Burlington Telecom - Schurz/ZRF

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Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."
Schurz and ZRF Switch Places in Backroom Deal. Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.
Dave Hartnett's Behavior Criticized. "The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."
Motives of Progressives Questioned. "Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework."
Many Uncomfortable with Lack of Transparency in Process. "Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall.
Progressives Dump KBTL. KBTL was the big loser in the process receiving only two votes in the final tabulation from Councilors Max Tracy and Ali Djang. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."
Questions Remain about Schurz Offer. According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. (Todd Schurz is sitting at table on left. ZRF head Faisal Nisar is on right.)

The purpose of this web site is to document the 2017 sale of Burlington Telecom and its subsequent operation under Schurz/ZRF.

This report is maintained by Hugh Pickens

Report begun September 20, 2017.

Contents

Transition of Burlington Telecom to Schurz/ZRF

January 4, 2018: Burlington Telecom Raises Rates, Schurz Not to Blame

WCAX reported on January 4, 2018 that starting next month, customers of Burlington Telecom, recently sold to Schurz in a contenious selection process, will start paying $10-$14 more for cable. Burlington Telecom says the increase will pay for more expensive broadcast contracts.[1]

Katie Jickling added at Seven Days Vt that according to BT spokesperson Abbie Tykocki, the changes have nothing to do with BT's sale to Schurz Communications though she admitted "it's really poor timing." It is worth noting that Broadband Internet rates will not be affected. As part of Schurz Communications' deal to pay $30.8 million for BT and allow the city up to a 33 percent stake in the telecom, the family owned company committed to net neutrality and vowed not to increase internet rates for five years. So far, the sale hasn't changed operations at the telecom. "It's business as usual at BT," Tykocki said. Its future, she noted, is now "all in the hands of the state."[2]

2017: Bidding Process for Sale of Burlington Telecom to Schurz/ZRF (Reverse Chronological)

December 23, 2017: Hugh Pickens writes: Tucows Dodges Bullet, Loses Burlington Telecom Bid

Tucows Dodges Bullet, Loses Burlington Telecom Bid Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 thanking Redditors for their support of the Ting initiative in Burlington and noting that "it’s crystal clear that a small but powerful group did not want us there. It would not have made for a constructive relationship."
Tucows stock has risen 13.47% since losing Burlington Telecom "It looks like the market is saying that Tucows dodged a bullet when they lost the bid," says Hugh Pickens, a long term investor in Tucows who closely follows the stock noting that the stock has risen 13.47% since losing the Burlington Telecom contract and has closed at a new high of 68.60 "Tucows will have other opportunities in the future. The market is saying that Tucows is better off not allowing themselves to become permanently entangled in the overpoliticzed atmosphere in Burlington."

Hugh Pickens wrote on December 23, 2017 that it now appears that Tucows dodged a bullet when they lost the bid for Burlington Telecom on November 28, 2017. Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 noting that " Burlington is behind us" and thanking Redditors for their support of the Ting initiative in Burlington. "It’s crystal clear that a small but powerful group did not want us there.," said Noss. "It would not have made for a constructive relationship."[3]

In the four weeks since Tucows lost the competition, Tucows stock rose 13.47% closing at a new high of 68.60. "It looks like the market is saying that Tucows dodged a bullet when they lost the bid," says Hugh Pickens, a long term investor in Tucows who closely follows the stock. "Tucows will have other opportunities in the future. The market is saying that Tucows is better off not allowing themselves to become permanently entangled in the overpoliticized atmosphere in Burlington."

December 15, 2017: City Council to Delay Final Burlington Telecom Vote Until December 27

Katie Jickling wrote in Seven Days on December 15, 2017 that although councilors were scheduled to approve the $30.8 million sale of Burlington Telecom to Schurz Communications and ZRF Partners on December 18, 2017, councilors will meet in executive session at the December 18 meeting so they can clarify details of the deal, according to council president Jane Knodell (P-Central District). Afterwards, the council will release the purchase and sale agreement, which it now expects to vote on at a December 27 meeting. Knodell would not say what questions remain about the bid, though she did say they'd be made public once the proposal is released. If the sale isn't completed by the end of the year, the city's portion of the net proceeds decreases from 50 to 35 percent. Knodell said she's "not really concerned" about the possibility of additional delays and lost revenues. "I think things are going well and we're working through [remaining issues]," she said.[4]

December 12, 2017: Charlotte Dennett writes: Answers Needed About Schurz Communications

Answers Needed About Schurz Communications. The chaos surrounding the last-minute offer by Schurz Communications to buy Burlington Telecom brings questions concerning the progressive councilors who pushed for Schurz and if they fully vetted Schurz before choosing them. Shay Totten, a former reporter for Seven Days and a proponent of KBTL, has done his own sleuthing into Schurz’s campaign donations and has concluded that Schurz is “a conservative media company from the Midwest whose owner Todd Schurz donates tens of thousands of dollars to some of the most conservative members of Congress who oppose gay marriage, raising the minimum wage (even opposed raising the federal wage to $7.25 an hour), In 2016 alone, the Schurz family gave to such illustrious Koch-brother backed candidates as: Sen. Todd Young, Sen. Mitch McConnell, Sen. Roy Blunt and many more.” Totten claims that he sounded this warning to city councilors, but to no avail. " What are its ties, if any, to Gray TV (which took over Vermont’s largest TV station, WCAX, earlier this year) and Sinclair Communications," says Dennett, "and does it share in their Trumpian conservative vision of buying up local and radio TV stations throughout the U.S.?"

Charlotte Dennett wrote an op-ed for vtdigger on December 12, 2017 about the chaos surrounding the last-minute offer by Schurz Communications to buy Burlington Telecom and about how it seems the councilors — and possibly even Mayor Miro Weinberger – had not fully vetted Schurz before choosing them. According to Dennett , since Schurz is privately owned and not publically traded, it is difficult to find information on its business dealings except through news stories and press releases but internet searches do reveal that Schurz is much bigger than a “family-owned business,” and has been flipping properties during the media acquisition craze of the last four years along with right-wing media companies that have come to be called “Trump TV.”

Shay Totten, a former reporter for Seven Days and a proponent of KBTL, has done his own sleuthing into Schurz’s campaign donations and has concluded that Schurz is “a conservative media company from the Midwest whose owner Todd Schurz donates tens of thousands of dollars to some of the most conservative members of Congress who oppose gay marriage, raising the minimum wage (even opposed raising the federal wage to $7.25 an hour), In 2016 alone, the Schurz family gave to such illustrious Koch-brother backed candidates as: Sen. Todd Young, Sen. Mitch McConnell, Sen. Roy Blunt and many more.” Totten claims that he sounded this warning to city councilors, but to no avail.

Dennett says that if the City Council wants to rectify the fiasco of Nov. 27 and regain the trust of Burlington voters, it should at the very least allow another public hearing before it votes on the final agreement with Schurz.

What, for instance, has Schurz been doing with the $430 million it gained from finalizing its 2016 sale to Gray TV other than offering $30 million to buy Burlington Telecom? What are its ties, if any, to Gray TV (which took over Vermont’s largest TV station, WCAX, earlier this year) and Sinclair Communications, and does it share in their Trumpian conservative vision of buying up local and radio TV stations throughout the U.S.? More questions should be asked of Councilor Hartnett, who, methinks (as Shakespeare would say) “protested too much” when Councilor Shannon began to ask questions about the last-minute deal. Did he, and Republican Kurt Wright (whose 2012 campaign for mayor Hartnett ran) know more about Schurz than either of them let on? Why were they, of all the councilors, the only holdouts for Schurz and seemed unconcerned about transparency in order to get the winning bid?[5]

December 12, 2017: Burlington Council Member Dave Hartnett Apologizes for His Outburst at a Previous City Council Meeting

Burlington Council Member Dave Hartnett Apologizes for His Outburst at a Previous City Council Meeting. Councilor Hartnett apologized for his outburst at the council meeting on November 27 when he attacked fellow Councilor Joan Shannon as she posed questions to the head of ZRF about their bid, their inability to answer questions about their secret investors, their plans to flip Burlington Telecom in five to ten years, and the meetings between council memebers and ZRF. "You know I crossed the line," said Hartnett.

WAMC reported on December 12, 2017 that at the meeting of the Burlington City Council on December 11, 2017 Councilor Hartnett apologized for his outburst at the council meeting on November 27 when he attacked fellow Councilor Joan Shannon as she posed questions to the head of ZRF about their bid, their inability to answer questions about their secret investors, their plans to flip Burlington Telecom in five to ten years, and the meetings between council memebers and ZRF. "You know I crossed the line," said Hartnett. "There's a code of conduct that a councilor should adhere to and I you know was disrespectful and you know I crossed the line and you have to step up to the plate and just apologize. My actions are reflection on the council so I apologized to the entire Council as well."

A final copy of the agreement to purchase Burlington Telecom is expected to be released by December 15 and the City Council meets again on December 18. A special council meeting could be scheduled on December 27. The city council started and ended its meeting in executive session to discuss the purchase and sales agreement with Schurz Communications to obtain Burlington Telecom. Because the purchase agreement is being reviewed by lawyers, the public deliberative agenda could only include discussion of the company’s Letter of Intent, or LOI, according to Ward 4 Republican Councilor Kurt Wright. “The LOI is already crafted. That's basically done. Whoever won the bid we would have had to spend significant time throughout the month of December with attorneys on both sides working on the final purchase and sales agreement. Because really the LOI we had already seen the LOI from Schurz weeks earlier. And that's what they worked from on the night that we passed it except they added some elements from the ZRF LOI which actually strengthened it. So this was not what's being characterized the way it's being characterized.”[6]

November 29, 2017: Elliot Noss Says "We love the community of Burlington but at this point it’s crystal clear that a small but powerful group did not want us there

Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 thanking Redditors for their support of the Ting initiative in Burlington:

I would like to say first that we really appreciated the BTV Redditors. You’ve been fair, and you’ve pushed us to explain our bid and our positions and asked forthright questions of us. In terms of further actions, there are none. Burlington is behind us. We love the community of Burlington but at this point it’s crystal clear that a small but powerful group did not want us there. It would not have made for a constructive relationship. At some point I imagine we will post something longer, but for now you have all our best wishes. Thank you Burlington![7]

November 28, 2017: Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom

Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

The Burlington Free Press, WCAX, Vermont Public Radio, NBC5, Seven Days, VT Digger, and MSN reported on November 29, 2017 that in a final vote in an 8 hour marathon session that ended at 2 am progressives voted in a Schurz Communications/ZRF partnership beating out co-op Keep BT Local by a vote of 8-2. ZRF and Schurz decided on a joint venture with ZRF as majority stakeholder after they were brought back into the process earlier this month, when the council couldn't decide between Ting Tucows and KBTL. In an 11th hour reversal Schurz became the majority stakeholder in a new joint proposal with ZRF that was presented to the council after it became obvious there were serious questions about ZRF's secret investors, who would make the decisions when ZRF chose to sell the utility after a few years, and whether Citibank would sue if the council chose ZRF's $25 million bid. The decision to go with Schurz followed a 90-minute public forum and hours of debate in which many spoke out in frustration over the process.

Faisal Nisar of ZRF Unable to Answer Questions About Secret Investors

During initial questioning of Faisal Nisar of ZRF, concerns emerged about secrecy around the investors who would be financially contributing to purchasing Burlington Telecom, who would make the decisions when ZRF chose to sell the utility in a few years, and whether Citibank would sue if the council chose ZRF's $25 million bid. Nisar was unable to give satisfactory answers to the questions put to him, prompting observers to conclude that the ZRF/Schurz bid might not prevail if it went to a vote.

Schurz and ZRF Switch Places in Backroom Deal

The City Council began the night with three bids. Keep Burlington Telecom Local, the cooperative that sprung up with the sole goal of buying the utility and Ting, the wireless services and fiber internet arm of Canadian-based internet services company Tucows, Inc. were the two finalists who the council deadlocked over at the beginning of November. Both ZRF and Schurz were eliminated earlier in the process, but were invited back after the council reached an impasse in deliberations between Ting and the co-op. Under a proposal submitted last week, ZRF, a private equity firm, would own and operate Burlington Telecom, with Schurz as a $10 million investor. There were two commercial bidders for Burlington Telecom in the final round: ZRF Partners with financial backing from the formerly independent bidder, Indiana-based Schurz Communications, and Toronto-based Ting. Ting offered $32 million, ZRF $25 million, and KBTL offered $12 million to $16.5 million.

Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. He said he believed it was the only way to avoid another deadlock.

Schurz and ZRF Switch Places in Backroom Deal. Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.

During a break at the meeting, ZRF and Schurz decided to flip their bid, making Schurz the primary owner and ZRF an investor in the cable and internet provider. This changed ZRF's $25 million offer to nearly $31 million. The winning offer, a hybrid of previous bids submitted to the city, did not exist when the meeting began on Monday evening, but was worked out in the hallways and backrooms of City Hall while the council was in recess. Some broad strokes of the deal were presented to councilors, such as the dollar amount of the cash offer: $30.8 million, and that Schurz would be the controlling partner while ZRF's promises of community investment would remain. Other details, like ZRF's exact role as a minority partner, were left unfinalized. The new letter of intent will be submitted later on Tuesday, said Ralphine O'Rourke, a lawyer representing the city, during the meeting.

During a recess, city attorneys worked with Faisal Nisar, founder of ZRF, and Todd Schurz, of Schurz Communications, to mark up a previously released proposal. It was posted online at 1:40 a.m. Tuesday.

The selection of the Schurz bid came as a surprise – especially since the bid that the council considered at the start of the meeting wasn’t the same bid that they ultimately voted on. At the start of the night, ZRF was offering $25 million, with $10 million coming from Schurz, who would be a minority partner. But after councilors raised concerns, ZRF and Schurz renegotiated their proposal in the halls of Contois Auditorium and presented a new proposal to the council. While Todd Schurz, CEO and President of Schurz, admitted that since the new deal had been worked out in about 15 minutes, there are still some details to nail down. But essentially, he said his company would make the same offer they had originally made to buy Burlington Telecom. “What we’re proposing is taking elements out of Schurz’s last LOI [Letter of Intent] and melding them with the LOI that you received from us Monday of last week and the updated one today," Schurz said. “So it would be the old Schurz price of $30.8 million… and all the elements of the ZRF bid.”

"I had to do the right thing," Nisar said after he decided to essentially "step aside" and give up his own bid to allow the city to reach consensus. Councilor David Hartnett said he approached Nisar and Schurz with the idea because he was concerned about the council reaching an impasse over Ting and Keep Burlington Telecom — again. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.

But some councilors did not agree with Hartnett's assessment. "I feel incredibly uncomfortable with this," said Councilor Max Tracy, speaking about the 11th-hour switch. "It’s just a slap in the face to the public process that’s happened here."

Ranked Choice Voting System Favored Schurz

Shortly before 2 a.m., the council voted twice. In the first round, councilors could cast two votes using a ranked choice voting system where the lowest vote-getter would be eliminated. The top two vote-getters moved on to the second round. The first round ended with 8 votes for Schurz, 7 votes for Keep Burlington Telecom Local, and 5 votes for Ting. "It was the ranked choice voting system," wrote poster on Reddit. "The Schurz voters on the Council had a bullet proof strategy provided that the ranked choice voting system remained intact. That's why two of the other Councilors abstained...they didn't think it was a fair method at that stage and they knew Schurz was already the winner. It sucks. It was more about spite than anything, as evidenced by Hartnett's manchild routine." All Schulz and KBTL's six supporters on the council had to do was vote for Schultz and KBTL to eliminate Ting even though progressives had no intention of voting for KBTL in the final round.

After Ting was eliminated, the final vote was 8-2 for Schurz. Councilors Sharon Bushor and Sara Moore, who have supported the co-op throughout the process and voted KBTL as their first choice and Schurz as their second in the first round, both chose Schurz in the final vote. Dieng and Tracy cast their votes for the co-op, while Deane and Shannon declined to cast votes for either option. Deane said he considered his vote a "No" vote, rather than abstaining. "I did not feel it was responsible on my part to vote for something I did not understand," he said, citing the lack of public support and his own lack of understanding of a bid that had come together only hours before. Shannon also characterized her vote as a "No," rather than an abstention.

"The outcome is a disappointment to me and those councilors who supported Ting or KBTL and believed that they were the best option for Burlington," wrote Councilor Chip Mason. "The winning bid represents a compromise as neither KBTL nor Ting were able to generate majority support from the City Council despite months of effort. I am committed to insuring that the final agreement and relationship with Shurz/ZRF is favorable to the City of Burlington, its taxpayers and BT customers and provides all of the protections we demanded, and they agreed to, on net neutrality, privacy, anti-monopoly future sale, right of first refusal and put right."

Dave Hartnett's Behavior Criticized

Dave Hartnett's Behavior Criticized. "The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."

Joan Shannon questioned Schurz's commitment to net neutrality, and ZRF's refusal to divulge the investors funding the purchase and the meeting grew testy when she raised questions about councilors who met individually or in small groups with Nisar and Schurz. "You're out of control, Councilor Shannon!" yelled Councilor Dave Hartnett, pointing her finger at her. At another point in the proceedings, Hartnett shouted an expletive and stormed out of Contois Auditorium during the first long break from public deliberation, with Councilor Chip Mason following close behind. Reporters could overhear the two talking in the hallway. Hartnett told Mason he did not want to vote for any of the three bidders. “This is crazy,” Hartnett said to Mason.

Shannon told reporters about a meeting between Nisar, City Council President Jane Knodell and Councilor Kurt Wright at the Burlington Airport last Wednesday. The rendezvous appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders, creating the impression that they were speaking for the whole council, and undermining the work of the city’s negotiator, Terry Dorman. When asked about the meeting, Wright said everything was on the level. “All we were ever told is we couldn’t meet individually,” Wright said. Wright explained that Dorman set up the meeting, and he checked with city attorney Blackwood. They met at the airport out of convenience, because Nisar was leaving town. They talked about potential problems with Nisar’s bid, Wright said. Later, when Nisar was in front of the council, Shannon asked him about the meeting. After initially dodging the question, he tepidly said he did not meet with councilors. Several councilors tried to interject, sensing Nisar was in hot water. “You’re out of control, Councilor Shannon. You’re going down the wrong path,” screamed Hartnett.

"The rendezvous (between Kurt Wright and Jane Knodell with Nisar) appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders," wrote Eileen Andreoli at VT Digger. "Yet Kurt Wright's response was, 'All we were ever told is we couldn’t meet individually.'"

"The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."

"It's not only the corruption of a secret, last-minute, unwritten, and unformed bid that Knodell, Wright, and Hartnett concocted," said one comment on Seven Days. "It's also the unhinged personal behavior of one councilor throughout the night -- yelling and storming out of the meeting; yelling at and berating the Mayor; interrupting and bellowing while Shannon had the floor (asking fair and appropriate questions about the brand new, secret bid), and accusing them both of lying. Shouldn't he have been ejected from the meeting for such behavior? But I guess Knodell needed his vote for Schurz so she did nothing."

Motives of Progressives Questioned

Motives of Progressives Questioned. "Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework."

"Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. "Pretty sad. Anti-Dems teamed up and pulled out all the stops from jigging the voting process to shameful verbal assault on Joan Shannon as she tried to do her job to vet the 12th hour orchestration last night. They chose to sacrifice BT to avoid allowing Dems to win a fight - that really wasn't theirs in the first place. While Progs selected their choice (before offers were even revealed), Dems as a Party did not choose anyone - it just appeared that way because a majority of Dems chose Ting. So for Anti-Dems, I guess its Party before City. We've seen this in Congress over the past 8 years of Obama, and here we see it in Burlington. Burlington is smart and engaged however. Those tactics are revealed in this environment, and they back fire. Just watch. We will not forget."

Later in the week, City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework." Knodell said she pushed for Schurz over Ting because Schurz is a family-owned company, and because it would allow "a locally-based, Burlington-centric telecom." Local control and ownership has been a major consideration, with many Burlington residents telling the Burlington Telecom Advisory Committee that it was their primary concern at a meeting at the start of the year. "It’s not the same as local control, it’s not the same as local ownership," Knodell said. But, she said, Schurz has a philosophy of decentralization.

Many Uncomfortable with Lack of Transparency in Process

Many Uncomfortable with Lack of Transparency in Process. "Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall.

Councilor Max Tracy said that he was uncomfortable with how the bid had been negotiated. “We came into this meeting thinking we were going to be debating one LOI and midstream, out of the view of the public, we got a completely different LOI that was negotiate out there in the hall,” Tracy said. “I think it’s incredibly unfair to the citizen of Burlington who have not had a chance to look at this LOI…it’s just a slap in the face to the public process that’s happened here.”

"Before highlighting the substantive and procedural outcomes from last night’s City Council meeting, I wanted to apologize for being unable to convince a majority of my fellow councilors to support what I believed to be the most viable of the bids for Burlington Telecom - the bid from Ting/Tucows," wrote Council Member Chip Mason. "I believe Ting offered the highest return for the Burlington taxpayers, a commitment to bringing jobs and investment to Burlington, a proven record of excellent customer service, competitive pricing and a commitment to net neutrality and privacy protections. I am disappointed that I was faced with the choice of voting in a flawed and opaque process, in a last minute setting, with little public vetting of a bid that changed several times over the course of the evening. My fiduciary and ethical responsibility to you obligated me to select an adequate but imperfect entity to purchase BT last night. Ultimately, I believe that I made the right fiduciary decision for Burlington, its residents, taxpayers, BT customers and employees. I am also sorry that the way we reached this compromise and the decision to move forward and vote was deeply flawed and confusing."

Councilors Max Tracy and Ali Dieng, who voted in favor of KBTL were uncomfortable with the lack of transparency in the process. “Burlington residents are going to wake up tomorrow morning and be furious that they did not get to weigh in,” Tracy said.

"I can't think of a less transparent process than coming up with-- after years of developing offers and months of bringing finalists to the table-- develop a new offer on the backs of envelopes and napkins after midnight," Shannon said.

"Keep BT Locals proposal was the weakest from the outset of deliberations this past spring, when I was still on the council. It was troubling to hear Councilors Tracy and Dieng imply that all for-profit entities are conspiratorial capitalists interested only in fattening up BT for Comcasts ultimate consumption. This was disingenuous on three counts: first, Ting/Tucows has a reputation in both Canada and the U.S. for being precisely the kind of successful, socially responsible company Vermonters have long championed. Second, the advocacy for KTBL was a slap in the face to the present employees of BT, who strongly preferred Ting. And third, the power-to-the-people rhetoric ignored the fact that it was a Progressive administration that got Burlington so deeply mired in the BT debacle in the first place," said former City Counciler Tom Ayres. " The reported failures of Schurz to commit to net neutrality and ZRF to reveal its investors should be subjects of grave concern for the City Council as it ponders a final BT purchase agreement in the coming days."

"Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall. Of all the sketchy political maneuverings I've seen the council engaged in my 20+ years here, this one takes the cake. The mayor and Shannon saw their pet privatization project blew up in their faces when the other Miro democrats chose expediency after the old guard Knodell, Wright, and Hartnett parlayed the public's genuine, and their own fake support for KBTL and Bushor's signature flippability to squeeze Ting out, scoring a political victory. Those four should really have their own party designation (the City Council OG, anyone?) At least Shannon stuck to her guns, Mason and Paul made a lot of noise about unfairness and how they couldn't, in good conscience, explain how all this is OK to their constituents, yet in the end voted for it anyways."

According to an editorial in the Burlington Free Press, Burlington residents have every right to wonder what happened to the promise of an open and public process for picking a buyer for Burlington Telecom. "By taking the vote before the revised Schurz offer could be fully vetted by residents and other stakeholders, the City Council essentially negated the months-long public process for the sale of the one-time municipal Internet telecom,"said the editorial. "The move was a power play – Schurz and its minority partner, ZRF Partners, had the money that gave them the financial nimbleness to revise their offer. Competing bidders were left with no time to cook up their own counter proposals." "Now this last minute back room deal brings a dark horse over the finish line," wrote Michael Long. "Revealing the feather weight of public input and of serving the public interest or of valuing democracy."

Progressives Dump KBTL

Progressives Dump KBTL. KBTL was the big loser in the process receiving only two votes in the final tabulation from Councilors Max Tracy and Ali Djang. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

KBTL was the big loser in the process. KBTL only received two votes in the final tabulation from Councilors Max Tracy and Ali Djang after Councilors Richard Deane and Joan Shannon abstained from the final vote after voting for Ting. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

Mayor to Sign Letter of Intent with Schurz

Council Chair Jane Knodell said Mayor Miro Weinberger will sign a letter of intent within the next week to finalize the sale. The city attorney said council must sign the agreement by Dec. 31. The vote authorized Mayor Miro Weinberger to enter into a purchase agreement with Schurz and Nisar. Weinberger promised he would not sign without a "very tight and well-written" document. "This is a surprise to me," he said. "I had no idea this was going to transpire." He called the process a spectacle and said he believed the people of Burlington deserved to weigh in, but said he believed the new Schurz/ZRF bid was a stronger offer. The council will vote to approve the signed purchase agreement next month according to the planned timeline.

