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Burlington Telecom: A Cautionary Tale 

[Ed. Note: Contributing writer Kevin J. Kelley penned this post for Blurt... so to speak. The image is from the cover story about Burlington Telecom that Kevin wrote in March.]

Burlington Telecom is treated as a cautionary example in a new report by a Washington-based civic-action organization that argues for the competitive benefits of publicly owned fiber networks.

The 53-page study by the Institute for Local Self Reliance, entitled “Breaking the Broadband Monopoly”, says “communities that have invested in these networks have seen tremendous benefits. Even small communities have generated millions of dollars in cumulative savings from reduced rates – caused by competition.”

The report points to several municipal systems that have successfully provided lower-priced telephone, Internet and cable TV links to residents and businesses around the country.

BT, however, “has become the poster child for why networks must be structured carefully,” the report comments in a sidebar.

“After starting with a strong tradition of transparency, a new mayor’s administration effectively cut off oversight of the network from both citizens and the City Council.,” the institute adds. “After two years of secrecy, the City Council found the network in deeper debt than anyone realized, leading to discussions of how to proceed.”

The report says elsewhere that the administration of Mayor Bob Kiss “hid the unexpectedly high debt from the City Council and public, resulting in a bigger scandal than if the mayor had been upfront about the problems – in a time when the entire economy was collapsing.”

Municipally-owned networks in states ranging from Louisiana to Minnesota and from Pennsylvania to California have taken different approaches to organizational and operational issues, the report observes. Burlington Telecom, it says, moved from “transparency to extreme secrecy following personnel changes.”

That’s presumably a reference to the replacement of BT’s first boss, Tim Nulty, by current director Chris Burns – a shift accompanied by deepening involvement in BT’s finances and operations on the part of Jonathan Leopold, the city’s chief administrative officer.

And while Burlington Telecom’s currently unpayable $50 million debt “has cast the future of the network in doubt,” the report nevertheless suggests that the city made a wise investment in fiber-optic infrastructure. “The network has saved millions for the city, which no longer had to lease overpriced lines from the incumbent,” the institute says. “It has generated jobs as businesses moved into town to take advantage of a faster and more reliable network than any nearby.”

The BT experience should impart an “important lesson,” the study concludes: “Ensure networks have proper auditing procedures and are truly accountable to the public.”

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