Six people were effectively laid off today at Burlington Telecom, less than two weeks after city officials proclaimed that the muncipal utility was paying all of its bills and netting a positive cash flow — absent paying off the debt it owes to taxpayers.
The six positions are slated for elimination as part of a staff restructuring being overseen by outside consultants. The positions include two technicians, two customer service representatives, an outside plant manager and BT’s marketing coordinator. The six people who hold those posts were placed on administrative leave today; the City Council will have to approve the changes. Once approved, the six people will be officially laid off, said consultant Gary Evans of Hiawatha Broadband.
At a special City Council meeting two week ago, Evans said the main problem facing BT was too few subscribers. So, why axe the marketing position?
“This doesn’t mean that BT’s marketing efforts will stop,” Evans said.
After the layoffs, BT will have a workforce of 20 employees. “We don’t think there’ll be a need for additional layoffs,” said Evans. “This action does, in no way, suggest the beginning of the end or that this is the end of BT. On the contrary, we feel as if this will put BT at the right staffing level for its customer base.”
Two weeks ago, outside consultant Steven Barraclough, who is helping to run BT’s day-to-day operations, told attendees at a special City Council meeting that BT has a “surplus” of roughly $40,000-$50,000 per month and is not taking any money from the cash pool. In addition, BT is paying the interest on the $16.9 million owed to the cash pool.
Burlington Telecom is in the midst of discussions with several financial and strategic partners in an attempt to stay in business. The city is awaiting word from CitiCapital about what equipment it wants returned, and how. The city backed out of its $33 million lease purchase agreement with CitiCapital last year after it could not reach an agreement to restructure its debt.
When asked, however, to produce a standalone termination letter, the city said no such document exists.
“There isn’t a stand-alone termination letter,” wrote City Attorney Ken Schatz in an email to Seven Days. “Letters between the City and CitiCapital involve ongoing contract negotiations and settlement discussions. Therefore, in order to protect the City’s interests, we need to keep them confidential.”
Barraclaugh said at the January meeting that BT has priced replacement equipment it suspects it will need when CitiCapital seeks return of the equipment it now owns as a result of the lease termination. Barraclough said the replacement equipment will cost about $6 to $8 million.
BT is developing a plan to take out existing equipment and install new equipment that is designed to provide “minimal disruption in service,” Barraclough said in January.
This article appears in Feb 9-15, 2011.
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“If one can also read the post (and the articles) with a critical eye, one can see that the $33 million (+/-) that is owed to Citi is for the infrastructure (material and costs of installation). There is no business or financier who wants to spend the money to pull down the cables and remove the equipment (that would cost more than the equipment is worth alone). That is why the $6-$8 million figure is good to know. If BT can find private financiers to front that sum of money to buy the equipment to return to Citi, then the outstanding debt would drop significantly.”Zuckerman, you have absolutely, positively, completely no idea if this is true. And that’s because your dishonest mayor has refused to say if this is true or not. Much, much more likely, the mayor knows that the city is on the hook to Citi for the full $33 million, plus the $17 million it stole from the cash pool, for a total of more than $50 million.If the true status were that the city only owed Citi $6-8 million, don’t you think the mayor would have made that great news crystal clear by now?
I do agree, marketing is key. I just saw a huge advertisement for comcast in the paper. Great deal!, $19.99 a month for internet (fine print…for the first 6 months then your rates go up, plus installation fee of $500, plus you have to buy another service they provide…)But in actuality, marketing is important and I wish BT would do a better job of it so people could really compare comcasts scams with what one gets from BT.BT does not offer one thing then have you hooked and increase your rates. BT does not charge the hook up fee. So actually, they can have the same cash flow with fewer people because for the first few months of each person hooked up the costs outweigh the income. But after the box is paid for, the income/cost stream for each customer improves.If one can also read the post (and the articles) with a critical eye, one can see that the $33 million (+/-) that is owed to Citi is for the infrastructure (material and costs of installation). There is no business or financier who wants to spend the money to pull down the cables and remove the equipment (that would cost more than the equipment is worth alone). That is why the $6-$8 million figure is good to know. If BT can find private financiers to front that sum of money to buy the equipment to return to Citi, then the outstanding debt would drop significantly.Yes, BT needs to be run as a business. Refinancing debt is something any business should and can do. If the liability for Citi is the cable and main servers, then buying that equipment at todays lower price, returning it to them and getting out from under then debt is actually a savvy business move. If a private company were to do that many of the complainers would be saying “nice move…private enterprise is so good at making it work.” It is not going to be easy, but I would rather BT get back on its feet and move forward so that the money owed to Burlington can be paid back (maybe over 10 years…I do not know), just as BED has become a cash cow for Burlington (it was a money loser at first too), I hope that folks will see that BT can become that as well.Finally, BT does help the city, companies like dealer.com and their many many jobs, are likely here because of upload speeds and quality of connection. This is of great value to Burlington. There are other businesses looking for this kind of service. This means property taxes, sales taxes and other local businesses benefit as well.I am sure I will get attacked. Have fun.