Weinberger said this was the most challenging vote he's seen the council take. “While I was as surprised as anyone by last night’s outcome, I am relieved that after weeks of uncertainty, the City Council has finally selected a winner that does not breach prior Council-approved Burlington Telecom agreements that would have exposed the City and taxpayers to another round of lawsuits," he said. "With last night’s vote, we are now in a position to close the book on Burlington Telecom’s decade of financial challenges and achieve long-term benefits for BT customers, taxpayers and the City."

"In the coming days, I will be working hard on behalf of Burlingtonians and BT employees to negotiate in writing what Todd Schurz and Faisal Nisar verbally committed to at last night's City Council meeting" said the Mayor in a statement. "I will ensure that the final agreement includes clear provisions regarding internet affordability, customer service, net neutrality, bridging the Digital Divide, and other items that reflect our community's values." According to an editorial in the Burlington Free Press, the mayor, in essence, is saying that the city chose an offer without locking down the details and without knowing the details of the final agreement, there is no way of knowing the full impact on the community.

The final letters of intent — documents outlining promises Schurz is making to the city — aren't public yet, as the mayor's office and city attorney are negotiating with Schurz. Weinberger said his office on Wednesday received the documents — an amalgamation of previous bids. He said it's unrealistic to expect a sales agreement to come to a council vote by Dec. 18, the last scheduled meeting of the year, but is optimistic that unless something goes wrong, the city will find a way to make the end of year deadline. The city's share of the proceeds will drop from 50 percent to 35 percent if the purchase agreement is not signed by the end of the year.

Questions Remain about Schurz Offer

Questions Remain about Schurz Offer. According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. (Todd Schurz is sitting at table on left. ZRF head Faisal Nisar is on right.)

According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. Schurz said that under the bid, his company would pay cash to the city, retain existing BT staff, and allow 20 percent — or potentially higher — city equity. Schurz will not increase broadband costs for five years. "The last [deal] we didn't have all sorted out because it took us four days. This one was 15 minutes." Schurz told the council when he stumbled over questions.

Tuesday afternoon, Katie Vane, a spokeswoman for the mayor, said she did not expected Schurz and ZRF would provide updated documents to the city until the end of the week. She said, prior to releasing the documents publicly, the mayor and the city attorney planned to review the documents, which are expected to be a hybrid of already-submitted bids, to make sure what was conveyed at the council meeting is represented on paper.

According to Councilor Chip Mason the details of the Schurz bid were: (1) Schurz is the owner and ZRF an investor; (2) purchase price of $30.8 million with a potential increase based upon 2018 performance; (3) the City of Burlington has the right to roll over cash proceeds from the sale into a 20% ownership interest in BT; (4) committed to full buildout of Burlington and neighboring communities on same time frame as proposed by BT; (5) $250,000/year contribution for 7 years to create a technology innovation fund and $50,000/year contribution to basic technical skills education for workforce/high school students; (6) no price increases on broadband for 60 months; (7) greed to anti-monopoly future sales restriction (no sale to Comcast); (8) committed to net neutrality; (9) put right in favor of the City if it rolls over to equity; and (10) a right of first refusal in favor of the City on the future sale of BT.

Jess Aloe reported that Burlington Telecom will also have a local board who will play a role in financial and strategic decisions, Schurz said. Who will sit on that board has yet to be determined, although the midnight summary put together by the city's lawyers had as members Schurz himself, Nisar, possibly Gary Evans, the former CEO of Hiawatha Broadband and has consulted for Burlington Telecom, and an industry expert appointed by the city.

Questions remain about Schurz's policy on net neutrality. In 2015, Brian Lynch, who serves in a dual role as Schurz's senior vice president in charge of the broadband division, signed a letter as general manager of then-named Antietam Cable arguing that it would be too arduous for small rural telecommunications companies to be subject to the FCC's regulations, and that they supported a free and open internet without blocking content. In July 2017, Lynch sent another letter to the Federal Communications Commission recounting how pleased the company was that the commission was considering rolling back the regulations because being regulated had caused them to pull back on their expansion plans. In his September letter of intent that was submitted for the eliminated October bid, Todd Schurz said he was committed to net neutrality for Burlington Telecom. [8][9][10][11][12][13][14][15][16][17][18][19]

Reference

November 21, 2017: Tucows updates offer to acquire BT business

Reuters released a press release from Tucows reporting that "Nov 21 (Reuters) - Tucows Inc:

  • Says ‍on Nov 20, city of Burlington D/B/A Burlington Telecom released updated bid letter of co regarding co’s bid to acquire all assets of BT​

November 20, 2017: ZRF and Schurz Team Up With Joint Venture

ZRF and Schurz Team Up With Joint Venture. According to Council Member Joan Shannon, ZRF/Schurz have not committed to operating Burlington Telecom for more than five to ten years. "The family biz was not looking to flip," said Shannon. "But this is not the 'family biz' offer. This is an investor offer from ZRF."

Seven Days, the Burlington Free Press, My Champlain Valley, and VT Digger reported on November 20, 2017 that Schurz Communications and ZRF Partners, previously eliminated in the bidding for Burlington Telecom, have gotten back in the running — this time as partners with a $25 million joint bid that would invest heavily in the local tech economy. Tucows put forward a $32.5 million proposal, up $2 million from its previous offer. And the co-op Keep BT Local raised its bid from $12 million to $18 million — though the co-op has yet to raise the $6 million difference.

Schurz and ZRF Joint Bid Finalized in a Week

Schurz CEO Todd Schurz and Faisal Nisar, founder of ZRF, met in Chicago for the first time last Tuesday, Schurz said in an interview in the Burlington Telecom offices. They agreed to move forward together last Friday. Under the proposal, ZRF which has no previous telecom experience and at this time has only one employee, would have full management control of the joint entity. Schurz would have a minority ownership. "Our strengths complement each other's weaknesses," Schurz said. "We've listened to what the community is saying," Nisar said. Nisar refused to answer questions about the conflict of interest on Monday. "We're trying to look forward, not backward," he said. "We don't think there will be any issues with the current proposal."

The joint proposal came about through Gary Evans, an adviser to Nisar and the retired CEO of Hiawatha Broadband Communications, which Schurz bought last month. Evans connected Nisar and Schurz last week, Schurz said, and the two men spoke for "hours" about their vision. Evans has served as a consultant for Burlington Telecom.

ZRF/Schurz Looking to 'Flip' Burlington Telecom in 5 - 10 years Says Joan Shannon

According to Council Member Joan Shannon, ZRF/Schurz have not committed to operating Burlington Telecom for more than five to ten years. "The family biz was not looking to flip," said Shannon. "But this is not the 'family biz' offer. This is an investor offer from ZRF."[20]

New Bid from KBTL

KBTL submitted updates to its offer Monday, including increasing the price from $12 million to $18 million based on being able to raise $6 million. If the equity can't be raised, the co-op would offer notes or carried interest to each of the parties due to receive proceeds of the sale, but is willing to reduce the price back to $12 million if the parties are unwilling to accept.

Ting Has the Highest Bid

Ting's latest offer is the highest remaining bid. It is offering just over $32 million total and promising to make Burlington a regional hub for its business.

Net Neutrality

With the recent news that the Federal Communications Commission said it plans to repeal regulations that ensure equal internet access, commonly called net neutrality rules, critics worry that without these rules, internet providers will be able to speed or slow internet access, or charge extra fees for streaming services. Ting has pushed to retain net neutrality rules, and Keep BT Local has said it would retain them as well. The ZRF Partners and Schurz letter of intent released Monday did not directly address net neutrality.

City Council Will Vote on November 27

Councilors are grappling with getting all this new information to the public. “The real challenge I have is, does the community have enough time to digest it, or does the council have enough time to communicate it,” said Councilor Adam Roof. Councilor Karen Paul said that traditionally major proposals like the ones bidders released Monday are public for at least two weeks before the council acts on them. “Are people going to feel that too much was done too quickly? I’m sure people are going to feel that way,” Paul said.

The council is scheduled to vote on a final buyer on November 27. The meeting is scheduled to begin at 5:30 p.m., 90 minutes earlier than usual, according to the city council president. During Monday’s meeting, councilors will first vote for their two top bidders. The bottom vote getter will then be out, and in the second round each councilor will vote for one bidder until a winner is selected, Roof said. There will be no mechanism for a tiebreaker, Roof said. “We have to figure it out. There will be no delays, no games,” Paul added. “We have to stop doing this.”

Even After the Council Chooses a Buyer the Process is Not Over

Even after the council chooses a buyer the process is not over. The Mayor can veto a Council decision. Council could overturn a veto with a two thirds vote, but if the veto was sustained, the item would fail. The Mayor is thought to favor Ting. Blue Water can also reject a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom). That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[21][22][23][24][25]

Reference

November 13, 2017: Burlington City Council Makes Third Attempt to Decide Who Blue Water Holdings Will Sell Burlington Telecom to

Burlington City Council Makes Third Attempt to Decide Who Blue Water Holdings Will Sell Burlington Telecom to. In their third attempt to decide the buyer for Blue Water's Burlington Telecom, Burlington City Council has decided to allow all four original bidders for Burlington Telecom to resubmit their bids for consideration and has created a subcommittee to figure out how the voting process will work in the next round.

Seven Days, the Burlington Free Press, and NBC5 reported on November 13, 2017 that in their third attempt to decide the buyer for Blue Water's Burlington Telecom, Burlington City Council has decided to allow all four original bidders for Burlington Telecom to resubmit their bids for consideration and has created a subcommittee to figure out how the voting process will work in the next round. In addition to Ting/Tucows and KBTL, previously eliminated bidders ZRF and Schurz Communications are once again joining finalists Keep BT Local and Ting Tucows in this round and will have until Monday to resubmit their bids. The City Council hopes to make a final decision on who will buy Burlington Telecom by November 27, 2017.

Four Member Subcommittee Appointed

A four-member committee, composed of Jane Knodell (P-Central District), Kurt Wright (R-Ward 4), Chip Mason (D-Ward 5) and Adam Roof (I-Ward 8), is tasked with deciding by the end of the week how the council will narrow four finalists to one buyer at a meeting scheduled for November 27. Knodell voted for KBTL at the first City Council meeting on October 17, 2017, Mason and Roof voted for Ting, and Wright voted for Schurz.

Roof said many members of the public had reached out to express frustration with the twists and turns of the process. "The process undoubtably has had twist and turns," said Roof. “It calls for a group of four councilors to consider options of how the council will proceed with voting during our meeting on the 27th. It clarifies the roles and standards of negotiation from this point forward. It further clarifies under what circumstances councilors may interact with the bidders. It sets in a clear fashion items that will help this council and the public make a fully informed decision on the 27th. Looking forward I think this resolution lays out how and when we will get to the finish line.”

The resolution also directs councilors to refrain from contacting bidders individually. That decision follows a controversy last week when Joan Shannon (D-South District) criticized Knodell and Wright for communicating with bidders.

The council adopted the measure by an 11-1 vote. Councilor Ali Dieng was the only opposing vote.

City Council Can Perform Due Diligance on All Four Bidders

The city council will have the option to meet with Burlington Telecom staff, visit the headquarters of each bidder and get a legal and financial analysis of all bids. Some councilors already visited Tucows in Toronto. The bidder proposals will be made public soon after they are submitted.

KBTL Releases New Plan to Raise Funds

On November 13, 2017, KBTL released their new plan to raise additional funds by selling cooperative shares for $500 each, which co-op board member David Lansky said could increase the cash the co-op has and possibly could lead to the co-op's raising its $12 million bid. Half the share price would be granted to each Burlington account, while the remaining $250 would be payable at $5 per month. Customers using the subsidized lifeline program would pay $1 per month.

Ting Will See What Happens at Next Council Meeting

Monica Webb, Ting's director for market expansion and government affairs, declined to discuss whether the Canadian-based company would offer an updated bid or stay in the process and said the company would "see what happens" at Monday's council meeting. "Honoring the existing democratic process and the result it created would be ideal," she said.

Tucows CEO Elliot Noss told analysts and shareholders at Tucows' Third Quarter Earnings Conference Call on November 9, 2017 that "Burlington is a great example of the difficulty in predicting the flow of any potential transaction. There is always uncertainty. It is just in this case much of it happens publicly and the big decisions are shown live streams on YouTube. We have no update other than what was public in the City Council Meeting last Monday and we will see what happens next in the City Council Meeting this Monday. We remind that this is all available live streamed on the internet."

Schurz Will Have a Chance to Tell its Story More Clearly

Schurz Communications CEO Todd Schurz said in a phone interview with Seven Days' Katie Jickling that the company would improve its public relations campaign now that it's been given a second chance. Schurz praised the process as "robust" but said that earlier this fall, "half-truths and mischaracterizations" had circulated about his company's customer service, prices and the political affiliations of his family members. This time around, Schurz said he'd try to tell Burlingtonians the company's story more clearly. "We’d like to learn from our mistakes," he said.

Schurz received one vote out of 12 in the initial City Council meeting when the company was eliminated. "[Dave Hartnett] has preached the importance of local interests and yet somehow justifies an elaborate scheme to bring back Schurz, a cable company out of Indiana with an awful record on customer satisfaction," said Tucows executive Michael Goldstein speaking not for Tucows but as an individual. "[Hartnett] admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that 'public company' versus 'family owned' are just words that elicit emotional reactions, not valid, substantive concerns."

Corporate Transparency of Schurz and Ting/Tucows

Hugh Pickens, an analyst who owns stock in Tucows and follows the company closely, says that corporate transparency is one aspect of the contrast between Schurz and Tucows that does not appear to have received much attention from Burlington City Council. Corporate transparency describes the extent to which a corporation's internal actions, plans, and policies are observable by outsiders as a consequence of SEC disclosures and regulation and the set of information, privacy, and business policies concerning corporate decision-making and operations available to employees, stakeholders, shareholders and the general public. Tucows CEO Elliot Noss is on the record as saying that he always tries to provide as much transparency as possible into Tucows plans and operations to allow investors to track Tucows' business. "Tucows has a high degree of corporate transparency as evidenced by the information available on my web site Tucows Analysis," says Pickens. "Burlington residents, who have expressed a high degree of concern about the future of Burlington Telecom after the sale, will have much less insight into the policies and intentions of a privately owned business like Schurz which is not required to file reports with the SEC or provide quarterly earnings reports and conference calls for analysts."

ZRF Has No Comment

According to Seven Days, Faisal Nisar, head of ZRF Partners, did not respond to requests for comment. "Maybe the board goes back to a private equity firm that would just look to sell BT again in a couple of years (most likely, to a large cable company because that would be the richest possible buyer)," said Tucows excutive Michael Goldstein speaking for himself and not as a representative of Tucows in a comment on Reddit. According to the Burlington Free Press, the option of choosing a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom), is the risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[26]

December 31 Deadline Looms

The city's share of the proceeds will drop from 50 percent to 35 percent if the purchase agreement is not signed by the end of the year. Friday, Knodell said she expects there to be some wiggle room. Mayor Weinberger said he was concerned there will be no council decision to select a winning bidder until late November, but he added it is "premature to concede that we will miss this long-established deadline."[27][28][29][30]

November 13, 2017: Tucows' Michael Goldstein Gives His Personal Opinion on how the Burlington Telecom Sale Process Has Gone So Far

Tucows' Michael Goldstein Gives His Personal Opinion on how the Burlington Telecom Sale Process Has Gone So Far. David Hartnett (above left) "admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that “public company” versus “family owned” are just words that elicit emotional reactions, not valid, substantive concerns." Hartnett voted for KBTL in both the council's previous votes and on November 6 said "Ting’s not the right partner for Burlington in so many ways and there are better partners including the two that we could add back into this.”

On November 13, 2017 Michael Goldstein, Ting's vice president for sales and marketing, posted a long comment on a Burlington message board on the website Reddit. In his message, Goldsten specified he was speaking on behalf of himself but said the negotiated deal would have been a great outcome for Burlington.

Hi. I am with Ting. I’m not sure if anyone is still following this thread. I think we’ve made all the public statements we need to make at this point. But I figured I would use this (relatively discreet) placement for just a few blunt, final thoughts. (By the way, I'm not sure if my colleagues here will even agree with how blunt I am about to get. So let's say formally that these opinions are my own!) For me, there are two distinct objectives in the idea of local ownership: Ensure that local interests are served in the operation of the business Maintain a local investment in what seems to be a valuable asset with upside I truly believe that KBTL was a valiant effort to deliver on both those. (Truly. It’s pretty tough to root against the co-op even when you are bidding against the co-op.) In the end, they were not able to secure sufficient financing to deliver on that local investment. And I think the city should have always been wary that they would bring much to the table to improve operations of the business toward the goal of best serving those local interests.

Regarding those interests, it is so important to separate “local” as a romantic idea from “local” as a set of crucial, tangible needs. I have heard those needs to be:
  • Maintain reasonable pricing
  • Deliver an outstanding customer experience
  • Grow jobs
  • Contribute meaningfully to the city and the startup community

I have always believed that Ting’s track record long before this process started and everything we have said and done throughout the process has actually indicated that we are the best bet to deliver on all four. You maintain reasonable prices and grow jobs when you are able to operate the business successfully. It is partly an ethic and partly a competence. We bring both. You deliver an outstanding customer experience when you combine the values that BT and Ting share with infrastructure and tools that turn those values into great execution. We bring that and the folks at BT were thrilled at how much better they could do their jobs with our help. We are contributing meaningfully to the communities in which we currently operate and nobody even made us promise to do it! It’s just the right way to succeed in a local business. Having said that, we have made concrete promises to do just that in Burlington.

The idea of Ting and KBTL negotiating a deal was smart. You ended up with everything we would bring to the operations, an asset valued at $30.5 million and up to 40% local ownership of that asset (up to 20% for the city, up to 20% for local investors or members, starting with the co-op). I think it was a great outcome for Burlington. But it was not accepted by the co-op board.

Now you really have to ask yourself what game the progressives on council are playing and what they are really trying to achieve for Burlington. Heck, more specifically, you have to ask what Dave Hartnett is trying to achieve. He voted for two rounds for KBTL and then admitted that he never considered them viable. He has preached the importance of local interests and yet somehow justifies an elaborate scheme to bring back Schurz, a cable company out of Indiana with an awful record on customer satisfaction. He admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that “public company” versus “family owned” are just words that elicit emotional reactions, not valid, substantive concerns. Maybe the board goes back to a private equity firm that would just look to sell BT again in a couple of years (most likely, to a large cable company because that would be the richest possible buyer). Again, that would do nothing to serve local interests. You also need to ask yourself what the co-op really wants to achieve.

In fact, I think the process worked. You had eight solid bids. The co-op’s presence absolutely helped move all bidders, including us, on key points and helped you get to a great outcome. You got to a fair, market-driven value of $30.5 million, a strong operator, hard promises to deliver on your key interests and, perhaps most importantly, up to 40% ownership going forward. The co-op is prepared to lose (because at this point their voters have admitted that they didn’t manage to come up with a viable bid) rather than accept that compromise. The council is prepared to glorify bidders that were never in the city’s best interest to begin with just to deny the mayor a victory. I think the idea of 100% local ownership was a great idea. But I think you have a pretty good fallback in Ting. You have a fair price and you have someone that has proven and promised that it would share your values and serve you well. I think folks should still be demanding that the council stop playing political games and deliver the responsible choice.[31]

November 10, 2017: Ting and KBTL Fail to Reach Agreement on Joint Venture

NBC5 reported on November 10, 2017 that Ting and KBTL said they negotiated but could not come to an agreement on a joint venture after the Burlington City Council set a deadline of 5 p.m. November 10, 2017 for a deal. The two sides said they were open to the idea of operating the company together but were disappointed a deal could not be reached by the deadline. City council said if there could not be an agreement, it would invite the other two bidders, Schurz and ZRF, back into the process. A final decision could be made at the regularly scheduled meeting on November 27, 2017.[32]

Mayor Miro Weinberger released a statement tonight saying he was disappointed. "While I'm dissapointed a Ting proposal to allow the co-op to own up to 20 percent of the new Burlington Telecom - in addition to the previously negotiated city ownership interest - narrowly failed to secure KBTL board approval, the effort speaks well of both organizations."[33]

"We had a series of good meetings with Elliot Noss and Monica Webb about how Ting and KBTL might be able to work together to purchase and operate BT," wrote KBTL board member David Lansky in an email to Mayor Miro Weinberger and the city council, referring to Tucows' CEO Noss and Webb, its head of market development and government affairs. "Throughout these meetings we experienced the Ting representatives as generous with their time, thoughtful, sincere, respectful, and open to discussion and consideration of a broad collection of options. We were unable to reach agreement on a way to work together that is acceptable to both parties." In an interview with Seven Days, Lansky would not specify the sticking points in the negotiations. "We tried to do something incredibly ambitious — form a collaboration between two organizations that have very different structures, histories, cultures — in five days," he said. "There's no one to blame. There are no bad people here." Lansky would not completely rule out returning to the negotiating table with Tucows at some point. "I don't want to close the door on anything," he said. "Until there's a closed deal, everything is possible."[34]

According to WCAX5, former Burlington Mayor Peter Clavelle was a key player in the negotiations. The Progressive is the city's longest-serving mayor and he led the charge to create Burlington Telecom 15 years ago. Current Mayor Miro Weinberger invited Clavelle to assist in talks this week. Clavelle was also key in landing an agreement to redevelop the Burlington Town Center mall.[35]

November 8, 2017: Council Member Joan Shannon Criticizes Jane Knodell for Contacting Eliminated Bidder ZRF

Council Member Joan Shannon Criticizes Jane Knodell for Contacting Eliminated Bidder ZRF. Councilor Joan Shannon has criticized phone calls from City Council President Jane Knodell (above) to ZRF Partners over the past weeks, which, she said, "wreak havoc on the process." "Councilors should not be negotiating with anybody," Shannon said.

Seven Days Reported on November 8, 2017 that Councilor Joan Shannon (D-South District) has criticized City Council President Jane Knodell's phone calls to ZRF Partners over the past weeks, which, she said, "wreak havoc on the process." "Councilors should not be negotiating with anybody," she said. The council had hired the head of Dorman and Fawcett, Terry Dorman, as negotiator for a reason, Shannon said. Shannon said Knodell's conversations with other bidders were part of a political charade by councilors who voted for Keep BT Local but now are backing off that support. "President Knodell isn't exactly rooting for @KeepBTLocal & @TingBurlington to successfully negotiate," Shannon tweeted on Wednesday. "I hope KBTL supporters like Schurz because it looks like that's where we're headed."

Knodell acknowledged that she had several phone conversations with ZRF Partners over the last few weeks, but said she did not negotiate anything. "To characterize my conversations with anyone as negotiations is absolutely wrong and baseless," said Knodell. "The council has been very divided. I felt it was prudent to keep our options open."

While communications with bidders without council approval do not explicitly violate council rules, they obscure a process meant to take place in the public eye, Shannon said. Knodell had not told the council about her communications, Shannon added. In an interview last Friday, Mayor Miro Weinberger also said that he had discouraged councilors from reaching out to bidders. "That's not something I support," he said.

Councilor Kurt Wright Also Reached Out to Schurz

According to Seven Days Councilor Kurt Wright (R-Ward 4) also reached out to Schurz and defended those calls. "Obviously we should not be negotiating, but it's important to be prepared, because we know there's a timeline," Wright said. "If we sprung it on them, then we'd be getting criticism of, how are we going to do this on the tight timeline?" "I think we should stay on the high road here," Wright added, urging councilors to focus on the negotiations at hand.[36]

Questions Remain About the Process

"Why was there a deadlock vote of 6-6 on Monday?" wrote Ken Grillo as a comment to the story in Seven Days. "If the vote was taken the week before, KBTL would have won 6-5 since Karen Paul had recused herself. Instead at least 3 of the 6 KBTL supporters chose to postpone what would have been their winning vote. Why did they do that? Maybe those KBTL supporters really didnt want KBTL to win. Why was Jane Knodell keeping the communication channel open with ZRF? She chose KBTL as her top candidate and could have voted them in on Oct 30. Instead she chose to postpone a winning vote for KBTL. I dont get it." "We need a new city council," added Ellen Joans. "What a mess."[37]

November 8, 2017: David Provost, Chairman of Burlington Telecom Advisory Board, Says Bidding Process Has Simply Become Political

The Middlebury Campus reported on November 8, 2017 that David Provost, chairman of Burlington Telecom’s Advisory Board and Executive Vice President for Finance and Administration at Middlebury College, says the bidding process for Burlington Telecom has simply become political. “The piece that’s too bad about what’s going on now is it’s simply become political,” said Provost. “We sent forward KBTL with the key understanding that its bid didn’t meet the financial standards,” Provost said. “If we sent them to the council, that would give the co-op a longer chance.

