[B]URLINGTON — City residents’ top priority for the sale of Burlington Telecom is that its ownership remain local, according to a survey conducted by its board of advisers.
Making sure the fiber optic network’s services remain affordable was the next most important goal identified by 216 respondents in an online survey conducted earlier this year. Those priorities were consistent with what residents expressed in a series of recent public forums.
The Burlington Telecom advisory board reiterated those priorities in its own recommendations to the city, included in a report released Monday. The full report is posted at the bottom of this article.
“The best option from our perspective is finding a buyer with ties to the local community that will allow the city to have a minority stake in Burlington Telecom,” said David Provost, chair of the advisory board.
A 2014 settlement with Citibank, previously the telecom’s main creditor, requires the eventual sale of Burlington Telecom, but the city could retain partial ownership, Provost said.
The City Council directed the board to develop criteria for the sale. At Monday’s council meeting, President Jane Knodell, P-Central District, said the council is likely to vote on whether to adopt those criteria in April.
At one of the public meetings in December, Provost said he was surprised the majority of residents who attended the forums appeared less concerned with recouping $16.9 million in tax money that was improperly used to prop up the utility, and more focused on keeping local ownership.
Residents who responded to the survey ranked recovery of the $16.9 million as their second-lowest priority out of 18 possible criteria — just ahead of maintaining the city’s credit rating.
Several residents have said they would like to see Burlington Telecom sold to a locally owned co-operative and that their greatest concern is the utility being sold to one of its larger competitors such as Comcast, AT&T or FairPoint.
Survey respondents also identified a commitment to net neutrality as a priority for a potential buyer. Net neutrality is the principle that Internet service providers shouldn’t favor certain websites or restrict access to anything online.
Provost said the board has a fiduciary responsibility to try to recoup as much of the $16.9 million as possible and he believes that should be a factor in selecting a buyer. Another priority is finding a competent management team that will be able to expand the fiber optic network.
The challenge will be finding a buyer with enough money to sustain the network and negotiating a sale that balances the city’s and residents’ goals for Burlington Telecom, Provost said.
Legal and regulatory requirements also will have to be met in the terms of any sale, he added.
In 2014, Citibank dropped a $33 million lawsuit in exchange for $10.5 million and a share of Burlington Telecom’s future value. The settlement relied on money from Blue Water Holdings LLC, an entity created by local businessman Trey Pecor with backing from Merchants Bank. Blue Water bought Burlington Telecom and leased it back to the city, which has continued to operate it as a utility.
Under the settlement, Burlington is allowed to pick the eventual buyer as long as an undisclosed financial threshold is met. The sale must be finalized by January 2019, or Blue Water can pick the buyer.
The longer a sale takes, the more money Blue Water gets to keep from the eventual proceeds. If a sale isn’t finalized by January 2018, Burlington’s share drops from 50 percent to 35 percent. Regardless of when Burlington Telecom is sold, half the city’s portion of the proceeds will go to Citibank.
Using public money to prop up BT violated the terms of Burlington’s 2005 certificate of public good from the Public Service Board, which regulates utilities in the state.
The advisory board, in its report to the City Council, notes that any buyer will need to be able to meet the Public Service Board’s standards for a certificate of public good to continue operating as a cable provider.
Among those requirements are that no one can own more than a 40 percent voting interest in a company providing cable services without PSB approval.
A certificate of public good is not required for providing Internet service.
