Tag: "public v private"

Posted December 8, 2017 by lgonzalez

Last week, Burlington’s City Council finally chose a buyer for Burlington Telecom (BT), their municipal network that began serving residents and businesses in the early 2000s. City Councilors and representatives from Schurz Communications and ZRF Partners hashed out the details of an agreement at the eleventh hour. The Letter of Intent (LOI) was released on December 6th; the public can now analyze the deal their elected officials chose for them.

Night Work

On December 1st, editors at the Burlington Free Press published a piece highly critical of the process that occurred in the late night and early morning hours of November 27th and 28th. They wrote:

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.

Many city residents woke up Wednesday morning to find that their elected representatives had chosen Schurz Communications as their preferred buyer for Burlington Telecom based on a bid significantly revised just hours before the vote.

Editors went on to state that the City Council had “negated the months-long public process for the sale” of BT by allowing Schurz and ZRF to alter their bid and accepting it without giving the community time to review it or weigh in. After so much time and effort invested in a process that was intended to be transparent and include the entire community, Burlington leaders seem to have dropped the ball at the five-yard line.

The Letter Of Intent

People following the process know that Schurz was one of the four bidders that made it to the semi-finalist status but was eliminated when the City Council cut the list down to Toronto-based Ting Internet and the Keep Burlington Local Cooperative (KBTL). When the vote was split between Ting and KBTL, the City Council asked the two to try to work... Read more

Posted November 22, 2017 by christopher

At the Institute for Local Self-Reliance, we have been watching the latest developments with Burlington Telecom from afar but with extreme curiosity. We have watched a wonderful local movement grow to Keep Burlington Telecom Local and that fits entirely with our values. 

Because of the challenges from BT's prior mismanagement and court settlement, Burlington's options are limited. The benefits of local ownership are tremendous - from being directly accountable for services to keeping more money in the community. But also the ability to correct problems as they arise. No management is perfect, but local ownership provides the most opportunity to ensure that the network will continue to serve the community, rather than a situation in which the community serves the network. We see the latter far too often in communities stuck with cable monopolies. 

We salute those that have made Keep Burlington Telecom Local a viable option and we continue to hope that BT indeed remain local. But we are concerned that BT may not remain locally controlled. 

In the event that the City Council decides to pick a non-local bidder, we want to offer some observations. We are an organization that shares localism as a strong value and has more than a decade of experience working on broadband policy to best benefit communities. 

We have a long history with Ting (though no financial relationship) but less experience with Schurz Communications. Not only have we extensively documented Ting's partnership with Westminster, Maryland, to build a citywide fiber network, but many of us have been customers of Ting's parent Tucows in various ways. 

In our experience, absentee ownership of broadband networks is concerning, in part, because of a tendency for such a company to cut back on customer service and network investments. Such actions can be financially lucrative in the short term but inconvenient when the owner of the company shops, worships, and/or mingles with those who bear the brunt of such disinvestment. Network owners from afar don't have to worry as much about upsetting their customers from declining standards.

Tucows has long been a force for good in protecting and expanding an open Internet, both in sponsoring important events and via... Read more

Posted November 21, 2017 by lgonzalez

The people of Burlington have proven beyond a doubt that they believe in publicly owned Internet networks. They’ve fought harder than any other community we’ve seen to maintain a voice in the future of their much loved publicly owned fiber optic network, Burlington Telecom (BT). Now after months of ruminating, debating, and examining their options, the future of BT is still uncertain.

The Back Story

We’ve covered BT extensively and dived into both the numerous benefits the community has enjoyed as well as the problems caused by former Mayor Bob Kiss and his administration. Bad choices and a lack of transparency snowballed, leaving the city to contend with sizable debt. Through all the difficulties, residential and business subscribers have consistently praised their hometown publicly owned network and expressed an appreciation for accountability, good service, and BT’s local ownership.

Citibank-Logo-1.png In order to fend off a lawsuit from Citibank, the city of Burlington had to agree to find a buyer for the network. To maximize the funds the city will receive from the transaction, a sale needs to be finalized by early January.

On November 6th, the City Council was scheduled to vote on which entity would be allowed to purchase the network, but that would have been a dull ending to a story filled with drama and, as the fates would have it, that isn’t what happened. At all.

The Kiss Of Debt

The Kiss administration’s choice to hide cost overruns from the public and the City Council led to a $33 million obligation to CitiBank. In 2014, the two reached a settlement after CitiBank decided to sue in 2011 and the parties had haggled in court for three years. As part of the settlement, the community committed to selling BT. In order to obtain the largest share possible of the proceeds from the sale - 50 percent - Burlington must reach an agreement with a buyer by January 2nd, 2018. The longer it takes to find a buyer, the less of the net proceeds the city will retain.

