red show the range of projected fiber penetration from one year to five years increasing from 20% to 50%.

6. The total Incremental Contribution from Ting per Share (Before Taxes and Other Expenses) in Q2 2016 was 57 cents.

7. Elliot Noss told analysts during the 2016 third quarter earnings conference call on November 7, 2016 that Tucows continues to feel good about their investment in Ting Internet and that their numbers show them "spending $2,500 to $3,000 per customer for a recurring margin of about $1,000 year." These numbers reference a mix of residential customer paying $89/month and businesses paying $139/month.^[913]

August 12, 2016: Hugh Pickens Calculates Tucows New Adjusted EBITDA Under the SEC Compliance Update

Tucows EBITDA Per Quarter (Click on chart to expand.)

Tucows CFO Michael Cooperman told analysts during the 2016 first 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."^[914]

Hugh Pickens, a long term investor in Tucows who closely follows the company, has researched what the effect is of the SEC compliance update on the calculation of Tucows' Adjusted EBITDA. Pickens' research indicates that the new Adjusted EBITDA can be calculated by taking Tucows' previously disclosed EBITDA figures and subtracting both the "Deferred Revenue" and the "Prepaid domain name registry and ancillary services fees" which are both under the heading of "Change in Non-Cash Working Capital" on page 3 of Tucows' Consolidated Financial Statements. Performing this calculation for the past two years results in the following spreadsheet.

	2014: Q1	2014: Q2	2014: Q3	2014: Q4	2015: Q1	2015: Q2	2015: Q3	2015: Q4	2016: Q1	2016: Q2
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
minus Deferred Revenue	$2,748,993	$867,445	-$656,430	-$1,871,865	$2,061,510	$983,000	$140,850	-$2,819,673	$1,508,582
minus Prepaid Domain Names	-$1,815,638	-$606,215	$573,727	$1,516,718	-$1,462,844	-$755,932	$149,905	$2,699,924	-$797,920
Adjusted EBITDA under New SEC Accounting Rules	$2,380,645	$3,013,770	$5,002,703	$3,886,147	$6,274,334	$5,129,932	$6,739,245	$6,432,749	$5,602,338	$7,112,000

Notes:

1. The "Adjusted EBITDA" is the original EBITDA that Tucows disclosed on their Financial Statement starting in Q1 2014 and going through Q1 2016.

2. The "Deferred Revenue" and the "Prepaid domain name registry and ancillary services fees" are both under the heading of "Change in Non-Cash Working Capital" on page 3 of Tucows' Consolidated Financial Statements.

3. Both the "Deferred Revenue" and the "Prepaid domain name registry and ancillary services fees" are subtracted from the "Adjusted EBITDA" which results in the "Adjusted EBITDA under New SEC Accounting Rules."

4. Starting in Q2 2016 these two adjustments have already been made to the numbers that Tucows reports in their quarterly reports.

August 9, 2016: Comark Cuts Q1 2017 EPS Estimate to $0.57

Community Finalcial News reported that investment analysts at Cormark cut their Q1 2017 EPS estimates for shares of Tucows in a research report issued on October 9, 2016. Cormark analyst Hubert Mak now anticipates that the firm will earn $0.57 per share for the quarter, down from their prior estimate of $0.61. Cormark also issued estimates for Tucows’ Q2 2017 earnings at $0.58 EPS, Q3 2017 earnings at $0.59 EPS, Q4 2017 earnings at $0.61 EPS and FY2017 earnings at $2.36 EPS.^[915]

July 28, 2016: Hugh Pickens writes 'Tucows and the Dog That Did Not Bark in the Night'

Tucows Breakout in 2015. In May, 2015 Tucows made an unexpected breakout. Tucows' stock price began a rapid increase beginning on May 1, 2015 when Tucows closed at 17.98 and increasing to a closing high of 31.59 on July 21, 2015. A month later on August 21, 2015 the stock price had retreated to about $25. During the same period, from May 1, 2015 to July 21, 2015 there was a succession of insider stock sales at Tucows. On May 19, 2015 Kenneth Derrick Schafer (EVP Retail) sold 16,250 shares; between May 22, 2015 and June 17, 2015 Rawleigh Ralls (Co-Chair Board of Directors) sold 86,260 shares of Tucows at prices ranging from 24.48 to 28.85; Allen Karp (Co-Chair Board of Directors) sold 10,000 shares on June 2, 2015 at 27.95; and Michael Goldstein (VP Marketing) sold 12,450 shares between June 16, 2015 and June 18, 2015.

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.

One of the most popular Sherlock Holmes short stories, "Silver Blaze" focuses on the disappearance of a race horse on the eve of an important race and on the apparent murder of its trainer. The tale is distinguished by its atmospheric Dartmoor setting and late-Victorian sporting milieu. It also features some of Conan Doyle's most effective plotting, hinging on the "curious incident of the dog in the night-time:"

Gregory (Scotland Yard detective): "Is there any other point to which you would wish to draw my attention?"

Holmes: "To the curious incident of the dog in the night-time."
Gregory: "The dog did nothing in the night-time."

Holmes: "That was the curious incident."

The "curious incident of the dog in the night-time" is easily explained: the dog made no noise, because no stranger was there. As Holmes explains: “I had grasped the significance of the silence of the dog, for one true inference invariably suggests others....Obviously the midnight visitor was someone whom the dog knew well. It was Straker who removed Silver Blaze from his stall and led him out on to the moor."^[916]

What does this have to do with Tucows and its future prospects? In May, 2015 Tucows stock price made an unexpected breakout. Tucows' stock price began a rapid increase beginning on May 1, 2015 when Tucows closed at 17.98 and increased to a closing high of 31.59 on July 21, 2015. A month later on August 21, 2015 the stock price had retreated to about $25.

During the same period from May 1, 2015 to July 21, 2015 there was a succession of insider stock sales at Tucows. Between May 22, 2015 and June 17, 2015 Rawleigh Ralls (Co-Chair Board of Directors) sold 86,260 shares of Tucows at prices ranging from 24.48 to 28.85; Allen Karp (Co-Chair Board of Directors) sold 10,000 shares on June 2, 2015 at 27.95; On May 19 Kenneth Derrick Schafer (EVP Retail) sold 16,250 shares; and Michael Goldstein (VP Marketing) sold 12,450 shares between June 16, 2015 and June 18, 2015.

This year, Tucows has broken out again beginning on July 7, 2016 when Tucows closed at 25.40 on high volume and rising to 29.90 on July 29, 2016. It is unknown whether the breakout will continue. What is known is that this year, in contrast to 2015, there has been no insider selling.

"Insiders, especially members of the board or senior management, understand the future prospects of a company better than the general public," says Hugh Pickens, a long term investor in Tucows who follows the company closely. "In 2015 when Tucows broke out, many insiders sold some of their stock, perhaps because they knew that the stock price had gotten ahead of itself and didn't have the fundamentals to sustain that level of valuation." According to Pickens the "dog that did not bark in the night" in 2016 is that now that the stock is making a similar break-out, there has been no rush of insiders to sell their stock in Tucows. "The fact that there is no insider selling at this level may indicate that insiders know that Tucows' fundamentals are strong. This may mean that Tucows can support the present valuation or perhaps an even higher one," concludes Pickens. "However, traders may want to watch future insider trades closely to determine if and when they want to take profits."

Note: 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.

May 11, 2016: Comark Raises Tucows' Earnings Per Share Projections to $2.26 for FY2016, $2.55 for FY2017

Comark Raises Tucows' Earnings Per Share Projections to $2.26 for FY2016, $2.55 for FY2017. Washington News Wire reported on May 11, 2016 that Research analysts at Cormark raised their Q2 2016 earnings per share (EPS) estimates for shares of Tucows to $0.55 for the quarter, up from their prior estimate of $0.53. Cormark also issued estimates for Tucows’ Q3 2016 earnings at $0.58 EPS, Q4 2016 earnings at $0.61 EPS, FY2016 earnings at $2.26 EPS, Q2 2017 earnings at $0.63 EPS, Q3 2017 earnings at $0.66 EPS, Q4 2017 earnings at $0.66 EPS and FY2017 earnings at $2.55 EPS.

Washington News Wire reported on May 11, 2016 that Research analysts at Cormark raised their Q2 2016 earnings per share (EPS) estimates for shares of Tucows to $0.55 for the quarter, up from their prior estimate of $0.53. Cormark also issued estimates for Tucows’ Q3 2016 earnings at $0.58 EPS, Q4 2016 earnings at $0.61 EPS, FY2016 earnings at $2.26 EPS, Q2 2017 earnings at $0.63 EPS, Q3 2017 earnings at $0.66 EPS, Q4 2017 earnings at $0.66 EPS and FY2017 earnings at $2.55 EPS.^[917]

May 10, 2016: Cantor Fitzgerald Lowers Tucows' Price Target from $36 to $29

Cantech Letter reported on May 10, 2016 that Cantor Fitzgerald Canada analyst David Tomljenovic has lowered his one-year price target on Tucows from (U.S.) $36.00 to $29.00, implying a return of 23% at the time of publication. Tomljenovic says he was overly optimistic about the number of subscriber additions that Ting Mobile would make, and is now reducing his revenue and EBITDA forecast for the remainder of this year because of it. Tomljenovic says that while Ting Mobile continues to deliver impressive growth an inevitable problem is surfacing. “While as impressive as Ting Mobile’s growth was in the quarter, the rate of change of growth continued to decelerate which is understandable – as the user base grows, the growth rate becomes more difficult to sustain. Our expectations in this regard have proven to be too aggressive. We have reduced our quarterly new subscriber rate to 6,000 / quarter down from our previous assumption of 9,500. This makes up the majority of our reduced revenue estimate. Given the strong impact that Ting revenues have on gross and EBITDA margins, this also brings our EBITDA number down. We are in-line with management’s 2016 EBITDA guidance of approximately U$30M with our estimate of U$30.6.”^[918]

April 27, 2016: Jerome Hass at Lightwater Partners Says Tucows Produces Predictable Cash Flow, Trades at a Reasonable Multiple, and Has Decent Growth Prospects

Michael Chu wrote at Business News Network on April 26, 2016 that according to Jerome Hass, portfolio manager at Lightwater Partners, Tucows is an “uncrowded” Canadian mid-cap stock that don’t get much attention from investors or sell-side analysts that produces predictable cash flows, trades at a reasonable multiple, and has decent growth prospects. "We also like that management has consistently used its cash flow to buy back shares and has been self-sufficient with its capital."^[919]

Hass is a Portfolio Manager at Lightware since 2007 and has over 20 years experience in the financial industry. Previously, Hass worked as a Portfolio Manager at Epic Capital Mgmt in Toronto and Montrusco Bolton Investments in Montreal and also worked as a Portfolio Manager in London, England for Canada Life Assurance Company. Hass holds a Bachelor degree in Economics from the University of Western Ontario, a Master of Arts in Applied Economics from the University of Victoria as well as a Master of Science degree in Economics from the London School of Economics, and is a holder of the Chartered Financial Analyst ("CFA") designation.^[920]

March 17, 2016: Cantor Fitzgerald Analyzes Melbourne IT Domain Business Acquisition, Maintains $36 Price Target for Tucows

David Tomljenovic at Cantor Fitzgerald issued a research note on March 17, 2016 analyzing Tucows acquisition of Melbourne IT’s Domain Business. According to Tomljenovic, Melbourne IT (“MIT”) has been shifting their business strategy towards managed services leaving their international domain services as a non-core asset and with over 250 global resellers in Melbourne IT's network the integration synergies between Tucows and Melbourne IT are obvious. Tomljenovic estimates that the sale price of Melbourne IT's international domain registration business is approximately $6.1 to 6.4 million. "The transaction details suggest that Tucows has consummated a good deal. Tucows has placed 10% of the purchase price(~$600k) in escrow, the balance of the purchase price is only payable once 95% of the existing domains have been migrated to Tucows," writes Tomljenovic. "We believe this is a very low risk structure for Tucows. It would also suggest that all Tucows has really purchased are the existing customers and the 250 international resellers. This structure would suggest that the actual post integration purchase price could be much lower than MIT’s disclosure."

