Burlington Telecom Fact Sheet
Published July 2008
Much misinformation has been disseminated about Burlington Telecom (BT).
Here are the facts. BT is a city department of Burlington, Vermont, which owns a fiber-to-the-home network and offers triple play services (phone, cable, internet). The network depends entirely on subscriber revenues and is not subsidized in any form by the City. BT has saved the City money while being built entirely with investor money -- no tax dollars have been or will be used.
BT remains current on its debt service, is adding 40 subscribers a week and has a take rate above 40% in the area it first began offering services.
Here are the facts. BT is a city department of Burlington, Vermont, which owns a fiber-to-the-home network and offers triple play services (phone, cable, internet). The network depends entirely on subscriber revenues and is not subsidized in any form by the City. BT has saved the City money while being built entirely with investor money -- no tax dollars have been or will be used.
BT remains current on its debt service, is adding 40 subscribers a week and has a take rate above 40% in the area it first began offering services.
| Download |
|---|
| Burlington Telecom Fact Sheet |
"Rules" are laws, ordinances, and regulations that can strengthen your community.
Federal Rules
International Rules
Info Area Highlights
- Publications
- Articles and Commentaries
- MuniNetworks.org - a New Rules Project to promote broadband networks that are accountable to the community.
List of popular RSS feeds
Comments
Burlington Telecom
You may want to update your facts on Burlington Telecom after the revelation that the mayor and other elected and appointed officials have lied to the public and the Vermont Dept. of Public Service regarding the operations and funding of BT.
Your comment below is no longer true.
"BT has saved the City money while being built entirely with investor money -- no tax dollars have been or will be used."
The truth is....BT has been losing money, is in debt way beyond their ability to recover and has, in violation of State law and City charter, been using millions of tax payer dollars to remain in operation. Seroius crimes have been committed and the public's trust has been broken. Those responsible should be investigated and if warrented, charged.
To the contrary
I have been closely scrutinizing BT due to the recent problems they are dealing with.
I don't think it accurate to say that city officials lied - they may have, but I think that long from settled. Not that I am going to defend them, because I think it clear that BT has violated its Certificate of Public Good, which is quite unfortunate. That said, you have your other facts off.
BT has been losing money, that is what happens in the first years of a telecom network. Sometimes it takes 7-10 years to break even. BT has not achieved its goal of breaking even in the first 4 years and has had to reassess.
In no way are they in debt beyond their ability to cover it. They have spread their fixed costs across too few subscribers and are rectifying that.
They have not been using tax dollars to remain in operation. They are borrowing money from the city pool - which is a fund that as far as I understand it, are city reserves that come from net revenue from other enterprise funds. It is standard practice to use this for other projects, such as BT, which need to continue investing even as seeking a refinancing of the network. However, they have borrowed from the City pool for longer than the 60 day maximum in the CPG, so that is a violation. Hardly a capital offense (unless you are feeling punny).
The restriction of 60 days has proven problematic due to the dramatic financial market upheaval, which was certainly beyond BT's control. Had BT not borrowed the money from the City pool, it would have violated its CPG in other ways, so it was in a Catch-22 situation. Some might think that distinguishing taxpayer dollars from the city pool is disingenuous, but I think it is a giant stretch to claim, as some do but the anonymous commenter does not, that taxpayers have subsidized the network. The network is borrowing city reserves and will repay that with interest when it completes the latest round of financing. For those unfamiliar with telecom network financing, taking on additional debt is not necessarily a sign of weakness. Even when finishing the last round of refinancing, they recognized a need to return to capital markets to get the necessary funds to complete the network. That the market melted down in 2008 changed the plans of everyone.
In talking with people in Burlington, my impression is that the public trust has not been broken, except among those who already hated the idea of the government investing in a network. I do not live there, so it is difficult for me to see directly. However, I do think there should be investigations to ensure the public money is used wisely, and I think the Burlington Free Press is pushing quite hard on such investigations.
Burlington Telecom
you fail to mention burl.cityCharter sec 438(c)(1) which prohibits use of tax&rate payer monies. also that the condition 60 violation has go on for over 650 days. Thus possible violations of 24VSAapp3-51 and 24VSAsec1786. also possible federal 18USCsec1346 with respect to election in march and violations of local and state statues and lastly federal RICO statues. there are deeper legal issues than may be apparent at first.
BT again
It is not clear that 438(c)(1) prohibits short term borrowing from the city pool. Yes, the city has borrowed for much longer than permitted under the Certificate of Public Good - though this is somewhat justified due to the credit meltdown. As for the idea that this violates RICO, I will wait to see that evidence.
From our perspective, this problem has a lot less to do with BT than with the Mayor, Chief Administrative Officer, and transparency.
Post new comment