As an added incentive to get a... Read more

Posted September 21, 2017 by lgonzalez

And then there were three. After months of review and vetting, the field of bidders to purchase Burlington, Vermont’s, treasured municipal network is now a manageable number. On September 20th, city officials announced which entities were still in the running and released details of their proposals.

Ting

Toronto company Ting, which is owned by Tucows, submitted a bid to purchase the network. The company is already providing services in Charlottesville, Virginia; Holly Springs, North Carolina; and in Westminster, Maryland, where the public-private partnership has received several awards. The company is also planning construction in Sandpoint, Idaho, and Centennial, Colorado, where they will also be partnering with the municipalities to use publicly owned fiber.

They describe the key points of their offer as $27.5 million in cash and they will pay the city an additional $500,000 if BT earns $4.25 million earnings before interest, tax, depreciation, and amortization (EBITDA) during the 2018 fiscal year. Ting is offering the city a minority interest in the network that they can later divest if they choose.

logo-ting.png Ting will also relocate BT’s equipment, currently housed in the city’s Memorial Auditorium. The move is estimated to cost $800,000. As part of the deal, the company will also donate $250,000 toward the city’s Burlington Ignite and other programs to encourage entrepreneurship and closing the digital divide.

In their offer, Ting guarantees expansion within the city and beyond the city limits. Like the other bidders, Ting plans to keep the current operational team in place. They also guarantee customer rates for 30 months.

Review the details of the Ting/Tucows offer here.

Schurz

Schurz... Read more

Posted September 14, 2017 by lgonzalez

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.”  

Surpassing Goals

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.... Read more

Posted August 9, 2017 by lgonzalez

The clock is ticking as the city of Burlington examines bids from entities to buy or partner to operate Burlington Telecom. The community has narrowed down what sort of characteristics they want in a buyer, but there is also some debate about the process as city officials move toward the final process.

On To The Next Step

The community received eight bids, none coming from large national telecommunications companies. Early in July, the Burlington Telecom Advisory Board (BTAB) reported that the highest bid was two and a half times the lowest, but they did not make dollar amounts public. They’ve eliminated some of the bids and on July 31st, the finalists are scheduled to make presentations to the City Council in an executive session. 

While price is a factor that the city and the BTAB are considering, it isn’t the only criterion that matters. Last year, the BTAB released a report based on community input, recommending the city first look for a locally based entity. Many people in Burlington like BT as a locally controlled asset and fear it may eventually be swallowed up by one of the large, distant carriers. 

Keep BT Local formed when city residents banded together to create a cooperative. They started in 2012 and have recruited members committed to keeping BT in the hands of local residents. Keep BT Local was one of the entities that submitted a bid.

How Much Public Input?

Keep BT Local is the only bidder that has publicly acknowledged its decision to bid on the network and city officials are still undecided about how much information to release to the public about bidders. Mayor Miro Weinberger has indicated he would prefer the bidders and their bibs remain confidential until after city officials make a final decision.

“Each bidder is working hard to convince the city they can meet those criteria, and they don’t fully know how they stack up against and what the others are offering,” Weinberger said. “That dynamic creates a strong... Read more

Posted August 7, 2017 by lgonzalez

If you’re a regular reader at MuniNetworks.org, listen to our podcasts, or if you simply follow publicly owned network news, you know an increasing number of communities have decided to invest in local connectivity solutions in recent years. We’ve watched the number of “pins” on our community network map multiply steadily, but every now and then, a network drops off through privatization.

FastRoads Sold To N.H. Optical Systems

New Hampshire FastRoads received America Recovery and Reinvestment Act (ARRA), which combined with state funding, created the open access fiber optic network in the southwest section of the state. Over the next several years, the network expanded with private donations and local matching funds. Many of the premises that connected to the network had relied on dial-up before FastRoads came to town. But in part because state law makes bonding for network expansion difficult, Fast Roads will no longer be locally controlled.

The Monadnock Economic Development Corporation (MEDC), a nonprofit organization whose purpose is working to see like projects are completed that will improve economic development prospects in the region managed the project. MEDC contracted with another entity to maintain the network, which cost approximately $15,000 per month. Since they had achieved their core goal - the construction and launch of the network - MEDC had been looking for another entity to take over the network or to partner with them. They recently finalized a deal to sell the network to New Hampshire Optical Systems

logo-fast-roads-2017.png Back in 2013, Christopher spoke with Carole Monroe, who was the FastRoads Project CEO but has since moved on to ECFiber in Vermont. She described how the introduction of the network inspired incumbents to lower prices - a win for everyone, whether they connected to FastRoads or not. She also told us how community anchor institutions (CAIs) were getting better... Read more

Posted July 14, 2017 by Staff

This is the transcript for episode 261 of the Community Broadband Bits Podcast. Dane Jasper of Sonic joins the show to discuss how the company, publicly-owned infrastructure, and public-private partnerships. Listen to this episode here.

