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Q: I’d love to see BT succeed and expand out to South Burlington/Shelburne/Essex/Winooski/Colchester…

A: Expansion to areas beyond Burlington’s city limits was part of BT’s original roadmap to profitability. In fact, BT was built to serve 100,000 customers (there are only about 17,000 potential residential customers within city limits). We plan to expand the network to all customers in Burlington, with wireless technologies if necessary. We also plan to work with the Public Service Board to expand outside of Burlington.

Q: How can you afford to expand outside of Burlington? Won’t it take millions?

A: Ultimately, yes. But, remember that telecom brings in a lot of revenue. Instead of sending those revenues out of state to enrich distant shareholders, we will re-invest them in building out the network. Incremental expansion – to densely populated, easily accessible areas (i.e., above-ground and no ledge) areas is not prohibitively expensive. Burlington is surrounded by areas like this. We will then use the revenues from expansion to bring full service to the ledge areas in Burlington.

Q: I have heard since BT started that it is very difficult to keep a telecom company viable, I assume it means a small telecom company as opposed to a large one.

A: It is difficult. However, there are a variety of strategies that are being used successfully and profitably by small telecoms. Hiawatha Broadband Communications (HBC), considered to be one of the nation’s best telecommunications companies, and a U.S. Ignite partner, is similar is size to BT, but has been much more successful than BT in a similarly competitive environment. They were brought to Burlington to study BT and recommend improvements.

One of the many strategies recommended in HBC’s report to the Blue Ribbon Commission was that BT “Leverage more effectively” our area’s “buy local” sentiment . This is a strategy that HBC itself follows, and one that is made-to-order for a cooperative. It doesn’t have to cost a lot, either.

Another way that HBC gains stature in its service area is by “giving back”, maintaining a deep, wide ranging commitment to community service. This is the kind of thing a coop naturally does. In fact, it’s encoded in the 7 Coop Principles. Have a look at how our own local food coop, City Market, shows “Concern for Community”.

Q: I’m curious how shrinking the ownership model from all taxpayers in Burlington to a small segment can make it profitable. It seems access to the city’s credit and capital is why a municipally owned utility can work. I’d love to be wrong!

A: Remember the “dot com” crisis – when hundreds of well-financed, but poorly-managed start-ups burned through millions of dollars, then crashed? Many of them never even got a product to market. Poor management can ruin even the most generously funded enterprise. Conversely, good management can stretch a dollar beyond what you might expect. Look at City Market!

Q: The lack of marketing investment to draw in new customers undermines BT’s ability to stabilize & grow operating revenues. How will you address this?

A: Marketing is absolutely key to the sustainability of BT. It will be a priority for us. See above for some strategies.

Q: What will you do about areas that cannot get service due to underground wires running through ledge?

A: As explained above, we will use revenues from expansion to fund the expense of bringing service to these areas. However, in the meantime, it may be possible to use wireless or fiber-hybrid technology to provide a level of service that’s significantly better than what is currently available to some of these areas.

Q: I’d like to see more women involved. How will you address this issue?

A: So would we! In fact, we can use all the help we can get, regardless of gender. Please contact us!

Q: I like the idea of a co-op as long as it doesn’t become an elitist, feel good front for a particular ideology while at the same time, pricing itself out of reach for many people.

A: A coop is run by its members, who elect a board of directors from within the membership. The board sets the policies, then hires a manager to implement them. The best way to make sure it’s not elitist or too pricey is to become an active member.

Q: I’m a huge coop advocate, but my only reservation about the coop model is that it does not scale up to take advantage of the much greater financial role that businesses could play relative to residential subscribers. Coops must be based on equal investment of capital; I don’t know if this could be tweaked in a way that would allow businesses to invest serious capital without seeking or being given a greater say in the business than household-level members.

A: It could. Equity levels can be different, but there’s still only one vote/member. Furthermore, any member (for example a business) can play a larger financial role (and earn a financial return in interest) by loaning money to the coop.

Q: Doesn’t a co-op imply equal ownership? How would the money you requested, then, result in an equity stake?

A: A coop implies equal power of ownership. That means that as a member, once you’ve purchased a share, you have power equal to any other share-holding member, no more, no less. You can indeed contribute more than the cost of a share, but it doesn’t buy you any more power.

Q: The internet has come to play a crucial role in the democratization of communication and information. It must be maintained as an uncensored and universally accessible communication medium. Free sharing of information has taken on the same social significance as a free press in the maintenance of democracy.

A: We agree!

Q: What about people who live in condos served only by Comcast? How will you get services to us?

A: Often, condo service is the result of the contract between the condo’s ownership and the service provider. We will do everything we can to offer competitive packages to landlords and condo associations.

Q: What are the current # of BT subscribers?

A: Around 7000. BT is currently available to 16,000 residences, so, even without any more investment in infrastructure, there is a lot of room to grow. It’s a matter of marketing.

Q: How many customers would be required to assure financial independence?


Q: Will you keep BT affordable and without a lot of marketing “gimmicks”, like prices that start out cheap and then increase?