Provost Says Benefits of KBTL Would Go to Maine Fiber

KBTL plans to borrow $10 million of its $12 million bid from Maine Fiber at a 14% interest rate. Although the supporters of the co-op think the city should own as much of Burlington Telecom as possible, according to Provost, over the next five years $25 million will go back to the firm. “The irony of them saying ‘keeping it local’ is that all of the money is going to Maine,” says Provost.

Knodell Says Selection of Ting/Tucows Would Benefit its Stockholders

Council President Jane Knodell doesn’t think that Ting’s proposal will be able to adequately provide the returns to Burlington that the people deserve. “What we’re giving up is local ownership and local control. Because that’s very valuable to me, I think we need to be compensated,” Knodell said. “We should get more of our returns.” According to Knodell, the co-op would directly provide returns to taxpayers in the form of dividend checks or, if the co-op were able to provide it, through lower prices. The caveat is that Burlington residents who don’t use BT as their provider won’t recoup the same benefits. Another concern of Knodell’s is the discrepancy in value of Ting’s earnings in Burlington as compared to those in the stock market. As a publicly shared firm, the majority of gains will thus end up with the shareholders, rather than Burlington residents. “The company is poised to have very strong growth in subscribers and growth in profits,” Knodell said. “They will benefit from that. Burlington taxpayers will not, because they will no longer be the owners.”

Stiff Time Pressure on City Council to Resolve the Impasse

There is stiff time pressure on the City Council to resolve the impasse over Burlington Telecom’s control. According to Provost, the city can control who purchases the telecommunications company only up until December 31. After that, the decision is transferred to the leadership of Blue Water. Blue Water also has the right to disapprove of a finalist under certain circumstances, such as the city choosing a first-time telecom operator as a buyer.[38]

In the Burlington Telecom Management and Sale Agreement with Blue Water that was approved by the Council in 2014 (and called out again specifically in the criteria for sale of Burlington Telecom adopted by the Council on April 25, 2016) is the City's right to direct the sale of BT to a "Qualified Purchaser" that has the "capability of operating a telecommunications company of size and service similar" to BT and is "reasonably expected to satisfy any statutory criteria in order to obtain a certificate of public good from the PSB. Such a purchaser "may be a first time operator if [Blue Water] reasonably determines such first-time operator to be able to timely obtain a certificate of public good from the PSB."

November 8, 2017: Burlington City Council President Jane Knodell Contacts Eliminated Bidder ZRF, Says ZRF and Schurz Are Willing to Re-Enter the Bidding Process

Burlington City Council President Jane Knodell Contacts Eliminated Bidder ZRF. ZRF Partners is a New Jersey Domestic Limited-Liability Company that was formed on April 1, 2016 by Faisal Nisar. A search of the internet does not show that ZRF has any prior experience operating a telecom. Before ZRF withdrew from the bidding process over concerns about a conflict of interest, ZRF's initial bid was $17 million while Ting is now offering $30.5 million, Schurz was offering $30.8 million at the time it was eliminated and KBTL is offering $10.5 million in cash with the city retaining a $1.5 million ownership.

The Burlington Free Press reported on November 8, 2017 that according to Burlington City Council President Jane Knodell, the two bidders for Burlington Telecom who have already been eliminated have been contacted and are willing to come back to the table and re-enter the bidding process if Ting/Tucows and KBTL are unable to develop a joint proposal that is acceptable to the City Council. Mayor Miro Weinberger said that he had concerns about extending the timeline to choose a buyer for Burlington Telecom. Burlington's share of the profits drops to 17.5 percent if a purchase agreement isn't signed by December 31, 2017. Weinberger, who has made comments supporting Ting, said that the fact that the co-op and Ting were having a conversation reflects the "common ground" between the two.

The two bidders who were already eliminated from the bidding process are Schurz and ZRF. ZRF Partners, an equity investment firm run by Faisal Nisar, withdrew days before the names of the four finalists were made public, after the mayor said he raised concerns about a conflict of interest. ZRF's initial bid was $17 million while Ting is now offering $30.5 million, Schurz was offering $30.8 million at the time it was eliminated and KBTL is offering $10.5 million in cash with the city retaining a $1.5 million ownership. "ZRF will make certain changes that address issues raised with them by the mayor in late September," said Knodell. Schurz was eliminated from the process on October 16, 2017 after if only received one vote by the City Council while KBTL received 6 votes and Ting/Tucows received 5 votes.[39]

According to an article in Seven Days on November 8, 2017, Knodell acknowledged that she had several phone conversations with ZRF Partners over the last few weeks.[40]

Some City Councilors Say the Appeal of ZRF's Proposal is its Community-Oriented Approach

According to some city councilors, the appeal of ZRF's proposal was its community-oriented approach. Faisal Nisar, the principal at ZRF, earned an MBA from Columbia Business School and then spent three years working at Merrill Lynch in New York City. Starting in 1999, he spent 17 years "managing investments in technology and media companies" at Baker Capital, a private equity firm in New York City, according to his LinkedIn profile. Nisar launched ZRF, the entity he used to submit a proposal for BT, in April 2016. Nisar's bid at $17 million, wasn't the highest, but it attracted "significant interest" from some councilors, according to Councilor Kurt Wright. "They had an aggressive plan in regard to economic development and small business development in the community," Wright said, noting that the company had also planned to expand beyond city limits. "Many of us were very interested in them as our No. 1 or No. 2 choice." According to Councilor Ali Dieng (D/P-Ward 7), Nisar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center, Dieng recalled.

"I'm extremely disappointed; I was a huge supporter of ZRF," said Dave Hartnett after ZRF withdrew from the bidding. "I'm not really quite sure where this leaves us." Wright said, it was clear that the damage had been done. ZRF wanted to hear from the mayor that he no longer had conflict of interest concerns, Wright said — and Weinberger couldn't give that assurance. "[ZRF] didn’t want to be dragged back in there under that cloud," Wright said. "They've already been jerked around a little bit here."[41]

Risk of Choosing a First Time Operator Like ZRF or KBTL

According to Bizapedia, ZRF Partners is a New Jersey Domestic Limited-Liability Company that was formed on April 1, 2016 by Faisal Nisar.[42] According to a Linkedin profile of Faisal Nisar, the founder of managing director of ZRF Partners, ZRF Partners is a private investment and advisory firm focused on building value through operational and strategic improvements. A search of the internet does not show that ZRF has any prior experience operating a telecom.[43] According to the Burlington Free Press, the option of choosing a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom), is the risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[44]

November 6, 2017: Burlington City Council Deadlocks, Directs KBTL and Ting to Try to Negotiate Joint Venture

Burlington City Council Deadlocks, Directs KBTL and Ting to Try to Negotiate Joint Venture. Both sides seemed amenable to working together after the lengthy impasse. "There is some philosophical alignment about doing what's best for the community," said Monica Webb, Tucows' head of market development and government affairs. Webb said she wasn’t going to make a judgment on how long Ting/Tucows would stay in the sale process if the groups weren’t able to come to an agreement on how to move forward together.

The Burlington Free Press, Seven Days, VT Digger, WCAX3, MyNBC5, WAMC, and VPR reported that the Burlington City Council deadlocked twice in a 6 to 6 vote between KBTL and Ting and finally ended the impasse by directing the two companies by an 11 - 1 vote to spend the next week discussing a joint venture between the two companies to operate Burlington Telecom. The formal resolution was put forth by Ward 7 Democrat/Progressive Ali Dieng. “The city council hereby requests that the Keep Burlington Telecom board, KBTL local, and representative from Ting/Tucows develop a joint venture proposal and deliver it to the city council and mayor.” Councilor Karen Paul offered amendments to clarify some language in the clauses. Both companies were amenable to the changes.

Under the resolution, the joint venture proposal will be delivered to the City Council next week, where councilors will be able to vote on what's brought forth. If the council votes down the joint proposal, or if the two finalists can't come to an agreement, the Council "could resolve to re-open the Burlington Telecom sale process including and not limited to the four initial bidders; KTBL, Tucows/Ting, Schurz and ZRF."

Only one councilor – Dave Hartnett – voted against the resolution. Hartnett said he had mixed emotions and he had been prepared to flip his vote from Keep BT Local to Ting/Tucows. “Now the board of directors of KBTL sells themselves out to Ting, I find that very ironic I really do, Hartnett said. “I think it was a bad decision. Ting’s not the right partner for Burlington in so many ways and there are better partners including the two that we could add back into this.”

City Council Asks KBTL and Ting to Present Joint Venture at Next Council Meeting

The agreement passed the the City Council instructs the two bidders to come up with a proposal that would benefit the city of Burlington and BT subscribers, as well as create a governing structure for the combined group. Both sides seemed amenable to working together after the lengthy impasse. "There is some philosophical alignment about doing what's best for the community," said Monica Webb, Tucows' head of market development and government affairs. “We talked about some broad concepts that both parties would be agreeable to and we suggested that we work out more details over the coming week,” Webb said. Neither group made any firm commitments about what a joint venture would look like, but after the meeting Webb expressed optimism, mentioning that Ting/Tucows have public-private partnerships in other cities as well.

"Our view is to hold true to [the co-op model] as much as possible," said Andy Montroll, vice chair of the KBTL board. "We don't know whether there's a place to go with this," but he added that the group is "looking forward to attempting something." "What we're looking to do is what's best for our community and if there's a desire that Keep BT Local and Ting speak we're certainly happy to do that. We don't know what the end results would be but having conversations and trying to see if there's a mutual way to work through this is certainly an option that we'd be open to looking at.”

Montroll said KBTL and Ting are holding their first meeting Tuesday. City Council President Jane Knodell said last week that "given the condition of the bids to date, neither option in its current form” meets the needs of the city. "I personally feel the best outcome would be some model that combines the strength of these two options," she said, referring to the Tucows and KBTL bids. Councilors took out language ensuring that the Ting and KBTL joint proposal be a cooperative, a major feature of the KBTL proposal. “I’m disappointed that the language ‘through a co-op model’ was eliminated,” said KBTL supporter Max Tracy, P-Ward 2. “I wish you great luck in trying to reconcile these two very different proposals.” Councilor Kurt Wright says the council will have its final vote on who will buy the cable and internet provider on November 27th. “It boils down to...do they come up with framework for an agreement?” said Wright. “If they don’t, then we go to this new process, or we still go to this new process that the council doesn’t support.”

City Council President Knodell Makes Case Against Ting

The meeting began with lengthy monologues from each councilor defending their respective decisions. Council President Jane Knodell (P-Central District) relied on her background as a University of Vermont professor when she started the council meeting with a economics lecture on what she saw as the weaknesses of the Tucows offer. “We have before us two potential buyers of BT (Burlington Telecom) that are in many ways opposite of each other. Ting is a wholly is wholly owned by a publicly traded corporation based in Toronto called Tucows and KBTL (Keep Burlington Telecom Local) is a new consumer cooperative based in Burlington. There's a stark trade off here. Ting is reasonably well capitalized although not the strongest on this account that we have seen that Burlington loses control of the asset altogether. KBTL offers total local ownership and control of the asset but it lacks an upfront equity base on which to run the company.” She described the bid as creating inadequate returns for Burlington and a "loss of local control." “I just have to say, I am not feeling the love,” she concluded, to whistles and applause from the pro-KBTL crowd.

Councilor Adam Roof says Burlington Telecom Staff Have "a strong preference for Ting"

Councilor Adam Roof, I-Ward 8, said Burlington Telecom's staff had shared that they have "a strong preference for Ting" during a meeting last Thursday. "They also shared concerns about the KBTL bid and their ability to quickly execute a full build-out of Burlington and beyond," he wrote. The telecom's director of marketing and public relations, Abbie Tykocki, briefly addressed the council shortly before the meeting adjourned, stating that the sale process had been hard on her and her colleagues and asking that they not be made into political pawns. Tykocki, on Monday afternoon, said that while telecom employees were free to speak about their personal preferences, it would put the staff in an awkward position to make an endorsement of either finalist. "It’s inappropriate for us to state a preference for one bid or another," she said. "However the councilors interpret the information they got from us is entirely up to them."

South District Democrat Joan Shannon cited numerous concerns about the local coop’s bid including potential litigation. “KBTL was only advanced because of public interest. Moving KBTL forward will mean either it is vetoed by the mayor, vetoed by Bluewater or vetoed by the PUC (Vermont Public Utility Commission). The clear choice between these two options is Ting.”

Mayor Weinberger Meets With Representatives from Ting/Tucows and KBTL

Because of the resolution governing how the voting process worked after each of the votes the council had to take a recess. After the first tie vote, the council broke for a 15 minute recess and briefly returned only to have to break again when the vote was tie. During the break after the second vote – which was supposed to be only 10 minutes but lasted over 40 minutes – a group of city councilors, Mayor Miro Weinberger and representatives from both Ting/Tucows and Keep BT Local met behind the glass doors in the city hall lobby. The city attorney looked on to ensure there wasn't a quorum of councilors, thus triggering public meeting laws. After a few minutes, Knodell strode out, muttering: "There's some kind of bullshit going on in there." But in spite of Knodell's misgivings, the group reached an agreement. When the council reconvened, Tucows' Webb and KBTL's Montroll said they had agreed to work together. The councilors voted on the compromise, giving the two organizations four days with which to come up with the joint venture agreement. Knodell envisioned a Tucows proposal with some revisions based on KBTL's community-based model.

What Will the Joint Proposal Look Like?

What a final proposal will look like is unclear. According to Seven Days the two bidders seem to be diametrically opposed: KBTL has no telecom experience but strong local support, while the Toronto-based Tucows has experience operating a telecom — in addition to more secure financial footing. The council seemed resigned to compromise. "I'm strongly committed to the cooperative model, but we have to try to come to some mutually beneficial solution," said Council Member Max Tracy.

If the two groups cannot reach an agreement by Friday, two other bidders, Schurz Communications and ZRF Partners, will be invited back and the council will select a buyer from those four on November 27. But if the agreement is reached by Friday, the council will vote on the joint venture proposal next Monday. If the joint Ting and KBTL proposal is rejected during the next council meeting, the council will open the bidding process back up during the following meeting Nov. 27. Ting and KBTL will be back in the running, along with the two previous finalists, Indiana-based Schurz Communications and Faisal Nisar, who runs a private equity firm in New Jersey called ZRF Partners. However, Nisar has said he no longer wants to be considered as a potential purchaser of Burlington Telecom. Ting representative Monica Webb said she wasn’t going to make a judgment on how long Ting/Tucows would stay in the sale process if the groups weren’t able to come to an agreement on how to move forward together.[45][46][47][48][49][50][51]

Reference

November 2, 2017: City Councilor Karen Paul Quits Job to Vote on Burlington Telecom Sale

Seven Days, the Burlington Free Press, and WCAX3 reported on November 3, 2017 that Burlington City Council member Karen Paul has resigned from her job and plans to vote on the Burlington Telecom sale at the Burlington City Council meeting on November 6, 2017 after recusing herself for an unexplained conflict of interest at the City Council meeting on October 30, 2017. According to WCAX3, with Paul back in the mix -- sources say the council is back to being evenly split between the bid from Ting and the bid from Keep Burlington Telecom Local.

Paul, a staff accountant with the accounting firm McSoley McCoy & Co., announced the decision in an email to other councilors and Mayor Miro Weinberger. "This morning, effective tomorrow, I have resigned my position with my employer which was the source of that professional conflict," Paul wrote in the email sent around 4 p.m. Thursday. "I intend to vote on the sale of BT assets on Monday evening." "After eight years of working to address Burlington Telecom’s challenges ... I never imagined that I would find myself in a position where I would not be able to cast a vote on this most important decision," Paul wrote in her email. "I have worked to identify ways to resolve the conflict and have determined that there is only one way I can resolve the conflict," she said, referring to the resignation. City attorney Eileen Blackwood "informed me that I may join the debate on this agenda item," Paul added.

When Paul recused herself during Monday's meeting, she said little about her conflict of interest. She did say it had come to light over the weekend and that the issue "has nothing whatsoever to do with the parties interested in purchasing Burlington Telecom." Councilors were unsure about the nature of the conflict, council president Jane Knodell (P-Central District) said on Thursday morning, before the news had been released. "It’s hard to know how serious the nature of the conflict is," Knodell said. "The timing of the discovery of the conflict is hard for me to understand." According to Knodell, councilors are not required to specify what the conflict is in order to recuse themselves.

Mayor Miro Weinberger lauded her decision. "Karen is an extremely hardworking and devoted City Councilor," Weinberger said in a written statement to Seven Days. "Her resignation shows just how committed she is to Burlington."

Paul joined McSoley McCoy & Co in January 2016 after running her own money management company, Paul Financial Services, for 20 years, according to her company bio.

City Attorney Eileen Blackwood said her office had reviewed votes Paul had cast regarding Burlington Telecom, both on the city council and the Burlington Telecom Advisory Board. When a person discloses a conflict of interest, the city's legal department looks if the person had cast any decisive votes. Blackwood said she was not aware of any times where Paul had cast a decisive vote on the telecom issue.[52][53][54]

November 2, 2017: What Happens If There is Tie in Vote on Burlington Telecom Owner?

Vermont Biz reported on November 2, 2017 on what may happen on October 30, 2017 when the Burlington City Council votes on whether KBTL or Ting will operate Burlington Telecom. City attorney, Eileen Blackwood, answered the following questions for Vermont Biz:

Q: If the Council vote is a tie how is that resolved? (Does the mayor vote?)

A: “The Mayor cannot vote on a Council matter, as he is not a Councilor. City Council would have to determine the method for resolving a tie in keeping with Robert’s Rules of Order.”

Q: Can the mayor veto a council decision and then what happens?

A: “The Mayor can veto a Council decision. Council could overturn a veto with a two thirds vote, but if the veto was sustained, the item would fail.” (Blackwood during the Council meeting said if the veto were sustained, then the original vote would be as if it never happened)

Q: If a councilor recuses herself can a substitute be brought in and who decides on who that is (this happens on some boards and courts)?

A: “There are no substitutes.”

Q: If a councilor quits how is she replaced (would the mayor choose as the governor would)?

A: “We would have to determine what the Charter dictates with regards to Councilor resignation.”

Q: Does Blue Water have the right to refuse to go along with the Council's decision and under what conditions?

A: “Blue Water does have the right to disapprove of a finalist under certain circumstances, such as if the City were to choose a first-time telecom operator as a buyer.”[55]

November 1, 2017: Tucows Gets Personal in Bid to Buy Burlington Telecom

Katie Jickling, a reporter for Seven Days, a Burlington, VT based Independent Newspaper, traveled to Toronto with five members of Burlington City Council to sit in on meetings between Council members and Tucows to hear Tucows' sales pitch to choose a new owner for its municipal telecom company, Burlington Telecom. Following are some excerpts from the article which is well worth reading in its entirety:

With this reporter in tow, the Burlington contingent arrived at the former carpet factory just before 9 a.m. for a day of meetings and tours. About 200 of Tucows' 500 employees work in the two-story brick building on the west side of the city. Inside, whiteboards, rows of computers, potted plants and sleek office furniture give the place a hipster techy vibe. Company milestones are advertised on wall hangings that resemble championship sports banners. The coffee maker is programmed to tweet the news of each fresh brew. Councilors met with eight leaders from the company's various departments in a first-floor conference room. After introductions, small talk and coffee served in company mugs, the Canadians broke the ice.

An opening line from the vice president of sales and marketing, Michael Goldstein, revealed that the company has a good idea of what it's up against in Burlington. "We usually spend time thinking we need to dress more like grown-ups," he quipped. "Now we're trying to dress less like an evil corporation." Noss described the ideal Ting city as one with universities and plenty of bookstores and coffee shops. "So Burlington is perfect," he said. Over the next seven hours, company reps played up Tucows' "hyper-local approach."

Tucows was in sales mode. After lunch Friday, the group video-conferenced with the company's Oregon-based director of field operations. Other employees explained the nuts and bolts of fiber mapping and installation — tools they'd use to bring fiber to Burlington's most inaccessible homes. Noss sat at the head of the conference table, energetically presiding over events like a master of ceremonies. He highlighted a company ethos that he said would jibe with Burlington's culture: an appreciation for good coffee, an adherence to net neutrality, health food in the company kitchen and, of course, the cow theme. The councilors interviewed the Tucows leaders. They asked about the decision-making processes, local control, customer service and Burlington jobs. How was the company's relationship with its shareholders? Would Tucows end up selling BT to a large corporation such as Comcast? With the exception of a 2002 sale of an electronic library, "I've never sold anything," Noss assured them.[56]

Reference

October 31, 2017: City Council Postpones Vote On New Burlington Telecom Owner

City Council Postpones Vote On New Burlington Telecom Owner. Tucows CEO Elliot Noss answered questions in front of the City Council and gave a two minute statement during the public comment session. He said he saw his company's bid as "stewardship" of Burlington Telecom. During questioning, Noss said that if Ting were to re-sell the utility, the new owner would have to abide by the full terms of the agreement between his company and the city.

Seven Days, the Burlington Free Press, NBC5, CBS3 and VT Digger reported on October 31, 2017 that in an anticlimactic ending to a four-hour meeting, the Burlington City Council decided in an 8-3 vote to wait another week to pick a new Burlington Telecom owner when councilors will skip public forum and pick up where they left off.

Karen Paul Recuses Herself from Voting

Councilor Karen Paul (D-Ward 6) recused herself from Monday's vote. Paul had previously backed Ting. Paul said as the meeting began that she had discovered "a professional conflict" over the weekend relating to her work as a CPA at McSoley McCoy & Co. Paul refused to describe the conflict, though she said that the issue "has nothing whatsoever to do with the parties interested in purchasing Burlington Telecom." Paul declined to comment further on the nature of her conflict of interest, or how long the conflict existed before coming to light. City Attorney Eileen Blackwood, when asked, said she does not believe that Paul's conflict could have impacted prior votes.

"To hear the news, that possibly there’s a city councilor that sat through this whole process that had a conflict of interest" raised concerns, said Councilor Dave Hartnet. He added later, "It's not responsible for the council to move forward tonight." In her remarks recusing herself, Paul said she has been working on Burlington Telecom for eight years and would have preferred to vote for the final choice. "This is not the position I would like to be in," she said. However, Hartnet said he still had concerns, saying that Paul could have influenced other councilors and that he was worried about voting without getting more legal information. "I don't feel good about that," Hartnett said.

Motion to Postpone Passes on Second Try

Councilor Dave Hartnett pushed to postpone the vote after two hours of public comment. Hartnett's motion came after Councilor Karen Paul recused herself, citing a professional conflict of interest. Paul voted for Ting in the preliminary round of voting two weeks ago and has served on the Burlington Telecom Advisory Board. Hartnett, who told the Burlington Free Press earlier Monday afternoon that he planned to vote in favor of selecting the co-op, Keep Burlington Telecom Local, said he would not cast a vote even if the council decided to move forward. During a recess, Hartnett said he was concerned after learning from Burlington's legal team that there was a possibility that councilors who voted for the co-op could be personally sued by Citibank. The lawyers tried to reassure councilors that they wouldn't be liable, Hartnett said, but he was still concerned.

Hartnett's motion failed on the first vote. But after councilors had the opportunity to ask Ting CEO Elliot Noss and the co-op's Chairman Alan Matson questions, Councilor Kurt Wright moved to reconsider postponing. The council voted 8-3 to adjourn the council meeting and postpone the vote on the second try. "I think it's wise to do this," City Council President Jane Knodell (P-Central District) said of the delay. "The council has done a lot of listening, but it hasn’t had the opportunity to do very much talking to each other. There are aspects of this decision that have not been explored, have not been fleshed out."

KBTL Supporters Address Council

Keep Burlington Telecom Local has gathered support from a vocal segment of residents and won the votes of six city councilors in a preliminary vote earlier this month. Ting, a subsidiary of Toronto-based Tucows, won five votes. KBTL supporters urged the need for local control of the telecom. "The number one criteria was local control," said David Lansky, a member of the KBTL board."I don't understand how Tucows and Ting can meet that criteria." "I don't support selling off our assets to the highest bidder," said state Rep. Brian Cina (P-Burlington). "Please don't let big business interests and out of state banks intimidate you. We need to protect what is ours." “Don’t sell our franchise, stay with democracy and don't let Citibank dictate what we do in Burlington Vermont,” said Joe Patalano.

Burlington Telcom Employees Urge Vote

In an emotional plea, Abbie Tykocki, director of PR and marketing for Burlington Telecom, urged the council to hold the vote. "We are not pawns on a political chess board," she said as she criticized the council for not actively seeking BT employees' input in the sale decision. "We are citizens of Burlington and we are stressed ... I ask you, I implore you ... to put this to a vote."

