Tim Nulty’s Response: “My Turn”

The reaction of an ECFiber delegate (a project to clone Burlington Telecom in rural Vermont) to the Free Press article was: “The tone is negative, but the facts are actually positive for BT”. Quite so.

The core facts are: The BT “Fiber-to-the-Home” project got its first financing at the end of 2004. At that time BT projected profitability in early 2008. Adelphia’s attempt to block the project during 2005 delayed the project 6 – 7 months. Therefore, in early 2006, BT re-estimated the profitability date as around July 1, 2008. In late 2006, the project was again held up 3 – 4 months by delayed pole “make-ready” by BED. Consequently, in early 2007 BT again re-estimated the profitability for the end of 2008 or early 2009. This last financial model was used in the CitiBank financing that was closed in August, 2007 and is still in force, as confirmed by Mr. Leopold in Briggs’ article.

All these financial projections were made by the Director and Senior Management of BT, working together, and reflected the best information available at the time. Despite inevitable birth pains of a high-tech start-up, BT’s projections have proven remarkably robust. In short: profitability was originally projected for early 2008. There have been two major unforeseen delays outside its control. Consequently, BT will become profitable about 10 months later than originally projected

This means: BT will be profitable just over 4 years after receiving its first financing—despite delays and difficulties. This is exceptional performance for a capital-intensive infrastructure investment…rarely achieved by the public or private sector. Oxford Utilities of Maine, a private company, started a similar network almost 2 years ahead of BT and is still not profitable. Verizon’s massive effort to build a similar network in the richest markets in the country (the “FiOS” system) also started before BT and is also not yet profitable. Most Municipal networks have taken 5 – 8 years to turn a profit.

Bottom Line: Burlington now has one of the best telecom networks in the USA—with services and prices comparable to any in the world. This is an enormous asset for the economic and cultural life of the City. Starting next year, assuming the City Government decides to do so, the City budget can start getting checks from BT—small at first but growing steadily—which can help relieve the City’s hard-pressed taxpayers. When the financing lease expires in approximately 19 years, BT (assuming it is well managed) should be generating $15 – 20 million a year of cash for the City government. The citizens of Burlington should expect and demand no less.

Burlington has been recognized throughout the country for this accomplishment, which is the envy of countless small cities and towns. Many people contributed to this, including: Andy Montroll and Bill Keogh who sponsored the first resolution to build a municipal network back in the 90’s; Peter Clavelle, Brendan Kelleher and the City Council members who stuck with the project throughout, the talented and dedicated staff of BT; The Vermont Department of Public Service which encouraged BT, and the current Council and Administration who are continuing the project.

Let’s celebrate our collective success and be proud of it instead of running it down. It is an outstanding community achievement that will benefit Burlington for a century to come.

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