"By applying the differential in the EBITDA acquisition multiple and Tucows trading multiple, we believe this acquisition could add up to 2.5% accretion to Tucows market cap," writes Tomljenovic. "We maintain our Buy recommendation and US$36.00 target price."^[921]

March 4, 2016: If Sandpoint, Idaho Can Support a Gigabit Fiber ISP, So Can Your Town

If Sandpoint, Idaho Can Support a Gigabit Fiber ISP, So Can Your Town. While telecom incumbents like Verizon and AT&T, are focusing on building out fiber in major metropolitan areas, Ting, a startup internet service provider that currently offers gigabit fiber in Charlottesville, Virginia and Westminster, Maryland and is planning a buildout in Holly Springs, North Carolina, says that Sandpoint, Idaho, a town of about 8,000, will be its next gigabit city. Ting’s venture into Sandpoint is a proof-of-concept. Can a fiber company make money in a small town without having the local government foot most of the bill? Graphic of Map of Sandpoint's new fiber backbone from Sandpoint local government

Jason Koebler writes at Motherboard that while telecom incumbents like Verizon and AT&T, are focusing on building out fiber in major metropolitan areas, Ting, a startup internet service provider that currently offers gigabit fiber in Charlottesville, Virginia and Westminster, Maryland and is planning a buildout in Holly Springs, North Carolina, says that Sandpoint, Idaho, a town of about 8,000, will be its next gigabit city. Ting’s venture into Sandpoint is a proof-of-concept. Can a fiber company make money in a small town without having the local government foot most of the bill? “It’s sort of, ‘If I can profit there, I'll profit anywhere’ and I think, for that reason, it ends up being good news for people in smaller cities and towns around the country,” a Ting spokesperson told me. “It’s an experiment to see if we can make it work in a small town.”

According to Koebler Ting didn’t choose Sandpoint at random. The town is already building fiber infrastructure in its downtown area that will connect municipal buildings “such as the courthouse, county administration, the library, and emergency services,” according to the town’s government. Ting will tap into this network (but will otherwise build the expensive part of the network itself) to serve as the backbone for its service. "Such an arrangement would be possible in lots of places," says Koebler. "Many of America’s cities and towns have fiber backbones that connect schools and public facilities but aren’t used to service residents, because the most expensive part of making a fiber network is the “last mile” connections to individual homes. “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,” Elliot Noss, Ting’s CEO, said in a statement. “Smaller cities and towns need faster, more reliable Internet too. Maybe even more so.”^[922]

December 11, 2015: Hugh Pickens Comments on Seeking Alpha Article on Tucows

Hugh Pickens made the following comment on December 11, 2015 to an article in Seeking Alpha called "Time To Go Long Tucows: Fiber Presents Massive Recurring Long-Term Opportunity" by 'True Intrinsic Value':

Good article. I learned a lot reading it, especially concerning industry comparisons of ARPU, SAC and Churn. There's another good analysis on the subject of “Cohorts, Retention, Churn, ARPU” by Matt Johnson at:

https://web.archive.org/web/20090228081659/http://blog.blist.com/2008/10/15/cohorts-retention-churn-arpu

Tucows is certainly a master of conversion rate optimization with their multiple campaigns on social media and the way they track each campaign's conversion rate.

Ting Mobile's growth problem is that while gross adds are increasing quarterly, net adds are staying flat because the 2.5% monthly churn is being applied to an ever increasing user base. This means that Ting Mobile needs to bring in more customers every quarter just to stay even and it means that even though gross adds are going up, net growth is slowing. What investors need to see next quarter is for Ting Mobile to bring it's churn rate back down to around 2% and for them to turn marketing back on to increase the net adds. Both these actions are certainly doable. We just need to wait until next quarter as see how Tucows executes.

On the plus side, I suspect that the Sprint FED problems are behind us with the bad memories decaying with a half life of about six months. I am also confident based on the recent Consumer Reports ratings that Ting still has excellent customer service, and I am encouraged by Ting Mobile's recent marketing forays with Kroger and Staples that they are continuing to test new marketing channels.

As far as Ting Internet goes, it is still very early in the life cycle to have any idea how this will play out. Ting Internet has three contracts and they are going after half a dozen more in 2016 so everything is in place for them to start wiring customers. We won't know anything until we start seeing customer figures later in 2016.

Two things in Ting Internet's favor are that fiber is a very sticky business and Ting Internet expects the lifetime value of a contract to be a lot higher than Ting Mobile. Ting Internet's advantages are the excellent customer service they honed and optimized with Ting Mobile and a local presence on the ground in the three localities. I agree that this is a local business and I am encouraged by articles about Ting Internet I am seeing in local newspapers in their three market areas and Tucows' participation in local events like the recent Carroll Biz Challenge.

Everything is now in place for Ting Internet to become an engine of growth for the company. We will just have to wait see how they execute and that is what the market has been doing with regard to Tucows' stock price since August.

As a holder of the stock since 2007 who has seen TCX increase 800% since they rolled out Ting in 2012, I'm putting my money on Elliot Noss and his management team.

For more information on Tucows:

http://tucowsanalysis.com

Best Regards,

Hugh Pickens^[923]

December 9, 2015: 'True Intrinsic Value' Says Ting Fiber Presents a Massive Recurring Long-Term Opportunity

Anonymous Contributor 'True Intrinsic Value' (TIV) writes at Seeking Alpha that if Tucows' can execute on their Ting Fiber roll outs over the coming two years, Ting fiber could present $50 to $60 million in additional revenue to the company, which given very conservative margin estimates in the 35% to 45% range could add approximately $15 to $25 million in EBITDA to this year's EBITDA base of $25 million. Using a 10x multiple the stock would be worth more than $40 per share for upside of at least 70% from today's price level. "Fiber is an inherently local business because the build out has to be done at a local level and is overseen by the local government unlike broader telecommunications infrastructure which is overseen at the state and federal level," writes TIV. "The local nature of the business also puts a premium on customer service, which is an area where incumbent cable and internet providers are notorious for their poor performance. Customer service is an area where Tucows already excels in their Ting Mobile business, and they are uniquely positioned to disrupt the incumbents with their superior model."

According to Tucows' management, the company plans to roll out to between 4-6 cities per annum in 2016 and 2017. "Given the company has already come to agreements with three cities we believe by 2018 the company can be fully rolled out in 10 cities," says TIV. According to TIV Tucows as a private sector company with experience in word of mouth marketing campaigns will be able to achieve take rates of at least 50% by year 3 of the roll out. Under this assumption, by 2018 Tucows would have 47.5k of the 95k addressable Multiple Dwelling Units as subscribers paying approximately $100 per month which translates to a potential annual revenue opportunity of $57 million for the company, which at 40% EBITDA margin would add approximately $23 million to the EBITDA of the company.

"Using a conservative 10x multiple for the company and a conservative 25% growth rate gets you a $31 stock price in 2016 and over a $60 stock price in 2018 for annualized returns of greater than 30% and 150%, respectively, excluding ongoing share repurchases that are likely total $50 million plus over the next 3 years," concludes TIV. "We believe Ting Internet will force the market to revalue Tucows at a significantly higher multiple setting the stage for a large move higher in the stock over the next several years."^[924]

November 9, 2015: Cantor Fitzgerald Canada Maintains One Year Price Target of $36 for Tucows

Nick Waddell writes at CanTech that Cantor Fitzgerald Canada analyst Scott Curtis thinks that Tucows still has upside and says that recent results for Q3 were in-line with his expecations. Curtis says the company’s move to diversify its business in 2012 by launching wireless service provider Ting, is on more than solid footing. "Ting Mobile business now contributes over 37% of consolidated sales (versus 25% last year),” says Curtis. “Tucow’s domain business continues to deliver stable cash flow to support business development of its gigabit fiber initiative (Ting Internet).” Curtis maintained his “Buy” recommendation and (U.S.) $36.00 (C$45.00) one-year target price on Tucows, implying a return of 31% at the time of publication.^[925]

November 6, 2015: Hugh Pickens Comments on Q3 Results at Seeking Alpha and Fierce Wireless

Hugh Pickens made the following comment on the stories about Tucows' Q3 results at Seeking Alpha, Fierce Wireless, and CanTech Letter.:

"As a long-term investor since 2007, who has watched TCX increase 800% in value since Tucows rolled out Ting Mobile in 2012, I was overall satisfied with Tucows' Q3 2015 performance. It would have been nice to see 10,000 to 12,000 net adds this quarter but as Noss indicated, Ting Mobile is still recovering from the FED problems with Sprint earlier this year and has taken a hit to its reputation and is just starting to regain momentum.

One big takeaway from Noss's comments is that Gross Adds have remained steady at just under 20,000 over the past five quarters. The problem is that while the 2.5% churn rate has remained relatively constant, cancellations in absolute numbers have increased as a function of the greater population of customers under contract. Every cancellation costs revenue but also $100 to replace that customer which last quarter cost the company $1.8 million. I think Ting Mobile needs to concentrate on bringing their churn rate back down to 2% and perhaps they should try to steer potential customers away from their GSM phones, even offering incentives to go with Sprint, if GSM's transient customer base is a major factor driving the higher churn rates.

I was very pleased with the progress with Ting Internet's three municipal customers and the fact that gross margins are much higher and it is a much stickier service than Ting Mobile. I look forward to seeing Ting Internet start to provide a significant contribution to Tucows bottom line in 2016. I totally agree with Noss' careful "get rich slowly" approach to entering two or three new markets in Google Fiber's Halo over the next year.

Overall a good quarter. Tucows is executing to plan and I think over the next year Tucows stockholders will be handsomely rewarded for their confidence in Tucows management. Tucows certainly has conviction in their own vision as demonstrated by the company buybacks of almost 400,000 shares of stock last quarter at an average price of $22.76 per share.

For an analysis of Tucows strategy and a model of Ting Mobile profitability, go to:

http://tucowsanalysis.com

Congratulations and Best Regards,

Hugh Pickens^[926]^[927]

November 3, 2015: Hugh Pickens Predicts 10,000 Net Additional Ting Customers during Q3 2015

Ahead of Tucows earnings release for Q3 2015 on November 5, 2015, Hugh Pickens predicted on November 3, 2015 that Ting will add 10,000 net additional customers for the third quarter. According to Pickens Ting added an average of 12,000 new customers during each of the four quarters in 2014 (Q1: 13,000, Q2: 12,000, Q3: 11,000, and Q4: 12,000) before dropping to 9,000 net adds during the first quarter of 2015 and 10,000 in the second quarter of 2015 after the disruption caused by the Sprint FED.