Mayor Weinberger Urges Vote

Mayor Miro Weinberger also asked for a final decision. "I believe the council has a fundamental responsibility and that is to vote," he said. "We have a chance tonight to end a long, long journey that has been very strained and very problematic." He noted that it was Ting supporters who were ready to vote and KBTL backers who were now questioning their initial decision. In a statement released ahead of Monday's meeting, he said that selecting Ting would "ensure a strong and affordable future for BT," pointing to the possibility of a credit rating increase and the promised economic investment. He called the co-op bid "well-intentioned but very weak." "The Council should not let slip away tonight's hard-earned chance to finish the job," Weinberger said. The mayor urged the council to vote on Monday night, saying that it was "time to see we have the political will" to make a tough decision. "Ting is committed really to regional, economic development that I think is quite exciting,” Weinberger said. “This proposal has a 10-year plan to invest $50 million in capital investment, building out the fiber network, not just in Burlington, but likely in other parts of Chittenden County."

Joan Shannon (D-South District) called for councilors to respect the public who had shown up, as well as Ting CEO and president Elliot Noss, who had traveled from Toronto for the meeting. Four members of the Burlington Telecom Advisory Board, led by chair David Provost, urged the council to adhere to the board's recommendation. In June, the board ranked KBTL as the weakest of eight proposals. "Just know that our guidance, suggestions and recommendations are not political," Provost said. "They were developed with the best interests of Burlington in mind."

Tucows CEO Elliot Noss Speaks

Tucows CEO Elliot Noss answered questions in front of the City Council and gave a two minute statement during the public comment session. He said he saw his company's bid as "stewardship" of Burlington Telecom. During questioning, Noss said that if Ting were to re-sell the utility, the new owner would have to abide by the full terms of the agreement between his company and the city.

Some Burlington citizens spoke in favor of Ting. "If KBTL were to advance tonight as the winning offer," said Burlington resident Russ Scully, " I think we know that there’s a number of events that are gonna ensue; starting with a lawsuit from Citibank.” “If Keep Burlington Telecom Local is my new management company, I'm done,” said Ted Adler, a Burlington resident. “It doesn't have the backbone. It doesn't have the experience.”

The Blame Game

After the city council meeting, the mayor and councilors traded recriminations. WCAX reported on the back and forth:

"A bomb dropped on the process," said Kurt Wright, R-Burlington City Council. Wright is on the Mayor's side in backing Ting, but he says the Mayor is going about breaking the council's deep divide all wrong. "I think this just taking the attitude of -- as it seems the mayor has done -- which is kind of my way or the highway attitude -- I don't think that's getting us to a good place right now," "I would say that unfortunately the mayor has participated in the process in a way that hasn't helped the process," said Council President Jane Knodell, P-Burlington. Knodell is in the Keep BT Local camp. She says this is the most divided she's seen the council -- and the public -- since Mayor Weinberger was first sworn in nearly six years ago. "I don't think it's productive to revisit the past because we are where we are, but I would hope the mayor would take some responsibility for how we got in this polarized place," she said.

"We are where we are because of a series of city council decisions," said Mayor Weinberger. He says councilors chose Ting and KBTL as finalists even though he pushed them to ditch KBTL from the final 2 and keep the bid from Schurz. Even councilors who are now complaining say if Schurz was in the mix now it could have brought consensus. "Unfortunately they chose not to do that, and at this point I think its very difficult to go backwards."

"You also have to know what went on behind the scenes," Wright said. He says councilors warned the mayor and his democratic allies that keeping Ting in the mix would only elevate support for KBTL among councilors because so many constituents support its local control message. And that's what happened. Wright says a meeting Sunday between some councilors and the Mayor before the vote should have been about finding a compromise. "Our thought was, lets try to work through that," Wright said. "The Mayor really didn't want to hear any of that." Wright says the meeting ended badly. The mayor agrees but says that is just because he told the councilors that he and the public expect the City Council to choose the next owner of Burlington Telecom from the two finalists the City Council selected. He calls this a long, strenuous and expensive process.[57][58][59][60][61][62]

Reference

October 30, 2017: Citibank Threatens to Sue if Burlington Council Chooses KBTL

Citibank Threatens to Sue if Burlington Council Chooses KBTL. Citibank's legal counsel sent a forcefully worded email containing a threat to sue the city of Burlington if the city council selects Keep BT Local's bid to take over Burlington Telecom. The co-op's offer is "not even remotely commercially reasonable and not qualified," said Kevin Fitzgerald.

Seven Days, the Burlington Free Press, WCAX, and WPTZ reported that Citibank's legal counsel sent a forcefully worded email containing a threat to sue the city of Burlington if the city council selects Keep BT Local's bid to take over Burlington Telecom. The co-op's offer is "not even remotely commercially reasonable and not qualified," Kevin Fitzgerald wrote in an email Sunday night to city attorney Eileen Blackwood. A city council decision in favor of the KBTL bid would be "vigorously opposed by Citibank on several fronts including but not limited to immediate litigation." A representative of Citibank wrote to Burlington's lawyers over the weekend to say choosing the co-op's offer would "be a profound, willful and bad faith breach of Burlington's patent contractual, legal, equitable and fiduciary obligations owed to Citibank, including a breach of the implied covenant of good faith and fair dealing, and will be vigorously opposed by Citibank on several fronts including but not limited to immediate litigation."

Blue Water Expresses Concerns

The city has also received a communication from Michael Furlong, a lawyer representing Blue Water, expressing concerns about the co-op's bid, said Councilor Chip Mason, D-Ward 5. Furlong wrote that Blue Water, the local group that purchased Burlington Telecom and leased its assets back to the city in 2014, would not insert itself into the city's decision making process, but has serious concerns about whether the co-op can make it through the state's regulatory process. Blue Water has the right to disapprove of a finalist under certain circumstances, such as the city choosing a first-time telecom operator as a buyer. Mason said he believes Furlong's email confirms that they will use that right. "KBTL is a first-time operator of a telecom system, lacks management experience, and its proposed debt financing reflects junk bond credit or worse," Furlong wrote in an email. "The City’s comparison of bidders found KBTL does not meet four of the 13 criteria considered, and the City’s outside financial and technical consultants found KBTL’s bid proposal inferior to other remaining bidders."

KBTL Inaccurately Portrayed the Terms of Their Loan

KBTL inaccurately portrayed the terms of their loan in a final proposal the group submitted to the city last week. KBTL, which plans to borrow $10 million of its $12 million bid from the Maine Fiber Company, said in a new written offer to the city last Thursday that it secured its loan at 8 percent interest, significantly lower than the original 14 percent. But that's no longer true, KBTL board chair Alan Matson confirmed Sunday afternoon. "We were unable to reach an agreement with Maine Fiber on an 8 percent base interest rate that included contingent payments based on the future success of Burlington Telecom," Matson wrote in a Facebook post on Monday afternoon. "While Maine Fiber agreed in concept to this idea and worked hard to support the idea, we were never able reach an agreement on a structure that was materially different (in almost all scenarios) from the 14 percent loan that we have already committed to with them." The terms of the loan, he said, are the same as they were during October 16 council vote. Matson confirmed the information with Terry Dorman, head of Burlington Telecom operator Dorman & Fawcett, in a series of emails on Sunday morning.

"I have to admit, I am frustrated. This is exactly what I feared, Chip Mason (D-Ward 5) told Seven Days on Sunday afternoon. "We’re less than 30 hours away from a supposed vote and the terms are just now being determined. That’s not OK." City Councilor Adam Roof, I-Ward 8, who went to Toronto last week to research Ting's operation, said he has a "ton of respect" for the co-op and does not want to get into a finger-pointing match. But, he said, lowering the interest rate would have been a "material change." "Does it impact the assessment? Yes, it does," he said. Roof voted for Ting in the preliminary vote and said he plans to vote for Ting again on Monday night.

Some KBTL Supporters Still Adamant

Councilor Max Tracy, P-Ward 2, said he will be voting for the co-op and believes the local choice to offer the best long-term benefit for the city. He said his understanding of the settlement does not require the city to pick the highest offer. "We'd have a very strong case if Citibank brings litigation," he said. Tracy added that the language about Blue Water's right to refuse a buyer is "vague." Council president Jane Knodell (P-Central District) said she'd vote for KBTL and expected a 6-6 tie at Monday's meeting — meaning a winner may not be chosen then. What happens if that is the case is unclear, according to Knodell. "We have to look at our different options about what our next steps are," she said. The co-op's last minute change didn't affect her decision, she said, though she added, "They might have gotten a little bit ahead of themselves." "I think the city of Burlington needs to get its fair share of [Burlington Telecom's] future profits," Knodell said of her vote. "Ting does not provide that."

Outcome of October 30 Vote Still Unclear

It is not exactly clear what happens if there is no winner. Several councilors said they believed Monday's vote may result in a 6-6 tie, and it was unclear how the council will proceed in the case of a tie. The mayor supports the Ting bid but he does not get a vote, so he cannot break the tie. In a statement he said, "Delay, or selecting the well-intentioned but very weak KBTL offer, exposes the City to serious legal and financial risk." Although Weinberger does not cast a deciding vote, he could use his veto power.[63][64][65][66]

October 28, 2017: Ting and KBTL Present Final Pitches for Burlington Telecom

VT Digger reported that Ting and KBTL released their final letters of intent on the eve of the Burlington City Council meeting on October 30 to select a buyer for Burlington Telecom. Mayor Miro Weinberger said Friday that he still believes KBTL has not done enough to address the financial, regulatory, legal and operational concerns he and others have raised and that Ting's bid had substantively improved, putting into writing a pledge to invest $50 million in Burlington Telecom over the next decade. Weinberger said in addition to having industry leading customer service and support, Ting’s plans to grow its business in Burlington will be a boon to the local tech economy. Ting will also make Burlington a hub for research and development on ambient connectivity, holding out the potential for more tech jobs in the future, helping city and state to retain skilled young people, including graduates of Champlain College’s cybersecurity program, said Tucows CEO Elliot Noss. The majority of Burlington’s business community is supporting Ting’s bid as well with the Lake Champlain Regional Chamber of Commerce saying that beyond the capital and experience Ting offers, there are legal and regulatory issues with the co-op bid that make it a risky proposition.

Meanwhile at a news conference and rally on the City Hall steps Friday, close to 40 co-op supporters urged councillors to go with Keep BT Local’s $12 million offer, over the $30.5 million final offer from Ting. They said the benefits of local ownership outweigh the larger sale price, arguing that Ting, which is a subsidiary of the publicly traded Canadian company Tucows, would manage Burlington Telecom in the interest of its shareholders — not local residents and subscribers. “They will bend and sway and blow in the wind in whatever direction their stockholders and equity investors demand, so that they can make more money,” said co-op backer Melinda Moulton, CEO of Main Street Landing. To shore up concerns raised by the City Council as to how KBTL would survive an economic downturn or pay unexpected costs while strapped with millions in debt, the co-op secured a lower 8 percent interest rate from Maine Fiber which was previously 14 percent. To secure the lower interest rate, KBTL agreed to make additional payments contingent on Burlington Telecom’s financial success that would essentially bring payments up to a 14 percent interest rate, but only if things are going well, said KBTL board chair Alan Matson.

Ting has committed in its letter of intent to put $250,000 annually into community benefit projects. KBTL has pledged to make a similar investment as co-op board member Andy Montroll said it would match Ting’s offer of $250,000 per year. That commitment isn’t explicitly reflected in the co-op’s letter of intent. Both Ting and KBTL said they would retain all current Burlington Telecom employees. Noss said one aspect of Burlington Telecom’s future is being “trivialized” in the sale process is the actual day-to-day operation of a fiber network. “People are acting like operating an ISP (Internet Service Provider) is just instant soup, like you just add water, but it’s more complicated. You need fresh vegetables and the right spices,” Noss said.[67]

Reference

October 25, 2017: Five Burlington Council Members Travel to Toronto to Visit Tucows

VT Digger reported on October 25, 2017 that in a trip has been in the works for weeks, five Burlington City Council Members. Adam Roof, Chip Mason, Karen Paul, Richard Deane, and Joan Shannon traveled to Tucows' headquarters in Toronto to perform due diligence to get a sense of the company’s culture and operations before casting their final vote on October 30. All of the councilors making the trip voted to advance Ting’s bid at the council’s Oct. 16 meeting. “I’ll be the first to say the optics aren’t ideal,” said Adam Roof adding that the trip is being paid for by Burlington Telecom. “There will be no inappropriate courting,” Roof said. “This is a due diligence trip through and through.” Mayor Miro Weinberger and members of the Burlington Telecom Advisory Board made a similar trip to the headquarters several weeks ago.

State Rep. Selene Colburn, who supports KBTL, said the trip was available to all city councilors but that the group going is essentially the Democratic caucus and a representative for the Democratic mayor — all of whom have publicly supported Ting over the co-op. “They didn’t create this dynamic, but now it’s the Democrats and the mayor’s office going to meet with Ting,” Colburn said. Brian Lowe, the mayor’s chief of staff, said such due diligence visits are typical when the city is negotiating a major transaction, and it was open to any member of the council. "The responsible step here is for all Councilors to see Ting's operations first hand," wrote Dave Gibson in a comment to the article. "I'm stunned to learn that they hadn't already. Meetings in Burlington with a select few cannot provide an accurate feeling for the culture of a company. How could any Councilor not choose to visit informally with employees in their space."[68]

October 17, 2017: How Members of the Burlington City Council Voted in Narrowing Burlington Telecom Sale Candidates

How Members of the Burlington City Council Voted in Narrowing Burlington Telecom Sale Candidates. The Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

The minutes of the October 16, 2017 meeting of the Burlington City Council showed that members of the Council voted in narrowing the Burlington Telecom Sale Candidates as follows:[69]

  • KBTL: Sara Moore, Sharon Bushor, Jane Knodell, Max Tracy, Dave Hartnett, Ali Dieng
  • Ting: Karen Paul, Adam Roof, Chip Mason, Joan Shannon, Richard Deane
  • Schurz: Kurt Wright

Democrats - 4 Members

  • Joan Shannon - South District - Ting - Member of Burlington Telecom Advisory Board (BTAB) - Shannon, who supported Ting, praised the company for advocacy regarding net neutrality and the commitments the company has made toward the community, such as BTV Ignite. "It's extremely important that we grow our tech economy," she said.
  • Karen Paul - Ward 6 - Ting - Member of Burlington Telecom Advisory Board (BTAB) - Paul said KBTL’s pro-formas pencil out, but they include no cushion for the unexpected. A recession or other economic disruption could tank a co-op owned Burlington Telecom, said Paul. Paul requested an outside analyst to weigh the benefits and risks of the co-op bid that are "out of the realm of conventional economic analysis," including net societal benefits.
  • William "Chip" Mason - Ward 5 - Ting - Mason brought up that Citibank has indicated that it may sue the city again if it believes it hasn't received its share of profits. In a discussion on Facebook on October 14, Mason posted that "BT survived because: (i) the city settled with CitiBank for $10mm and agreed to give them 50% of the sale proceeds in an arms length sale; and (ii) because Bluewater agreed to purchase the equipment and lease it back to the city in exchange for 40% of the sale proceeds. The value of BT has been established by 2 independent bids of $28mm and $30.5mm. KBTLs offer is $12mm which nets those we agreed to share proceeds with much less. CitiBank has already indicated that they will bring suit against the City if it accepts the lower offer and intervene in the PUC proceeding. CitiBanks claim could be as high as $4.5mm and would have to be paid by the taxpayers which the PUC will not allow. We also have two different residents who have threatened to bring suit if we accept the lower offer. I, too, appreciate the decision of a prior council to lease to City Market but the vote on BT is not the same. There were not threats of litigation. Onion River had been in business for over 20 years and the city was not precluded by charter from helping. I would welcome the opportunity to speak to you or anyone else about these issues. The mediated settlement agreement with Citibank and the agreement with Bluewater are public and approved by City council after much debate. The threat of litigation arises because of the disparity in the bids which wasn’t known until offers were submitted. If KBTLs offer were twice as high this would be a non issue. We were months away from trial in federal district court facing a claim for $33 million and the loss of the assets. Absent the settlement BT would have been sold and we would have had no say and not the possibility of some return to the taxpayers. I am not patronizing any participant in this conversation or my constituents. The reference to the best interest of the city refers to the fiduciary duty each councilor has when taking action. Each councilor comes to that decision in his or her own way. The threat of litigation is not my opinion."[70]
  • Richard Deane - East District - Ting - Deane emphasized that this is not the final vote the council will make regarding the sale of Burlington Telecom. “I think we need to be certain of four critical points. That those two candidates that we choose are financially stable, that the chosen firm must have proven managerial and technical expertise. Third they have to have the best chance to be favorably evaluated by the Public Utility Commission. Finally they must offer the best assurance the $16.9 million of taxpayer funds that were inappropriately allocated by a previous administration are returned.”

Progressive Party - 3 Members

  • Jane Knodell - Central District (City Council President) - KBTL - City Council President Jane Knodell, despite her vote for the co-op, said it was a "reasonable" position to be worried about the risks facing the co-op's bid and said that Monday's vote might not translate into continued support when the council picks a winner at the next City Council meeting on October 30. "I will vote for it tonight, but I don't think it's there yet," said Knodell. Knodell said even though she started out a skeptic of the bid from Keep BT Local, it was growing on her. But Knodell also was clear to point out she still thought the proposal needed work. “I’m here tonight to support Keep BT Local but also to say keep working because there will be hurtles and … I think the people that are saying we are very worried about the financing that is legitimate,” Knodell said. Knodell reviewed the bidders’ pro-formas, or 10-year projections. The information is not public, because it includes proprietary information about the bidders. Currently, Burlington Telecom is paying for growth out of profits. Keep BT Local would have a difficult time keeping up with debt payments under that scenario, Knodell said. “It can be done, but it has to be flawless,” she said of the co-op’s plans for Burlington Telecom. Her message to the co-op board: “Please don’t rest on your laurels. Keep working hard.” Though Knodell didn’t vote for Ting, her comments signaled that it may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. The council president said she thinks Burlington should choose a buyer who can help the local tech economy flourish, something Ting has made the greatest commitment to thus far, pledging $250,000 [per year] to specific local efforts including BTV Ignite. “The next Skype could come out of Burlington. I think we need to be thinking quite big when it comes to this sale,” Knodell said
  • Max Tracy - Ward 2 - KBTL - Tracy voiced strong support of the bid, saying the community had long set forth a criteria for local ownership and adding that the city should support the co-op in overcoming any hurdles. Tracy said public input was what ended up tipping the scales in favor of Keep BT Local. Tracy read emails submitted by the public. According to Tracy, 186 support the co-op, compared to 20 for Ting and 16 for Schurz. Tracy posted on his Facebook page on October 16, 2017 that "We need lots of advocacy and big turnout for the next meeting on 10/30."[71]
  • Sara Moore - Ward 3 - KBTL

Independent - 3 Members

  • Adam Roof - Ward 8 - Ting - Roof addressed the emotion that has been swirling over the deliberations. “I am not fearful or scared or intimidated by the CitiBank potential lawsuit. Nor am I intimidated or fearful or directed by the mayor and his opinions. I do think that KBTL for me has a long way to go to mitigate the concerns that I have especially around the financial dynamics.” Roof said he was disappointed that the discourse had, at moments, turned less civil. He wrote he has received calls that he characterized as political threats and harassment. "Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would 'have a target on my back' and that 'capitalist pigs will be slaughtered,'" he wrote in an email that went out to about 20 or 30 people shortly before the meeting. He blasted the threats as both tasteless and ineffective, but said he was encouraged that the "majority of Burlingtonians are kind and thoughtful people who realize that far more unites us than divides us."
  • David Hartnett - North District - KBTL - Hartnett cast a vote for the co-op while adding he had concerns about all three bids. "I was probably the first councilor to speak up and say they weren't financially viable," he said about the co-op. "I'm willing to give them one last chance." In spite of the "major hurdles" the co-op faces, "You’ve worked hard to earn my respect," said Hartnett. "I’m a hometown guy and I’m from Burlington."
  • Sharon Foley Bushor - Ward 1 - KBTL

Democrat/Progressive - 1 Member

  • Ali Dieng - Ward 7 - KBTL - During the proceedings Dieng, referring to the fact that one of Ting/Tucows 40,000 domain resellers had sold a domain name that was used for a neo-nazi web site, told the Council that "I hear members of this council supporting entities that are hosting white-supremacy web sites, that are hosting neo-nazi web sites." Dieng added that he had received threats from some members of the Burlington City Council. "I have received so many threats just because of this issue. When I was coming here I was so excited that I will join other people who are so excited about this city. How can we partner and make this happen for the residents of Burlington. I'm going to tell you the truth. I was disappointed by some members of this council, by some members at this table, who gave me some threats about this vote. If you vote this way, it will follow you in the next election in March. Think about that."

Republican - 1 Member

  • Kurt Wright - Ward 4 - Schurz - "It’s not about fear [of litigation against the city], it's whether there’s legitimate concerns about whether Keep BT Local can pull it off," said Kurt Wright (R- Ward 4) as he explained his unwillingness to support the co-op and its $10 million loan with a 14 percent interest rate. "I don’t take those considerations lightly."

Reference

October 17, 2017: Burlington City Council Narrows Sale of Burlington Telecom to Ting/Tucows and KBTL

Burlington City Councils Narrows Sale of Burlington Telecom to Ting/Tucows and KBTL. The Burlington City Council voted to advance the bids of Ting/Tucows and KBTL in the process to buy Burlington Telecom with six of councilors voting for KBTL, five voting for Ting/Tucows and one voting for Schurz which has now been eliminated from the sale process. City Council President Jane Knodell (right in photo) led the Progressive Caucus in voting for KBTL. However Knodell signaled that Ting may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. "I will vote for it tonight, but I don't think it's there yet," said Knodell. “Please don’t rest on your laurels. Keep working hard.”

The Burlington Free Press, Sevens Days, VT Digger, Vermont Public Radio, WAMC, and My Champlain Valley reported on October 17, 2017 that the Burlington City Council voted to advance the bids of Ting/Tucows and KBTL in the process to buy Burlington Telecom with six of councilors voting for KBTL, five voting for Ting/Tucows and one voting for Schurz which has now been eliminated from the sale process.

City Council Hears Supporters of KBTL

The city released more than 200 pages of emails from residents sent to btfeedback@burlingtonvt.gov, the dedicated email address set up for residents to share Burlington Telecom input. People who chose to weigh in overwhelmingly — though not unanimously — expressed a preference for local ownership. The public comment period was dominated by people speaking in support of Keep BT Local’s bid to buy Burlington Telecom. Many of those speaking in support of Keep BT Local spoke passionately about the benefits of having Burlington Telecom run by a local company and criticized Mayor Miro Weinberger and some city councilors for not supporting the co-op’s bid. “When [Weinberger] said that the offer of Keep BT Local was not viable I felt really sad,” said Diane Pearson. “I came tonight to to ask each of you one question before you vote tonight: how can our community not be viable and what can be more viable than our community?

About 150 residents crowded into Contois Auditorium to voice their support for the co-op's bid. They stood along the walls and sat on the floor, bearing signs with slogans in favor of Keep BT Local. "How about we keep our internet & just sell Miro instead?" read one, taking a shot at Mayor Miro Weinberger. Read another, "Hands off our internet." "This is probably the biggest issue you've ever voted on," former Progressive state legislator Dean Corren told the council. "Decades from now, it will seem silly that we considered having something other than local control over the telecom." Others urged the council to consider the extensive public support for the co-op. Among the lawn signs placed in yards around the city, "You've never seen a sign saying, 'Give it to Tucows,'" said Charles Simpson, referring to Ting's parent company. People applauded and laughed.

A few people spoke in favor of the other bids, arguing that Burlington has an obligation to all its taxpayers in the sale — not just the Burlington Telecom subscribers who would become co-op members. Others questioned whether the debt-financing is workable. John Callow said that the prior mismanagement of Burlington Telecom needed to be considered and the council should consider the proposals from Schurz and Ting/Tucows. “They both offer tremendous amount professional experience and have demonstrated they can compete in a marketplace around the country,” Callow said. “Contrast that with the local option which is somewhat undervalued.

Taxpayers Speak at Public Forum

The public forum prior to the city council’s deliberation was dominated by residents pleading with leaders to keep the local bid in the running.

  • Dave Mahr: "I live in the new North End. You will hear a number of emotional pleas in support of Keep Burlington Telecom Local. But I urge you to take the advice of a Nobel Prize winning economist, Richard Thaler, and base your decision on the facts and figures versus your emotions.”
  • Dean Corren: “Not only is the coop a very viable offer but it is the only one that meets the key criterion of keeping control local.”
  • John Caulo: “I wanted to speak in favor of the Schurtz and Ting proposals. We’ve got two proposals that are fairly equally valued. Contrast that with the local option which is somewhat undervalued. This transaction and whom you select will have a bearing on the future vitality of our community.”
  • Tom Hyde: "I’m from Ward 6 and I think it’s really important that the reason that we’ve been told that City Bank would sue the city if the Keep BT Local bid is accepted, that should be disclosed.”

