The consulting company Dorman & Fawcett will not operate Burlington Telecom once the utility is sold, the firm’s founder told the Burlington City Council Monday.
Questions about the company’s future role with the telecom had arisen in recent weeks. All three potential buyers still in the running had previously expressed interest in keeping the firm on after the purchase.
Terry Dorman did not elaborate on the decision, which he announced as councilors peppered him and BT general manager Stephen Barraclough with questions about the remaining three bidders during a public forum at City Hall.
The city hired Dorman & Fawcett in 2009 to help resuscitate the failing telecom and to facilitate a sale. Barraclough came on as general manager in 2010. The firm stands to receive 10 percent of the BT sale price.
Within the coming weeks, the council must choose between a $12 million offer from the Keep BT Local co-op, a $30.8 million offer from Schurz Communications and a $27.5 million bid from Ting, which is based in Toronto.
A fourth bidder, ZRF Partners, withdrew for good last week after Dorman relayed concerns over a possible conflict of interest.
The council originally intended to use Monday’s meeting to whittle the three bidders down to two. But the decision has been put off for two weeks and is now scheduled for October 16. The city must complete the sale by the end of the year to maximize its share of the profits.
Much of Monday’s forum centered on KBTL. Councilors posed questions about risks to the city if it accepted the co-op’s bid, or whether the co-op could meet standards set by the Public Utility Commission — even though the grassroots entity has never operated a telecom. Meanwhile, attendees offered strong words of support for the co-op during public comment; some held signs saying “Hands Off Our Internet, Keep BT Local.”
The council also accepted a host of letters — almost all of which were in support of keeping the telecom locally owned.
But it wasn’t all good news for the co-op. Burlington could face legal risk if it selects the $12 million bid proffered by KBTL , according to city attorney Eileen Blackwood.
“We are definitely confirming that there is risk” that the city’s creditor, Citibank, could take legal action if Burlington doesn’t select a bid that would allow the bank to maximize its share of the sales profit, according to Blackwood. The co-op’s bid is the lowest of the three remaining potential buyers.
Blackwood said she could not specify how risky it might be. She also mentioned the co-op’s lack of experience in the telecom field could be a potential “hurdle” when the PUC examines the sale.
Councilors also had questions for Dorman about selling BT to the other, higher bidders. Of particular interest: Would the profit interests of Schurz and Ting trump the needs and desires of Burlington taxpayers?
Dorman assured councilors that they can control the terms of the sale and write those terms into the contract. “I think the city has the opportunity to get whatever is important to the city in writing,” he said.
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The other entity that should not be allowed to have anything to do with Burlington Telecom going forward, or who should recuse themselves, is the McNeil Law Firm who committed Legal malpractice and were complicit in providing Kiss and Leopold cover for the fraudulent diversion of millions in taxpayer funds that were allegedly protected by City Charter and State Statute from being used but were used anyway. The law firm also received a Hillary-Pass from justice as did Kiss and Leopold due to their political connections as well and should be precluded from making money on any future billable hours as pertains to BT.
Can anyone give a good BUSINESS or LEGAL reason for supporting KBTL? Genuinely curious.
All I hear is strong emotion and strong emotion alone is usually the foundation for our worst decisions, historically.
CONCERNING BURLINGTON TELECOM
We are now at a civilizational turning point, especially as regards war and climate change. The question is whether our operations will continue to be dominated by profit and bottom-line thinking, or whether we can reconceive our footings, and turn toward cooperative and community-based structures.
Our decision with respect to Burlingtons communication system will either embrace these new values or will continue to embrace the old ones leading the planet to destruction.
Our Burlington numbers here are relatively trivial: they represent between 1 and 1 minutes of our government spending on war. But the PRINCIPLES involved in our choice, and our modeling those principles is, finally, as important for the future of the planet than all the destruction we can presently throw at it.
Burlington Telecom’s offer, though smaller, quantitatively, than that of the others, is far larger in its meaning and effect. I hope that the Burlington City Council will have the values and the vision to look past the bottom line to the real horizon.
Thanks, Mark Estrin. A simple “No” would have also answered my question.