Pickens expects revenue from Tucows domain services to be essentially flat this quarter and does not expect any significant contribution from Ting Fiber until 2016. Pickens predicts that Tucows will maintain their guidance for Adjusted EBITDA at $25 million for 2015 and thinks the favorable Canadian exchange rate will help Tucows meet its financial goals for the year.

On May 7, 2015 Pickens predicted that Ting would have 8,000 net additional customers for Q1 2015. Tucows actual numbers released later that day came in at 9,000 net adds. On August 8, 2015 Pickens predicted 12,000 net adds for the second quarter. The actual number came in at 10,000.

Pickens also predicts that this quarter for the first time, Ting will because the largest contributor to Tucows bottom line with the Incremental Contribution from Ting (Before Taxes and Other Expenses) equalling or exceeding the Incremental Contribution from Tucows Domain Services (Before Taxes and Other Expenses) during Q3, 2015. The Incremental Contribution from Ting (Before Taxes and Other Expenses) in Q2, 2015 was $6,919,000 while the Incremental Contribution from Tucows Domain Services (Before Taxes and Other Expenses) was $7,719,000.

October 8, 2015: Zacks Lowers Tucows Stock Rating from 'Buy' to 'Hold'

Dakota Financial News reported on October 8, 2015 that Tucows was downgraded by Zacks from a “buy” rating to a “hold” rating in a research report issued to clients and investors on October 7, 2015.^[928]

October 6, 2015: Zacks Reports Consensus Earnings for Tucows will be $1.10 for FY2015 and $1.51 for FY2016

Dakota Financial News reported on October 6, 2015 that equities analysts expect Tucows to report $0.29 earnings per share for the current fiscal quarter and full year earnings of $1.10 per share for the current financial year. Two analysts have provided estimates for Tucows’ earnings. The highest EPS estimate is $0.30 and the lowest is $0.28. For the next year, analysts expect that the company will report earnings of $1.51 per share, with EPS estimates ranging from $1.48 to $1.54. Zacks Investment Research’s EPS calculations are a mean average based on a survey of sell-side research firms that cover Tucows.^[929]

September 14, 2015: The Globe and Mail Does Feature Story on Tucows

Toronto based newspaper The Globe and Mail is one of Canada's leading newspapers and with a weekly readership of approximately 950,000 in 2011 is considered "Canada's National Newspaper," the most authoritative print news source in Canada. The Globe and Mail published a feature story on Tucows on September 14, 2015 which profiled Tucows and gathered views about the company's future from different sources.^[930]

On the positive side, the newspaper quoted Cantor Fitzgerald's recent coverage of Tucows that “Ting Mobile is the current growth engine of the company,” said analyst Scott Curtis, who recently initiated coverage of Tucows with a “buy” and $36 (U.S.) a share target price. That’s more than 40 per cent above its current price, around $25 on the Nasdaq. “Ting Internet is the sexy growth opportunity." The newspaper quoted Cormark Securities analyst Hubert Mak who has a $34 target for Tucows. "We like Tucows for its defensive quality coming from its market-leading Internet domain registrar business that provides it with a steady cash flow stream,” Mr. Mak said in a note. “Further, we believe its new Ting business continues to show traction that is adding to its recurring revenue base.”

On the negative side, the newspaper said that while Tucows has done well and is diversifying in the right direction, some portfolio managers still see it as too small or too expensive right now to add to their funds. “It’s a nice little business,” said Darren Sissons, managing director at Portfolio Management Corp. “In the tech space you have to be clever and figure out where you need to go next.” Stephen Takacsy, chief investment officer and portfolio manager at Lester Asset Management, said Tucows is generating good cash flow from its domain businesses but sees the new higher-growth Ting divisions as more risky and requiring more money for expansion. “The stock is ridiculously expensive,” Mr. Takacsy said, adding that Tucows is trading at 17 times forward earnings, which is above many of its peers in both the mobile and domain services sectors. “We are much more value driven. The Internet market isn’t somewhere we’re looking for investments, but they might do very well."^[931]

August 25, 2015: Cantor Fitzgerald Initiates Coverage of Tucows with One-Year Price Target of $36

MFI reported on August 25, 2015 that brokerage firm Cantor Fitzgerald has initiated coverage of Tucows with a "Buy" rating and set a one year Price Target of $36 for shares of Tucows..^[932] According to a post by investguy2000, Cantor Fitzgerald's investment thesis is based on Tucows' impressive leadership that has demonstrated their proven ability to grow in competitive markets; a stable business in domain names that delivers strong cash flow; growth and gross margin expansion in Ting Mobile; operating leverage from Ting's established customer interfacing platform that enhances infrastructure productivity; Tucows’ gigabit fiber initiative with a growing pipeline of opportunities; and a strong balance sheet and access to capital that will allow Tucows to aggressively pursue business development opportunities.

"Tucows’ share price has appreciated considerably over the last few years due to the rapid success of its Ting Mobile business; we continue to believe its mobile business will grow division sales at a pace greater than 50%. Ting Internet should begin to provide a material contribution in 2017 as its first two markets scale to a critical mass," says analyst Scott Curtis in his report on Tucows. "This 'get rich slow, for a long time' business behaves like a modern utility, providing recurring cash flow with high visibility." According to Cantor Fitzgerald their Discounted Cash Flow-based 12-month target of $36.00 implies 15x (2016E) and 12x (2017E) Expected Value/adjusted EBITDA using Cantor Fitzgerald's estimates.“Tucows,” writes Curtis, "is a growth story that is de-risked on many fronts.”^[933]^[934]

Cantor Fitzgerald, L.P. is a financial services firm founded in 1945 that specialises in institutional equity, fixed income sales and trading, and serving the middle market with investment banking services, prime brokerage, and commercial real estate financing. The firm is also active in new businesses including advisory and asset management services, gaming technology, e-commerce, and other ventures. It has more than 5,000 institutional clients and is one of 22 primary dealers authorized to trade U.S. government securities with The Federal Reserve Bank of New York. Cantor Fitzgerald's 1,600 employees work in over 30 locations, including financial centers in the Americas, Europe, Asia/Pacific, and the Middle East.^[935]

August 24, 2015: Dr. Hedge writes in Seeking Alpha that Tucows Remains Materially Undervalued With Price Target Between $33 and $41

Anonymous contributor "Dr. Hedge" wrote in Seeking Alpha on August 24, 2015 that Tucows management recently raised EBITDA guidance 20% from $20 mil to $25 mil for 2015, that the quality and depth of Tucows' management team is unmatched with the company’s top 4-5 executives having served with the company for over a decade, that Tucows added 10,000 subscribers in Q2 despite having a marketing disruption for two months during the quarter, that Tucows is currently on pace to grow revenue approximately 20% and EBITDA 60% plus in 2015, and that given Tucows' organic growth profile and increasing profitability the stock remains materially undervalued. "Tucows is a defensive growth company with recurring revenue, strong free cash flow generation, and increasing profitability with an excellent management team and board of directors that exhibits strong corporate governance," writes Dr. Hedge. "The CEO is aligned with investors and continues to own 6.5% plus of the company. At today's price levels we believe the stock provides a compelling investment opportunity to long term investors who want to be a part of a disruptive company run by an outstanding management team."

Dr. Hedge writes that assuming, conservatively, that Tucows growth rate is cut in half in 2016, the company would still do approximately $3.15 per share in EBITDA in 2016. "On these numbers the stock trades at less than 8x EV/EBITDA, which for a company with increasing profitability and a long runway for growth we see as being materially undervalued. If the stock were to trade in line with other companies exhibiting similar growth trajectories as Tucows we believe the stock should receive at least an 11x multiple, if not 12-13x multiple. Under these assumptions the stock would be worth somewhere between $33 and $41, again, excluding any share repurchases."^[936]

August 10, 2015: Zacks Upgrades Tucows to 'Strong Buy' with $28 Price Target

American Banking and Market News reported on August 10, 2015 that Zacks had upgraded Tucows from 'Hold' rating to 'Strong Buy' with a $28 price target for the stock. According to Zacks, “Tucows Inc. is a pioneering provider of personalized information agents and Web sites. They deliver information over the Internet and other communications mediums such as email. Their sites provide users with relevant information they cannot conveniently locate in any one place elsewhere on the Internet."^[937]

August 7, 2015: Comark Securities Reiterates Tucows 'Buy' with $34 Price Target

Investguy2000 reported on August 7, 2015 that Comark has reiterated their 'Buy' rating for Tucows and increased their price target from $22 to $34. "We continue to like Tucows for its Ting Mobile that is providing the company with outsized growth which is starting to provide another growing recurring cash flow base in addition to its defensive domain registrar which had been the source to enabling this disciplined Management team to consistently return capital to shareholders. On top of this, the company is now pushing into fixed Internet which given the economics and Management’s successful track record to date will more than likely result in another solid recurring cash flow base."^[938]

August 6, 2015: Hugh Pickens Predicts 12,000 Net Additional Ting Customers during Q2 2015

Just ahead of Tucows earnings release for Q2 2015 analyst Hugh Pickens predicted on August 6, 2015 that Ting will add 12,000 net additional customers for the second quarter, up from the 9,000 net additional customers during the first quarter of 2015. According to Pickens Ting added an average of 12,000 new customers during each of the four quarters in 2014 (Q1: 13,000, Q2: 12,000, Q3: 11,000, and Q4: 12,000) before dropping to 9,000 net adds during the first quarter of 2015.

"I believe the drop to 9,000 net adds in the first quarter was due to a one time event when Sprint changed their criteria for devices that were eligible to activate with Ting Mobile and other Sprint MVNO's on February 15, 2015," says Pickens. "I believe Ting will recover this quarter as Tucows moved rapidly to address the issue by identifying errors in Sprint's process leading to the number of rejections falling from 70% to 30% in just a few weeks." Pickens also notes that Tucows launched their GSM service on March 1, 2015 giving customers another option to activate devices. "We are looking for a solid second quarter with 12,000 net new Ting customers and 18,000 new devices bringing Ting to 115,000 active accounts and 181,000 active devices," says Pickens. "It will be especially interesting to see the breakdown between new Sprint adds and new customers from Ting's GSM offering."

Pickens says he expects revenue from Tucows domain services to be essentially flat this quarter and does not expect any significant contribution from Ting Internet until 2016. Pickens predicts that Tucows will maintain their guidance for Adjusted EBITDA at $20 million for 2015 and also thinks the favorable Canadian exchange rate will help Tucows meet its financial goals for the year. "The Canadian exchange rate over the past three months has been very favorable to Canadian based companies like Tucows," says Pickens. "It could add up to $1.5 million to EBITDA this year."

On May 7, 2015 Pickens predicted that Ting would have 8,000 net additional customers for Q1 2015. Tucows actual numbers released later that day came in at 9,000 net adds.

