A Year in the Life of Burlington Telecom

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Ed. Note: During the last week of the year, we asked our writers to reflect on the highs and lows of 2010.

Woulda, coulda, shoulda.

That could easily be Burlington Telecom's motto. Or, its epitaph.

BT remained one of the most politically charged and financially relevant stories of the year, which is saying something when you have a nuclear power plant sprouting a new leak practically each week.

Budget battles under the Golden Dome came and went, as did entire administrations, but allegations of malfeasance and the tanking of a political dynasty in Burlington are here to stay. At least for a few more months.

Expect the first few months of 2011 to be the make-or-break time for Burlington Telecom. Though, it seems as if Mayor Bob Kiss isn't going to go out without a fight. With little credibility left among voters, and even his own party, it's hard to see how Kiss can lay legitimate claim to being the "credible" player on the field.

BT entered 2010 hobbling and under intense scrutiny after it was revealed in late September 2009 that city officials has "loaned" the utility $17 million over the course of several years and failed to repay the cash — violating BT's certificate of public good and the city charter.

It heads out of 2010 in no better shape, really, though somehow still in business.

The City Council, in response to public outcry, called for the mayor to resign and fire his top financial aide, took control of BT and worked with the state to fix its finances and come into compliance. Well, it tried to do that, anyway, but in the end it let Mayor Bob Kiss and his team try to renegotiate BT's $33.5 million lease with CitiCaptial.

Those talks fell apart in October and BT cancelled its lease agreement, allowing CitiCapital to repossess all of the equipment BT bought with the borrowed lease money. In early December, CitiCaptial notified the city it was beginning the process of evaluating what it would take and how the city would deliver it to them.

Despite holding a commanding control of the 14-member council, Democrats and Republicans haven't been able to force some changes thanks to the strong hand the mayor holds — at least legisatively. The council refused to confirm Chief Administrative Officer Jonathan Leopold's reappointment in June. But Mayor Bob Kiss refused to put Leopold on leave last October after the $17 million "loan" was first discovered.

Kiss' Progressive Party got beat badly in some key ward races in the March elections and the bid to keep instant runoff voting in the city tanked, too. But, in the end the Progressives ended the year with just one less Progressive on the council. They now have two.

Unable to seize control of City Hall, the city council empaneled a "blue ribbon" task force to closely study BT's finances and operations. What'd they find out? Essentially that BT overspent, has too few customers and can't make enough money to pay off its debts. To succeed, BT needs to find an outside partner that knows what it's doing.

Nine months later, no such outside partner has been found, though consultants hired by the city to turn BT around are allegedly in talks with outside investors and strategic partners.

At the same time, the state embarked on a fiscal review of BT. During one portion of its analysis, something caught the eyes of officials at the Vermont Attorney General's office and soon enough a criminal review was underway. By year's end, the feds got into the game, too.

As BT struggled to stay alive, the rest of telecom world was showered with federal stimulus money in the form of direct grants and low-interest loans. In July, the feds dumped $47 million on Vermont telecom ventures. Then, in August, the U.S. Department of Agriculture gave $116 million in federal stimulus grants and loans to VTel out of Springfield.

Ah, if only they hadn't gone and blown all that taxpayer money without explicit approval, BT would have been given taxpayer money to spend.

As the year comes to a close, VTel's president Michel Guite is one of the possible BT allies waiting in the wings to help the municipal utility stay alive in 2011.

To be sure, BT has few allies these days — at least politically. I guess it rubs people the wrong way when you spend $17 million of taxpayers' money and have little to show in the end.

Comments

[Jimmy]

"BT cancelled its lease agreement"

You keep saying this, but even Kiss says it was "mutual." The reality is that the lease was terminated due to BT's default. No one explicitly terminated anything. BT couldn't make its payments, so that was the end of it.

"Ah, if only they hadn't gone and blown all that taxpayer money without explicit approval, BT would have been given taxpayer money to spend."

You're kidding with this statement, right? Burlington has other providers of high speed internet. Much of the state that will benefit from the Fed money doesn't. The Feds don't give out cash because some dysfunctional little municipality arbitrarily decided that they wanted to compete with a big bad corporation.

Also, the state law, city charter and CPG that forbid the use of taxpayer money make no provision for "explicit approval." I assume you know this.

[Buster]

Shay produce the lease termination agreement and publish it in the paper please. Kiss should happily submit this were it true.

Why are you not calling for KIss and Leopold to be prosecuted? If they screwed one city department they have probably screwed all of the city Departments. The 17 million was either an over tax or the debts are growing exponentially and Leopold continues the cash pool shuffle.
robbing peter to pay who Burlington College and Mrs Sanders? There has been no credible evidence of where he spent the money.