Jemy,
The KBTL website has a lot of good reasons listed here:
https://www.keepbtlocal.com/burlington-telecom-co-op-news/talking-points-kbtl/
Perhaps the most important reason they list in my view is that it is short-sighted to sell it to an outside company where all the profits leave the state.
The BT Co-op will repay city taxpayers multi-fold over its lifetime. Residents of Burlington know that they paid $16.9 million towards the existing utility that is now being sold. Local, cooperative ownership will keep both the control and the economic benefits of this asset here in our community. A cooperative approach could yield additional dividends to members and the city at largethrough patronage refunds, fewer increases in base pricing over time, and ownership that can respond to the needs of the community.
Cooperative Telecom ownership is widespread in the United States, and some of the largest regional telecoms are co-ops. In all there are 260 telecom cooperatives in 31 states throughout the US. Combined, these telecoms generate $3.9B in revenue, $1.3B in wages paid, $1.8B in value-added income, and employee roughly 23,000 people. Some examples:
ATMC Telecom Coop in Brunswick/Columbus Counties in NC. Established in 1955, it has more than 35,000 customers and has returned $35.9 Million to its member owners.
The Winebago Cooperative Telecom Association in Iowa (est. 1950) has acquired more than 70 companies and has returned more than $26 Million in patronage dividend payouts.
Horry Telephone Cooperative (HTC), Conway, SC, Founded in 1952
Over 50,000 access lines
Has returned over $117 Million to members since 1979.
Jemy:
Selling to a co-op is the only way we retain influence over our area’s economic development.
Co-ops’ priorities are set by their members, and locals want our economy to flourish. We want the telecom to ‘grow smart’ in ways that will help our other local businesses – the same way City Market helps food producers.
The other bidders aren’t answerable to us. They answer to owners/shareholders, whose priority is profit. In that scenario BT customers and northwestern Vermont are just inputs. Those buyers could turn around and sell BT or prioritize investing elsewhere.
As I understand it, given their admitted lack of experience in running a telecom business, KBTL’s bid is fundamentally premised on keeping Dorman & Fawcett on to run BT. But with D&F saying they will not stay on after the dale, doesn’t that make KBTL’s bid even worse?
The management experience question is being framed out there in a way that is not very accurate.
I think KBTL has said they would prefer to keep Dorman & Fawcett on. D&F have done a good job, but they don’t walk on water. If they are not available there are many other capable options for professional consultants like them that can be hired-on. The KBTL board members don’t need experience running a telecom any more than the City Market Coop board members need experience running a grocery store, Coop boards, like corporate boards, are elected to make thoughtful executive decisions about the big picture. They hire the right people to run things day-to-day.
The KBTL board will be composed of local coop members elected by the other members to make big picture decisions in the interests of the coop and its members (basically Burlington).
The Shurz Communications board of directors doesn’t seem top have telecom experience – see for yourself here https://www.schurz.com/board-of-directors/
The Tucows/Ting board is also short on telecom experience – maybe a little more “tech” experience, but not telecom operation and management.
https://www.schurz.com/board-of-directors/
I don’t know about anyone else, but I trust my fellow local citizens to make better decisions, than these folks from away, about such an important local utility.
Sorry, I pasted the Schurz link twice – here is the Tucows board:
http://www.tucows.com/about-us/board-of-directors/
War? The future of the planet? What do these heady topics have to do with Burlington Telecom? I for one have not changed my mind. As a full-freight taxpayer, I am looking to recoup some of the loss brought about by government malfeasance when the numbers came to light and grew exponentially during the Kiss administration. I do not agree that most locals want our economy to flourish. Maybe they don’t need to care because they get property tax rebate or other hand-outs from the state. I much prefer taking a chance on new management and playing it safe. That the city’s own lawyer doesn’t think a local buy will stand up to scrutiny ought to be enough to put the kabash on local ownership. Imagine having to start the bid process all over again when it doesn’t past muster. No one will be interested then is my guess.
City Council: Don’t give our valuable internet service to a bunch of inexperienced hippies. Especially for a ridiculously low and financially irresponsible bid.