August 4, 2015: Bowser Report Provides Case Study of Tucows

Tim Rice wrote at the Bowser Report on August 4, 2015 that when they originally recommended Tucows in January 2013 it was trading for an adjusted price of $6. Since that recommendation "Ting took off. The business introduced its Android application in April 2013, began offering Tri-Band LTE service and devices in December 2013, added the iPhone 5 to its list of compatible devices in March 2014," writes Rice. "Access revenues grew from $3,965,684 in fiscal 2012 (right after recommendation) to $35,887,005 in fiscal 2015—growing 805%!"^[939]

August 3, 2015: Short Seller Sonya Colberg Makes the Bearish Case Against Tucows, Sets $13 Price Target

Revealing in an "Important Disclaimer" at the end of her analysis that Streetsweeper holds a short position in TCX and stand to profit on a decline in Tucows' stock price, Streetsweeper Senior Editor Sonya Colberg wrote on August 3, 2015 that she thinks that Tucows' market valuation will drop well below the current $293 million and sets a $13 price target for TCX. Colberg, who according to her bio at Streetsweeper was once a reporter at the "recent Warren Buffet acquisition," the Tulsa World^[940], (Buffet acquired the Tulsa World in 2013.^[941] Colberg left the Tulsa World in 2000.^[942]) gives four reasons she thinks Tucows’ stock price is ready to drop:

According to Colberg, Tucows’ core Internet domain name business is flat and poised for further decline. On a yearly basis, revenue for domain name services fell to $111.78 million in 2014 from $113.40 million in 2013.

Although Ting's subscriber base grew in 2013 and 2014, Colberg says that growth is slowing and that a Sprint policy-change hurt Ting and promises long-term negative consequences even as wireless becomes commoditized. "We believe Sprint’s change in policy constitutes more than a temporary setback. Frustrated customers will throw up their hands over Ting Mobile. Word will spread," writes Colberg. "The time is right for well-heeled giants in the mobile phone and services field who will happily scoop up Ting’s old customers, as well as potential future customers."

Colberg says that Tucows lacks the multi-millions to build a fiber network and her research shows the Ting fiber business probably won’t ever produce meaningful revenue. "Despite Tucows’ braggadocio, AT&T and Comcast resources easily stomp Tucows’ resources into the dirt," writes Colberg. "Inadequate bucks means Tucows can’t develop significant fiber networks or market the service."

Colberg notes that with 26 sells in the last year including 14 in the last three months, company officers and directors have been selling their stock in Tucows. Co-chairman of the Board Rawleigh Ralls sold 65,000 shares in May alone.^[943]

June 11, 2015: TheStreet Wire Highlights Tucows as "Under The Radar Stock Of The Day"

TheStreet Wire reported on Jun 11, 2015 that Trade-Ideas LLC identified Tucows ( TCX) as a strong and under the radar candidate. "The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TUCOWS INC increased its bottom line by earning $0.54 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($1.01 versus $0.54)."^[944]

June 4, 2015: Hugh Pickens Writes That Ting’s High Growth and High Margins Are Fueling the Increase in Share Price

Hugh Pickens wrote a comment to Andrew Alleman's story at Domain Name Wire on June 4, 2015 that he agrees with Alleman's reason 3. "I think that investors are realizing that Tucows is no longer just a low growth/low margin domain name wholesaler," wrote Pickens. "They are realizing that with Ting’s high growth, high margins and increasingly significant contribution to the bottom line, Tucows is deserving of a higher P/E."^[945]

June 4, 2015: Andrew Alleman Says Tucows' Stock is on Fire

Andrew Alleman wrote at Domain Name Wire on June 4, 2015 that if you bought shares of Tucows at the opening price one month ago, you’ve already realized a return of a whopping 57%. According to Alleman it’s not entirely clear what’s behind the surge but here are some possible reasons.^[946]

1. Tucows buying back up to $20 million of its own stock on the open market.

2. Increased analyst coverage.

3. With the growth of Ting, Tucows is being valued as a technology company.

4. GoDaddy’s IPO has made people focus on other domain name companies.

5. A large player is growing its stake in the company.

May 8, 2015: Lucius Bossio Says Ting’s Q1 Subscriber Growth Suffers from Sprint’s New Unlocking Validation Process

Lucius Bossio wrote at Andriod Headlines on May 8, 2015 that CEO Elliot Noss reported that "an alarming 70% of devices that people were trying to activate on Ting were rejected following Sprint’s implementation of FED." According to Bossio, Ting is frustrated by the technical implementation of some of the required fixes, but are very happy Sprint is taking the issue very seriously as Noss noted that deactivating customers who owe the carrier a small amount of money from a long time ago may not be financially advantageous for Sprint.^[947]

"Obviously the issues caused by Sprint’s FED had a significant impact on Ting’s ability to acquire new customers. Their support team quickly became overwhelmed by customers complaints, which prompted Ting to shut down all marketing and promotional activities until they could handle the increased burden placed on their support team. According to Noss, giving every prospective customer an outstanding level of service is an integral component of Ting’s strategy as this is how the company expects to attract and keep customers over the long-term; apparently Ting is just getting back to an acceptable level of service and conversion rate on their activation process."^[948]

May 7, 2015: Hugh Pickens Predicts 8,000 Net Additional Ting Customers for Q1 2015

Just ahead of Tucows earnings release for Q1 2015 analyst Hugh Pickens predicted that Ting will have 8,000 net additional customers for the first quarter, down from the 11,000 net additional customers predicted on February 11, 2015 in the fourth quarter earnings conference. The numbers are predicated on an original scenario with 2% turnover in customers (2,650 customers) and a gross add of 13,650 customers necessary to reach 11,000 net adds. "I think the number of gross additional customers are going to be lower than expected," says Pickens, "because uncertainty caused by Sprint's new Financial Eligibility Date (FED) policy announced on March 3, 2015 is going to depress new customer acquisition."

"We slowed down to fix the issues that lead to this broken promise and to mitigate the risk of it happening again," wrote Andrew Moore-Crispin on the Tucows blog on April 7, 2015. "We stopped any initiatives to get new people in the door until we’re sure we’re meeting this promise once more. Very soon, we’ll be in a position to start turning the tap back on full blast, inviting and welcoming new people to Ting. We’re looking forward to looking forward."^[949]

Pickens says he thinks uncertainty surrounding Sprint's FED depressed new customer adds to about 60% of normal gross adds from the period March 3 through April 7 when Tucows announced that things were getting back to normal and depressed new customer adds to 80% of the baseline during the final month of the quarter. "We believe new customers adds are now back to normal and may even increase going forward with the rollout of GSM coverage," says Pickens.

'	Month 1	Month 2	Month 3	Gross Adds	- Churn	Net Adds
Predicted Net Adds	4,550	4,550	4,550	13,650	2,650	11,000
Modified Net Adds	4,550	2,730	3,640	10,920	2,650	8,270

March 13, 2015: Analyst Sets 12-month Price Target for Tucows of $22

Intercooler reported on March 12, 2015 that the one broker that provide coverage for Tucows has rated the stock with a buy recommendation and set a 12-month consensus target price of $22.00 for the company. The analyst is predicting that the company will post $0.22 EPS for the current quarter.^[950]

January 15, 2015: Max Lukenbach Writes: Social Media May Be Useful for Predicting Ting Intra-Quarter Subscriber Growth

Max Lukenbach wrote in Seeking Alpha on January 15, 2015 that Ting subscriber growth is a key component in determing Tucows valuation but since Tucows only discloses subscriber growth on a quarterly basis he has developed an alternative method to estimate growth through measuring Ting's visibility on social media platforms such as Facebook and Twitter. "I have tracked Ting's social media growth against two of its primary peers, FreedomPop and Republic Wireless," writes Lukenbach. "I initially anticipated this to be a very casual endeavor, so that explains the limited number of MVNOs that I collected data for. I plan on adding a more MVNOs and will monitor a wider base going forward. With that said, I still argue that FreedomPop and Republic Wireless are useful and relevant comparisons."

Lukenbach's results show that Ting's Q3 to Q4 growth on Facebook was 32% compared to 13% for Freedompop and 2% for Republic Wireless. The corresponding growth on Twitter for Q3 to Q4 growth is 75% for Ting, 6% for Freedompop, and 3% for Republic. "This analysis demonstrates that Ting appeals to a younger/tech-savvy demographic, people are very happy with the product, and Ting's churn rate is likely to remain low. Furthermore, it illustrates that the company is proactive on social media, which is a low-cost and modern form of advertising."^[951]

January 15, 2015: Hugh Pickens comments on Max Lukenbach's Methodology for Estimating Ting's Intra-Quarter Growth Rates

One of the problems for an investor in Tucows is that subscriber growth figures are only disclosed during the quarterly earnings conferences calls leaving investors in the dark outside these four times a year. This means that there are only four yearly opportunities for Tucows' investors to evaluate execution versus projections and there are only four opportunities for the growth figures to act as a catalyst on the stock valuation. Congratulations to Mr. Lukenbach for his insight that there may be a way for investors to gain some insight into subscriber growth on a more frequent basis and that there is probably a correlation between Ting social media mentions and subscriber growth. Thanks for compiling the data to date, and in developing a method that with more data and analysis will become very useful to investors in predicting Ting's intra-quarter subscriber growth. Mr. Lukenbach has provided a methodology that allows investors to make an informed estimate on subscriber growth between the quarterly conference calls. I look forward to Mr. Lukenbach gathering more data and to seeing how well social media mentions correlate with subscriber growth and churn.

I agree with Mr. Lukenbach that Tucows has been very astute in using social media as a cost effective way to publicize Ting and that this will probably have the most impact in reaching early adapters who are just the people people Ting needs to get the word out about their offering.

I am also looking forward to the rollout of the GSM offering and seeing what effect this will have on subscriber growth. I have the greatest respect for Elliot Noss' vision and his execution of Ting's growth plan and I hope that at some point he will begin providing Ting subscriber growth figures on a more frequent basis.^[952]

December 23, 2014: MacroLion Writes: Ting's Profitable Growth Points To 30% Upside in Tucows Stock Price

MacroLion, a growth investor, wrote at Seeking Alpha on December 23, 2014 that:

Recent 10-K reports and management calls allow us to quantify the trajectory and economics of Ting's growth. Ting will drive company EBITDA from $8m in 2013 to $19m in 2015.
Ting's growth is extremely profitable: it requires only S&M investments which deliver 165% IRR.
The rest of Tucows business in terms of revenue and gross margin is growing (retail) due to top product offering and new gTLDs.
2014 10-K is the catalyst: 2014 is the first year when Ting is noticeably contributing to EBITDA. Ting's potential is under the radar for most investors.
Market EV/EBITDA LTM = 20.1х, EV/EBITDA 2015F = 8.1х.

"Taking Ting net customer growth as the key driver and assuming 50-150k customers range for 2015-17, we derive a target price of $20-29.," writes MacroLion. "It could be achieved in 1-1.5 years time when Ting's growth economics and trajectory are discussed in financial reports."^[953]

December 23, 2014: Hugh Pickens Comments on MacroLion that He Has Come to Similar Conclusions

Hugh Pickens wrote a comment to the article in MacroLion on December 23, 2014.

Good Article. I've independently come to similar conclusions with my financial model of Ting at: http://tingmodel.com My takeaways from Tucows recent performance are that:

Tucows (TCX) stock price has quintupled since launching Ting in 2012.

Ting is the high growth business segment of Tucows.

Up until the 4th quarter of 2014 Ting has contributed modestly to Tucows' bottom line.

A financial model of Ting's past growth predicts that Ting will soon overtake domain services to become the dominant driver for Tucows' future growth.

My model shows 146,000 Ting customers by 2015F under the 16k quarterly growth scenario and 161,000 Ting customers under the 18% quarterly growth scenario which is in line with your prediction of 143,000.

