BURLINGTON — A 500-member not-for-profit cooperative is gearing up to buy Burlington Telecom when it goes on the market in the next few years.
KeepBTLocal, a members-based cooperative that started in 2013, brought together members, board of directors, and a telecommunications consultant to announce on Sunday that the co-op is writing an acquisition plan.
The co-op has been researching how to buy Burlington Telecom since late 2014 — right before the city settled a five-year lawsuit under the condition that it would sell the municipal telecommunications entity to a private investor, who would then sell it off again.
Andy Montroll, chair of the board of KeepBTLocal, said on Sunday that the city will put Burlington Telecom up for sale in the next few years. He said the co-op wants to be at the table when that happens.
“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.”
The board has been working with telecommunications consultant Brian Lippold since February to draft a business plan and acquisition plan. Lippold’s early work projects that Burlington Telecom still has room to penetrate residential and commercial markets, and he says it will have $1.8 million per year in cash flow going forward.
“That’s a big number for a business of this size,” he said. “But that is more than sufficient to continue running this business without running into financial problems.”
Lippold is a former executive for Adelphia cable, FairPoint Communications, and several other telecom companies in the Burlington area. He said he is working at a discounted rate because he wants to see the co-op acquire Burlington Telecom’s all-fiber network and maintain quality customer service.
Results from a recent survey promoted by KeepBTLocal say that Burlington Telecom customers are 87 percent satisfied with their Internet service, compared to about 63 percent of customers nationwide who are happy with their Internet service providers.
Montroll, the board chair, said keeping it local would maintain that service quality. “When you read the news reports, cable television companies have some of the lowest customer service satisfaction of any type of company,” Montroll said.
The company’s all-fiber network is a 30-year asset, Lippold said, and management has turned the company around. “Good or bad, Burlington Telecom has gone through a financial cleansing,” he said.
“I expected to find more challenges, but they’ve done a good job,” Lippold said of the management. “They’re talented. They’re passionate. … It’s a good news story, and it’s too bad that it isn’t commonly known.”
According to KeepBTLocal, residential subscribership dropped in 2010 when Burlington Telecom was being sued. It crept back up to 4,354 residential subscribers in 2014. In the same time period, commercial subscribers have increased from 215 to 386.
Megan Epler Wood, another board member, said the membership organization could not buy Burlington Telecom alone, and she invited members to come to them with supplemental financing ideas. They might team up with local corporations or seek federal funding, she said.
The board declined to say how much the acquisition would cost, but they said they want to buy it as a co-op in order to return profits as “patronage refunds” to the co-op’s members, rather than let a telecom giant buy it and send profits to shareholders.
Lippold said that while the investment would require strategic marketing, if a telecom giant like Comcast acquired Burlington Telecom, it would “synthesize” operations and cut local jobs in the process.
“If there’s 25 jobs in there today, at least 15 of those would be eliminated,” Lippold said. “It isn’t only the level of service that you’d be seeing.”
The city recently took $17 million of debt off its books that was owed by Burlington Telecom. The money was improperly taken from city coffers in late 2007 and early 2008 to support Burlington Telecom when its income fell short of its operating costs. It is unclear whether the city will ever recover the money.
Correction: KeepBTLocal board member Megan Epler Wood’s name has been corrected.