So the consultant keeps his job and fires six employees? More good money after bad.
Pete Jewett,The problems do not lie in Burlington Telecom they are squarely sitting in City Hall. The place is Tammany of the north the entire joke is that Leopold stole a pile of money and shoved the loss onto the books of BT. If the liar loan is realized the citys credit rating turns to junk. That is why we are having all of the gyrations and the Narrative that BT is an asset blah blah. i have faster download speeds from comcast than I did from BT I like most of the citizens could give a rats patoutie about upload speeds. It just isnt that important. BT and fiber could be wonderful if wee had forward thinking leadership in Ctiy hall instead of a bunch of thieving incompetent bastards.The fact is the company is bankrupt, today tommorow and into the foreseeable future because Kiss hasn’t got a brain bigger than a gnat. Can we join forces with NRTC and make a coop I don’t think there are enought dirty hippies with deep pockets in this town they would need 4 million to leverage. CITI would need to see 25 million. thats just to get to ground zero.The hospital will never join forces with a progressive Burlington administration they send Hospital presidents to prison for following their orders.So until we change the guard in city hall all of the forward thinking talk is Bullpuckey.If you can go out and sell the asset bring in second and third tier server farms lets make a deal with BED etc start a coop buy out the CITI lease for a reasonable haircut and kick the progressive incompetents to the curb bully for you.But if you are dealing with Doorman and faucet and not the suits at CITI you are whistling past the graveyard.
Laying people off when you don’t have enough money coming in to pay them isn’t what I’d call “making prudent financial and strategic decisions,” it’s just keeping the lights on. Now that they’ve been forbidden from pillaging the City coffers further – for operations, at least – they clearly had no choice.And once again, if anyone can explain how the “positive cash flow” is exactly the same at 4000 subscribers as it was at 5000, I’m all ears. Otherwise it’s safe to assume that they’re quoting numbers from 3-6 months ago.
Pete, you misunderstand me. I have no delusion that taxpayers will ever recoup the 17Million that Kiss and Leopold stole from them. I have no interest in finding a solution. This is a done deal. Shut it down before it costs me anymore. Chalk it up to lesson learned and stop stealing my money.Sinking more money in BTC is the like the gambling addict that throws in the deed to his house because he’s got a “sure thing.” The solution if there is one… let someone establish a co-op, sell shares and finance it out of someone else’s pocket. I have no more money to sink into a failed experiment.
Believe it or not, there are parties (with IQs higher than 60-70) that are interested in helping our city find a way out this and keeping this Telco operational. Let the consultants do their job, if you were really worried about recouping our investment, you’d be focusing on solutions instead of making this into political theater. I’m done commenting on this article, I wish I had the time to argue online. I’ve got to get back to work, like thousands of others in this city, building up our tech economy. Shout as loud as you want in these comments and at the meetings, but this issue is going to be won by the forward-looking people that understand the future value of this asset.
PeteJewett, What negotiations??? Negotiations…. that’s hilarious. What are they negotiating? Who is going to give them 8 million dollars for a customer list? Just laughable. There isn’t any negotiations and there won’t be. BT owns nothing other then the building on College St. They are 51 Million in debt and they are only cash flow positive if they don’t pay for equipment or debt. Who in their right mind is going to give them an 8 million loan when they are 40K/month to the good if they are paying interest only in current debt? 40K/month isn’t going to service a new loan and they will be back in the cash flow negitive. You would have to be in the 60-70 IQ range to loan these guys money.
The City Council and Administration made a great decision when they decided to hire the outside consultants (Dorman Fawcett) to temporarily manage BT and seek out investors/buyers to recoup our investment. These consultants are the only ones that really know the details of whats going on at BT in terms of Citi negotiations and outside investors. The comments above are mostly armchair speculation.Dorman Fawcett seem to be doing a good job, they’re making prudent financial and strategic decisions as evidenced in this article and in the positive cash flow at BT. We’ve got a world-class network under our feet that is the present and future backbone of our City’s growing high-tech economy. Its in the best interest of Burlington to rally around our Telco right now and do our best to protect the asset, and the only realistic way to recoup our investment.
The whole situation is just a wreck. No one including Kiss, The Council, the PSB seems to have a clue as to what is actually going on. Kiss stands there with that dumb look on his face repeating everything is fine. Keogh just keeps repeating BTC is an asset, but only in BTV can an entity that bleeds money be considered an “Asset.” They all throw around “cash flow positive” then tack on a list of “ifs” and not one of them have enough balls to stand up and say we lost 17Million of your money. We apologize. Instead they keep it going flailing at every possible way to save face and recoup the money no matter how hair brained it is. I’m still waiting for someone to propose selling the building (the only thing BTV actually still owns) and putting it all into powerball tickets. The PSB needs to simply call Citi and ask what the plan is. They have the authority to do so. Time for them to do their job. It’s a shame Obrien was still in charge, you can bet he would have an answer at this point.