I had a previous concern that problems with the Sprint network could cause customers to leave Ting and that Sprint's poor reputation could provide a drag on Ting. However, Tucows recent announcement that they will be providing nationwide GSM service (probably through T Mobile although their partner has not yet been announced) mitigates that risk and should accelerate growth in Ting's customer base since Ting will be able to provide better coverage and start selling the iPhone 6 in February 2015.

My only real concern with Tucows at this point is with their recent decision to buy a majority stake in Blue Ridge InternetWorks and enter the independent Internet service provider business space. I am concerned that this might be a mis-step that may divert resources from their other two business lines and that Tucows might be better advised to concentrate on the MVNO business segment which by 2016F will become the primary profit center for the company.^[954]

July 11, 2014: 'Undiscovered Stocks' Writes: Tucows Puts Its Customers And Shareholders First

Undiscovered Stocks, a private investor who tries to find microcap stocks that are growing and could get sell-side coverage and potential up listings as they continue to execute, wrote at Seeking Alpha on July 11, 2014 that Ting just passed the two-year mark, and has been accelerating customer adds while expanding margins at the same time. and as Ting begins to ramp considerably in the next year and beyond, the company will show significant flow-through to the bottom line.

Undiscovered Stocks writes that Ting's differentiators include:

Customer Service. "Ting is all about customer service. For example, when you call in, you always get a real service agent without going through the hoops of an automated prompt."

Honesty and Transparency. "The company culture itself is also very honest and transparent. Ting is treating its customers with respect and attention, regardless of if the customer is paying $10/month or $100/month."

Lower Rates. "Ting has been lowering rates but Tucows stated in the last earnings call that even though it lowered Ting’s price, the gross margins remained in the targeted range."

No Contracts. "Ting does not lock its users into any contracts. Customers can leave whenever they want, but due to the great customer service, the company is anecdotally experiencing less churn than other MVNOs."

According to Undiscovered Stocks, as Ting continues to become a bigger part of the revenue mix, "I expect EBITDA and cash flow to increase significantly." "Given the pace of Ting’s growth in customers, I believe that Ting will grow customers 100% in 2014, 70% in 2015, and 40% in 2016. As the operating leverage kicks in, Ting will double the overall company’s EBITDA by 2016."^[955]

July 11, 2014: Hugh Pickens Writes: Elliot Noss Has Executed a Long Term Plan to Increase Stockholder Value

TCX Stock Chart from July 11, 2014 to July 11, 2016. "Tucows has very stable and well run core business as a domain name wholesaler and a high probability of a substantial increase in the stock price within two years as we watch Tucows execute its Ting growth plan," wrote Hugh Pickens on July 11, 2014. The stock increased 95% in the following two years while the S&P500 increased 9% over the same period. (Click chart to expand.)

Hugh Pickens wrote at Seeking alpha on July 11, 2014 that Tucows CEO Elliot Noss has executed a long term plan to increase stockholder value with stock buy-backs, the reverse split, and capitalizing on Tucow's core competency in phone based customer service to enter the high growth MVNO business segment. "Noss has quadrupled Tucows' stock price since the beginning of 2012. At this point, I think there is limited downside potential given Tucows very stable and well run core business as a domain name wholesaler and a high probability of a substantial increase in the stock price within two years as we watch Tucows execute its Ting growth plan. Ting's use of social media to reduce customer acquisition cost is working to plan and Ting's infrastructure has gotten all the early bugs out and is now in place and ready to scale up for high annual subscriber growth."^[956]

March 28, 2014: Mike Arnold Writes: "Tucows Is A Scrappy Tech Company Cannibalizing Itself"

Mike Arnold wrote at Seeking Alpha on March 28, 2014 that to ramp growth at Tucows, management recently introduced "what I believe is a game changing business called Ting which I believe will be a catalyst for increasing Tucows' valuation." According to Arnold, Ting appears to be catching on. "Revenues for Ting increased from $4 million in 2012 to $16.5 million in 2013, a 400%+ increase. There is plenty of tarmac for growth as well, considering the wireless communication sector is a multi-billion dollar industry and consumers are actively looking for ways to manage their monthly overhead."

Arnold says that once Ting is more established, one way to compare it might be to assess the lifetime value of the customer relationship to other subscription type businesses. "In this case, magicJack (CALL) might be a good proxy of value, as it operates in the same industry and is innovating both in terms of developing a disruptive telecommunications technology and unique value proposition for its customers. This, too, could prompt a re-rating in Tucows' shares."

Arnold concludes that at the current $140 million market cap, "I think there is little risk of permanent downside, and a rather good chance of Tucows becoming a meaningfully larger company if it executes its growth strategy (Ting) and returns value to shareholders in an accretive manner (buybacks)."^[957]

Risk Factors

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:

March 11, 2015: Ting Risk Factors From FY2014 10-K Filing With SEC

Tucows identified the following risk factors in their 10-K Filing With SEC for FY2014:^[958]

Ting has a short operating history which may not be indicative of our future performance and, if our revenue and earnings growth are not sustainable, we may not be able to generate the earnings necessary to fund our operations or continue to grow our business.
Ting’s service offerings may not be successful in the long term.
Ting may face competitive pressure to reduce prices for our products and services, which may adversely affect our profitability and other financial results.
Competition in the wireless industry could adversely affect Ting’s revenues and profitability.
The blurring of the traditional dividing lines among long distance, local, wireless, video and Internet services contributes to increased competition for Ting services.
Ting employs a postpaid business model which exposes us to increased credit risk.
Ting may be limited in its ability to grow its business and customer base unless it can continue to obtain network capacity at favorable rates and meet the growing demands on its business systems and processes.
As an MVNO, Ting is dependent on its Network Operators’ for its wireless network and any disruptions to their networks may adversely affect its business and financial results.
Ting competes with our Network Operators’ products.

December 15, 2014: Ting ISP Risks

Tucows' announcement on December 15, 2014 that they are acquiring 70% ownership of an independent Internet service provider to provide high speed Internet access, Internet hosting and network consulting services to over 3,000 customers in Central Virginia brings a new set of risks to Tucows.^[959]

This is a new line of business which is different from their domain services business segment and their MVNO business segment. There is no guarantee that the core competencies that have made Tucows successful will transfer over to the new line of business.
The new business line may divert resources from the other two business lines.
The new business line is very capital intensive as opposed to the two existing business segments which do not require massive capital expenditures.
High speed internet access is a very competitive business space with large entrenched competitors such as Google and Comcast.

December 10, 2014: Ting MVNO Risk Mitigation

Ting's announcement on December 10, 2014 that they will be partnering with a second network provider (rumored to be T-Mobile) to provide nationwide GSM coverage goes a long way towards mitigating Ting's most serious business risks from having Sprint as Ting's sole source of network coverage and the perception of Sprint's poor coverage in some geographic areas.

March 18, 2014: Ting Risk Factors From FY2013 10-K Filing With SEC

Tucows identified the following risk factors in their 2013 Annual Report:^[960]

Ting has a short operating history which may not be indicative of our future performance and, if our revenue and earnings growth are not sustainable, we may not be able to generate the earnings necessary to fund our operations or continue to grow our business.
Ting’s service offerings may not be successful in the long term.
Ting may face competitive pressure to reduce prices for our products and services, which may adversely affect our profitability and other financial results.
Competition in the wireless industry could adversely affect Ting’s revenues and profitability
The blurring of the traditional dividing lines among long distance, local, wireless, video and Internet services contributes to increased competition for Ting services.
Ting employs a postpaid business model which exposes us to increased credit risk
Ting may be limited in its ability to grow its business and customer base unless it can continue to obtain network capacity at favorable rates and meet the growing demands on its business systems and processes.
As an MVNO, Ting is dependent on Sprint for its wireless network and any disruptions to such network may adversely affect its business and financial results.
Ting competes with Sprint’s products

Note: The Risk Factors in the 10-K Filing with the SEC for FY2014 on March 11, 2015 are identical to the Risk Factors for FY2013 except for the final factor which has been expanded from "Ting competes with Sprint’s products" to "Ting competes with our Network Operators’ products".

Insider Activity at Tucows

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 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:

Introduction

According to Investopedia, insider trading is the buying or selling of a security by someone who has access to material, nonpublic information about the security. Insider trading is legal once the material information has been made public, at which time the insider has no direct advantage over other investors. The SEC requires all insiders to report all their transactions. So, as insiders have an insight into the workings of their company, it may be wise for an investor to look at these reports to see how insiders are legally trading their stock.^[961]

See also:

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.^[962]

Read Tucows and the Dog That Did Not Bark in the Night July 28, 2016

November 20, 2015: Insider Activity by Tucows Officers and Board Members from March 5, 2015 through September 25, 2015

Following are insider transactions taken from SEC Filings made by officers and board members at Tucows since Tucows 10-K was filed on March 11, 2015:^[963]

Tucows Officers and Directors	Transaction Type	Last Price	Elliot Noss (CEO)	Michael Cooperman (CFO)	David Woroch (EVP, Sales and Support)	Allen Karp (Co-Chair Board of Directors)	Rawleigh Ralls (Co-Chair Board of Directors)	Robin Chase (Director)	Erez Gissin (Director)	Joichi Ito (Director)	Jeffrey Schwartz (Director)	Carla Ann Goetz (EVP HR)	Kenneth Derrick Schafer (EVP Retail)	Michael Goldstein (VP Market- ing)
Shares Beneficially Owned per 10-K Filing on March 5, 2015	NA	NA	764,833	325,831	173,250	69,375	513,750	4,375	50,000	13,750	60,625	21,275	25	12,913
March 6, 2015	Sell	19.00			-1,000
March 9, 2015	Sell	19.00			-1,000
March 13, 2015	Sell	19.11		-7,500
March 19, 2015	Execute Buy Option	2.40		18,750
March 20, 2015	Sell	18.79										-18,000
March 27, 2015	Sell	19.08					-8,000
March 30, 2015	Sell	19.00					-10,100
March 31, 2015	Sell	19.04					-6,900
April 9, 2015	Execute Buy Option	2.40	11,000
May 7, 2015	Execute Buy Option	2.40			16,250
May 12, 2015	Execute Buy Option	2.80							5,000
May 14, 2015	Execute Buy Option	2.40											16,250
May 19, 2015	Sell	21.50											-16,250
May 20, 2015	Execute Buy Option	2.40										16,250
May 22, 2015	Sell	24.48					-22,775
May 26, 2015	Sell	24.85					-2,225
May 27, 2015	Sell	26.43					-11,788
May 28, 2015	Sell	26.31					-15,812
May 29, 2015	Sell	27.07					-12,400
June 2, 2015	Sell	27.94				-10,000
June 16, 2015	Sell	28.66												-500
June 16, 2015	Sell	28.96					-14,455
June 17, 2015	Sell	28.90												-700
June 17, 2015	Sell	28.87												-8,250
June 17, 2015	Sell	28.85					-6,795
June 18, 2015	Sell	29.18												-3,000
June 22, 2015	Sell	35.20				-10,000
July 15, 2015	Execute Buy Option	2.48				9,375
July 15, 2015	Execute Buy Option	8.92								7,500
August 19, 2015	Sell	25.52								-6,250
August 20, 2015	Sell	24.95	-50,000
August 24, 2015	Sell	22.29							-18,750
September 3, 2015	Execute Buy Option	2.48					5,000
September 11, 2015	Sell	25.06		-30,279
September 25, 2015	Sell	24.21			-2,000
November 13, 2015	Sell	25.17		-499
November 17, 2015	Sell	24.72		-1,400
November 20, 2015	Sell	24.50		-34,632

Net Activity Since 10-K Filing on March 18, 2015	NA	NA	-39,000	-55,560	12,250	-10,625	-106,250	0	-13,750	1,250	0	-1,750	0	-12,450

Notes

1. Taken from Tucows 10-K filing on March 11, 2015.

2. Includes an aggregate of 124,036 shares of common stock that are held in Mr Noss’s RRSP accounts. Includes 564,951 shares of Common Stock that are subject to a loan and pledge arrangement entered into by Mr. Noss in order to satisfy the required Canadian taxes and exercise price due in connection with the exercise of expiring options.