A: BT definitely needs better marketing. We don’t believe it needs “gimmicks” to expand and succeed.

Q: What about the Public Service Board? Will you get their “blessing” to proceed early on?

A: We won’t proceed without it.

Q: Will the employees have a seat at the management table?

A: We’d like that, but this is a question that must be decided by the membership and the board that is yet to be elected.

Q: What about DVR’s and set top boxes that are compatible with other TV equipment that is out there, such as Tivo’s

A: We’ll do everything we can to use compatible equipment, except go broke. In other words, equipment is expensive. We’ll improve it as fast as we can.

Q: What will I get for becoming a member? Will I get free cable TV?

A: We don’t have the ability yet to make specific promises. but when we do, we expect to offer a range of member benefits. We’ll try to find benefits with wide appeal. Some benefits that have been suggested and/or requested:

a) additional bandwidth
b) basic cable (30 channels) with other paid monthly service
c) basic phone service with any other paid monthly service
d) free subscription to Hulu Plus
e) 2-3 free movies on demand per month
f) free install for all services
g) discounts on web-ready hardware

One thing we can’t do is “give away the farm”. In other words, we have to make sure that we can absorb the costs of member benefits without going broke. For example, I believe the actual cost of a cable set-top box is about $300. Compare that to the $250 for a member-equity share. It’s also my understanding that most cable content costs BT almost what they charge for it, which makes giving it away as a member benefit problematic.

Having said that, there still may be ways to provide some cable content as a member benefit, using BT’s Internet bandwidth. Since we’re building a coop, we expect that members (and we hope you will decide to become one!) will help us to decide what benefits make the most sense to offer. The ultimate decision will be made by the coop Board of Directors, in conjunction with the general manager.

Of course, coop membership gives you a voice in these matters. It also allows you to run for the Board of Directors, which sets all the policies for the coop.

Regardless of any member “perks”, like those above, as we increase revenues, each year, the Board will ask, “How much of this should we devote to capital (equipment improvements and expansion) and loans (there will be repayment requirements that must come first), and how much can we give back to members?”. As soon as we have money to give back, we will initiate a “patronage refund”. That means a check written to each member.

For example, City Market is about 10 years old. For four years now, City Market has been giving “patronage refunds” to members. Last year’s refund averaged $90+ /member. So, after waiting 6 years, many members have already gotten their original $200 member share back and each year, going forward will get more back. And since a share is not a fee, if a member leaves, she or he will still get back the original $200 invested.

Telecoms are known for costing a lot to build, then delivering a lot of revenues, which become big profits, as the build-out is paid for. One of the main reasons we want to form a coop BT is so that those profits not only stay here (instead of going to distant shareholders), but are distributed widely to our community (coop members), not just to a few individuals.

Q: BT is in a lot of debt. How will you deal with that?

A: The city must first resolve its debt to CitiCapital. There are a variety of ways to do this, most of which involve renegotiation of the debt, along with money from a third party, like us, or another company. We know that there have been discussions with at least one “out of state telecom”. While the City might get more money in the short term from Comcast, Verizon, or similar, we feel that a strong argument can be made, both to the City and to the Court that it would ultimately be more in the public interest to keep ownership local.

The debt to Burlington taxpayers is different. Part of our mission is to repay this debt over time using increased revenues. How? By expanding BT’s subscriber base within the city with aggressive marketing, and by expanding its service area beyond city limits – as was originally planned.

Q: What do I get for my $250.00?

A: The $250 buys you a share of ownership (member-equity) in a coop which has yet to be created. A share entitles you to voting privileges, qualifies you to run for election to the Board of Directors, entitles you to member benefits (typically discounts, etc.), and down the road, in years where profit exceeds the coop’s need for capital and debt service, to a “patronage refund”, which is a check for cash, based on your “patronage” – how much you bought.

For example, City Market was established 10 or 11 years ago. For, I think, six of those years, it used all of its excess revenues (after expenses) for needed improvements and to make payments. In year 7, and every year since, there has been enough left over to issue patronage refunds. Due to this calculation, amounts vary from year to year. The average check last year was $94, for 2012 it will be $86. With a share of City Market costing $200, many members have already made back what they spent to buy a share. For them, each new year’s patronage check will represent a cash return on their investment.

Q: What if you raise the money, or only part of the money and you can’t make an offer, or your offer is rejected, do I get my money back?

A: You won’t need to get your money back because you will still have it. We can say that with certainty because when you sign up to become a member you are pledging money, not paying it immediately. In fact, we won’t ask for any actual money until:

1. The coop is created. It won’t be created until we have enough in pledges to feel that we have enough community support that it will be worthwhile to move forward.

2. The coop Board of Directors is elected. The Board then decides what to do next. We expect that the Board will then:

3. Consult with the members to OK an offer (by a member vote) that it will make to the City to acquire BT.

4. If the City accepts the offer, only then will the Board call in the pledges. Only then will you have spent any money. Once you have spent money, we’ll have a functioning coop and a deal with the City.

If, for some reason, the Board doesn’t follow this sequence and calls in pledges before you are comfortable sending money, simply don’t send the money.

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