Discourse, at Moments, Turned Less Civil

Councilor Adam Roof said he was disappointed that the discourse had, at moments, turned less civil. He wrote he has received calls that he characterized as political threats and harassment. "Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would 'have a target on my back' and that 'capitalist pigs will be slaughtered,'" he wrote in an email that went out to about 20 or 30 people shortly before the meeting. He blasted the threats as both tasteless and ineffective, but said he was encouraged that the "majority of Burlingtonians are kind and thoughtful people who realize that far more unites us than divides us."

Mayor's Recommendation Disregarded

Mayor Miro Weinberger had urged councilors to block the advancement of the co-op in the bidding process, arguing that KBTL isn’t financially viable, lacks managerial experience and would face legal and regulatory hurdles. At a news conference last week he said a lawsuit from Citibank is a “near certainty” should Burlington accept the co-op’s low offer.

Dean Corren, a former Progressive state representative, gave remarks that typified those of co-op supporters. He referred to Ting and Schurz as “Comcast by any other name,” highlighting a major concern among advocates for local ownership who fear no deal with a corporate buyer would bind a telecom giant should it purchase them in the future. “You cannot run a city based on threats of corporate litigation,” Corren said. Corren was not the only Keep BT Local supporter who took aim at the mayor. Ward 8 Independent Adam Roof addressed the emotion that has been swirling over the deliberations. “I am not fearful or scared or intimidated by the CitiBank potential lawsuit. Nor am I intimidated or fearful or directed by the mayor and his opinions. I do think that KBTL for me has a long way to go to mitigate the concerns that I have especially around the financial dynamics.”

Weinberger defended himself against criticism. The settlement, he said gave the city control over the future of Burlington Telecom. Citibank had initially sought to force the fiber network into receivership. “We heard frequently tonight that it’s important to fight the banks and not be afraid of litigation. I just hope we all remember the history. We did fight. I did fight,” Weinberger said.

Progressive Caucus Voted Unanimously to Support KBTL

The Burlington Progressive Party voted unanimously Sunday to support the Keep Burlington Telecom Local bid, saying it offers "the greatest long term value to Burlington residents." The party cited the success of other cooperatives, including City Market, in Burlington.

Some of the councilors who cast their votes for the co-op warned the supporters who packed Contois Auditorium that they still had some concerns. City Council President Jane Knodell, despite her vote for the co-op, said it was a "reasonable" position to be worried about the risks facing the co-op's bid and said that Monday's vote might not translate into continued support when the council picks a winner at the next City Council meeting on October 30. "I will vote for it tonight, but I don't think it's there yet," said Knodell, adding that she had started out as a skeptic toward the co-op, but it was growing on her.

Concerns About KBTL Continue

Ralphine O'Rourke, a private attorney hired by the city to assist with the sale of Burlington Telecom, told Weinberger and the council that she and Eileen Blackwood, the city attorney, had spoken with Citibank's lawyer. O'Rourke wrote that the lawyer, Kevin Fitzgerald, told them the co-op's offer would "not meet the City's obligations to Citibank." She added that the bank was uninterested in equity in the co-op-run company. "In terms of our providing you with a risk assessment regarding the possibility of whether Citibank would bring a claim, it has moved from quite possibly to definitely," she wrote.

The co-op addressed the question of Citibank's potential legal challenge on its website. "It is our position that the potential problem with Citibank can be cured, but it requires cooperation with City Council and the Mayor," the co-op wrote. "We are fully prepared to respond to this concern and are confident that with the City’s help we can clear these hurdles." The co-op’s board has said it believes it has a financially sound proposal that will pass regulatory muster. On Monday, KBTL announced an “Executive Transition Advisory Board” to help guide it through the next phase of the bidding process. Among those on the executive transition team are Avram Patt, a former Washington Electric Co-op general manager, and Carina Driscoll, a former state representative, city councilor and Sen. Bernie Sanders’ stepdaughter.

Councilors also expressed concerns about the financial viability of Keep BT Local's bid. The co-op's $12 million offer would be financed by a $10 million loan with a 14 percent interest rate. "It’s not about fear [of litigation against the city], it's whether there’s legitimate concerns about whether Keep BT Local can pull it off," said Kurt Wright (R- Ward 4) as he explained his unwillingness to support the co-op. "I don’t take those considerations lightly."

Councilors May Change Their Votes in Final Vote on October 30

Councilors said that their votes Monday night weren't necessarily an indication of their final choice. The two finalists will continue to refine their offers before the council selects the winning bid on October 30. While half of the City Council voted for Keep BT Local, some of them made it clear that their vote to move the co-op into the next stage of the sales process didn’t guarantee they’d support the bid in the final vote. Several councilors who voted for Ting said they appreciate the benefits of local ownership that the co-op offers, but those benefits won’t be realized if Keep BT Local can’t survive the in the short term. City Councilor Karen Paul, D-Ward 5, said the co-op’s pro-formas pencil out, but they include no cushion for the unexpected. A recession or other economic disruption could tank a co-op owned Burlington Telecom, she said.

East District Democrat Richard Deane emphasized that this is not the final vote the council will make regarding the sale of Burlington Telecom. “I think we need to be certain of four critical points. That those two candidates that we choose are financially stable, that the chosen firm must have proven managerial and technical expertise. Third they have to have the best chance to be favorably evaluated by the Public Utility Commission. Finally they must offer the best assurance the $16.9 million of taxpayer funds that were inappropriately allocated by a previous administration are returned.”

City Council President Jane Knodell said even though she started out a skeptic of the bid from Keep BT Local, it was growing on her. But Knodell also was clear to point out she still thought the proposal needed work. “I’m here tonight to support Keep BT Local but also to say keep working because there will be hurtles and … I think the people that are saying we are very worried about the financing that is legitimate,” Knodell said. Knodell reviewed the bidders’ pro-formas, or 10-year projections. The information is not public, because it includes proprietary information about the bidders. Currently, Burlington Telecom is paying for growth out of profits. Keep BT Local would have a difficult time keeping up with debt payments under that scenario, Knodell said. “It can be done, but it has to be flawless,” she said of the co-op’s plans for Burlington Telecom. Her message to the co-op board: “Please don’t rest on your laurels. Keep working hard.”

Though Knodell didn’t vote for Ting, her comments signaled that it may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. The council president said she thinks Burlington should choose a buyer who can help the local tech economy flourish, something Ting has made the greatest commitment to thus far, pledging $250,000 to specific local efforts including BTV Ignite. “The next Skype could come out of Burlington. I think we need to be thinking quite big when it comes to this sale,” Knodell said.[72][73][74][75][76][77]

October 16, 2017: City Council to Decide on Burlington Telecom Finalists at October 16 Meeting

'City Council to Decide on Burlington Telecom Finalists at October 16 Meeting. The Burlington City Council will meet at 7 pm EST on October 16, 2017 to select two finalists to buy Burlington Telecom. A final decision will be made by the Council October 30. Two out-of-state bidders, Ting and Schurz, and one local bidder, KBTL, are the finalists.

Vermont Biz reported on October 16, 2017 that the Burlington City Council will meet at 7 pm EST on October 16, 2017 to select two finalists to buy Burlington Telecom. A final decision will be made by the Council October 30. Two out-of-state bidders and one local bidder are the finalists. Last week, Mayor Miro Weinberger urged the City Council to advance to the final round the bids from Ting/Tucows and Schurz Communications. This was expected as they were the high bidders. The third bidder, Keep Burlington Telecom Local (KBTL), presented a bid that would provide less than half the cash and a high debt load. The chairman of the BT advisory council already had advised against the KBTL bid because of that. The bid from the Canadian company Ting was $27.5 million; Schurz from Indiana was $30.8 million; and KBTL was $12 million, with $10.5 million in cash, including $10 million financed at 14 percent interest. All the bidders offered a way for the city to retain a minority stake in the "new" BT. KBTL would run the fiber-based telecom as a for-profit co-op, which would include current subscribers. BT provides Internet, phone and television service.[78]

City Council President Jane Knodell said on October 12, 2017 that it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[79] The Burlington Free Press reported on October 16, 2017 that the Burlington Progressive Party voted unanimously to support the Keep Burlington Telecom Local bid on Sunday, saying it offers "the greatest long term value to Burlington residents." The party cited the success of other cooperatives, including City Market, in Burlington.[80]

According to a story on Vermont Public Radio, each councilor will get one vote Monday night and the two proposals with the most votes will advance to the final stage of the sale process.[81]

October 13, 2017: Ting/Tucows Clarifies Some Points in its Burlington Telecom Offer

Tucows CEO Elliot Noss sent a letter to David Provost, Chairman of the Burlington Telecom Advisory Board and Terry Dorman on October 13, 2017 clarifying some points in their offer:

Re: Concerns about Tucows as a publicly-traded company
Over the last 24 years, Tucows’ has succeeded by providing our customers with a great experience for a fair price. Actions like suddenly raising prices, enacting data caps, selling customer information, or cutting back on service would damage the reputation our entire company is built on, and would be inconsistent with our actions for over two decades. We have simply never done these things. Treating customers and employees right leads to company success. Investor success follows, but does not lead our decisions. Our investors understand and value this choice, and would expect us to do nothing less for Burlington Telecom and the people of Burlington.

We also think it’s important to note that Ting does not follow a traditional cable or media model. We are a progressive Internet company, with a genuine customer-centric approach to running our business. We’re open to operating differently--and better--than cable, telecom, and media companies, and this model has won us devotion from customers in our other markets and in our mobile business, as well as awards for our city-friendly partnerships, from community broadband organizations. We fought for Net Neutrality before it became a discussion topic. We also worked against SOPA/PIPA and have been actively engaged in every issue to protect consumer interest and an Open Internet since the beginnings of the Internet, and we will continue to do so, in Burlington, if we are chosen.

Re: Burlington Telecom staff retention
We would need every current BT employee to continue running the operation, and we hope they stay. Our expectation is that the headcount and opportunities for Burlingtonians to grow over time as the network expands and gains more subscribers, and that employees would have access to expanded career options.

Re: Burlington Telecom’s importance within the Ting Internet family
Of Ting’s five cities, BT would immediately become our largest and most developed market. The comprehensive experience of the BT workforce, through both good times and lean ones, would bring significant insights to Ting, and underpin our ability to develop a winning model in Burlington for how ubiquitous gigabit fiber can transform a community through spurring entrepreneurship and innovation, and improving overall social and economic outcomes.

Re: Annual $250,000 community commitment
We would like to underscore that Tucows’ local commitment would be $250,000 per year to programs in Burlington that support municipal, economic development and entrepreneurship. This type of hyper-local community support is a signature strategy that Ting Internet is renowned for in all of our markets. The Burlington commitment includes:
  • $60,000 per year to BTV Ignite
  • $50,000 per year to free TV advertising for local startups and community events
The remainder would go to programs developed with local community involvement such as:
  • Free service to select, local non-profits
  • Sponsorship of local events and programs
  • Low-income Internet service subsidies
  • Internship programs
  • Zones offering free gigabit-powered, state-of-the-art Wi-Fi
  • Additional public, educational and government (PEG) access channels
  • Free co-working space
  • Small business challenges

Re: Lifeline support for low income households
In our community commitment, we cited low-income Internet service subsidies. That will absolutely include continuing BT’s support for the Federal Lifeline Broadband program. However, we do not think the Lifeline program is enough, and we have started to work on innovative approaches with local communities that provide more effective solutions to the digital divide, and we would expect to bring these lessons to Burlington.

Re: Assets and liabilities
Tucows’ offer is for all of the assets required for the current operations of Burlington Telecom. It assumes a zero cash balance at closing.[82]

Reference:

October 13, 2017: 'Keep Burlington Telecom Local' Pushes Its Case on the Steps of City Hall

'Keep Burlington Telecom Local' Pushes Its Case on the Steps of City Hall. Chairman Alan Matson called the 14% interest rate KBTL will be paying on its $10 million loan from Maine Fiber “no doubt higher than what we’d like” but said the loan was structured with lower payments in the first years and higher as time went on.

VT Digger reported on October 13, 2017 that supporters of 'Keep Burlington Telecom Local' rebutted arguments against their bid on October 13, 2017 at a press conference held outside City Hall, and reiterated they were “very actively pursuing” a purchase of the city’s internet, cable and telephone service provider. KBTL Chairman Alan Matson called the 14% interest rate KBTL will be paying on its $10 million loan from Maine Fiber “no doubt higher than what we’d like” but said the loan was structured with lower payments in the first years and higher as time went on. Matson said the co-op could buy out the loan after three years and negotiate with a new lender. Matson also cited co-op board members and supporters with managerial and legal skills, including appearing before the Public Utility Commission, which must approve any sale.

City Council will narrow the three bidders down to two finalists on Monday night. City Council President Jane Knodell on October 12, 2017 said it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[83]

October 12, 2017: 'Keep Burlington Telecom Local' responds to Questions on Reddit AMA

on October 12, 2017, Alan Matson, Chairman of 'Keep Burlington Telecom Local' board, responded to questions on KBTL's Reddit AMA.

Question: People have stated that KBTL lacks expertise in the ISP business, how would you refute that?

Alan Matson: Several things...but the key is that KBTL's being led by a Board of Directors. If we are successful, the Board will hire a general manager who actually runs the telecom. This hire is truly what should be looked to for the expertise. Second...on our board are three business folk who have all started up successful businesses plus a lawyer who has a practice that includes telecom and has submitted CPGs for telecom companies in Vermont. As for the point of who would we hire for a manager.....our intent has always been to keep the existing management in place...if at all possible...and that continues to be our plan.



Questions: What challenges to would you anticipate in gaining PSB approval if selected?

Alan Matson: While I'm not the lawyer on the Board, I understand that there are two issues that have been raised about PSB (Now Public Utilities Commission "PUC") approval. They are management and financial stability. Additionally...there are two CPGs in play here....phone and cable. I'll start with phone...this CPG should not be an issue. Phone CPGs pretty much ask some simple questions about prior bankruptcies. The cable CPG will be the tougher one...on the management front, we are quite confident that our bid is successful that the PUC will have no issues with our management. It's tough to say more at this point. On the financial front....we have submitted Pro-forma financial info to the City as regards our bid, and right now nobody is saying that it doesn't work or that the assumptions are wrong. Also...the PUC tends to encourage competitive providers which BT is in this situation.



Question: As I understand it (and I am not paying much attention) your bid is much less than the others. Why should you get the franchise?

Alan Matson: Key is the value to the City as a whole and not just the headline bid number (of which the City only gets 25% over $6 million). Also, the total $$ value of the bid is only one of the criteria listed in the sale criteria.



Question: Why is the mayor being such a dick to you guys?

Alan Matson: I can't speak to motives, but the mayor is only one part of the decision process here, and our offer continues to provide for the City benefits that don't exist in the other bids. We're continuing to highlight those benefits, as well as highlighting what we think are misrepresentations about all three bids. Basically, we think the risks of our bid are being exaggerated, whereas the risks of Tucows and Schurz are being overlooked. For example, Tucows does not currently manage any cable companies, nor do they have the cash on the balance sheet to purchase BT which makes debt issuance likely. Schurz, on the other hand, has a recent history of buying and selling media properties (including a cable company in Florida last year) and uses data caps in their pricing model for at least one of the cable companies.



Question: I've been a supporter of KBTL for quite a long time, if you'd asked me as recently as a month ago I'd have said that you guys should win the bidding process with no doubts in my mind. Between the several events of the past month I have to say that you are now my last choice. I've read the proposals. I've examined the available financials. I've listened to what the Mayor has to say and taken the time to understand why he said it. Most importantly I've read the Ting/Tucows and KBTL AMAs.

People have been up in arms about the Mayor saying that the city should reject your offer. If that was all he said I would agree, however, he clearly stated that his reason for wanting to reject your bid is that accepting it would open the city to additional legal risk. That means that KBTL is effectively asking the city and it's tax payers to not only accept significantly less money ($7.5 million allocated to the city from your bid vs approximately $11 million from Ting and $11.5 million from Schurz) but to accept significant legal risk on your behalf. It's quite possible that legal fees and an eventual settlement with Citibank could exceed the $7.5 million paid to the city from your bid. This would effectively mean having the tax payers pay you for the honor of giving you a profitable business with significant valuable assets.

Alan, you and the other directors should be ashamed of your AMA. This AMA represented a significant chance to engage with the community you seek to serve, and you failed to do so in any meaningful way. In your AMA you also went out of the way to disparage your competition, something I have not seen from either Ting or Schurz, and something that I find highly unprofessional.

First, you state that Ting (Tucows) has no experience managing a cable company, while failing to mention that you and your board also have no experience managing such a company. In fact you have no experience managing a telecom company of any kind. In the quoted sentence you also mention that Ting doesn't have sufficient assets on hand to purchase Burlington Telecom for cash, and that they would very likely issue debt to do so. You're a business person, so you know that large asset purchases are almost always debt financed, it is absolutely the normal course of business. In fact it would be much more remarkable if Ting were to make this purchase entirely with cash. What you're doing is attempting to frighten people who are less business savvy than yourself. Shame on you!

When asked an incredibly important question about your total lack of expertise or any experience at all in running a telecom company you fail to provide a concrete plan. Instead what your prospective customers get is a vague answer of "Our current plan is to probably keep existing management... maybe." Given this answer I have way less faith in your ability to manage Burlington Telecom than I already had.[84]

October 10, 2017: Burlington Mayor Miro Weinberger Recommends City Council Choose Ting/Tucows or Schurz Communications

Burlington Mayor Miro Weinberger Recommends City Council Choose Ting/Tucows or Schurz Communications. Burlington Mayor Miro Weinberger (left) and David Provost, chairman of the Burlington Telecom Advisory Board, held a news conference on October 10, 2017 to recommend that the City Council move forward with Ting/Tucows and Schurz Communications excluding the effort known as Keep Burlington Telecom Local (KBTL).

The Burlington Free Press, VT Digger, Seven Days, and Vermont Biz reported on October 10 and 11, 2017 on Burlington Mayor Miro Weinberger's public announcement at a press conference on October 10, 2017 that he recommends the City Council move forward with Ting/Tucows and Schurz Communications excluding the effort known as Keep Burlington Telecom Local (KBTL). Weinberger did not endorse either of the proposals by Ting/Tucows and Schurz, but said both should remain when the City Council winnows the finalists down to two choices Monday night. The financial offers by those two companies are substantially higher than that made by the Keep Burlington Telecom Local co-operative, according to Weinberger.

A 2014 settlement with Citibank, the network’s main creditor, requires the city to sell Burlington Telecom. A separate agreement with a holding company that bought Burlington Telecom’s assets, and is leasing them back to the city, allows Burlington to direct the sale. For the city to keep the largest possible share of the proceeds, it must select a buyer by the end of the year. KBTL is offering $12 million; the fiber company Ting is offering $27.5 million; and broadcaster Schurz Communications is offering $30.8 million.[85][86][87][88]

Mayor Says "The KBTL Proposal is Not Viable"

According to Mayor Weinberger, KBTL's $12 million bid is doomed by legal, financial and regulatory concerns, and is inferior to the $27.5 million offer from Ting and the $30.8 million put up by Schurz Communications. "Fundamentally, at this point, the KBTL proposal is not viable," Weinberger said. David Provost, who has spent the last eight years as the volunteer chair of the Burlington Telecom Advisory Board, went further adding that the KBTL bid was “the weakest” of the eight received and was forwarded to the City Council only because “we thought it was important to keep a local option available.”

Mayor Praises KBTL's Role in the Process

However Mayor Weinberger repeatedly thanked the co-op group for its involvement and said it made the bidding process better, saying KBTL's involvement — dating back to before the sale process began, when the group was just advocating local control — improved community engagement and forced other companies to make offers that reflect the city’s values. “In part because of the KBTL-inspired community engagement, both the Schurz Communication and Ting proposals are very strong, and ultimately accepting either will result in big wins for Burlington Telecom customers, taxpayers and the city itself,” Weinberger said.

Mayor Weinberger's Complete Statement

“I appreciate the hard work of the KBTL Board and other volunteer supporters to present the City with an option for local ownership,” said Mayor Miro Weinberger. “KBTL’s focus on local issues throughout this process has helped shape the City’s goals and will positively impact BT’s future no matter which bid the City selects. Regrettably, however, the KBTL offer is simply not a viable option for the City to pursue. Selecting it would result in legal action and substantial taxpayer financial exposure, threaten to undo years of BT progress and put Burlington Telecom’s future on very uncertain footing. The KBTL focus on securing local benefits has improved the two very strong proposals from Ting and Schurz. These proposals would secure a bright future for BT, put the days of broadband monopoly behind us for good, lead to substantial reinvestment in our community, return millions of taxpayer dollars, and create the possibility of meaningful City ownership in the future company.”

City Bank Will Almost Certainly Sue the City of Burlington if the City Council Chooses KBTL

Mayor Weinberger said he has strong legal concerns if the KBTL proposal moves forward. Weinberger said Citibank, which is set to receive a portion of proceeds from the purchase of Burlington Telecom, has told city attorneys that the potential risk for legal action has increased to “near certainty” if the city accepts a bid that’s less than 50 percent of the other two bids, as is the case with KBTL's proposal. Some co-op supporters acknowledge that risk, Weinberger said, but want the city to be part of the solution in overcoming potential financial problems as it did with the development of City Market. The difference, Weinberger said, is that state law prohibits the city from subsidizing telecom operations.

Weinberger added that even though the co-op bid meets a minimum threshold dollar figure included in the agreement with the holding company, that doesn’t mean the city can accept a low offer without consequence. “Citibank is saying the gap between the proposals is too great and does not satisfy a commercial reasonableness test that all contracts (to buy Burlington Telecom) must abide by,” Weinberger said. “We are now advised by our attorneys that what was characterized as a risk of legal action by Citibank at the last City Council meeting has now become the near certainty of legal action, and real legal exposure to the city, should we attempt to move forward with a bid that’s less than 50 percent of the two other bids."

Weinberger added that not only would the City of Burlington face the high probability of a lawsuit from Citibank if the City Council chooses KBTL, but that the city could be sued by residents of Burlington who do not believe that choosing KBTL protects the city's interests.

The City also has financial concerns with KBTL's proposal, with KBTL relying on a $10 million loan at 14% interest. Questions also exist as to whether the KBTL board can put together an experienced and competent management team, something the mayor said is already included in the other offers.

Ting/Tucows and Schurz Communications Have Strong Proposals That Will Benefit the City

Mayor Weinberger emphasized the positives found in the proposals from Ting/Tucows and Schurz Communications. According to Weinberger, both proposals include a pledge to build out the system so that it can reach portions of the city where service is not now available and both Ting/Tucows and Schurz Communications are committed to strong privacy policies, net neutrality and to having an office and "major staff presence" in Burlington. "Ultimately, accepting either will result in big wins for Burlington Telecom customers, taxpayers and the city itself," Weinberger said.

Weinberger added that selling to Ting/Tucows or Schurz Communications could also head off potential lawsuits from taxpayers who are out $17 million after the previous administration improperly plowed money into a then-struggling Burlington Telecom. The mayor could veto the Council's decision, but would have no authority in the decision other than that selling to Ting/Tucows or Schurz Communications would allow the city to recoup roughly $6 million of that money while ensuring Burlington Telecom continues to offer fast, affordable internet service.

Both Ting/Tucows and Schurz Communications Need to be Chosen So the City Has Leverage to Negotiate With Them

Mayor Weinberger urged members of the Burlington City Council to accept both the Ting/Tucows bid and the Schurz Communications bid so that city officials can do a final blitz of negotiations with the two companies. If the City Council chooses KBTL as one of the two companies to go forward in final negotiations, then the city will have little leverage to get a higher "best and final" offer from the remaining out-of-state company said Hugh Pickens, an industry analyst who owns stock in Tucows and has been following the Burlington Telecom bid process closely.

Alan Matson Says Weinberger's Recommendation is Not the Death Knell for KBTL's Proposal

Alan Matson, chairman of the Keep Burlington Telecom Local board, said after Weinberger’s news conference that the mayor’s position “makes it tougher” for his group to move its plan forward. “I don’t necessarily see it as a death blow. It sure doesn’t help us," said Matson. According to Matson, KBTL has a strong proposal in place despite a lack of experience in running a telecom company. “I couldn’t be more confident of our management plan, that our management plan will be as strong as anything put forward,” Matson said. According to Matson, Weinberger's recommendation is not necessarily the death knell of KBTL's proposal. "He's one voice in this process," Matson said of Weinberger. While it certainly doesn’t help the co-op’s cause to have the mayor oppose its bid, “The death blow will be a full City Council vote,” Matson said.