3. Includes 37,188 shares of common stock that are held in Mr. Cooperman’s RRSP account.

4. Includes 53,984 shares of common stock that are held in Mr. Woroch’s RRSP account and 10,750 shares of common stock held in his wife’s RRSP account.

5. Includes 5,000 shares of common stock that are held directly by Mr. Karp’s wife.

6. Of these shares, 56,250 shares are held in Mr. Ralls’ IRA account, 6,250 shares are held in Mrs. Ralls’ IRA account and 40,000 are held by Mrs. Ralls directly.

7. The sale price of 35.20 for 10,000 shares of TCX sold by Allen Karp on June 22, 2015 is taken from the SEC Filing and is believed to be in error. The highest trade on June 22, 2015 TCX was 32.00 and as of August 17, 2015 TCX has never traded over 32.23.^[964]

March 5, 2015: Insider Activity by Tucows Officers and Board Members from March 18, 2014 through March 5, 2015

Following are insider transactions taken from SEC Filings made by officers and board members at Tucows since Tucows 10-K was filed on March 18, 2014:^[965]^[966]^[967]

Tucows Officers and Directors	Transaction Type	Last Price	Elliot Noss (CEO)	Michael Cooperman (CFO)	David Woroch (EVP, Sales and Support)	Allen Karp (Co-Chair Board of Directors)	Rawleigh Ralls (Co-Chair Board of Directors)	Robin Chase (Director)	Erez Gissin (Director)	Joichi Ito (Director)	Jeffrey Schwartz (Director)	Lloyd Morrisett (Director)
Shares Beneficially Owned per 10-K Filing on March 18, 2014	NA	NA	754,521	318,644	166,063	65,625	945,000	NA	42,500	10,000	56,875	44,375
April 3, 2014	Execute Buy Option	1.52				6,250
May 27, 2014	Execute Buy Option	2.24										9,375
July 3, 2014	Execute Buy Option	2.24				9,375
July 11, 2014	Execute Buy Option	2.32		37,500
August 6, 2014	Execute Buy Option	2.32			15,000
August 12, 2014	Execute Buy Option	2.24				5,000
August 20, 2014	Execute Buy Option	2.24									9,375
September 3, 2014	Execute Buy Option	2.24							5,000
December 5, 2014	Acquisition (Non Open Market)	0.00					384,361
December 5, 2014	Disposition (Non Open Market)	0.00					-695,167
December 12, 2014	Acquisition (Non Open Market)	0.00					43,461
December 12, 2014	Acquisition (Non Open Market)	0.00					7
December 12, 2014	Disposition (Non Open Market)	0.00					-154,833
December 19, 2014	Execute Buy Option	2.40	4,000
January 7, 2015	Sell	18.50					-3,461
January 7, 2015	Sell	18.50					-9,368
February 26, 2015	Acquisition (Non Open Market)	18.77			1,000
February 26, 2015	Disposition (Non Open Market)	18.77			-1,000
Net Activity through March 5, 2015			4,000	37,500	15,000	20,625	-435,000	0	5,000	0	9,375	9,375
Sum of Shares Beneficially Owned per 10-Q Filing on March 18, 2014 plus Net Activity for the Year			758,521	356,144	181,063	86,250	510,000	0	47,500	10,000	66,250	53,750
Shares Beneficially Owned per 10-K Filing on March 5, 2015	NA	NA	764,833	325,831	173,250	69,375	513,750	4,375	50,000	13,750	60,625	NA

Notes

1. Taken from Tucows 10-K filing on March 18, 2014.^[968]

2. Based on 11,185,384 shares outstanding as of March 17, 2013, adjusted for shares of common stock beneficially owned but not yet issued.

3. Includes an aggregate of 124,036 shares of common stock that are held in Mr Noss’s RRSP accounts. Includes 564,951 shares of Common Stock that are subject to a loan and pledge arrangement entered into by Mr. Noss in order to satisfy the required Canadian taxes and exercise price due in connection with the exercise of expiring options.

4. Includes 37,188 shares of common stock that are held in Mr. Cooperman’s RRSP account.

5. Includes 53,984 shares of common stock that are held in Mr. Woroch’s RRSP account and 10,750 shares of common stock held in his wife’s RRSP account.

6. Includes 5,000 shares of common stock that are held directly by Mr. Karp’s wife.

7. Includes an aggregate of 850,000 shares of common stock that are indirectly owned by Mr. Ralls. Of these shares, 56,250 shares are held in Mr. Ralls’ IRA account, 6,250 shares are held in Mrs Ralls’ IRA account and 850,000 are held by Lacuna Hedge Fund LLLP (“Lacuna Hedge”) and are indirectly owned by Lacuna, LLC (“Lacuna LLC”) and Lacuna Hedge GP LLLP (“Lacuna Hedge GP”). Lacuna LLC is the sole general partner of Lacuna Hedge GP, which is the sole general partner of Lacuna Hedge. Neither Lacuna LLC nor Lacuna Hedge GP directly owns any securities of the Company. Each of Lacuna LLC and Lacuna Hedge GP disclaims beneficial ownership of the shares held by Lacuna Hedge, except to the extent of its pecuniary interest therein. Mr. Ralls is a member of Lacuna LLC. Mr. Ralls disclaims beneficial ownership of the shares held by Lacuna Hedge, except to the extent of his pecuniary interest therein.

8. Includes 12,500 shares of common stock that are owned jointly by Dr. Morrisett and his wife.

Comparison With Other MVNOs

It is always useful to compare a company to another company in the same business space. Tucows is, to our knowledge, the only MVNO that is part of a publicly traded company for which subscriber information, acquisition costs, chrun, and gross margins are available. However, there are other MVNOs for which some subscriber information is available:

FreedomPop which is presently rumored to be talks with Sprint and other carriers about acquisition or investment

Virgin Mobile which was acquired by Sprint Nexus in 2009

FreedomPop

FreedomPop is a free wireless internet and mobile phone service provider based in Los Angeles, California. The company provides wireless data voice and text services for Clearwire and Sprint. FreedomPop sells mobile phones, tablets and broadband devices for use with their service. FreedomPop was co-founded by Stephen Stokols, CEO and Steven Sesar in 2011. Prior to founding FreedomPop, Stokols served as CEO of Woo Media, a video-chat and entertainment startup. FreedomPop partnered with Lightsquared in December 2011, but ended its partnership after Lightsquared did not receive Federal Communications Commission (FCC) approval to build out its network. FreedomPop began selling its first smartphones in October 2012. That month the company converted 5% of its free users to paid users. The following month, in November, the number of converted users increased to 10%. FreedomPop also began offering mobile and wireless internet services in the United States using Clearwire's 4G network. FreedomPop converted 20% of its free user base to paid users in December 2012.^[969]

In April 2013, FreedomPop partnered with Sprint to expand its coverage to include 3G and 4G with Sprint compatible devices. In October 2013, one year from its initial wireless broadband launch, FreedomPop launched its beta free mobile phone plan that included voice, text, and data service. In November FreedomPop launched a bring your own device for Sprint-compatible phones.^[970]

Sprint Acquisition of FreedomPop

Josh Ong reported on The Next Web on May 14, 2014 that FreedomPop was on track to hit 250,000 total subscribers. According to FreedomPop, over 60 percent of its phone customers stick to the free plan and don’t spend anything for service. This would mean that FreedomPop had 100,000 paying customers in May, 2014. According to Ong FreedomPop added 100,000 customers in the previous year. Using this figure and the 40% rate, this would mean that FreedomPop has about 120,000 paying customers at the time this comparison is being made in December, 2014.^[971]

John Shinal reported in USA Today on November 12, 2014 that according to two sources Sprint was in talks with FreedomPop about a possible acquisition that could boost Sprint's revenue growth and lower its subscriber-acquisition costs. "The talks are fluid, meaning they could lead to an investment, an acquisition or no deal between the companies," writes Shinal. "Other suitors have emerged for FreedomPop, among them a large U.S. technology company and a smaller wireless carrier, according to the sources who are not authorized to speak publicly about the matter." According to Shinal an acquisition would likely value all of FreedomPop in a range between $250 million and $450 million, while an investment would value it closer to $200 million.^[972]

Kevin Richard reported at GigaOm on November 12, 2014 that FreedomPop CEO Stephen Stokols said parts if not all of the report are false adding that while FreedomPop is in formal talks with “a few” companies about a potential acquisition, Sprint is not one of them. “We’ve gotten several inquiries on the M&A side, but nothing official from Sprint,” said Stokols.^[973]

Valuation of FreedomPop

Dividing FreedomPop's paying customer base of 120,000 into the company's valuation range of $200 to $450 million, the value per customer is in the range of $1,660 to $3,750. Applying the same valuation per paying customer to Ting's 82,000 paying customers at the end of the third quarter in 2014 results in a valuation in the range from $136 to $307 million. Tucows domain services must be added for a total company valuation. Using Tucows stock price of $3.00 per share on December 30, 2011 before Ting was publicly announced times 11.3 million outstanding shares, provides a value of Tucows domain services of about $33 million. This gives Tucows a total valuation of between $170 and $341 million. Using the $18 stock price on December 1, 2014 times 11.3 million shares gives Tucows a market cap of $203 million putting The company at the low to mid range of its valuation if it were to become a target for acquisition.

