A citizen’s group in Burlington, Vermont hopes to transform troubled municipal network Burlington Telecom into a customer-owned cooperative. In so doing, the group – tentatively called Green Mountain Broadband Fiber — hopes to prevent the network from being privatized and to retain local control.
According to a report published by the Institute for Self-Reliance that details the Burlington Telecom saga, Burlington Telecom was created about 10 years ago with the goal of bringing better broadband connectivity to Burlington but ran into problems beginning around 2007 involving the scope of the network and marketing plans. Tim Nulty, who was hired to manage the project, wanted to expand to neighboring communities and to invest in marketing, but when the mayor disagreed, Nulty resigned and was replaced by someone who took the mayor’s side. (Nulty has since become involved with another troubled municipal network in Lake County, Minnesota.)
Problems came to a head in 2010 when Burlington Telecom was unable to make payments on a $33.5 million loan from Citibank. Citibank has sued the company, which has been seeking a commercial partner to provide a cash infusion.
All is not doom and gloom with Burlington Telecom, however. The network is operational and has customers. Recently it also announced service at speeds of up to 1 gigabit per second, putting it on par with Google’s high-profile Kansas City network as well as networks in Chattanooga, Tenn. and in a handful of other U.S. communities.
A report published by the Burlington Free Press notes that local citizens who want to create a cooperative to control Burlington Telecom offered a “best-case scenario” for 2014 at a recent meeting. That scenario calls for the venture to have $1 million in member equity, $4 million in member loans, $5 million in commercial loans and no legal encumbrances by that date.
The Burlington Free Press quotes one of the organizers of the citizens’ group: “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.”
The cooperative ownership model is one that has worked for hundreds of local telecommunications service providers nationwide so it would seem to be a logical choice for municipal networks as well.
As an FYI, Tim Nulty was involved in that Lake County project but has not been for some time now. He has been involved with the East Central Vermont Fiber network that has been raising money from the community to connect rural unserved households — a few hundred now I believe.
1. Tim Nulty left Burlington Telecom 2 years before the problems arose BT due to misappropriation of funds by the Mayor and City Treasurer (as determined by the Vermont Public Service Board). Abundant data is available on the public record demonstrating that BT was doing well when he left. He had nothing to do with the difficulties that surfaced after he left and, when the matter was subject to a criminal investigation by the Vt Attorney General's office, the latter explicitly stated in court that Dr. Nulty was not and would not be a target of that investigation.
2. Dr. Nulty was one of four partners of National Public Broadband which Lake County, Minn contracted to apply for Federal Stimulus funds. The other 3 are Minnesota citizens well known and active in Minnesota rural telecommunications. NPB was paid 1/2 of their fee during preparation of the simulus fund application with the other half to be paid if they obtained the funds. They did–Lake County was awarded some $75 mln. by the US Dept of Agriculture Rural Utility Service. Immediately thereafter, Lake County decided not to employ NPB to run the project and, as a result NPB and Dr. Nulty have had nothing whatsoever to do with any aspect of the design, construction or operation of the project since the original award of the funds. Any "difficulties" with the project after award of the funds are solely the responsibility of Lake County and whoever they contracted to manage the project
3. Nulty is also head of the ECFiber project in Vermont. This is a grass roots effort jointly owned by 23 Vt towns. They have raised $3 million entirely from private local investors without any $ from either the Federal or State government. ECFiber has constructed 45 miles of fiber in some of the most rural parts of the eastern USA and has 80 more miles under planning and construction. The network currently has 300 customers and is adding 4 – 5 per week. It has met all its targets for construction and operating cost and for demand (take rate is over 70% in its rural areas and residential revenue is $95/month for the "double play"). The project is expected to achieve positive EBITDA by the end of 2013 (2 years after connecting the first customer) and full profitability 12 – 18 months later.