Matson added that the idea that Citibank can take this type of action to influence the sale at the last minute is further evidence of the need for local control, so Burlington Telecom will not continue to be at the mercy of outside entities. “There will be pressures on any company that has multiple locations and multiple lines of business that may or may not favor Burlington at some point or another," said Matson.

October 10, 2017: What Members of the Burlington City Council Think About the Burlington Telecom Bidding Process

What Members of the Burlington City Council Think About the Burlington Telecom Bidding Process. The Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

The Burlington Free Press reported on October 10,2017 that the Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

Alan Matson of KBTL said he is still working to win councilors’ support ahead of next week’s vote but doesn’t have a count for how he expects that to play out. If Democrats line up behind Weinberger — a fellow party member — that leaves enough votes unaccounted for to swing the process in either direction, he said.

City Council President Jane Knodell has already said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed." Another Councilor, Max Tracy, said he had some unanswered questions, though his top choice was also the co-op. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process. Councilor Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.[89]

Following are the members of the Burlington City Council sorted by party affiliation with any public information on their background and the way they may be planning to vote.[90]

Update: Here is how the members voted on October 16, 2017.[91]

Democrats - 4 Members

  • Joan Shannon - South District - Member of Burlington Telecom Advisory Board (BTAB) - Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said. [Voted for Ting on October 16, 2017]
  • Karen Paul - Ward 6 - Member of Burlington Telecom Advisory Board (BTAB) - According to a profile in the Burlington Free Press in 2014, Paul is a CPA who ran for office in 2008 to contribute her financial skills to the Council and has worked to address challenges including uncovering the city's audit and working to put into place more transparent budgeting procedures. "I am inspired to run to continue working to address our pension underfunding and restoring our City’s credit rating." To our knowledge, Paul has not expressed an opinion of the Burlington Telecom bid process or how she will vote.[92] [Voted for Ting on October 16, 2017]
  • William "Chip" Mason - Ward 5 - Mason has been supportive of Mayor Weinberger's approach to the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had asked to be removed from the process, "the Democratic mayor stood flanked by Chip Mason (D-Ward 5) and Richard Deane (D-East District), who said they'd stay focused on the remaining bids," according to an article in Seven Days that appeared on September 26, 2017. [Voted for Ting on October 16, 2017]
  • Richard Deane - East District - Dean has been supportive of Mayor Weinberger's approach to the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had asked to be removed from the process, "the Democratic mayor stood flanked by Chip Mason (D-Ward 5) and Richard Deane (D-East District), who said they'd stay focused on the remaining bids," according to an article in Seven Days that appeared on September 26, 2017. [Voted for Ting on October 16, 2017]

Progressive Party - 3 Members

  • Jane Knodell - Central District (City Council President) - Member of Burlington Telecom Advisory Board (BTAB) - City Council President Jane Knodell has already said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed." Knodell said on October 12, 2017 it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[93] Knodell is the longest-serving Progressive councilor serving her 19th nonconsecutive year on Burlington's governing body. The Stanford-educated economist has taught at the University of Vermont since 1986, during which time she's also authored papers such as "Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking." She stepped down from the city council after she was appointed UVM's provost in 2010 but returned in 2013, shortly after resigning from that position. "She's less loquacious than your average politician, but when Knodell does talk — in a slightly gravelly voice and at a professor's measured pace — councilors listen," writes Alicia Freese. "She's probably the smartest person at the table," said Progressive Councilor Max Tracy. According to Freese, Knodell can be blunt during policy debates. Drawing on her fiscal acumen, she's challenged Mayor Weinberger on subjects ranging from the fate of Burlington Telecom to the future of the Burlington Town Center mall. But her opposition generally takes the form of probing for answers rather than waging personal attacks. She's been especially vocal about the city-run Burlington Telecom, insisting that it remain locally owned and that city officials try to recoup the $17 million still owed to taxpayers.[94] According to the Burlington Free Press, Knodell, a Progressive, had the endorsement of the Democratic Party in the 2017 election. The cross-party endorsement came at the urging of Mayor Miro Weinberger, who also criticized the "hijacking" of the Progressive Party by what he called a reactionary fringe. Knodell said she believes in marrying the economic development agenda espoused by the mayor with the Progressives' equity agenda.[95] [Voted for KBTL on October 16, 2017]
  • Max Tracy - Ward 2 - Max Tracy says he has some unanswered questions, though his top choice is KBTL. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process. Tracy Wright has been highly critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process, according to a story in Seven Days, Tracy compared Weinberger to former mayor Bob Kiss, who secretly propped up the telecom with $17 million in city funds. Like Kiss, Weinberger was "making decisions in secret without council or public consultation as well as ... not taking personal responsibility for mistakes that were made with regard to BT," Tracy wrote in a message to Seven Days that day. "He is, simply put, a hypocrite." According to an article in Seven Days published on October 11, 2017, the thirty year old Tracy is know as "the council's most combative Progressive." According to Seven Days, "even though his activist efforts have been largely unsuccessful, Tracy sees himself as more than a gadfly. He's looking long-term to win policy changes that benefit working-class Burlingtonians and to shift the conversation in the direction of Progressive values."[96] [Voted for KBTL on October 16, 2017]
  • Sara Moore - Ward 3 - Moore has been critical of certain aspects of the way Mayor Weinberger has handled the Burlington Telecom negotiations. After Weinberger asked the fourth bidder to withdraw without input from the council, Moore said "It's hard not to consider that maybe he's trying to limit what people know about the way that this is playing out."[97] [Voted for KBTL on October 16, 2017]

Independent - 3 Members

  • Sharon Foley Bushor - Ward 1 - Bushor is the longest serving member of the Burlington City Council having served 30 years. According to a profile in Seven Days in 2012, Bushor is Burlington's hardest-working City Councilor and no one carries out a councilor’s duties more conscientiously than Bushor. “She immerses herself in details,” says Bill Keogh, who served alongside Bushor for 16 years. “She studies all the documents and brings up items the council might otherwise miss.” To our knowledge, Bushor has expressed no position on the current bidding process for Burlington Telecom or how she may vote.[98] [Voted for KBTL on October 16, 2017]
  • Adam Roof - Ward 8 - Roof has been somewhat skeptical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process, according to a story in the Burlington Free Press, Roof, who attended the announcement and met with the mayor afterwards, said he was reserving judgment on the situation until he had more clarity on what exactly had happened. "If the mayor made a unilateral decision instructing a bidder to be removed, I would have a problem," he said. "It’s a worthwhile question to ask."[99] [Voted for Ting on October 16, 2017]
  • David Hartnett - North District - Member of Burlington Telecom Advisory Board (BTAB) - According to an article in the Burlington Free Press on July 31, 2017, Hartnett said that the City Council is trying to come up with the best deal for the taxpayers of Burlington with regard to the bid process for Burlington Telecom, as well as not interfere with the ongoing operations of the company. "We’re really pushing hard to stay on this timeline," Hartnett said. He was optimistic about the city's ability to meet the deadline.[100] [Voted for KBTL on October 16, 2017]

Democrat/Progressive - 1 Member

  • Ali Dieng - Ward 7 - Dieng has been critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process on September 26, according to a story in Seven Days, Dieng cast blame for keeping the sales process under wraps and not listening to public feedback — most of which has been in favor of the co-op . Dieng said that the fourth bid from Nizar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center. [Voted for KBTL on October 16, 2017]

Republican - 1 Member

  • Kurt Wright - Ward 4 - Wright has been critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process on September 26, according to a story in Seven Days, Wright alleged that Weinberger had asked the fourth bidder to withdraw without input from the council. "There was a breach of trust," Wright asserted. [Voted for Schurz on October 16, 2017]

October 6, 2017: VT Digger Writes: 'Parent Company of Burlington Telecom Bidder Registers neo-Nazi Site,' Tucows Responds

VT Digger published a story on October 6, 2017 that a domain name reseller WSMDomains registered a domain name to a neo-Nazi website Stormfront. WSMDomains is one of the 40,000 third party-resellers to domain name wholesaler Tucows, the parent company of Ting, a mobile phone and fiber internet service provider, which is among three finalists looking to purchase Burlington Telecom.

According to VT Digger Internet companies are under increasing public pressure to deny service to groups that promote hate speech but are under no legal obligation to do so.Tucows CEO Elliot Noss says domain registration is a “fundamental protocol” on the internet, part of its basic infrastructure, and website content issues should be addressed by the hosting company or the reseller before a registrar considers taking action. “I’m comfortable saying we object to the content more than most. That makes these issues even more difficult,” said Noss. To deny Stormfront access to Tucows’ domain registration services would be the equivalent of a phone company cutting its service, or a municipality telling them they can’t use public roadways, said Noss. “The great irony, in the Burlington context, is this is a net neutrality issue."[101]

In August, Tucows announced it would stop providing domain privacy protection services to the Daily Stormer, another neo-Nazi website. "Tucows was never the webhost nor the registrar for the domain. Tucows provides a domain privacy service for millions of domains belonging to our wholesale domain resellers and to other registrars. The domain in question was transferred to one of our registrar partners and the privacy service was automatically applied," said Tucows in a press release on August 15, 2017. "The process of balancing free speech and the ugly opinions that people share is neither easy nor pleasant. Every day we receive many, many complaints about the content on any number of the 24 million domains on our platform. Let us be exceptionally clear: we find the content of many of these pages patently abhorrent and evidence of the worst that humanity can stoop to. Nevertheless, there are legal mechanisms and processes in place for dealing with issues of free speech and we consider it our responsibility to follow them. We have and will act in what we call “exigent circumstances” where there is an imminent threat of violence or crime. GoDaddy responded to the Daily Stormer appropriately under these circumstances. However, these circumstances aside, we have found that the clearest path forward, to protect freedom of speech and expression, is to act where we have evidence that due-process has been observed. When such is provided to us, we act on it."

October 5, 2017: 'Keep Burlington Telecom Local' Unable to Hold Planned Reddit AMA, Postpones One Week

'Keep Burlington Telecom Local' announced on October 5, 2017 that they would be unable to hold their scheduled Reddit AMA (Ask Me Anything) that they had planned for October 5, 2017 and had postponed it for one week because something unexpected had come up for Board Chair Alan Matson. "We were planning on doing the AMA today, but board chair Alan Matson had something unexpected come up and can't make it, so we're rescheduling the AMA for next week, same time and place (Thursday, 10/12 from 3-4pm). Apologies for the inconvenience, and looking forward to your questions and discussion then!'[102]

Ting/Tucows previously held an AMA on September 21, 2017 to address the community's concerns and respond to issues raised by citizens of Burlington and current customers of Burlington Telecom. There were 92 questions and answers on Ting/Tucows' AMA and another 32 on their pre-AMA.

Schurz Communications, the third bidder for Burlington Telecom, has not made any announcement on whether they plan to hold an AMA to address issues raised by the community and respond to concerns from Burlington citizens.

The Burlington City Council will select two finalists to go forward in the selection process at their meeting on October 16, 2017.

October 4, 2017: Burlington City Council President Jane Knodell is Undecided but Leaning Towards Voting For 'Keep Burlington Telecom Local'

The Burlington Free Press reported on October 4, 2017 that City Council President Jane Knodell said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed. "If you think that's so important, then you're going to be willing to take a chance," said Knodell. Knodell said she was still raising concerns about the financing model the co-op has proposed. Knodell said if KBTL could lower the 14% interest rate on the $10 million in debt that 'Keep Burlington Telecom Local' will be taking on, she believed the path forward would become much more viable.

Another Councilor, Max Tracy, said he had some unanswered questions, though his top choice was also the co-op. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process.

According to the Burlington Free Press, Councilor Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.[103]

About City Council President Jane Knodell

According to a profile of Knodell in 'Seven Days' written in 2015 Knodell is the longest-serving Progressive councilor serving her 19th nonconsecutive year on Burlington's governing body. The Stanford-educated economist has taught at the University of Vermont since 1986, during which time she's also authored papers such as "Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking." She stepped down from the city council after she was appointed UVM's provost in 2010 but returned in 2013, shortly after resigning from that position. "She's less loquacious than your average politician, but when Knodell does talk — in a slightly gravelly voice and at a professor's measured pace — councilors listen," writes Alicia Freese. "She's probably the smartest person at the table," said Progressive Councilor Max Tracy. According to Freese, Knodell can be blunt during policy debates. Drawing on her fiscal acumen, she's challenged Mayor Weinberger on subjects ranging from the fate of Burlington Telecom to the future of the Burlington Town Center mall. But her opposition generally takes the form of probing for answers rather than waging personal attacks. She's been especially vocal about the city-run Burlington Telecom, insisting that it remain locally owned and that city officials try to recoup the $17 million still owed to taxpayers.[104]

According to the Burlington Free Press, Knodell, a Progressive, had the endorsement of the Democratic Party in the 2017 election. The cross-party endorsement came at the urging of Mayor Miro Weinberger, who also criticized the "hijacking" of the Progressive Party by what he called a reactionary fringe. Knodell said she believes in marrying the economic development agenda espoused by the mayor with the Progressives' equity agenda.[105]

October 4, 2017: City of Burlington Releases Report from Burlington Telecom Advisory Board (BTAB)

On October 4, 2017 the city of Burlington released a report from the Burlington Telecom Advisory Board (BTAB) on the three bidders. The original report was written in July in order to give the full City Council the consensus view of BTAB members on the slate of bidders proposing to purchase Burlington Telecom (BT). The BTAB is made up of four City Councilors and four community members with relevant experience and has advised the City Council for many years on the decisions related to the future of Burlington Telecom.[106]

Members of BTAB include:

  • David J. Provost – Board Chair, Executive Vice President, Middlebury College
  • Clem Nilan - Board member, Former General Manager, City Market
  • Theresa Alberghini DiPalma - Board Member, Network SVP Marketing and External Relations, UVM Medical Network
  • Tim Halverson – Board Member, Owner EB Strong’s, Halverson Street Café
  • Joan Shannon – Board Member, (City Councilor, South District)
  • Karen Paul – Board Member, (City Councilor, Ward 6)
  • Jane Knodell – Board Member, (City Council President)
  • Dave Hartnett – Board Member, (City Councilor, North District)

Reference:

BTAB Evaluation of 'Keep BT Local Co-Op'

The KBTL proposal to date has been the weakest of the 8 respondents. The proposal submitted on 5th June was incomplete and a further update due on 30 June was also incomplete. The proposal relies very heavily on expensive debt and this weak capital structure has the BTAB very concerned about the risk of losing the asset again to the lender. We are also concerned that there is no management depth beyond the existing team. The BTAB is pessimistic that the PSB would ever approve this structure given the debt, lack of capital and lack of management experience in the industry. The BTAB has moved this proposal forward to the Council due to the significant public interest in the offer. However, unless KBTL can address the concerns of the BTAB we do not believe this to be a viable offer.

Strengths
  • Member owned local co-operative – local solution
  • Long standing interest in acquiring BT assets
  • Removes uncertainty of future sale, if remains viable
  • Would seek to keep BT Management Team and Operations, if not possible, they have a contingency plan.
Weaknesses
  • Vision for BT beyond local ownership unclear
  • Financial offer at low end of valuation range
  • Funded with $10M of debt at 14% interest rate
  • Limited capital to grow BT’s operations
  • Currently the Maine Fiber investment is not finalized
  • Weak capital structure unlikely to obtain State approval
  • Assets exposed in event of financial challenges, exposed to losing the asset to Maine Fiber Company and BT failing.
  • LOI failed to capitalize on the coop model.
  • Consumer orientation could stifle business development
  • Liquidity challenge for City of Burlington if the City leaves its money in.
  • Only members benefit, not all taxpayers
Update From the July Report
  • The Maine Fiber investment is characterized as “not finalized” in the July BTAB Report, but KBTL has now received a commitment from Maine Fiber.

BTAB Evaluation of Tucows

A strong offer and proposal for the council to consider. One of the strongest offers in terms of price, customer service and capital. Name would likely change to Ting, and real control of operations would move from Burlington. No new debt, but it is a publicly held company and risk of a future sale would always be a possibility. BTAB offers Ting/Tucows as a finalist to the City Council with one reservation about its publically held status and a desire to continue to work with them to strengthen their proposal and minimize the risk to the City in the event of a sale of the Company.

Strengths
  • Highly profitable, high multiple, domain name business
  • Now focused on fiber as their next growth segment
  • Strong focus on customer service
  • Relatively new entrant in several muni fiber markets
  • Local presence and customer facing operations
  • Strategic investor offering second highest price
  • No new debt used for BT purchase
Weaknesses
  • Based in Toronto, publicly traded on NASDAQ
  • Fiber is relatively new and unproven future growth play
  • Control would be centralized outside of Burlington
  • No interest shown in meeting BT management team
  • Core business highly cash positive, but declining margin
  • Less control over sale, as a public company
  • Will change the name from Burlington Telecom to Ting
Update From the July Report
  • Ting has decided to keep the name BT and add a slogan to the brand symbol so that it reads “BT” with small text noting “Powered by Ting.”

BTAB Evaluation of Schurz Communications

An extremely strong offer and proposal for the council to consider. The strongest offer in terms of price, experience and track record of holding onto investment. Current operations would remain in Burlington. BTAB offers Schurz as a finalist to the City Council, with further parameters needed on the options for the unlikely event of sale in the future, to protect the City’s interest.

Strengths
  • 5th Generation, 150-year-old family investment fund
  • Strategic investor already in the fiber & cable business
  • No debt used for BT purchase
  • BT name, management team, staff and operations would remain, GM tbd
  • Strong commitment to and focus on customer service
  • Strongly decentralized local management approach
  • Culturally good fit, and a team that works well together
  • Highest financial bidder and likely long-term holder
  • Focused on continuing to grow BT – product/geography
  • Track record of investing/holding for the long term
  • Would be a good local corporate citizen, track record of giving back to community
Weaknesses
  • Other holdings include newspapers - challenging sector
  • Local ownership only through any City carried interest
  • Local control ceded
  • Inside family members control the board and the company
Update From the July Report
  • Schurz has now committed to devolving decision-making about BT to the Burlington management team wherever possible, in recognition of the community’s strong desire for local control.

October 4, 2017: City of Burlington Releases Letter from City Attorney Eileen Blackwood Regarding Concerns with Bidders for Burlington Telecom

On October 4, 2017 the city of Burlington released a letter to the Mayor and City Council from City Attorney Eileen Blackwood dated September 7, 2017 and updated October Z 2017 regarding Legal Issues involved in the sale of Burlington Telecom. According to the letter as the various proposals to purchase BT have been being reviewed, some legal issues have arisen that should be taken into account as the Mayor and Council consider the potential purchasers. One issue involves the role of the Public Utility Commission; the second involves the role of Blue Water, and the third concerns the role of Dorman & Fawcett. The first issue came up in the context of evaluating the various proposals for the City's carried interest I then asked our outside counsel Ralphine O'Rourke at Primmer, Piper for an independent opinion, particularly focusing on what risks would arise from a Council decision to roll over some or all of the City's net sales proceeds. Her legal memo is attached but is summarized below.[107]

Regulatory Concerns for Public Utilities Commission Approval and Carried Interest Investment

The purchase and sale agreement for this transaction will ultimately be subject to the review and approval of the Vermont Public Utilities Commission (PUC) (formerly known as the Public Service Board), which must grant the buyer a Certificate of Public Good (CPG) before the sale can close. In its process, the commission will give great weight to the opinion of the Department of Public Service (DPS), particularly in relation to the statutory and so-called EMCO criteria that the PUC will ultimately evaluate. Those PUC criteria are set forth in the criteria for sale of Burlington Telecom, adopted by the Council April 25, 2016, and in Attorney O'Rourke's attached memo.

Rejection of the sale by the PUC would put the City in a very difficult position, as by the time that decision is made, the City will have missed important deadlines in the agreement with Blue Water, and will be in a substantially weaker negotiating position with future prospective partners than it is in today. Given the regulator's criteria and role, the City must consider how the PUC will view this transaction. • Both the DPS and the PUC are likely to more easily approve an entity with a demonstrable track record of success in managing a municipal telecom and demonstrable access to capital, rather than a first-time cable operator, as they are charged with considering both the financial stability and operational experience of the proposed company. The regulators are likely to subject to greater scrutiny an entity formed solely to purchase BT, which has no experience actually operating a telecom business, than they would more established and better capitalized companies.

  • The regulators are likely to look favorably upon the return on the City's existing investment into BT that will flow from a higher sales price and may not support a City decision to accept a lower valuation without strong justification, as returning less benefit to the taxpayers.
  • Two of the finalist bids currently before the Council would allow the City to opt to reinvest its "net sales proceeds" in a carried City interest in the future BT entity and one requires that reinvestment. However, in considering that carried interest, the PUC will still have to evaluate the existing charter provisions about our telecom authority, as Attorney O'Rourke describes in her attached memo. If the PUC believes the City investment is speculative and could result in losses, it may hesitate to agree to a carried interest Even if the PUC allows some carried interest, it may require the City to take some of the net sales proceeds in cash in order to ensure that the taxpayers have seen some return and may require certain legal protections against losses (more fully described in Attorney O'Rourke's memo). The legal team recommends that whatever proposal is taken to the PUC should include the option to take the entire net sales proceeds in cash if the PUC requires that[108]

Blue Water Approval

An additional challenge to be considered is that Blue Water has an interest if the sale is to a first-time operator.

In the BT Management and Sale Agreement with Blue Water that was approved by the Council in 2014 (and called out again specifically in the criteria for sale of Burlington Telecom adopted by the Council on April 25, 2016) is the City's right to direct the sale of BT to a "Qualified Purchaser" that has the "capability of operating a telecommunications company of size and service similar" to BT and is "reasonably expected to satisfy any statutory criteria in order to obtain a certificate of public good from the PSB. Such a purchaser "may be a first time operator if [Blue Water] reasonably determines such first-time operator to be able to timely obtain a certificate of public good from the PSB."

An option that involves a first-time operator (that is, an entity that has never operated a telecom), therefore, faces the added risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[109]

Potential for Perceived Conflict of Interest

Dorman & Fawcett (D&F) has been wearing many hats over the past few years, and from time to time the issue of conflict of interest has arisen. D&F agreed to defer its fees during these past several years, allowing them to accumulate and be paid at the sale, in return for receiving 10% of Blue Water's interest in the net sales proceeds. From the City's perspective, this arrangement seemed to give D&F an incentive to find a purchaser, at a good price, who could receive a CPG in a timely manner; their interest therefore seems aligned with the City's interests. However, the Council's April 2016 Resolution on the BT Sale Criteria specifically acknowledges that others may perceive D&F's financial interest as creating a conflict of interest, or the perception of such a conflict, such as an interest in accepting the highest offer. That is a perception the City has kept in mind throughout this process.

Initially, some of the bidders had included a continuing role for D&F after the sale, either as operator or with the option to roll over its sale proceeds into an equity stake in the future entity. Because of concerns that this continuing role could be perceived as a potential conflict of interest, D&F has informed all the finalists that none of the bids should be based on D&F's having a continuing role in the new entity beyond a transition period.[110]

Other Legal Interests

In 2014, the City entered into a settlement agreement with Citibank that was "predicated on the assumption that the [financing with Blue Water] is intended as a bridge to the eventual arm's-length sale of the System to a private entity." After the closing of that sale, the City is to share 50% of its portion of the net proceeds of the sale with Citibank Citibank, therefore, has an interest in what the net proceeds consist of, and the City must evaluate in good faith how the finalist's proposals will address Citibank's interest A proposal that fails to treat Citibank's interests equivalently to the City's so that it realizes its 50% share is likely to face legal challenges.

