As fall sets in, the Burlington Telecom Advisory Board (BTAB) is still working on choosing a buyer for the Vermont city’s municipal network. The review of the four semi-finalists continues, concerned people express their opinions and BT’s work benefits the community.
High-Speed For Low-Income
In August, BT officials announced that they would be the first ISP in the state of Vermont to offer high-speed Internet to low-income residents through the federal Lifeline program. Lifeline provides a $9.25 monthly credit for qualifying households; BT will be offering symmetrical 25 Megabit per second (Mbps) service for $9.95 per month, leaving the balance for subscribers.
According to BT General Manager Stephen Barraclough, BT is able to participate in the program due to previous upgrades to the infrastructure:
“Because we have a gigabit network, because over the past three, four, five years we’ve essentially swapped out the majority of equipment that’ll allow a thousand meg to go to every home we have lots and lots of equipment that we’ve actually taken off the side of homes that is more than capable of delivering more than 25 meg symmetrical. We have lots and lots of routers that can still be used. So if you look at it from a marginal cost perspective, how can we afford to do this, really there’s very little incremental out-of-pocket cost over and above what we already have.”
August was also an exceptional month for subscriber numbers at BT. In addition to reaching a new height for the number of subscribers added in one month, BT eclipsed their original goal of 7,000 total subscribers. As of the end of August, the network served 7,136 members of the Burlington community.
On their website, BT celebrated with this message for the community:
This amazing level of growth is a historical achievement for Burlington Telecom. We owe special thanks and gratitude to those who make this all possible, our customers – those who stood by us in BT’s darkest days, those who left but then came back, and those growing numbers who have been willing to give BT a chance. Without the loyalty and ongoing support of so many in this community none of this would be possible. Burlington truly is an Unmatchable City.
Under the terms of a 2014 settlement with Citibank, Burlington must sell their beloved municipal network either in whole or in part. A previous Mayoral administration hid major cost overruns from the public for years, which led to city debt to Citibank for approximately $33 million. The BTAB faces the daunting task of finding the right entity to take over ownership of the network.
As the BTAB reviews proposals from four bidders that have not been eliminated, members of the public have stepped forward to express their support for the Keep BT Local cooperative. Much like the original spirit that led to the community’s investment in the Internet infrastructure, people in Burlington see the advantages of keeping control of the asset local.
The letters to local news outlets and lawn signs for Keep BT Local echo the results of a 2016 BTAB report based on community input. That report recommended the city try to find a local owner because community members wanted dollars circulated within the community and valued local accountability. People in Burlington are savvy to the possibilities and fear that a distantly located owner might sell the network to one of the large, disinterested ISPs like Comcast.
Recently, the BTAB publicly expressed concerns about the Keep BT Local plan, which includes crowd funding from the community and a loan from Maine Fiber Company. BTAB stated that, in addition to the debt financing, they were concerned with the group’s lack of experience, however, they plan to keep the current management team in place at BT. The group knows the network, the community, and understands BT subscribers.
A recent letter to VT Digger asks:
Can the same be said for the other BT bidders? The identities and proposal structures of the three remaining bidders have been kept secret, as well as their bid amounts. Some details were provided by David Provost, chairman of the Burlington Telecom Advisory Board, in a recent Burlington Free Press article. According to Provost, two are cash offers from “mature, financially stable companies.” The other, he says, “comes from a private equity investor with valuable local relationships and extensive telecom experience and a vision for aggressive BT regional growth.”
Author of the letter, Janice Shade, notes that the cooperative has collected $396,000 from 41 investors as of the end of August but they need $500,000 by January 1, 2018, to support their bid. She also reports that pledges have momentum and they expect to obtain the necessary funding.
Burlington Likes Public Ownership
This won’t be the community’s first experience with a member owned cooperative. Residents Don Schramm and Jan Schultz each wrote to the Burlington Free Press to support the Keep BT Local bid and each drew a parallel to the local City Market Co-op, started almost 20 years ago.
Schultz, who is a former member of the BTAB, pointed out that the debt Keep BT Local plans to take on will not handicap the organization:
The Burlington Telecom Co-op’s bid is not debt-free, but let me explain why this is not a problem. BT currently has over 7,000 members and is on track to have over $3 million in cash flow after expenses. Paying back a $10 million loan is very doable.
She also notes that public ownership of the Burlington Electric Department (BED) keeps the rates in check and within the local economy:
BED’s rates have not gone up in over eight years, and in 2015, an average BED residential customer paid $371 less per year than the statewide average-an aggregate savings of $6.2 million. That’s a lot of money to keep in the local economy.
Over time, similar savings and refunds would occur with the BT Co-op, and that’s why choosing a not-for-profit BT Co-op-owned by the people-is the best decision for Burlington.
Don Schramm is a past President of the cooperative that created the City Market and now a member of the Keep BT Local Cooperative. He describes how the membership of the co-op that owns City Market has grown six-fold since 2002 and has seen the value of community ownership. He writes:
We would be choosing the cooperative model versus the corporate model… Essentially it boils down to this: there will be no third party, whether local or out of state, making decisions that impact us, setting subscriber rates and collecting the profits from our purchases.
Imagine it, next year, after the Public Service Board approves the conversion of Burlington Telecom, our new Telecom Utility Cooperative will instantly have 7,000 member/owners. 7,000 citizen sales agents for the improvement and growth of our telecom services. With a utility coop, every new customer is a new member/owner.