Who Should Buy BT?
The key question: whose interests will be served?
Burlington has a world-class, built-to-last, fiber-optic network.
The only reason Burlington Telecom exists is because the City of Burlington built it and has continued to operate it to serve the interests of its subscribers and our community. When other telecom providers in Burlington were asked to upgrade their networks (with fiber-optic to almost all addresses in Burlington) they didn’t simply refuse; they actively opposed the city’s efforts to build BT. Adelphia (now Comcast) brought a lawsuit to stop BT’s construction; although this failed to stop BT it crippled the City’s ability to fund BT. The city remained committed to serving our interests; building and improving BT as fast as it could, even in the face of funding limits and continued challenges by Comcast (who successfully lobbied for onerous build-out requirements on BT).
BT provides important benefits to our schools, the city administration, our economy, and residents of Burlington, including to those who subscribe to BT’s competitors (who charge substantially lower rates in Burlington than in surrounding communities, to compete with BT), saving our community an estimated $2.5 M every year. While providing these benefits, BT is growing steadily, is profitable, and has excellent customer satisfaction ratings; service from BT is top quality and an excellent value.
Unfortunately, due to past financial mis-steps, the City must now sell BT. There is strong support for continued community ownership of BT. A good solution is for us (residents of Burlington, who have already paid for BT), to buy it from the City, and run it as a co-op. This is how we can ensure that BT will continue to support its mission and remain accountable to us.
Ownership determines interests served
Typically, business organizations serve primarily the interests of their owners. In the case of the typical corporation, it’s spelled out in the charter: The Board is bound to act in the best interests of the shareholders. For example, if those shareholders decide that they stand to profit more by selling the company to someone else, they can force a sale. If the owners of the majority of shares (or the CEO they hire) decide they’d rather have more profits today by capping speeds or cutting customer service, that’s what will happen.
What makes BT such an asset to our community is that it was designed, built, and operates with the clear mission of serving the long-term interests of its owners, the people of Burlington. That is why it was built using a fiber-rich model that cost a little more to build, but will render it competitive for the foreseeable future. That’s why BT is dedicated to providing unbeatable customer service. It is important to note that BT is able to do these things and still be both competitive and profitable.
The buyer of BT will determine whose interests it serves. Do we want to hand the keys to our future to an organization that, by definition, will put our interests after those of someone else?
The profit-driven corporate model is a jewel of capitalism, a supremely effective, efficient, and long-lived way of allowing a group of people to do business as one person. And it scales well. It can easily accommodate growth. Its main flaw, from the point of view of our community, is the question of whose interests will be served.
If the the owners of a corporation are its customers and the community it serves, their interests align. We have good experience with this in Burlington; we (city residents) own Burlington Electric. We are the first city in the US to have 100% of our electricity come from renewable sources. We also enjoy substantially lower rates for electricity than most of New England. Community ownership can work well (and Burlington Electric was both controversial and financially weak in its early decades).
Again, because of past mis-steps, the city must sell BT. A good option is for the customers of BT and the community BT serves to buy BT from the city and run it as a community owned corporation. There are a variety of good models for community ownership of corporations, mutuals (as in insurance company or bank), credit unions, and cooperatives. Co-ops have a democratic ownership structure, where each owner has equal voting power. There are many utility co-ops providing electric, telecom, and other services to their local community, all with local control, where the interests of the owners and the co-op enterprise are well aligned.
Can a co-op run a telecom effectively?