In 2009, Burlington taxpayers sued the City and its former CAO Jonathan Leopold for having spent $17 million of taxpayer money on BT, despite the charter provisions requiring that taxpayers not suffer from BT's losses. The claims against the City were ultimately dismissed, but some taxpayers may raise new claims if the City chooses a bid that they believe is not as beneficial to the taxpayers (as opposed to the subscribers of BT) as another option. Thus, the interests of taxpayers, as well as those of BT subscribers must be considered. When BT is sold, the employees of BT will end their employment with the City. Currently, the City's pension plan has an unfunded liability, a portion of which is attributable to those BT employees. For the year ending June 30, 2016, that amount was $1.lmillion, but it fluctuates from year to year depending on market conditions and other factors. When BT is sold, the City will need to contribute to its pension plan from the net sales proceeds some amount to cover that liability, and as soon as the City's new actuaries are on board, there will be a better estimate of what that amount will be. However, it is likely that the City will need to take at least some portion of its net sales proceeds in cash.[111]

Summary

From a legal perspective, the state regulatory agencies are more likely to approve a proposal that involves an established, independent company with experience in telecom operations and a significantly higher valuation and access to capital and would look less favorably on one that involves a new company with a much lower valuation. . The state regulators may hesitate to allow the City to roll its entire net sales proceeds into the new entity, and if rollover is allowed, will likely require protections against losses. Blue Water, Citibank, and non-subscriber taxpayers all have interests that must be considered to avoid legal challenges.[112]

Reference

October 4, 2017: City of Burlington Releases Independent Financial Analysis of Bidders for Burlington Telecom

On October 4, 2017 Burlington Telecom released the independent financial analysis of the three bidders for Burlington Telecom performed by Jeffrey Small CPA which is contained in a letter dated September 25, 2017. Small was engaged to review the financial status of the above three named companies in regards to their financial stability and how that then integrates with their letters of intent to purchase Burlington Telecom. Following are the conclusions of the report:

  • If we assume a EBITDA of 3.5 million then an enterprise valuation of Burlington Telecom using the Industry average multiples of 8.1 it would compute to a market value of 28.35 million. If we use the enterprise valuation EV/Sales ratio and the 2018 budgeted sales of 10 million, we would come up with a valuation of 25 million for the enterprise value.
  • If we assume a FMV (fair market value) of between 25 and 30 million, then the Keep BT Local proposal would pass this equity interest to the Burlington subscribers of BT as owners/members. As stated in the Keep BT Local LOl "In recognition of the fact Burlington residents/taxpayers have already paid nearly $17 million dollars toward the development and operations of BT, there would be no additional cost for Burlington subscribers to become member/owners of KBTL." This means Burlington residents that are non BT subscribers will not get any benefit from any equity or value transfer.
  • In analysis these three companies from purely a financial strength standpoint, the strongest company is Schurz Communications, Inc. with Tucows, Inc. also being a strong company while Keep BT Local has weaknesses with various financial benchmarks. [redacted]
  • The cost of debt for Tucows, Inc. and Schurz Communications is well below the industry standard while Keep BT Local cost of debt is substantially higher than the Industry standard. [redacted]
  • Cash balance to be left at closing in the company would be zero in Keep BT Local and Schurz Communications. [redacted] Tucows, Inc. is silent on amount.[113]

Reference:

October 4, 2017: City of Burlington Releases Independent Legal Analysis of Bidders for Burlington Telecom

On October 4, 2017 the City of Burlington released an Independent Legal Analysis of the bidding process for Burlington Telecom performed by Ralphine O'Rourke, Esq. of the law firm Primmer Piper Eggleston & Cramer PC (PPEC) and documented in a letter to the city dated October 2, 2017 regarding the "Carried Equity Interest in New Burlington Telecom Enterprise and Blue Water Approval Rights." O'Rourke was asked to provide her thoughts with respect to the City of Burlington's allocation of all, or a portion of, the net sale proceeds from the sale of Burlington Telecom to acquire an equity interest in the new BT enterprise upon the sale of the assets of BT by Blue Water Holdings, LLC and the City to a third party and also asked to consider what approval rights Blue Water has in connection with the sale of BT. Following is a summary of the report:

  • The City Charter expressly allows the City to establish a joint venture or other business relationship to provide telecommunications services;
  • Upon the City's exercising its authority to establish such a venture, it must be approved by the Vermont Public Utility Commission ("PUC");
  • The PUC, in issuing a certificate of public good ("CPG") for such a joint venture, must ensure that any losses from the business are not borne by the City's taxpayers, and in the event of complete abandonment or curtailment, that the costs associated with investment in the telecommunication network are not borne by the City's taxpayers;
  • In order to obtain a CPG to that effect, the City (and the other owner of New BT) will need to be able to demonstrate that no losses will be borne by City taxpayers as a result of the joint venture;
  • The PUC has numerous and substantial other standards that it considers in connection with issuing a CPG, which include considerations relating to the management experience and financial stability of the petitioner and
  • If the petitioner for the CPG is a first-time operator, Blue Water has the right to "reasonably determine" if such first-time operator would be able to timely obtain a CPG from PUC.[114]

Reference:

October 2, 2017: 'Keep Burlington Telecom Local' to do Reddit AMA

'Keep Burlington Telecom Local' announced on October 3, 2017 that Keep BT Local co-op board president Alan Matson is game to do an AMA Thursday, October 5, 2017 from 3-4pm. "It also sounds like at least a few of the other board members and other key volunteers will be available at that time to chime in about our bid to make BT subscriber-owned, so bring your questions, and hopefully it will be a good conversation!"[115]

October 2, 2017: Burlington City Council Discusses Burlington Telecom at Public Forum

Dorman & Fawcett Won't Operate Burlington Telecom After Sale

Seven Days reported on October 3, 2017 that during a public forum at City Hall on October 2, 2017 to discuss the sale of Burlington Telecom, Terry Dorman told the Burlington City Council that his law firm Dorman & Fawcett, hired in 2009 to help resuscitate the failing telecom and to facilitate a sale, will not continue to operate Burlington Telecom once the utility is sold. Dorman did not elaborate on the decision, which he announced as councilors questioned him and BT general manager Stephen Barraclough about the remaining three bidders. City council originally had planned to use Monday's meeting to select the top two bidders but that decision has been put off for October 16. The city must complete the sale by the end of the year to maximize its share of the profits.[116]

Attendees Offered Strong Words of Support to 'Keep Burlington Telecom Local'

Much of the forum centered on 'Keep Burlington Telecom Local' as attendees offered strong words of support for the co-op during public comment; some held signs saying "Hands Off Our Internet, Keep BT Local." The council also accepted a host of letters — almost all of which were in support of keeping the telecom locally owned. "We are now at a civilizational turning point, especially as regards war and climate change. The question is whether our operations will continue to be dominated by profit and bottom-line thinking, or whether we can reconceive our footings, and turn toward cooperative and community-based structures," wrote Marc Estrin as a comment to the story in 'Seven Days'. "Burlington Telecom's offer, though smaller, quantitatively, than that of the others, is far larger in its meaning and effect. I hope that the Burlington City Council will have the values and the vision to look past the bottom line to the real horizon."[117]

Burlington Could Face Possible Legal Risk with Selection of 'Keep Burlington Telecom Local'

But Burlington could face legal risk if it selects the $12 million bid proffered by KBTL, according to city attorney Eileen Blackwood. "We are definitely confirming that there is risk" that the city's creditor, Citibank, could take legal action if Burlington doesn't select a bid that would allow the bank to maximize its share of the sales profit, according to Blackwood. The co-op's bid is the lowest of the three remaining potential buyers. The council must choose between a $12 million offer from the Keep BT Local co-op, a $30.8 million offer from Schurz Communications and a $27.5 million bid from Ting. Blackwood said she could not specify how risky it might be. Councilors also had questions for Dorman about selling BT to the other, higher bidders. Of particular interest: Would the profit interests of Schurz and Ting trump the needs and desires of Burlington taxpayers? Dorman assured councilors that they can control the terms of the sale and write those terms into the contract. "I think the city has the opportunity to get whatever is important to the city in writing," said Dorman.[118]

According to VT Digger there are also questions as to whether Keep BT Local would be able to get regulatory approval from the Public Utility Commission, which must issue a certificate of public good to the eventual buyer.

The PUC must consider the purchasing company’s financial stability, management and technical expertise. The co-op purchase price relies on the city retaining a $1.5 million stake in Burlington Telecom. Burlington’s charter allows the city to enter a joint-venture to operate a telecommunications company, but the Public Utility Commission must determine that in such an arrangement, the risk is borne by other investors, not city taxpayers, the state or ratepayers. Making that determination is complicated because the $17 million the city improperly plowed into Burlington Telecom nearly a decade ago was a combination of taxpayer dollars and money loaned by Citibank, Blackwood said. In the intervening years, ratepayer money was invested in Burlington Telecom as well.
Were the city to invest in the new owner of Burlington Telecom, it would be difficult for regulators to parse whether Burlington’s investment would place taxpayer or ratepayer money at risk of future losses, Blackwood said. Both Ting/Tucows and Schurz would allow Burlington to purchase a stake in the new Burlington Telecom, but their offers don’t rely on the city retaining partial ownership. The settlement allows Bluewater to reject a buyer if it determines that a first-time operator does not have a “reasonable likelihood” of getting PUC approval, said Ralphine O’Rourke, an attorney with Primmer, Piper, Eggleston & Cramer whom the city has hired to help navigate the sale process. Blackwood said officials have not asked Bluewater whether it would make that finding for Keep BT Local, because they want to leave room to negotiate with the company should the city decide it wants to sell to the co-op. The regulatory uncertainty is a cloud over the sale process, because Burlington plans to pick a buyer by year’s end to maximize its return on the sale, while the PUC could take more than a year to issue a certificate of public good, Blackwood has said.[119]

September 29, 2017: Burlington Free Press Says City Hall Stumbled during Burlington Telecom Bid Process

The Burlington Free Press published an editorial on September 29, 2017 saying that the bidding process for Burlington Telecom lacked sufficient transparency. "When dealing with Burlington Telecom, City Hall has no room for missteps that even hints at anything less than a full effort toward absolute transparency," wrote Engagement Editor Aki Soga. "When dealing with Burlington Telecom, city residents have every right to demand that the people they elected to represent their interests conduct themselves with the utmost scruples."[120]

September 28, 2017: Ed Adrian Says Local Sounds Awesome and It Is, Until It Isn’t

Former Burlington City Council member Ed Adrian published an op-ed on Vermont Public Radio on September 28, 2017 that "an advocacy group called Keep Burlington Telecom Local, is once again promoting community ownership of BT. Local sounds awesome and it is, until it isn’t. We can’t afford to celebrate idealistic aspirations, no matter how lofty or pure, at the expense of taxpayers. My view is that we’re lucky to have excellent out-of-state bidders offering to buy and take over BT operations – because while our little City on the lake is capable of doing amazing things, I don’t believe we can compete in the telecom industry without help from the outside."[121]

September 28, 2017: Fourth Bidder on Burlington Telecom Has Chosen to Remain Out of the Bidding Process

Fourth Bidder on Burlington Telecom Sales Process Has Chosen to Remain Withdrawn From the Process. "For now, we have withdrawn our bid," said Faisal Nisar of ZRF Partners adding that he was concerned that anything he said would complicate the city's sale process going forward. "They're going through an important process," he said. "I wish them well." Photo: Google Street View

Burlington Mayor Miro Weinberger and City Council President Jane Knodell made the following public announcement on the Burlington Telecom website on September 28, 2017: “Since Tuesday we have spent hours together and with other parties exploring whether there is a way in which the fourth bidder could re-enter the BT sales process. The bidder has chosen to remain withdrawn from the process. The City greatly appreciates the interest the bidder had in Burlington and the ideas and energy they brought to the process. Resolving this matter has delayed focus on the bids that are before the City Council for consideration. Instead of voting to narrow the field to two bids on October 2, as planned, the Council will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids. The Council will then vote to select two final bidders to conduct legal due diligence with on October 16.”[122]

Identity of the Fourth Bidder Revealed to be Faisal Nisar of ZRF Partners

City officials would not name the bidder or release more information, citing a nondisclosure agreement signed by all parties but according to Seven Days, the fourth bidder is Faisal Nisar, a 42-year-old investor who operates his own private equity business, ZRF Partners. Reached by phone last week at his New Jersey home, Nisar confirmed his involvement. He declined to speak further, citing concerns about the nondisclosure agreement he had signed with the city. Nisar's name has not previously been made public. Nisar and Dorman have ties. The two once served together on the board of a Massachusetts-based technology firm, Custom One Design. Dorman said he's known Nisar for 12-plus years in a professional capacity. The two also shared a friendship with Gary Evans, who consulted with BT from 2009 to 2013 and was key to its survival, according to Councilor Joan Shannon (D-South District).[123]

"For now, we have withdrawn our bid," Nisar said around 9 p.m. Wednesday. He declined to speak further citing both his non-disclosure agreement and his respect for the city and the Burlington Telecom sale process. Nisar, who lives in New Jersey, said he was concerned that anything he said would complicate the city's sale process going forward. "They're going through an important process," he said. "I wish them well."[124]

Nisar Submitted Bid for $17 million

Nisar had submitted a bid for $17 million, according to Kurt Wright (R-Ward 4). Ting is offering $27.5 million, while Schurz is offering $30.8 million.[125] Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership.

Appeal of the Fourth Bidder's Approach

According to some city councilors, Nisar's proposal had appeal. Nisar earned an MBA from Columbia Business School and then spent three years working at Merrill Lynch in New York City. Starting in 1999, he spent 17 years "managing investments in technology and media companies" at Baker Capital, a private equity firm in New York City, according to his LinkedIn profile. Nisar launched ZRF, the entity he used to submit a proposal for BT, in April 2016. Nisar's bid wasn't the highest, but it attracted "significant interest" from some councilors, according to Wright. "They had an aggressive plan in regard to economic development and small business development in the community," Wright said, noting that the company had also planned to expand beyond city limits. "Many of us were very interested in them as our No. 1 or No. 2 choice." According to Councilor Ali Dieng (D/P-Ward 7), Nisar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center, Dieng recalled.

The loss of the fourth bidder was "somewhat unfortunate," said Councilor Joan Shannon (D-South District). "I don't think they're nefarious actions." Instead, the controversy has made Nisar's bid "this kind of forbidden fruit, which makes it much more appealing than it would have been," Shannon said.[126] "I'm extremely disappointed; I was a huge supporter of ZRF," said Dave Hartnett (D-North District). "I'm not really quite sure where this leaves us." Wright said, it was clear that the damage had been done. ZRF wanted to hear from the mayor that he no longer had conflict of interest concerns, Wright said — and Weinberger couldn't give that assurance. "[ZRF] didn’t want to be dragged back in there under that cloud," Wright said. "They've already been jerked around a little bit here."[127]

Dorman & Fawcett Deny that Any Conflict of Interest Exists

At the heart of the questions about a potential conflict, according to councilors, is Dorman & Fawcett's involvement. But councilors were not specific. Dorman denied to Seven Days that any conflict exists. "There isn't one based on everything I know. We stand behind the work we've done," he said. The firm is dedicated to getting the city the best possible result, he said. The company's employee, Stephen Barraclough, has been running BT since 2010. All bidders expressed interest in retaining Dorman & Fawcett to manage BT, said city attorney Eileen Blackwood. Dorman has been entertaining offers for BT since he took the job, he said, and, when the city was ready to sell this year, he reached out to those who had previously expressed interest or seemed like a good fit.[128] Each of the four finalists had expressed interest in retaining the firm, city attorney Eileen Blackwood said at a September 20 press conference. Knodell said the decision is ultimately up to Dorman & Fawcett. "In many ways it'd be great if they would stay in, but I don't know the status of that conversation," she said.[129]

Ting/Tucows, Schurz, and Keep Burlington Telecom Local Are the Remaining Three Bidders

According to the Seven Days both Ting/Tucows and Schurz are offering cash. Ting is offering $27.5 million, while Schurz is offering $30.8 million. Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership. Elliot Noss, the CEO of Ting, said he had been following the Burlington Telecom story for years. He said he first reached out to the mayor's office in 2014 about the possibility of purchasing the utility and was put in touch with Terry Dorman, who he said has been his main point of contact and has "run the process." Noss said the signals he has received from Dorman, the mayor and other Burlington officials "struck a balance between being encouraging and noncommittal." Schurz's CEO, Todd Schurz, said he was approached by a "third party that knows BT and knows us." He declined to say who the person was, but a Schurz spokesperson, Brian Lynch, said it was not Dorman or anyone associated with their firm. They only met Dorman and other parties of the city after the formal sale process began, he said.

Katie Vane, a spokeswoman from Weinberger's office, said equivalent site visits were not made to ZRF or Keep BT Local because they were not operating telecom companies, and the point of the visits was to get a grasp of how their operations worked.[130]

Independent Financial Report Not Yet Released

On September 25, 2017 an independent financial analysis of the four bids was presented to city officials. Knodell said earlier this month, while announcing a new timeline that promised more transparency and a robust public process, that the analysis would be made public. However, it has yet to be released.[131]

The Selection Process Has Been Delayed Two Weeks

The controversy has once again delayed the selection process, which must be made by the end of the year for the city to maximize its share of profits from the sale. The city council originally planned to narrow the field to two on October 2 and pick a winner on October 16. Now, the council "will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids," officials said in a statement. The two finalists will then be chosen on October 16, the statement said.[132]

September 28, 2017: Mayor Miro Weinberger and City Councilor Joan Shannon Discuss the Bidding Process on 'The Mayor's Show'

Burlington, VT Mayor Miro Weinberger hosts his monthly show and discusses the upcoming sale of the city-owned Burlington Telecom internet, phone and television service provider with Burlington City Councilor Joan Shannon.

September 26, 2017: Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids

Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids. The Lake Champlain Regional Chamber of Commerce held a news conference urging the city council to consider the two out-of-state bids, Tucows/Ting or Schurz Communication, over the Vermont-based co-op bid, Keep Burlington Telecom Local. "I've taken the time to review each (bid) and have come to the conclusion that the co-op proposal does not compare equally and favorably to the others and doesn't offer the citizens and its residents the protections, financial and otherwise, that are guaranteed by the other finalists," said Tom Torti (photo above left), President of the Lake Champlain Regional Chamber of Commerce since 2006.[133]

VT Digger reported on September 26, 2017 that the Lake Champlain Regional Chamber of Commerce held a news conference urging the city council to consider the two out-of-state bids, Tucows/Ting or Schurz Communication, over the Vermont-based co-op bid, Keep Burlington Telecom Local. "I've taken the time to review each (bid) and have come to the conclusion that the co-op proposal does not compare equally and favorably to the others and doesn't offer the citizens and its residents the protections, financial and otherwise, that are guaranteed by the other finalists," said Tom Torti, President of the Lake Champlain Regional Chamber of Commerce since 2006. Torti said he is a supporter of the co-op ownership generally, but KBTL’s offer relies on a $10 million loan with a 14 percent interest rate, which would leave the telecom “too highly leveraged” to be successful going forward. "It has nothing to do with the model and everything to do with financing."

Andy Montroll, a board member of Keep Burlington Telecom Local, said that if Burlington Telecom is sold to one of the telcos with offers on the table, decisions about its future will be left to out-of-state executives. Torti countered that Burlington Telecom required the clandestine bailout of $17 million in taxpayer money that the city spent improperly to prop up Burlington Telecom nearly a decade ago precisely because it was strapped with debt and didn’t have experienced managers, something he said is also lacking in the co-op’s bid.[134][135]

September 26, 2017: City of Burlington Considers Inviting Telecom Bidder Who Withdrew His Proposal Back to the Table

Burlington Mayor Weinberger and City Council President Knodell issued a statement on September 26, 2017 regarding the potential fourth Burlington Telecom bidder who made withdrew his proposal from consideration. “After extended consultation with the City’s attorneys and Council discussion, there was a strong Council consensus that the City should explore whether the possible conflict of interest with the fourth bid could be resolved. If so, the fourth bidder will be encouraged to promptly submit a final LOI. Together we will be pursuing this outcome immediately.”[136]

The Bidder that Dropped Out May Be Back in the Running if a Possible Conflict of Interest Can Be Resolved

According to the Burlington Free Press, the drop-out bidder may be back in the running to buy Burlington Telecom following a rift between the mayor and some councilors over the circumstances leading to the bidder's withdrawal — if a possible conflict of interest can be resolved. If the conflict of interest is resolved, the fourth bidder will be encouraged to submit a final letter of intent promptly. Knodell said they are hoping to connect with the fourth bidder Tuesday. The council is set to narrow the field to two finalists next Monday. Mayor Weinberger said the bidder made an "independent decision" to withdraw, but that some communications from him may have prompted the decision. "I, as mayor, had some concerns about the fourth bidder and conveyed them to the bidder," he said last week. The potential conflict of interest was a concern raised by the mayor. Weinberger said the non-disclosure agreements prevented him from discussing the details of his communications but confirmed that he had "directly" communicated with the bidder.

The withdrawn finalist had been described by Burlington Telecom Advisory Board Chairman David Provost as "a private equity investor with valuable local relationships and extensive telecom experience and a vision for aggressive BT regional growth."[137] Knodell says 8 of the 12 councilors felt the bidder that pulled out was their first or second choice. "Someone should care as a citizen of Burlington because what if it was the best proposal? What if it was the proposal that worked best for the citizens of Burlington and gave us the best return? They have so much to offer the city in the way of new business formation, building a strong tech economy, and creating good jobs for young people coming out of our school system," Knodell said.[138]

City Councilors Knew who the Fourth Bidder Was

According to Vermont Biz, because of non-disclosure agreements, city councilors knew who the fourth bidder was and were able to review its proposal, but neither they nor the mayor could disclose who it was or what terms they were going to propose. Weinberger said in announcing the three bids that he had presented his concerns to the bidder and to the Council and that the bidder independently decided to withdraw. Weinberger said he could not disclose what his concerns were. "Many city councilors were concerned about how this company disappeared from the mix," said Councilor Kurt Wright. He and Knodell both felt the mayor had a hand in its withdrawal. "There was great, significant support for this company." "In my evaluation, they were the strongest from the point of view of business formation, business services, creating good jobs, building the tech economy," Knodell said. The company had been described as a local, "private equity" firm.

However, neither Wright nor Knodell described it as such or in any other way provided who was behind it or what its bid might have looked like. Wright, a Republican, ran for mayor against Weinberger, but lost by a comfortable margin (58 percent-37 percent in March 2012). Knodell is a Progressive. The mayor's office has been dominated by Progressives or Progressive leaning Independents for more than three decades (Bernie Sanders, Peter Clavelle, Bob Kiss) with a short interlude for one Republican Mayor (Peter Brownell, 1993-1995). Weinberger is the first Democrat since 1981. Wright is currently the only GOP member on the Council.

Possible Conflict of Interest for the Law Firm of Dorman & Fawcett

The mayor and city attorney have still not said publicly why the bid was withdrawn, but according to VT Digger an email from the mayor to city councilors, obtained by Seven Days, provides some insight. “You will see that, in the wake of the legal, regulatory and conflict of interest concerns that have arisen, Terry [Dorman] requested that [the bidder] withdraw its proposal. I support Terry’s decision and expect there will be further conversation about it in our session this evening.”

Terry Dorman, referred to in the email, is a member of the law firm Dorman and Fawcett that the city hired a few years ago to manage Burlington Telecom. Dorman and Fawcett have provided feedback to the city throughout the sale process and will keep 10 percent of the proceeds when Burlington Telecom is sold. The mayor has acknowledged that this is a potential conflict of interest — one that he said the city has managed carefully as it looks to find a buyer. Asked during a news conference announcing that the final bids would be made public, city councilors did not respond directly to a reporter’s question as to whether Dorman and Fawcett had connections to any of the bidders.[139]

One Local Bid Remains From 'Keep Burlington Telecom Local'

Knodell also discussed the one remaining local bid from Keep Burlington Telecom Local (KBTL). "The advantage by going with Schurz or Ting," Knodell said, "is they're well capitalized. They have resources." They are cash bids, Knodell said, "That's pretty attractive, in many ways," but BT would no longer be Burlington-based and their ultimate interests are related to their shareholders. "The relative weakness in [KBTL's] bid is, compared to Schurz and Ting, is that they are thinly capitalized."[140]

September 21, 2017: Ting Hosts Reddit AMA to Discuss Burlington Offer

Ting Bids on Burlington Telecon Fiber Network. Ting would host an AMA (Ask Me Anything) on Reddit from 3 to 4pm on September 21, 2017 to hear and respond to questions about their BT offer, business or "anything else you want to know."

The Ting Blog reported on September 21, 2017 that Ting will host an AMA (Ask Me Anything) from 3 to 4pm on September 21, 2017 to hear and respond to questions about their BT offer, business or "anything else you want to know."


Some of the most interesting questions and answers include the following:

Question:
Assuming you win the bid...
1. Burlington Telecom's prices right now are significantly lower than what you offer in your other locations. Currently, I am also aware of programs that subsidize access for low income families, as well as discounts for college students. Do you plan on raising prices in the area and getting rid of these programs?
2. Will you continue to maintain, upgrade, and expand the network in the years to come? Since Burlington will be just one of many cities (and probably your smallest) will we get as much attention from you as your other locations? Do you plan on expanding the network to neighboring areas like Winooski, South Burlington, Essex, Williston, Colchester, etc?
3. How many new jobs will be created in the Burlington area? Will anyone currently employed by Burlington Telecom be laid off? Will support be "centralized" to either your own call center at your headquarters or a call center in another country like India, or will we still be able to talk to someone from Burlington?
4. Will the people of the Burlington area have any say in decisions made about the network in the future? Will the people most "in charge" be residents of the Burlington area (people from here employed by you), or executives in an office hundreds of miles away in another country?
5. Will there be any possibility of you selling the network to another telco, possibly Comcast or Fairpoint? shudder
6. Had any of you heard of Burlington or been to Burlington or Vermont before the bidding talks started happening? If so, what were your impressions of us?

