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KeepBTLocal Working on Plan to Purchase BT

Burlingtonians love their municipal network. We have reported in the past that, prior to the sale of the network to Blue Water LLC, a group of locals organized to create the KeepBTLocal cooperative. Recently, the organization reaffirmed its commitment to purchase the network when it goes up for sale, a condition of the Blue Water LLC transaction.

A customer satisfaction survey in April revealed that BT customers are more than twice as satisfied with their provider as those obtaining service from competitors. The VTDigger reported survey results:

· 87% customer satisfaction with BT’s Customer Service;

· 24% of customers chose BT’s services after being recommended by a friend or family member; and

· General impression of BT by non-BT customers saw a 10% “positive” increase over their 2014 impression.

The survey also reported that customers with other providers were 40% satisfied with their service.

BT offers 150 Mbps for $55 per month and gigabit service for $85 per month or $70 per month with a 12 month contract. All speeds are symmetrical.

It has been a long road for BT after prior city leadership covered up years' worth of cost overruns creating serious financial difficulties for the community. Eventually, CitiBank filed suit to recover the $33 million Burlington owed. The two settled and Burlington eventually transferred ownership to Blue Water with the city still leasing. The ultimate goal for the city is to sell the network. Enter KeepBTLocal.

According to a June VTDigger article, the coop has been working with a former telecommunications industry executive now working as a consultant. They are developing business and acquisition plans to purchase the network when it goes up for sale within the next few years.

Andy Mortoll, Chair of the Board of KeepBTLocal told VTDigger:

“It’s just so important for so many of us in Burlington to keep Burlington Telecom a local, community-owned asset,” Montroll said. “If the city is going to sell it, we want to be the ones to acquire it on behalf of the residents.”

Burlington Sells Burlington Telecom, Continues to Operate the Network

In November, Burlington's City Council approved the much anticipated settlement with Citibank. Burlington Telecom, a nearly citywide gigabit FTTH network owned by the city, was run into the ground by a previous mayor. That Mayor's Administration hid major cost overruns from the public for years, resulting in a challenging situation for the community. In the the world of municipal broadband, this is a significant anomaly.

The City found itself owing CitiBank some $33 million with no clear path on how to pay it. After years of arguing in court, the situation is largely resolved. Early in 2014, Citibank and Burlington reached a settlement [PDF] in which the the city would pay $10.5 million and a share of BT's future value in exchange for Citibank to drop its $33 million lawsuit. The obligation will include funds contributed by the city's codefendant, McNeil, Leddy & Sheahan P.C. law firm.

BT revenues, net cash flow, and the city's insurance carrier will contribute to the city's obligation, but the lion's share will be paid for with bridge financing from a local source. Trey Pecor, a Burlington business owner, has secured funding and created Blue Water LLC. The city will transfer ownership of the network to Blue Water in exchange for $6 million and will continue to lease the network from Blue Water at about $558,500 per year for a maximum period of five years. The goal is to find a partner to purchase the network. At that time, Blue Water and the city will divide any proceeds from the sale. 

As part of the agreement, the City Council and the Vermont Public Service Board (PSB) needed to approve the terms. The PSB is the state entity tasked with regulating utility rates and related financial matters in Vermont. On November 3rd, the PSB approved the transaction unanimously [PDF of the Order].

A Vermont Digger article reported that several organizations, including the Center for Media and Democracy, the Regional Educational Television Network and Vermont Community Access Media, requested a six month public engagement process before the deal be approved. The groups, known as Burlington Access Management Organizations (BAMOs) were concerned that a distant corporate owner that may purchase network, will not be community-minded in its decisions. The BAMOs also requested that three to five people with experience in telecom, alternative corporate structures, and public engagement, be added to the Advisory Board. From the VTDigger article:

The Public Service Board did not agree to the request. The board said it would be premature to impose conditions on a prospective sale, and that any future owner will be expected to comply with the same public access obligations the city must meet now.