Dane Jasper: I think a city that adopts an open access, dark fiber model creates the greatest opportunity for a diversity in choices for the consumer and a diversity in the performance and price of services. That's the model that I think would be the most interesting.

Lisa Gonzalez: This is Episode 261 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Dane Jasper from the internet service provider Sonic visits with Christopher this week. We've written about Sonic on MuniNetworks.org and how the company has used publicly-owned infrastructure to bring better connectivity to Brentwood in California. In this interview, Dane offers his perspective on different types of publicly-owned community networks, and how those networks affect a potential partnership with a company like Sonic. Before we start the interview, we want to remind you that this is a commercial-free podcast, but it isn't free to produce. Take a minute to contribute to ilsr.org. If you're already a contributor, thanks. Now here's Christopher with Dane Japer from Sonic.

Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast. I'm Chris Mitchell, and today I'm speaking with Dane Jasper, the CEO and Co-founder at Sonic. Welcome to the show.

Dane Jasper: Thanks, Chris.

Christopher Mitchell: Dane, I suspect most of our listeners are familiar with Sonic. Although you serve three cities in California, your reputation is much wider and deeper than that. Maybe you can just enlighten those who haven't heard of Sonic. What is Sonic?

Dane Jasper: Sonic is an alternative access provider, so we're a regional, competitive, local exchange carrier and internet provider. Today, we offer broadband services in 125 California cities using copper technologies, VDSL, pair bonding, ADSL2+, and three cities, as you noted, with gigabit fiber to the home. We have a little over 400 employees and about 100,000... Read more

Posted June 1, 2017 by lgonzalez

For the second week in row, our staff has felt compelled to address a misleading report about municipal networks. In order to correct the errors and incorrect assumptions in yet another anti-muni publication, we’ve worked with Next Century Cities to publish Correcting Community Fiber Fallacies: Yoo Discredits U Penn, Not Municipal Networks.

Skewed Data = Skewed Results

Professor Christopher S. Yoo and Timothy Pfenninger from the Center for Technology, Innovation and Competition (CTIC) at the University of Pennsylvania Law School recently released "Municipal Fiber in the United States: An Empirical Assessment of Financial Performance." The report attempts to analyze the financial future of several citywide Fiber-to-the-Home (FTTH) municipal networks in the U.S. by applying a Net Present Value (NPV) calculation approach. They applied their method to some well-known networks, including Chattanooga's EPB Fiber Optics; Greenlight in Wilson, North Carolina; and Lafayette, Louisiana's LUS Fiber. Unfortunately, their initial data was flawed and incomplete, which yielded a report fraught with credibility issues.

So Many Problems 

In addition to compromising data validity, the authors of the study didn’t consider the wider context of municipal networks, which goes beyond the purpose of NPV, which is determining the promise of a financial investment.

Some of the more expansive problems with this report (from our Executive Summary):

  • They erred in claiming Wilson, Lafayette, and Chattanooga have balloon payments at the end of the term. They have corrected that error in a press release. Other errors, such as confusing the technologies used by at least two networks, are less important but decrease the study’s credibility.
  • Several of the cities dispute the accuracy of the numbers used in the calculations for their communities.
  • The Net Present Value calculation is inappropriate in this context for... Read more
Posted May 26, 2017 by Nick

S&P Global Market Intelligence - May 26, 2017

Hard Data on Municipal Broadband Networks

Written by Sarah Barry James

There is a dearth of good data around municipal broadband networks, and the data that is available raises some tough questions.

A new study from University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger, a law student, identified 88 municipal fiber projects across the country, 20 of which report the financial results of their broadband operations separately from the results of their electric power operations. Municipal broadband networks are owned and operated by localities, often in connection with the local utility.

...

Yet Christopher Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance, argued that Yoo's study did not present an entirely accurate or up-to-date picture of U.S. municipal networks.

"When I looked at the 20 communities that he studied — and his methodology for picking those is totally reasonable and he did not cherry pick them — I was not surprised at his results because many of those networks are either in very small communities … and the others were often in the early years of a buildout during a period of deep recession," Mitchell said.

As an example, Mitchell pointed to Electric Power Board's municipal broadband network in Chattanooga, Tenn. — one of the five networks Yoo identified as having positive cash flow but at such a low level that it would take more than 100 years to recover project costs.

...

In fact, without the revenue generated by the fiber-optics business, EPB estimated it would have had to raise electric rates by 7% this year.

According to Mitchell, Yoo's study captured the Chattanooga network when it was still "small and growing," but misses "what's going to happen for the rest of the life of the network, which I think is the more important part."

...

Read the... Read more

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