Virgin Mobile

NBC News reported on July 28, 2009 that Sprint Nextel Corp. had made a $483 million deal to buy Virgin Mobile USA Inc. Sprint paid $5.50 in stock for each Virgin Mobile share. Sprint already owned 13.1 percent of Virgin Mobile, which uses Sprint's network to offer service. Virgin Mobile had 5.2 million subscribers who paid an average of $20 per month. Sprint has 49.1 million subscribers, including those using the network through wholesalers like Virgin Mobile.^[974]

"This is a good transaction for Sprint, which already owns 13 percent of Virgin, because it provides 5 million customers which are already using its own network. This more than doubles the size of Sprint's prepaid business overnight and increases its distribution channels quickly for prepaid where it has had recent success with Boost Unlimited," wrote Walter Piecyk of Pali Research, noting that the transaction values each Virgin subscriber at $130, which the firm said is slightly above what it costs Virgin Mobile to acquire a customer.^[975]

"We believe Virgin Mobile felt compelled to sell because its customer base was declining, the prepaid space is getting much more competitive and it faced a $100 million debt maturity at the end of next year that we do not believe it had enough free cash flow to pay-off," Piecyk wrote. "Virgin was selling an uncompetitive unlimited offering right next to Boost Unlimited in its own stores which we believe will either be terminated or brought to parity with Boost Unlimited. We think it's more likely that Virgin terminates its unlimited offerings and returns its focus to its legacy pay as you go model."^[976]

Board of Directors of Tucows

According to the 10-K filed with the SEC on March 11, 2015 the folowing are members of Tucows Board of Directors:^[977]

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.^[978]

"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.”^[979]

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.^[980] Burnham currently serves on the boards of Indeed, Pinch Media, Tumblr, Wesabe, Adaptive Blue, SimulMedia, UpCompany, Meetup, and Bug Labs.^[981]

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.^[982]

"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."^[983]

Allen Karp

Co-Chairman of the Board since September 2012 and Director since October 2005

Mr. Karp, 74, was with Cineplex Odeon Corporation in various positions since 1986, where he retired as Chairman and Chief Executive Officer in 2002 and as Chairman Emeritus in 2005. From 1966 to 1986, he practiced law at the law firm of Goodman and Carr LLP, where he was named partner in 1970. Mr. Karp was until recently a Director of Brookfield Real Estate Services Inc., the Chair of its corporate governance committee and sat on the audit committee, and was Chairman of the Board of Directors of IBI Group Inc., and was Chairman of the Nominating, Governance and Compensation Committee. Mr. Karp is a past director of the Toronto International Film Festival Group, where he served as Chairman of the Board from 1999 to 2007 and has served as Chairman of its Corporate Governance Committee since 2007. Additionally, Mr. Karp was previously a director of several other public corporations.

Mr. Karp has extensive executive leadership skills, long-standing senior management experience, a strong ethics and compliance focus and audit committee experience. These skills and qualifications, in addition to his current service on the boards of directors of other public companies, enable him to bring valuable perspectives to our Board, particularly with respect to corporate governance matters, and qualify him to be a director of Tucows.

Rawleigh H. Ralls

Co-Chairman of the Board since September 2012 and Director since May 2009

Mr. Ralls, 52, is a founding partner of Lacuna, LLC, an investment management company focused on both public and private companies, which he formed in October 2006. Prior thereto, from 1999 to 2006, he was Chairman of Netidentity.com, an Internet email and web hosting company, where he led corporate strategy and development until the firm’s sale in 2006. Mr. Ralls currently serves on the Board of Directors of a number of companies, including Savoya, LLC, IntraOp Medical, Knowledge Factor, and Mocapay, Inc.

Mr. Ralls has a wealth of industry experience, most notably the experience that he gained through his leadership of Netidentity.com. In addition, Mr. Ralls contributes a unique perspective to the Board’s discussions and considerations based on the two decades of investing and portfolio management experience. All of these attributes qualify Mr. Ralls to be a director of Tucows.

Erez Gissin

Director since August 2001

Mr. Gissin, 56, has served since 2010 as a managing partner in Helios Energy Investment, a Renewable Energy investment fund, and since 2005 as the Chief Executive Officer of BCID Ltd., an investment company focusing on infrastructure development projects in China. From July 2000 to March 2005, Mr. Gissin has served as the Chief Executive Officer of IP Planet Networks Ltd., an Israeli satellite communication operator providing Internet backbone connectivity and solutions to Internet Service Providers. From July 1995 to July 2000, Mr. Gissin was Vice President, Business Development of Eurocom Communications Ltd., a holding company that controls several telecommunications services, equipment and Internet companies in Israel.

Mr. Gissin has a strong background in the internet communications industry and has gained significant institutional knowledge in his long tenure as one of our directors. Mr. Gissin also has significant leadership experience as the Chief Executive Officer of BCID Ltd. and IP Planet Networks Ltd. and has extensive financial acumen derived from his years of executive experience. All of these qualities qualify Mr. Gissin to be a director of Tucows.

Joichi Ito

Director since December 2008

Mr. Ito, 48, is the director of the MIT Media Lab. He is a co-founder of Digital Garage (Tokyo Stock Exchange 4819), where he has served on the board since September 2006. Mr. Ito has been a member of the Board of Directors of the New York Times Corporation since June 2012 and of Sony Corporation since June 2013.

From June 2002 until July 2008, Mr. Ito served on the board of Pia Corporation, a ticket and entertainment magazine company in Japan (Tokyo Stock Exchange 4337). He served on the board of ICANN, a U.S. non-profit corporation, from December 2004 until December 2007. ICANN manages the domain name registration system that Tucows uses for its domain name business and ICANN receives fees from Tucows for domain name registrations.

Mr. Ito is also on the board of directors of a number of non-profit organizations, including The Knight Foundation, the MacArthur Foundation and The Mozilla Foundation. He has created numerous Internet companies, including PSINet Japan, Digital Garage and Infoseek Japan and was an early stage investor in Twitter, Six Apart, Flickr, Dopplr, Last.fm, Kickstarter, Formlabs and littleBits. He has served and continues to serve on various Japanese central as well as local government committees and boards, advising the government on IT, privacy and computer security related issues.

Mr. Ito has extensive experience as a director of a number of publicly traded companies and has a wide range of experience with internet companies generally. This experience, along with Mr. Ito’s domain specific knowledge, enables him to bring key experience to the Company and qualifies him to be a director of Tucows.

March 7, 2016: Joichi Ito Resigns from Tucows Board of Directors

Tucows filed a Form 8-K with the SEC on March 7, 2016 for a Change in Directors or Principal Officers stating that on March 1, 2016, Tucows Inc. (the "Company") received a written letter of resignation from Joichi Ito stating that Mr. Ito resigned, effective immediately, from his position on the Board of Directors (the "Board") of the Company. Mr. Ito's resignation from the Board is not a result of any dispute or disagreement with the Company.^[984]

Ito is a Japanese-American activist, entrepreneur, venture capitalist and Director of the MIT Media Lab who has received recognition for his role as an entrepreneur focused on Internet and technology companies and has founded, among other companies, PSINet Japan, Digital Garage and Infoseek Japan. He maintains a blog, a wiki and an IRC channel. Ito is the chairman of the board of PureTech Health. Ito is a board member of Sony Corporation, The New York Times Company, the John S. and James L. Knight Foundation, the John D. and Catherine T. MacArthur Foundation, and General Partner of Neoteny Labs.^[985]

Ito joined Tucows' Board of Directors on December 15, 2008.^[986]

Elliot Noss

Director since August 2001

Mr. Noss, 52, is our President and Chief Executive Officer and has served in such capacity since the completion of our merger with Tucows Delaware in August 2001. From May 1999 until completion of the merger in August 2001, Mr. Noss served as President and Chief Executive Officer of Tucows Delaware. Before that, from April 1997 to May 1999, Mr. Noss served as Vice President of Corporate Services of Tucows Interactive Ltd., which was acquired by Tucows Delaware in May 1999.

Mr. Noss’s lengthy service as our Chief Executive Officer has provided him with extensive knowledge of, and experience with, Tucows’ operations, strategy and financial position. In addition, Mr. Noss has widespread knowledge of the internet and software industry generally that, coupled with his operational expertise, qualifies him to be a director of Tucows.

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."^[987]

Jeffrey Schwartz

Director since June 2005

Mr. Schwartz, 52, has served as a director of Dorel Industries since 1987 and as Executive Vice President and Chief Financial Officer since 2003. Mr. Schwartz is a graduate of McGill University in Montreal and has a degree in the field of business administration.

Mr. Schwartz has a significant amount of public-company financial expertise, particularly in his executive experience as the chief financial officer of Dorel Industries, Inc. This executive experience, along with Mr. Schwartz’s service as one of our Audit Committee members (and as Chairman of our Audit Committee since 2005), qualifies him to be a director of Tucows.

Robin Chase

Director since October 2014

Ms Chase, 56, is a transportation entrepreneur. She is founder and former CEO of Zipcar, the largest car sharing company in the world; Buzzcar, a service that brings together car owners and drivers in a car sharing marketplace in France; and GoLoco, an online ridesharing community. She is also Executive Chairman of Veniam, a vehicle communications company building the networking fabric for the Internet of Moving Things.

Ms Chase is on the Boards of the Massachusetts Department of Transportation, the World Resources Institute, and Tucows. She also served on the National Advisory Council for Innovation & Entrepreneurship for the US Department of Commerce, the Intelligent Transportations Systems Program Advisory Committee for the US Department of Transportation, the OECD’s International Transport Forum Advisory Board the Massachusetts Governor’s Transportation Transition Working Group, and Boston Mayor’s Wireless Task Force.

Ms Chase lectures widely, has been frequently featured in the major media, and has received many awards in the areas of innovation, design, and environment, including Time 100 Most Influential People, Fast Company Fast 50 Innovators, and BusinessWeek Top 10 Designers. Robin graduated from Wellesley College and MIT's Sloan School of Management, was a Harvard University Loeb Fellow, and received an honorary Doctorate of Design from the Illinois Institute of Technology.

Her experience operating companies at the CEO level along with her numerous experiences on these boards and councils qualify her to be a director of Tucows.

Principal Shareholders of Tucows

According to the 10-K filed with the SEC on March 11, 2015 the folowing are principal shareholders of Tucows:^[988]

Osmium Partners, LLC

960,269 Shares

8.7%

300 Drakes Landing Road, Suite 172, Greenbrae, CA 94904

Renaissance Technologies LLC

615,135 Shares

5.5%

800 Third Avenue, New York, NY 10022

Elliot Noss

764,833 Shares

6.9%

96 Mowat Avenue, Toronto, ON M6K 3M1

Tucows Financial Statements

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 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:

Tucows News

Financials and Earnings Reports Overview

Tucows 10-K Filing with SEC

Tucows 10-K Filing for FY2014 March 11, 2015
Tucows 10-K Filing for FY2013 March 18, 2014
Tucows 10-K Filing for FY2012 March 11, 2013

Earnings Results

Tucows' (TCX) Q2 2017 Results August 8, 2017
Tucows' (TCX) Q1 2017 Results May 9, 2017
Tucows' (TCX) Q4 2016 Results February 7, 2017
Tucows' (TCX) Q3 2016 Results November 7, 2016
Tucows' (TCX) Q2 2016 Results August 8, 2016
Tucows' (TCX) Q1 2016 Results May 9, 2016
Tucows' (TCX) Q4 2015 Results February 9, 2016
Tucows' (TCX) Q3 2015 Results November 5, 2015
Tucows' (TCX) Q2 2015 Results August 6, 2015
Tucows' (TCX) Q1 2015 Results May 7, 2015
Tucows' (TCX) Q4 2014 Results February 11, 2015
Tucows' (TCX) Q3 2014 Results November 12, 2014
Tucows' (TCX) Q2 2014 Results August 12, 2014
Tucows' (TCX) Q1 2014 Results May 14, 2014
Tucows' (TCX) Q4 2013 Results February 12, 2014
Tucows' (TCX) Q3 2013 Results November 13, 2013
Tucows' (TCX) Q2 2013 Results August 8, 2013
Tucows' (TCX) Q1 2013 Results May 15, 2013

Tucows Quarterly Consolidated Balance Sheets

Competitive Analysis

Google Fiber

Google Fiber Twitter Feed

Canadian Dollar

Five Year Graph of Canadian Dollar to US Dollar

Twitter Search for Tucows

Twitter Search for Tucows

Management at Tucows

Tools

Excel to MediaWiki Converter

Archive of Previous Versions of This Article

Other Stocks I Invest in and Monitor

Phillips 66 (PSX)

References

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:

About the Author

Hugh and Dr. S. J. Pickens

Dr. Pickens and Hugh Pickens celebrated 33 years of marriage before Dr. Pickens passed away in 2017.