“While the conditions requested by BAMOs may provide a useful mechanism to explore issues in connection with a prospective future sale of BT’s Assets, the Board declines to impose such conditions,” the PSB wrote.

Unfortunately, the PSB missed the fundamental point - the required public access obligations are quite small. Burlington Telecom, like most municipal fiber networks, went above and beyond the bare minimum required by law. The only way to ensure Burlington continues providing great customer service, high quality connections, and additional services to the community is by making it sure it is accountable to the community, not distant shareholders.

We cannot help but be disappointed at the continued pain caused by the failure of Mayor Kiss's administration to be honest with the people of Burlington - a reminder of how important transparency is for local governments.

We strongly support the efforts of local groups to ensure that when the network is next sold, it is to a locally rooted entity that will ensure the high level of service BT has delivered will continue.

The PSB did grant the city's requested reprieve from a condition that the network connect every address in Burlington. There are still approximately 3,250 addresses that BT does not reach, often in areas with underground utilities or condos where the owner is not cooperative. In order to make the system more enticing to potential buyers, the PSB removed the obligation from the utility's certificate of public good.

On November 17th, the City Council approved the settlement along with bridge financing documents, which will allow the process to move forward. The Council also decided to expand the BTAB and approved operating guidelines. WPTZ reported that there were local residents attending the council meeting who spoke out against the sale, but the Council voted to approve unanimously. From WPTZ:

"Given the circumstances that we were faced with over the past five years, this settlement is the best solution, the best possible outcome from our saga with Burlington Telecom," said Karen Paul, a Burlington city council member.

Local coverage on the City Council settlemet approval from WPTZ:

See video

Chris Visits Burlington to Talk About Local Telecom Challenges

Burlington Telecom customers love their local muni. Throughout the community's political, legal, and financial challenges, residents and businesses have rallied behind the ability to control their access locally. As part of their efforts to educate the community, Code for BTV and Keep BT Local brought Chris to town to discuss community ownership. The video of his presentation is now available online at Burlington's Town Meeting Television.

Chris discussed a variety of community ownership and said of Burlington:

"When it comes down to getting community support to raising capital and understanding the value of a cooperative, Burlington's about the best place in the country to be trying to do that."

Keep BT Local began officially organizing in late 2012. Their goal is to transform the municipal network into a cooperative structure on order to protect local interest in the service. The gigabit network has won awards, partnered with local nonprofits to improve digital inclusion, and offered local services such as computer repair, setting it apart from the distant corporate providers with no interest in local communities.

No wonder Burlingtonians want to keep their network! This is an informative conversation that touches on a variety of topics including how to fire up potential cooperative members, strategies to entice community anchors, and promoting the unique characteristics of a local network.

The video runs about one hour and twenty minutes.


Chris Mitchell In Burlington, Vermont on September 19th

Members of the Burlington community are hosting a luncheon on Friday, September 19th, to discuss ways to help keep BT local. Chris, as one of the leading experts on municipal broadband, will be leading the discussion. We have followed BurlingtonTelecom's challenges and victories since 2008.

The event is titled "How Do We Keep Burlington Telecom Local?" and will be at the CCTV Center for Media & Democracy in Burlington. From the announcement:

Many Burlington residents and activists are concerned about the City of Burlington’s plans to sell Burlington Telecom to a private entity by 2017. While the City is committed to BT as a driver for economic and community development, it currently has no specific plans to retain a meaningful ownership stake in the new entity. 

The event is part of a series of community talks aimed at maintaining public input as the City prepares to move forward. 

A free discussion will begin at 11 a.m.; it will be followed by lunch for $15. You can now register online. For those who want to learn more about the network and keep up on the latest developments, CCTV of Vermont has put together a resource page detailing upcoming steps with news coverage, video, and court documents. 

Burlington's Civic Cloud Collaborative Wins Knight Foundation Award

The John S. and James L. Knight Foundation has awarded a Knight Prototype Fund grant to the Civic Cloud Collaborative of Burlington, Vermont.

