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Content tagged with "Burlington"
Burlington Telecom (BT), the Fiber-to-the-Home (FTTH) ISP in Burlington, Vermont, has been celebrating two pieces of recent good news. The ISP received praise from customers in a BT survey, and became the first fiber provider in its region to be “fiber certified.”
BT has had some bumps in the road as it transitions from a municipally run ISP to a private sector one. The change didn’t stop the telecom, however, from continuing to receive good feedback from the annual customer survey. Overall, 90 percent of BT customers said they were at least “satisfied” with their service, and 70 percent of those said they were “very satisfied.” BT also saw a 5 percentage point increase in customer satisfaction with the quality of customer service, to 77 percent.
The accolades don’t stop there. Fiber Broadband Association (FBA) awards All-Fiber Certifications to those networks providing at least 90 percent fiber optic connectivity to subscribing residences. BT boasts 100 percent fiber, making it the first ISP in New England to receive the FBA certification. The All-Fiber certification not only recognizes majority-fiber networks, but also high level strategy in deployment of that fiber, and a commitment of the networks to bring the highest quality connectivity to its customers.
The Future of the Promising Network
Burlington Telecom began as a municipally-run network. However, due to mismanagement of funds on the part of the city, BT had to reach a deal with investors to settle a debt issue, contingent upon the city selling the telecom to a private entity. Back when the financial mismanagement came to light and the future of the municipal telecom first got on shaky ground, Community Networks wrote a case study of the rise and fall of Burlington Telecom.
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.
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
We're continuing the interviews Christopher conducted while at the November Broadband Communities Economic Development Conference in Atlanta; this week, he's talking with Stephen Barraclough, General Manager for Burlington Telecom (BT) in Vermont. Stephen has worked diligently to reinvigorate and preserve the publicly owned network that, regardless of troubles, has been popular with subscribers.
Christopher and Stephen had their conversation prior to the November 27th Burlington City Council meeting when Councilors voted to sell the asset to Schurz Communications and ZRF Partners. The vote came after a long and arduous process that dragged on the community. Details of the agreement were still being negotiated when we published this podcast. Read more about the history of BT here.
Stephen and Christopher talk about what it was like when Stephen took the helm of the network. At the time, there were financial difficulties caused by a prior Mayor’s administration, but the community had come to rely on the fiber optic network and wanted to do what they could to preserve it.
Stephen describes the problems he faced and how they went about restoring the network step by step. He notes that saving BT was a team effort that involved industry colleagues, employees at BT, the city’s leadership, and the community as a whole. Central to their rebirth was self-reflection as an organization and taking control to set themselves apart from the competition. Christopher and Stephen also talk about other issues, such as BT’s low-income program, customer service, and the effort to retain a public interest philosophy under the expectation of privatization. Stephen sees only opportunity for BT and its subscribers as the community moves forward.
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Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
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.
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.
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.
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.
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.
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.
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:
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.
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):
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.