Pickens Museum opens on NOC Tonkawa Campus. Pictured (L-R): Dr. Cheryl Evans, NOC President, Hugh Pickens, Executive Director of Pickens Museum, and Sheri Snyder, NOC Vice President for Development and Community Relations. (photo by John Pickard/Northern Oklahoma College)

Hugh Pickens (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, commissioned microwave communications systems across the empty quarter of Saudi Arabia, and built satellite control stations for Goddard Space Flight Center in Australia, Antarctica, Guam, and other locations around the world. Retired in 1999, Pickens and his wife of 33 years moved from Baltimore back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows seven acres of lawn, writes about local history, photographs events at the Poncan Theatre, produces the annual Oklahoma Pride series with his wife at Ponca Playhouse, and recently sponsored the first formal dinner in the Marland Mansion in 75 years. Pickens is founder and Executive Director of Pickens Art Museum with locations at Northern Oklahoma College in Tonkawa, Oklahoma, City Central in Ponca City, and Pickens Gallery at Woolaroc. Pickens can be contacted at hughpickens@gmail.com. Pickens is a covid survivor and a stroke survivor.

Personal Statement

Most days you will find me sitting in my easy chair with an HP laptop or a book in front of me. I enjoy intellectual pursuits: studying, writing, reading, researching, analyzing, and predicting. During my off time I like riding the backroads of Oklahoma in my hot rod, working out, watching old movies on TCM, playing games like chess or dominoes, participating in community theatre, and, my secret pleasure, reading trashy detective novels by John D. MacDonald. I enjoy theater and concerts and I go to NYC several times a year to see Broadway shows and visit galleries and museums.

Pickens' Publishing

In 1996, Pickens edited and published ''My Life In Review: Have I Been Lucky of What?'', the memoirs of Jack Crandall, professor of history at SUNY Brockport. Since 2001 Pickens has edited and published “Peace Corps Online,” serving over one million monthly pageviews. Pickens' other writing includes contributing over 2,000 stories to “Slashdot: News for Nerds,” and articles for Wikipedia, and “Ponca City, We Love You”. Pickens has written the following articles available on his wiki at Research and Ideas.

History and Biography

I enjoy doing in-depth research on one person and writing a detailed biography of lesser known events or figures. I like to find someone, an artist, a politician, a former Peace Corps Director, or an Oklahoman, that I like and am interested in learning more about them and writing their biography from scratch. I started and filled out dozens of biographies when I wrote for Wikipedia back in the stone age in the early 2000's when they were getting started. But Wikipedia became too bureaucratic and political for me so now I research and write biographies on my own mediawiki platform. (I only make anonymous edits to Wikipedia now usually on the discussion pages.)

My Biography of Jon Carson -The Man Who Won the Presidential Nomination for Barack Obama (>888,000 pageviews)
My Discovery that Barack Obama's Mother Grew Up in Ponca City February 6, 2009 (>389,000 pageviews)
Academy Award Winning Screenwriter Chris Terrio (>400,000 pageviews)
Biography of Ninja of Go! Team (Nkechi Ka Egenamba)

History of the 100-Year Old Oil Refinery in Ponca City, Oklahoma (>535,000 pageviews)
My Uncle Donald and America's Fresh Water Submarines in World War II (>171,000 pageviews)
What Happened to Okies after "The Grapes of Wrath" (30,000 pageviews)
The Pioneer Woman Models Come Home to Ponca City February 26, 2010
President Barack Obama's Mother Grew Up in Ponca City February 6, 2009

Science and Technology

I graduated with a degree in physics from SUNY Brockport in 1970 and have worked in science and technology my entire career. I have held such jobs as Geophysical Observer on a geological survey crew in the amazon jungle, running a portable hydrocarbon detection laboratory on an oil rig, systems engineer for the microwave communications system and supervisory control system on the 800-mile long Trans-Andean Pipeline, independent contractor to Collins Radio in 1979 installing, commissioning, and testing microwave repeater stations all over Saudi Arabia, military advisor to the Royal Saudi Navy on naval communications, navigation, and fire control systems (1980 - 84), project engineer, then project manager for Bendix Fields Engineering (later becoming AlliedSignal Technical Services, then Honeywell Technical Services) from 1984 until my retirement in 1999.

Business and Investing

I am a speculator and enjoy designing and executing trading strategies that exploit market inefficiencies through my assessment and evaluation of information asymmetries, market psychology, and human emotion. Over the years I have put together several open-source histories of companies I am interested in including micro-caps that I have invested in.

An Independent Evaluation of Phillips 66, its Business Strategy, and Execution (over 1,000,000 pageviews)
Latest News from Phillips 66 (>450,000 pageviews)
A History of the Ponca Refinery in Ponca City (>268,000 pageviews)
A Financial Model for Tucows and Ting (over 1,000,000 pageviews)
The Story of "Keep Burlington Local" and the Schurz/ZRF Conract Award

Ponca City, Oklahoma

I was born and grew up in Ponca City, Oklahoma, a town of about 25,000 somewhat isolated in North Central Oklahoma (a two hour drive to the nearest metropolitan areas in Tulsa, OKC, and Wichita.). After I left Ponca City to go to college, I worked overseas and on the East Coast for 30 years. But my wife and I came back to Ponca after our retirement in 1999.

Ponca City is an interesting amalgam of historical developments including being being founded and created from scratch during and after the Cherokee Strip Land Run in 1893, becoming an oil boom town in the 1920's, home of the "Palace on the Prairie" built by oil magnate E.W. Marland, home to Conoco's R&D facility employing hundreds of Phd.'s in the 1950's, 60's and 70's giving Ponca a character of a university town, and finally the continual influence of Native American tribes on our history especially the Ponca tribe and Osage Nation. Some interesting articles I have researched and written about Ponca City include:

Hugh and Dr. S. J. Pickens Sponsor First Dinner Served in E. W, Marland Formal Dining Room in 75 Years December 18, 2016
"Lydie Marland in the Afterlife" Reinterprets the Life of Ponca City's Controversial First Lady June 30, 2017
The Pioneer Woman Models Should Return to Ponca City July 13, 2007
The Pioneer Woman Models Come Home to Ponca City February 26, 2010
President Barack Obama's Mother Grew Up in Ponca City February 6, 2009
Standing Bear Looks to the Future
Ponca City, We Love You
What to See in Ponca City
Railroads and Ponca City
Ponca Playhouse to Present "The Broken Statue" January 17, 2012
What Ponca City Owes EW Marland June 20, 2012
How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66? July 23, 2012
EW Marland and the Movie "The Ends of the Earth" (320,000 pageviews) May 23, 2013
Sculptor Bryant Baker's Lost Masterpiece November 3, 2015
Ponca Playhouse Production of "Lydie Maryland in the Afterlife" Ends in Triumph

Pickens Museum

Pickens Museum is a distributed museum that is active in three location: Northern Oklahoma College in Tonkawa, Oklahoma, City Central in Ponca City, Oklahoma, and at Woolaroc Museum near Bartlesville, Oklahoma. The museum has plans to build a 15,000 ft2 art museum on highway 60 West of Ponca City, Oklahoma. in the next few years.

Pickens Museum
Doctor Pickens Museum Facebook Page
Meet the Team that is Going to Design Doctor Pickens Museum May 21, 2018
World's Largest Naja on Display Outside Ponca City by Stephen Schwark August 29, 2018
A 1949 Hudson Limousine August 2018
Jo Davidson Sculpture from 1929
Native American Artist Tonya Rafael Visits Ponca City February 2018
Pickens Museum Opens New Exhibition "Winter in New York" by Roger Disney January 22, 2020
The Three Faces of the Pioneer Woman by Daniel Pickens February 2020
Letter from a Birmingham Jail by Faith Ringgold February 21, 2020
The Turquoise Guitar by Jolene Bird November 26, 2018
Sculptor Bryant Baker's Lost Masterpiece November 3, 2015
Doctor Pickens Museum of Turquoise Jewelry and Art

Art

My Biography of Academy Award Winning Screenwriter Chris Terrio (>400,000 pageviews)
The Pioneer Woman Models Should Return to Ponca City July 13, 2007
The Pioneer Woman Models Come Home to Ponca City February 26, 2010
Ponca Playhouse to Present "The Broken Statue" January 17, 2012
EW Marland and the Movie "The Ends of the Earth" May 23, 2013
Sculptor Bryant Baker's Lost Masterpiece November 3, 2015
A Ponca City Mystery - Who is this man? April 5, 2018
Ponca Playhouse Presents: August Osage County"
Biography of Ninja of Go! Team (Nkechi Ka Egenamba)
I Refuse to Be Lonely Phyllis Hyman's Final Album
Eight Reasons to see Sunday in the Park with George at Ponca Playhouse

Peace Corps Writing

I served as a Peace Corps Volunteer in Peru from 1970 - 73 working with the Peruvian Ministry of Education teaching high school science teachers how to build lab equipment out of simple, cheap materials. In 2000 I started "Peace Corps Online" to document the work volunteers are doing around the world both during and after the Peace Corps Service. I ran the web site for ten years and posted about 10,000 stories. Even though the site is no longer active, I still get over 50,000 monthly pageviews.

Personal

Dr. S. J. Pickens October 21, 2017 (53,000 pageviews)
Pickens Museum Opens New Exhibit Honoring Dr. S. J. Pickens
I Am a Covid Survivor December 27,2020 (27,000 pageviews)
The Anger and the Guilt I can Handle - It's the 'Missing Her' I Can't Stand June 1, 2018
My Uncle Donald and America's Fresh Water Submarines in World War II (>171,000 pageviews)
Death Be Not Proud - a Remembrance of my friend Peter Militch (58,000 pageviews)
My Favorite Christmas
A Victorian Mansion in Baltimore's Reservoir Hill (41,000 pageviews)
Remembering John D MacDonald and His House on Siesta Key (75,000 pageviews)
Remembrances of My Life as a Geophysical Observer with Petty Geophysical Working in the Amazon Jungle in Peru in the early 1970's (14,000 pageviews)
My blog on Facebook
The Time Somebody Tried to Light a Fire in Front of Our House on Good Friday April 7, 2015
Pickens Answers on Quora on Investing, Day Trading, Becoming a Millionaire, Human Loss, and Faking Your Own Death

Phillips 66

Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: Hugh Pickens all rights reserved.

For nearly 100 years oil refining has provided the bedrock of Ponca City's local economy and shaped the character of our community. Today the Ponca City Refinery is the best run and most profitable of Phillips 66's fifteen worldwide refineries. The purpose of this collection of reports is to provide a comprehensive overview of Phillips 66's business that documents and explains the company's business strategy and execution of that strategy.

Safety, Environment, Legal

Corporate

Strategic and Financial

Business Segments

Stock Market

Reference

Refining Business Segment

Increasing Profitability in Refining Business Segment

Detailed Look at Ponca City Refinery

Other Phillips Refineries

Other Locations

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[473] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[474] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[475] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

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[477] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[478] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[479] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[480] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[481] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[482] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[483] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[484] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[485] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[486] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[487] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

[488] Seeking Alpha. "Tucows' (TCX) CEO Elliot Noss on Q3 2016 Results - Earnings Call Transcript" November 7, 2016.

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