The cost of delivering cellular phone service to consumer demanding the latest technology has the Dryden Municipal Telelphone Service in an $8.3-million financial quandary.
But the Northwestern Ontario community’s city manager is reassuring clients its business as usual – though he refused to rule out the possibility of a takeover by a company like TBayTel, long rumoured to be interested in purchasing the municipally owned utility.
“I think anything is a possibility at this point,” Joe van Koeverden said Tuesday, when asked specifically about a TBayTel takeover.
“From the city’s perspective, we need to correct the financial concerns we have with operating the telephone (company).”
TBayTel, when contacted, had little to say.
“We don’t comment on speculation,” was the email response given by TBayTel spokesman Barry Streib.
According to audited 2011 financial statements released this week, the company has a combined deficit totaling $8.3 million on the mobility side of its business, though the company did make about $325,000 on voice and Internet services.
Dryden Mobility’s operating loss in 2011 alone was $3.66 million.
Van Koeverden said DMTS simply can't keep up with the demand for new technology in an area where there's a limited customer base and the industry continues to move at an alarming rate.
“It’s really hard to keep up and provide the level of service people are expecting. And the amount of investment just isn’t justified for the amount of market that we have in our area,” Van Koeverden said.
“We are meant to be a municipal telephone service, so we need to ensure that 90 per cent of our service is done within our municipal boundaries. We don’t really have the capacity to stretch out into other communities that well.”
The costs are just too prohibitive, he added.
“This region is so big, so vast,” he said.
“It all costs money and it costs to develop services. People (have) expectations for data. We haven’t been able to facilitate data yet on our system, because we’re still using older technology. And the younger people are demand it. They want to download stuff. We just don’t have the capacity.”
The situation is also costing the City of Dryden, which forecasted an operating budget of $26.5 million in 2012, its annual DMTS dividend, estimated at $1.25 million. The capital budget is $21.5 million.
In 2008 Dryden city council voted to retain and grow DMTS, rather than sell the asset like Kenora did. The city hired a consultant last year to look at the business model and develop strategies to move forward.
Van Koeverden said as a result, DMTS has decided to explore potential partnership and alternative solutions to resolve the financial and technological challenges it’s facing.
“It is a major concern for the city. It needs to be right-sized in order for us to get the financial picture in order, for the whole city,” he said.