The Civic Cloud Collaborative is a group of eight organizations using Burlington's gigabit network to create civic and public spaces. The group describes the Civic Cloud project on their website:

The Civic Cloud will be available for the community to use as a platform for public, non-commercial Internet applications and digital creative works. Several applications will be deployed during an initial prototyping phase of the Civic Cloud. High-definition live streaming will be provided for community media outlets to webcast live public meetings and cultural events. WordPress websites will be hosted for several Vermont non-profits including rescue squads, food shelves, job banks and historical societies. A collection of volunteer-developed applications and a state-of-the-art website deployed to the Civic Cloud will help Big Heavy World preserve and promote Vermont-made music. Lakecraft, an educational, multi-user game aimed at youth and adults that gamifies the Lake Champlain Basin, will also be one of the first applications to run on the Civic Cloud.

Vermont Public Radio also reported on the award. From the article:

“We’re interested in it being a non-commercial space on the Internet,” said Bradley Holt, a Burlington-based developer who heads CodeForBTV, the local chapter of Code For America, an organization for public service software developers.

The cloud service, Holt said, will provide hosting capacity for local community organizations seeking to use the Internet to advance the public interest.

For more, check out the press release from Code for BTV, one of the collaborative members.

Video: Burlington Telecom Coop Effort Moving Ahead

In December, 2012, a group of local residents decided to engage in an effort to turn beleaguered Burlington Telecom into a coop. The effort has advanced and the organization, Keep BT Local, continues to gain pledges. To date, the organization has collected pledges in the amount of $108,000 for equity and $156,000 in loan pledges.

Keep BT Local is ultimately shooting for membership pledges from about 4,000 residential and business customers. The goal has been to collect $250,000 worth of pledges to move forward with incorporation this month.

Local Chanel 17 carried a discussion on the effort to get more info on the business plan. Alan Matson and Don Schramm, who head up the Steering Committee talked with host, Matt Kelly, about the venture and took calls from viewers.

In addition to a discussion about the the heart of what is "local," the group discussed the business plan and where challenges may arise.

The discussion is about 30 minutes long.

Coop Status for Burlington Telecom? Maybe.....

Burlington Telecom may be headed for some changes. Due to the mismanagement of the prior Burlington Mayor Administration, the network took on an unsustainable amount of debt and damaged its reputation. Some of the plans to make the network sustainable again involve privatizing it. Unfortunately, as we have seen with public power privatizations, such an action typically results in worse services and higher prices due to the loss of local control.

Operating under the name Keep Our Telecom Local, a group of local residents and business leaders want to ensure BT remains owned by the community by turning it into a cooperative. At a December 13 public meeting, the group of about 50 volunteers gathered and talked strategy. According to a Burlington Free Press article on the meeting, attendees broke into smaller groups to discuss specific issues and plans.

The next step will be efforts to increase publicity for the movement and the creation of a business plan. Currently, a committee is forming to determine the best way to file for a Vermont Certificate of Public Good. Another committee is looking into formation of a board of directors.

Most municipal networks do not have to contend with the problems that have plagued Burlington Telecom. But even with all of the problems faced by this publicly owned network, the community still sees great value in rescuing it rather than abandoning it. The Burlington community appreciates the incredible value of keeping their broadband resource local. From the article:

Don Schramm, one of the organizers of tentatively named Green Mountain Broadband Fiber, said it makes sense to pursue a Third Way.

“Keeping our telecom locally owned means that the jobs stay here, the money spent stays here, the profit stays here — and most importantly, the control stays here,” Schramm said. “We will have a broadband cooperative responsible to our community needs, not the profit wants of out-of-state owners.”

We applaud the community for recognizing the value of this great asset, the importance of local control, and their efforts to keep BT local.

Burlington Telecom Announces a Gig and Computer Repair Services

We have covered happenings at Burlington Telecom, both positive and negative, extensively. We are glad to report some interesting new developments of this Vermont municipal network. BT is rolling out faster connections and using its competitive advantage in customer service to offer some computer repair services. Joel Banner Baird at the Burlington Free Press reported:

Without cash reserves and promotional enticements available to BT’s commercial competitors, the fiber-optic Internet/phone/cable provider will focus on its strength in customer service, said interim General Manager Stephen Barraclough.