[Jon Normandin]

The object is to save Burlington Telecom, not to destroy it. Remember, its destruction is a loss and saving it is a gain. Subscribe to it and help it pay its debts is just about the only logical choice. Those who want to throw it away must live outside of town because I don't think anyone in town can afford to throw away that kind of money.

[Morgan M]

"The object is to save Burlington Telecom, not to destroy it."

I agree, but I don't think we can save it as "Burlington Telecom." It's a bit of a stretch to expect current Comcast and FairPoint subscribers to switch to BT out of some kind of civic sentiment, when they may already be facing a bill to bail out current BT subscribers.

BT has done nothing to engender any good will among potential subscribers, and that is putting it mildly. It's safe to say everyone who feels positively about BT is already a subscriber. You either love BT or you hate it, and the latter group constitutes BT's untapped market!

So good luck with that. I don't think that the "fiber" will go dead, but it the TV screens that it feeds will have to display a new logo before you see any subscriber growth.

[dale tillotson]

Bob Kiss and Jonathan Leopold must resign before any sensible negotiations continue. With these two at the helm it just leads to a lack of trust and confidence with any negotiations the city is involved in, from BT, to Moran and in the sewers of the sewage bond payment coming due.
Say nothing about the had working pensioners that have been screwed at the hands of our great leaders.

[Gay Bob]

So Dale, I'm curious if there's a City Council race in your ward on Town Meeting Day, and, if so, if you're running. It's pretty easy making your accusations/suggestions/demands sitting at a computer, something different actually getting involved in the process.

[Buster]

Saving Burlington Telecom, how and at what cost? Kiss claims he can replace all of the equipment for 8 million. it would only cost 300grand to keep the lights on.
Progressives are smoking crack if they think they can pull this out of their Kiss hole.
Bt is actually a bit of a side show to the misfeasance that has gone on under Bob Kiss. The phantom loans in and out of BT and god knows where the money went.

There is no way that Citi is rolling over and taking a 30million dollar haircut Citi owns all of the cash that is in BT's coffers. all of it read the master lease agreement.
Until some one from the City publishes a letter from Ctit Capital that proves that the lease was mutually terminated and all of the covenants of the lease are rendering null and void The Argument that we must keep BT is bullpuckey.
Citi controls the company's assets all of them and according to the master lease all of the money collected from the use of their equipment reverts to Citi and their bondholders. Fair point offers a 57 dollar double play Comcast is in for faster download speed at 29 a month.
BT is 99. so suck it we lose.
I do not want to see this go away but it is going away because of Bob Kiss, Jonathan Leopold, Chris Burns and Amber Thiabult.
I for one am pissed off that my taxes are going up to prop up these idiots who pissed in the soup.

[giant]

1-800-Comcast. It's the only way out of this mess.

[Tim]

The Telecom Song

Lyle Lanley: Y'know, a town with money is like a mule with a spinning wheel. No one knows how he got it and danged if he knows how to use it!

(audience laughs)

Homer: Heh heh! Mule.

Lyle Lanley: The name's Lanley. Lyle Lanley. And I come before you good people tonight with an idea. Probably the greatest... Aw, it's not for you. It's more of a Shelburne idea.

Mayor Kiss: Now wait just a minute! We're twice as smart as the people of Shelburne! Just tell us your idea and we'll vote for it!

Lyle Lanley: All right, I tell you what I'll do. I'll show you my idea! I give you Burlington Telecom! (audience gasps) I've sold Telecoms to Brockway, Ogdenville, and North Haverbrooke, and by gum, it put them on the map!

Well, sir, there's nothing on earth

Like a genuine,

Bona fide,

Electrified,

Fiber optic

Telecom! ...

What'd I say?

Ned Flanders: Telecom!

Lyle Lanley: What's it called?

Patty & Selma: Telecom!

Lyle Lanley: That's right! Telecom!

(crowd chants "Telecom" softly and rhythmically)

Miss Hoover: I hear those things are awfully expensive.

Lyle Lanley: We'll finance it, don't be apprehensive.

Apu: Is there a chance the taxpayers could get billed?

Lyle Lanley: Not a chance, they'll all be thrilled.

Barney: What about the CPG?

Lyle Lanley: The State will love it, wait and see.

Keogh: Were you sent here by the devil?

Lyle Lanley: No, good sir, I'm on the level.

Chief Wiggum: The ring came off my pudding can.

Lyle Lanley: Take my pen knife, my good man.

I swear it's Burlington's only choice...

Throw up your hands and raise your voice!

All: Telecom!

Lyle Lanley: What's it called?

All: Telecom!

Lyle Lanley: Once again...

All: Telecom!

Wright: But Main Street's still all cracked and broken!

Bart: Sorry, Kurt, the mob has spoken.

All: Telecom!

Telecom!

Telecom!

Telecom!

Homer: Tele... D'oh!