Management of the V.I. Next Generation Network terminated five employees Friday in the wake of president Tonjia Coverdale’s resignation over the fiber-optic network’s direction.
The federally-financed viNGN was established in 2010 as part of a national initiative, spearheaded by President Barack Obama, called the Broadband Technology Opportunities Program. It was initially conceived as a "middle-mile" wholesaler, authorized only to sell network access to local internet service providers, who then in turn would invest in fiber-optic infrastructure and offer access to their customers.
Coverdale resigned her position after a March 10 viNGN board meeting in which she had disagreed with Gov. Kenneth Mapp over additional paid holidays for viNGN employees, and in which there was dispute over whether viNGN should branch out from being solely a "middle-mile" wholesaler. Coverdale did not give a reason for her resignation, which was announced later in a statement from Government House.
Asked about reports that a number of top personnel appointed by Coverdale had been terminated in the wake of her resignation, interim CEO and President Peter Schultz said the personnel changes were part of an effort to "re-align" the organization in line with its "primary mission."
"The primary mission of our company is to provide wholesale middle mile high speed communication services to the USVI community through ISP’s using our fiber optic network. In an effort to re-align the organization and refocus our attention on this important mission, we eliminated five staff positions last Friday and the individuals in those positions were terminated," Schultz said.
In December, Mapp signed an agreement allowing the government’s Bureau of Information Technology to become the sole Internet service provider for other government agencies. Currently those agencies purchase internet services from various private ISPs. With the change in policy they will soon all purchase much cheaper access to publicly-owned viNGN through BIT, saving taxpayers’ money.
Coverdale testified to the V.I. Legislature in February that the system, which is several orders of magnitude faster than existing internet in the territory, was not reaching the homes of Virgin Islanders quickly enough. She urged legislators to change the law to allow it to compete with local ISPs rather than waiting for them to act as middle men. (See Related Links below)
Private V.I. ISPs oppose these changes, arguing they are struggling to stay afloat and are unable to compete without protection. Michael Carty, president of local ISP Smartnet and Alliance Data Services, testified at the February Senate hearing that some small businesses in his industry were already feeling the negative effects of government policy changes in the wake of the territory’s broadband conversion.
While Mapp allowed government agencies to save money by connecting directly to the viNGN through BIT, during the board meeting at which Coverdale resigned, Mapp spoke against allowing the government-owned network to compete with private ISPs.
“It is their (private ISPs) job to get out there, construct the last mile, knock on doors and be competitive, not the government," Mapp said at that meeting. ( See Related Links below.)
At the February hearing, senators opposed both Mapp’s move to allow the government to buy cheaper internet service from the government-owned viNGN and Coverdale’s recommendation to allow the viNGN compete directly with private ISPs.
“Colleagues, we cannot allow private established businesses in the Virgin Islands that have been here for years, some of them 15 to 20 years, to fall by the wayside. We can’t. And the possibility is already here,” Sen. Kurt Vialet, (D-St. Croix) said.
“I am not in agreement with BIT being the sole ISP [for the government]. Taxes helps to fund the government. By sideswiping the private sector the economy will be greatly impacted. Gross receipt taxes, employment taxes, corporate taxes will decrease as a result of removing private companies that operate as ISPs,” Sen. Clifford Graham (D-St. Thomas) said.
The largest private ISPs in the territory pay little to no gross receipts taxes and corporate income taxes now, because they receive tax breaks negotiated with the University of the Virgin Islands RTPark, granted in 2009. In 2014, Senators changed the law to retroactively legalize those tax breaks and, when Gov. John deJongh vetoed the legislation, voted to override that veto. Graham voted for the legislation and for the veto override (See Related Links below)
Employees of the government-owned viNGN and employees of privately-owned ISPs both pay employment taxes.