As our readers know, BT is in the midst of a pending lawsuit with Citibank, wherein the financial giant says the city still owes it $33.5 million. The network's troubles, including misuse of public funds by the previous Mayor, have hurt its ability to generate income and Burlington's credit rating has suffered.

While fixing PCs certainly won't pay mounting legal fees, it will make life easier for customers. Details include a $25 diagnostic fee and a rate of $45 per hour plus materials. More about the service is available on the PDF of the official anouncement.

A more recent announcement puts Burlington among the few communities with citywide access to a gig. Burlington Telecom is in the midst of upgrades and will be offering 1 Gbps service and 40 Mbps service starting on December 1, 2012. Both options are symmetrical.

40 Mbps - $99.99 per month

1 Gbps - $149.99 per month when committing for one year; or $199.99 per month with a month-to-month arrangement


View a PDF of the official announcement flyer.

A gig for $150 to residential connections is one of the best deals we have seen in the nation and is far superior to what FairPoint DSL or Comcast Cable offer in town.

Burlington Telecom Partners to Increase Digital Inclusion

On its facebook page, Burlington Telecom has announced a partnership with ReSOURCE, a local nonprofit, that will make refurbished computers available to qualified Burlington families.  


Citibank Finally Files Suit Against Burlington Telecom

After more than a year of expecting Citibank to file suit against Burlington, they finally did. Burlington Telecom, a muni FTTH network, now illustrates the worst case scenario for muni broadband. After the founder of the network left following disagreements with the Mayor, the Mayor's Administration ran the network into the ground (leading us to recently publish the report "Learning from Burlington Telecom: Some Lessons for Community Networks."

Burlington had financed its network with a municipal capital lease, rather than the more commonly used revenue bonds, meaning that the actual network secures the loan. In this arrangement, the network is technically owned by the lender (Citi) and Burlington leased it. So when Burlington decided to stop paying the lease for the network, it became Citi's problem.

And Citi had a lot of problems due to the games massive banks were playing having killed the economy. BT became just one more non-performing asset. They did nothing while the City continued to run the network without making lease payments. Now Citi is suing for the world (this is how these things work) but it isn't clear that Citi can actually get what it demands (the State has a say in whether the network simply gets shut down, which Citi is presently asking for). And if the network did get shut down, Citi would be in a worse position to recover any of its losses because the value of the network is far greater than the sum of its parts.

State law says that losses from a public telecom venture cannot be carried by taxpayers, which is where we return to an interesting document prepared by the Mayor's Administration. As reported by Blurt:

In its lawsuit, Citibank notes that a letter written by attorney Joe McNeil on behalf of Burlington "expressly warranted to Citibank that at least 40 percent of Burlington's revenues were derived from sources other than taxpayers' funds and would be available to fund payments to Citibank, and further, that Burlington had the financial resources and ability to make all payments to Citibank for the full term of the agreement."

I read that document last year and remember being fairly surprised as it appeared to be incorrect from my non-lawyer reading of the law. This is just another case in which the Mayor's Administration played too fast and loose with essential infrastructure.

We have watched in dismay as Burlington Telecom transitioned over the past four years from a model community network to the worst case scenario. This situation proves only that community networks can suffer from bad management in some of the many ways private telecom companies can suffer from bad management (resulting in anything from bankruptcy to prison).

Communities can learn lessons from Burlington's situation -- chief among them that transparency is important. As with other public enterprise funds, the operation should be regularly audited and oversight must be in place to catch errors early, when corrections are easier and less costly.

Unfortunately, Burlington Telecom is in a very bad position presently. The actions of the Mayor's Administration made that position worse than it could have been. Time will tell if it can be saved. Given its important positive contributions to the city (millions of dollars in community savings, increased economic development), the City would benefit from its continued operation.