Answer from Elliot Noss
1. In our current FTTH markets we charge $89 for a gig. In Burlington it is $70 with contract and $83 without. So there is not really a significant difference. There are a bunch of things as follows:
  • We have committed to maintaining prices for 30 months. this does NOT mean in month 31 we will be raising prices. what is true is that there are currently tons of SKUs and we greatly prefer simplicity. we will be looking for some ("gamers package" I am talking to you!).
  • We believe that prices for telecom are too high in general and are likely to fall in the longer term, not rise. the inputs for these services are all essentially subject to moore's law so they should. and we are used to living in markets (like domain names) where falling prices are the expectation. television content is an (UGH) exception.
  • We are strong supporters of addressing digital divide issues and will be looking to implement specific programs to address these issues. we have started to do so in Charlottesville and expect to do so in every market we are in including (hopefully) Burlington. these programs need be developed for and with each community individually.
2. I think this was answered somewhere else and will look for a link. Basically, build baby build!
3. The best way to answer this is to say we are growing and need more good people. The best place to get a sense of this is to look at the slides in our presentation talking about our history with companies we have acquired and the people from those businesses. If we are really lucky, my successor will be a Burlingtonian!
4. We delegate a lot of authority to people on the ground, who will be people of Burlington! More importantly, we really try and make an effort to engage with the local community. Community leaders, groups and organizations, neighbourhoods and just people, to learn about what is important to them and what can most help. We believe that FTTH can be transformative and we want to be part of that.
5. No one here has any intention of selling to any of those large incumbents. shudder
6. I have been following the Burlington Telecom story for many years now and of course was familiar with the city otherwise. I have been three times now and love it!

Answer from Ross Rader
Regarding #3, Our plan is to keep customer service in Burlington and grow that operation to also help us in other cities. We run a distributed operation already - we have customer service staff in Charlottesville VA, Toronto ON, Starkville MS, St. Catharines ON, Nelson BC, and just outside of Chicago IL - a Burlington team will be a great complement to that.
I started in the customer service business in the 90's as a technical support rep for an early ISP, I'm really excited by the prospect of being able to sit down with everyone at BT so I can learn more about why the people of Burlington love BT so much already, what their magic service formula looks like and share as much as I can about what we've learned over the years. Everything I've heard about the Burlington team has been very positive and I think we'll learn a lot from them.
We believe that we can do a better job of servicing our customers than any one else - we don't outsource Ting Internet CS today and we've made an explicit decision not to go that route in the future. We've experimented with it elsewhere in the business and it really requires a different discipline and skills and even if you nail it, the results are just kind of meh. By focusing on delivering great service through our own staff, we can really get into the details of providing great service - and our track record shows it. Ting Mobile consistently ranks at levels consistent with the service delivered by Apple, Nordstroms and Zappos and Ting Internet tracks even higher than that. Working together, I think the two teams have a great opportunity to build on the already excellent results that we see from BT customer service.

Answer from Adam Eisner
I'll comment on 2. One of the commitments we've made is to continue to expand the network, both inside and outside Burlington. So we would certainly continue to expand inside the city, yeah. BT has also identified many of the areas you mention as possible expansion targets, and we've reviewed the initial plans and really like what we see. It's early, and we'd finish Burlington work first, but we'd get into surrounding areas as well.


Question:
This issue with 5, though, is if one of those incumbents decides they want to acquire you, as a publicly traded company your board has the legal obligation to accept the offer if it is sweet enough. As someone who follows business ownership and acquisition patterns quite closely, it's a real and significant risk that recalls the classic scene from Silicon Valley.
So, even if your as good as your earnest PR voices claim at the moment, your ownership structure leaves our community vulnerable. The co-op, on the other hand, would require a vote of all subscribers, which is a far more powerful structural firewall.

Answer from Elliot Noss
This is true about any ownership structure other than municipal ownership. Sadly, that is now precluded because history. We (Ting) can't change that, only try and make it the best it can be from here.
We have agreed to sale restrictions with respect to existing Burlington incumbents.
We cannot guarantee the future. What we do believe is that running an ISP is a challenging business and that we might be among the best in the world at it. We also aspire to learning (from you) all about what is best for Burlington. We aspire to combine the best of an amazing operation and customer service infrastructure (your customer service experience will get even better!) with a deep respect for the local nature and needs of the community.!


Question:
1. Do you feel having a headquarters outside of the country will hinder your ability to maintain the high levels of customer service and same day responsiveness that BT is known for?
2. Considering BT also does cable and phone service, are you going to support those customers or focus strictly on internet and fiber business?
And local staffing is a huge plus. If you win the bidding, what elements of the business will continue to be staffed locally? I assume you'll outsource call center type positions to your existing facilities.

Answer from Adam Eisner
1. We've got a long track record of working on a distributed basis - we're an "internet first" company, so it really is in our genes. For example, we have customer service staff in Charlottesville VA, Toronto ON, Starkville MS, St. Catharines ON, Nelson BC, Kirkland WA and Chicago IL - it will be real work, but we know what it will take to bring a Burlington team into that organization and foster its growth in positive ways. You point out that BT is already known for providing great customer service which is really exciting for me. I don't think for a second that we know everything about providing great customer service - there are always things we can improve - I'm really looking forward to the prospect of working with the BT team to see how they are achieving those great results, comparing that to what we are doing and sharing best practices in both directions.
2. And to your question about local staffing - I think it is important to point out that we wouldn't just be talking about entry level positions. We take great pride in our corporate values, one of which being that leadership and innovation can happen anywhere in the organization - that extends to all of the towns we work in - we're definitely not a "all the good stuff happens at HQ" kind of company. If our bid is successful, I can definitely see lots of opportunity for Burlingtonians to tackle other aspects of Ting's work, not just BT. (our proposal laid out a lot of this and underlined our track record in this area so I won't rehash it here...)


Question:
Being from waaay out of town, what do you know about the Burlington, VT, USA market and why should we trust such a fast-expanding shop to operate in our small sandbox?

Answer from Trish McLean
Hi - It's true that we're not local and we would never be able to be local on our own. But how we've approached it in our other markets is to get involved and do the work. While we have a small national team - I'm in marketing for example, most of what we do is driven by our local teams. We would never assume to simply know what's right for a community. We'll always listen. We've always done community meetings where people have a chance to get to know us and for us to understand their concerns. And then we do the best job we can delivering a great product and great customer service.
In terms of growth, we are expanding but not in my opinion too fast. As you know it takes a while to build a fiber network and there's many steps to setting up a market, lighting customers and then operating. I feel pretty confident in our ability to scale because so much of what we do is done by the local teams. Hope this helps -


Question:
I'm curious how exactly you will keep profits and ownership local. According to surveys in the city done last year, the #1 issue that was most important to this sale was keeping the Telecom local. As a publicly traded company, how can you give residents the service and local commitment we have come to expect, especially when your #1 responsibility is to your shareholders first and foremost?

Answer from Elliot Noss
The best way we can answer is to suggest you check out all our public facing customer feedback (reddit/facebook/twitter, etc.). We deeply believe that happy customers = good business and our shareholders have come to believe us. They didn't always, as you can see by our stock chart for many years. Eventually results win out.
It is worth noting that despite being public for over 17 years, we have never sold a share and never raised money. We are not a conventional public company. But our shareholders are as happy as our customers. And many people start in one of those groups and end up in the other!


Question:
Up 'til now I've only heard of Ting/Tucows in the mobile/cell service and the domain name industries. Moving into a traditional ISP role seems like a new venture. Has Ting/Tucows operated any residential or commercial ISP's before? What does Ting/Tucows seek to gain by purchasing Burlington Telecom? And why here, why now?

Answer from Elliot Noss
We have been doing this for a while. You can see the front door here.
Burlington is a more mature fiber market and it is once a market is penetrated that the REALLY interesting benefits can start to accrue. If we are lucky enough to be successful here, we can start to learn things about the benefits that fiber provides together, and we can spread those learnings to help make positive change in other communities.
Burlington is a natural to lead the nation in something like this!

Follow up Question:
I mean, from a business perspective, what does Ting seek to gain by purchasing Burlington Telecom? What's the bottom line?

Answer from Elliot Noss
The most important thing about it for us is operating a FTTH at scale (>50%). We believe that is where the magic happens. The opportunity to really take the impact of ambient connectivity to the next level and for what we learn together in Burlington to be a model for the rest of the country.!


Question:
It sounds like you're expanding rapidly. How can we be sure your corporate growing pains won't affect us? How will you be able to focus on our local needs and engage our rabidly interactive and opinionated citizens/subscribers/businesses on a regular basis?

Answer from Trish McLean
Burlington would definitely be a big deal to us, as you can probably tell, we're excited at the idea of getting involved.
Keep in mind with the local team we'll be accessible and engaged with the whole community. By that I mean, having community meetings, getting feedback, talking with partners and being available to respond via phone/email/social.

Answer from Adam Eisner
Fair question. It's not untrue to say we've been expanding quickly, for sure. That said, we've been scaling the business for quite some time. For example: we are actively building right now in Holly Springs and Charlottesville. We aren't building in Westminster because the City manages the build, but we're operating there. We are also building in Sandpoint, ID and Centennial, CO concurrently. So all of that is a long way of saying: we are comfortably building and selling in several markets at once right now, and it's going really well. All the systems, structures and plans we've put in place are designed to let us operate in multiple markets at once.
Now for the citizens part. ;) We do interact a lot with each municipal government, businesses and citizens. We're involved in multiple public private partnerships, and get that it's important a) that the partnerships successful for both municipality and Ting and that b) everyone is heard. I certainly see that as incredibly important here. To be honest, we manage that by getting out and being everywhere as much as possible with our local teams (which are led by a local city manager who knows the area inside out), holding events, communicating the heck out of build plans, and so on. We really do think constant communication is key.


Question:
Just wondering How vast your resources are in order to keep the kind of eye on BT that a local co-op with a singular focus can, especially when you have a number of other projects ramping up across the country?

Answer from Adam Eisner
This is a really good question. I think the answer is: each one of our operations are incredibly local. We're incredibly aware that you can't manage a local fiber operation remote. As a result, we have deep and expansive local operations in every market, including field ops/installations, city managers, marketing and support. They are local Ting employees, working out of local warehouses/operations centers and experience spaces we have built. They drive trucks we have procured locally. And so on.
Where we CAN add additional help and value from a remote/centralized operation is in operational muscle. For example: can use our experience managing multiple construction projects to build more, faster. (That's what we meant by "building footprints" in our presentation: we can cover large areas quickly and effectively because we have the experience and resources to do so). We can use the platforms we have to extend tools to customers, quickly. Those kinds of things.

Question:
As a supporter of Keep BT Local co-op's bid and how it'll keep OUR money circulating in OUR community rather than paying off your lenders, I was a little dismayed to see you co-opt their slogan on your slide decks for the PowerPoint. Not a great way to start your introduction to the community by usurping a truly local bid's own name and slogan. I sense you see the opportunity many of us saw years ago when we pushed to create BT, and now is being sold off by short-sighted politicians to out-of-state/out-of-country profiteers who see us as a long term Tucow cash cow. What's the expected return on your investment of $27M - 15%? 20%? 25%? What jacked up rates are you going to charge us after the 30 month "grace period" for Internet VOIP only?

Answer from Michael Goldstein
Hi Shay. I work for Ting.
I am going to try to address your comments and questions. If your intention is more to rant or campaign than to get to know us, that’s cool too. This is Reddit after all. Both the history and fate of BT are disappointing. Skepticism toward politicians and telcos is pretty fair. And doubts that anyone non-local will be quite as accountable to maintain jobs, offer great service at reasonable prices and generally play nice are completely understandable. We get it.
All I will say about us is this. We compete with multi-billion dollar telcos and cable companies in each of our Internet markets and in our national mobile business. We can’t outspend them. We can’t outscale them. In fact, they can pretty much copy anything we do on product or price. Our only competitive hope is to care more, to try harder, to be more honest and fair and to be more responsive. It’s all we got.
Please ask Charlottesville, Virginia, Holly Springs, North Carolina and Westminster, Maryland and ask any of our cellphone customers. You will find them all here.
Regarding your comments:
The choice to keep the bidding process secret was not ours. (As you’ll see, we prefer to engage early and often.) Here is the Mayor talking about why the City made that choice: http://www.burlingtonfreepress.com/story/news/2017/07/31/city-council-hears-burlington-telecom-bids-secret/520827001/
Those slides in the deck were a response to an explicit question from the City. How will you commit to keeping BT local? It’s not a slogan, we were repeating the question! ☺ The City is pushing every bidder to do just that in all the ways that really matter (jobs, accountability, community participation and contribution). We are thrilled to do it. Again, it’s what we are doing in the other towns and nobody asked us to.
You ask if we’ll jack up prices. Look at our business in other cities. Look at our mobile business. Look at how we have passed along rate cuts when we have reduced our own costs. Look at what I wrote about the pricing bullshit that goes on every day in our industry: https://ting.com/blog/ting-pricing-promise/
Again, I am not claiming that we don’t ultimately want to grow our business. I am not claiming that we are headquartered in Burlington. But if we don’t do right by the people of Burlington and any other town we service, they will go elsewhere and we won’t grow anything.

Follow up Question
Thanks for the reply and it was part rant part question. I have a lot of concerns a publicly traded company that is heavily invested in by some of the largest hedge funds taking control of our public utility. And, I don't see how you make a return on $30M without raising prices or cutting services or siphoning off money that would otherwise stay here if you were truly local. I say that not in hostility, but just as an observation of what's happened in Vermont with small telcos that come in with big promises to stay local and just get swallowed up in five to 10 years. You wouldn't be the first if/when it happens to you. The top criteria from residents in any sale was that BT remain under local control. Not just who's employed by it, but who's earning the profits. I wish you luck but I'll be sticking with the coop model, which has proven to be an extremely successful business model in Burlington - from housing to supermarkets to some of our biggest employers. Cheers.

Answer from Michael Goldstein
Shay, this is a great conversation. Thanks. I will tell you that our current bid for this size customer base at these current prices and levels of service is actually a perfectly good investment. As long as we treat customers well and they stick around for a while, there is nothing wrong with this breakeven analysis that would cause me to think that we need to charge more or spend less. Anyone who thinks differently is either doing different math or is less patient than we are.


Question:
What makes you guys the best candidate for buying BT? Or more specifically, what is unique that only you can bring in this offering?

Answer from Monica Webb
We’ve spent time in Burlington and engaged with the City at length. We’ve done a video about why we think Burlington and Ting would be great partners. In large part, it comes down to a fit of values between Burlington and Ting. We both feel passionately about strong local presence, outstanding customer service, the fastest, most reliable and most affordable Internet we can offer, and the myriad of issues that impact Internet users, including digital divide, net neutrality and consumer privacy.
But we admit that talk is cheap. Companies will say a lot of things to put themselves in the best light. So never mind what I’ve just said. Look at our track record. Look at the comments on https://reddit.com/r/ting. Look at our ratings on Consumer Reports, where Ting mobile has been rated #1 or #2 of all mobile companies the last three years running. Check out our Net Promoter Score (NPS), which is the percentage of our customers that would recommend us. Our NPS for Ting mobile is 70+, which is the top score in the world, and our NPS for Internet is >90, though it’s early days for measuring that. And look at our website (www.tucows.com/aboutus) and see what we have always stood for. We lobby, we agitate, we support and we actively engage on issues of concern to Internet users, beyond our customers.
We really think we would make a great steward for the amazing network and legacy of BT. But I would encourage everyone here to do their research. Kick the tires. And the only thing we can ask is that you evaluate all of your options in an informed way.


September 20, 2017: Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network

Ting Bids on Burlington Telecon Fiber Network. Tucows is one of three finalists bidding to become the steward of the Burlington fiber network. Under a plan developed by the Burlington Telecom Advisory Board, potential buyers must meet certain criteria and qualified buyers would make presentations to the Burlington City Council, which would then approve one buyer. Read Ting's entire presentation to the City of Burlington Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.
Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network. Three of the most important criteria the Burlington Telecom Advisory Board is looking for in a service provider are: affordable service, a local presence, and a long-term strategic vision for the future. Other criteria set out by the board include a commitment to net neutrality, the principle that internet service providers should not favor or block particular websites, a commitment to BTV Ignite, and a management team that will support expansion to underserved communities in Burlington. "We're not necessarily looking for the highest bidder," says City Councilor Dave Hartnett. Photo: Church Street Marketplace by Don Shull Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

The Ting Blog reported on September 20, 2017 that Tucows is one of three finalists bidding to become the steward of the Burlington, Vermont fiber network. Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.[141]

Ting's Bid

Ting welcomed the opportunity to bid on the contract. "We think that our community involvement, our customer-first approach and our commitment to the open Internet and net neutrality make Ting the right choice to work with BT to maintain the fiber network and continue to grow its footprint," writes Andrew Moore-Crispin in the blog post. "Ting is admittedly not a small local service provider. We could also never possibly be mistaken for a national conglomerate. We have the benefit of some scale in our business, with lots of lessons learned and efficiencies gained across our handful of markets. We also consider each market its own opportunity, with its own culture, needs, challenges and preferences. We are not looking to make Burlington work for our business. We want to make our business work for Burlington."

"If our bid is successful and we take responsibility for the BT network, you’ll find us an active community partner here in Burlington. Local events, cornerstone buildings, libraries, shared spaces, festivals and the like are what make a geography a community. We support these things and more in the Ting towns we serve. Whether it’s working with a local art space and providing gigabit fiber Internet at no charge or sponsoring a keystone community event, we don’t just think about marketing impact when we decide where to put our advertising and sponsorship dollars. We come out for things like farmer’s markets, community movie nights, festivals and things that defy simple categorization. We support and even create Makerspaces in the towns and cities we serve. We’re looking forward to talking to Generator Makerspace now that our bid is public information to see if we might work together, like we do with other Makerspaces in Ting communities."

"More than being a part of the communities we serve, we believe strongly in the open Internet and in net neutrality. We protect the open Internet in both word and deed. Tucows, Ting’s parent company, is run with the belief that the Internet is the greatest agent for positive change the world has ever known. We believe that better Internet infrastructure is what will help to keep North America at the fore. We believe that this national issue can only really be solved at the local level."[142]

Criteria

According to an article in the Burlington Free Press on March 14, 2017, three of the most important criteria the Burlington Telecom Advisory Board is looking for in a service provider are: affordable service, a local presence, and a long-term strategic vision for the future. Other criteria set out by the board include a commitment to net neutrality, the principle that internet service providers should not favor or block particular websites, a commitment to BTV Ignite, and a management team that will support expansion to underserved communities in Burlington.

"I think it's the right process," said City Councilor Dave Hartnett, D-North District, who sits on the advisory board. The process will allow the board to reach out to potential buyers who will match the values held by Burlingtonians, rather than hold an auction process. "We're not necessarily looking for the highest bidder," said Hartnett.[143]

Background

Burlington Telecom is for sale following a scandal involving the administration of former Mayor Bob Kiss, which secretly diverted $17 million from the city's general fund to the city-owned provider of internet, television and phone service. Mayor Miro Weinberger settled a $33 million lawsuit brought by Burlington Telecom’s main creditor, Citibank, in 2014, which requires the utility be sold after four years. “The city was in a very deep hole. In 2012, when it was being sued by Citibank for $33.5, plus penalties and interest in addition the $17 million of tax payer funds we didn't have access to, and we had our credit rating downgraded to junk bond status,” said Mayor Miro Weinberger. “Because we have fixed BT, we have restored the city's financial credit rating. That is something that saves us millions of dollars a year."[144]

Under the settlement, the city was allowed to pick the buyer as long as an undisclosed financial threshold is met. Settlement money came from Blue Water Holdings LLC, an entity backed by the Merchants Bank and created by Burlington businessman Trey Pecor. Blue Water bought the company and leased it back to the City of Burlington, which continued to operate it as a municipal utility. The sale must be finalized by January 2019, or Blue Water can pick the buyer.[145]

VT Digger previously reported on February 1, 2017 that under a plan developed by the Burlington Telecom Advisory Board, potential buyers must meet certain criteria and qualified buyers would make presentations to the Burlington City Council, which would then approve one buyer. The board planned to launch the sale process in March and select a buyer by July. “An alternative process would be like a ‘for sale’ sign,” Advisory Board Chair David Provost said. “We’re not looking for a buyer with the most money, or a big national and international footprint. There’s (public) fear of selling to a huge conglomerate, but I don’t think the criteria will allow that to happen.” The sale criteria was developed by the board with public comment, and approved by the City Council in April 2016. The purchaser must be financially sound and have experience running a broadband company and the buyer must go through a certificate of public good process to operate as a cable provider.[146]

Three Finalists

The Burlington Free Press reported on September 20, 2017 that City Attorney Eileen Blackwood had announced three finalists to buy Burlington Telecom: Ting or Tucows Inc., Schurz Communications Inc. — and Keep BT Local. Eight entities submitted bids to buy the telecom. The City Council chose four as finalists but one of the finalists has dropped out.. One finalist, Keep BT Local, has been public about their desire to buy the utility throughout the process. The cooperative, which is made up of local residents and business owners, has been passing out leaflets throughout the city and gathering signatures on a petition. At a late August council meeting, David Provost, the chairman of the Burlington Telecom Advisory Board, said the board had "serious concerns" about the co-op's financing model and lack of operating experience.[147]

Final letters of intent from the three finalists were made public on September 20. Now a public comment period will begin between until an October 2 special City Council meeting that the mayor plans to call. At that special meeting, the council is expected to take a vote further winnowing the field to two final bids. Then at a regularly scheduled October 16 meeting, the council is expected to select a buyer for the fiber network. Any sale of Burlington Telecom must be approved by the Public Utility Commission — formerly the Public Service Board — but city officials say that the commission doesn’t need to sign off on the deal before January for the city to retain a larger share of the sale proceeds. The city has previously said that none of the offers would result in major staff changes at Burlington Telecom; that the city would have the option to retain a “significant ownership interest”; and that the entity would continue to offer residents an alternative to other cable or broadband providers.

Two offers are from established telecommunications companies. Both are cash offers and would not require Burlington Telecom to take on any new debt. The final offer comes from Keep BT Local, a group proposing a cooperative member ownership model, which publicly identified itself early in the process. The two cash offers from telecommunications companies are within a few million dollars of each other, and are more than double the offer from Keep BT Local.[148]

According to the Seven Days both Ting/Tucows and Schurz are offering cash. Ting is offering $27.5 million, while Schurz is offering $30.8 million. Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership. "Keep BT Local's" offer also includes $10 million in debt financing it will pay back at 14 percent interest over 10 years. "14% is a very heavy burden to carry. If no standard lender will lend the funds, at any interest rate, that should tell you something. No business history and no collateral should also be a red flag," wrote Charles Haffter in a comment to the article. "Given where the current prime rate is, if this is correct, lenders must have no faith in the coops ability to run a successful telecom company."[149]

All three bids include commitment to building out Burlington's fiber network, commitment to net neutrality, commitment to investment in community initiatives like BTV Ignite, commitment to customer service and restrictions on future sales. The anti-monopoly future sales clause would mean that a company can't sell Burlington Telecom to another telecom that owns a big section of the market in the area, but does not restrict other types of sales. The city will be looking at a company's history of buying utilities to ensure Burlington Telecom doesn't get sold to a bigger company in the near future. According to the article in the Burlington Free Press, Ting/Tucows is a public company based in Toronto that has been operating for 2 years (Tucows has actually been in business since 1993). Schurz Communications is an Indiana-based company that has been in business for 144 years.[150]

An independent financial analysis of the bidders is currently underway and Council President Jane Knodell said on September 13, 2017 that she expects the document to be released to the public on September 25, 2017. "We can have meaningful public input," she said. The input will take the form of public comment sessions, written comments, and councilor engagement with constituents at neighborhood meetings.[151]

Additional Information

The History of Burlington Telecom before its Sale to Schurz/ZRF

Creation of Burlington Telecom

Loans from the City for $17 million

Burlington Telecom Goes into Receivership With Citibank

City Makes a Deal with Citibank

Operations Under Dorman

2017: Bidding Process for Sale of Burlington Telecom to Schurz/ZRF (Chronological)

September 20, 2017: Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network

Ting Bids on Burlington Telecon Fiber Network. Tucows is one of three finalists bidding to become the steward of the Burlington fiber network. Under a plan developed by the Burlington Telecom Advisory Board, potential buyers must meet certain criteria and qualified buyers would make presentations to the Burlington City Council, which would then approve one buyer. Read Ting's entire presentation to the City of Burlington Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.
Ting is One of Three Finalists to Become Steward of Burlington Telecon Fiber Network. Three of the most important criteria the Burlington Telecom Advisory Board is looking for in a service provider are: affordable service, a local presence, and a long-term strategic vision for the future. Other criteria set out by the board include a commitment to net neutrality, the principle that internet service providers should not favor or block particular websites, a commitment to BTV Ignite, and a management team that will support expansion to underserved communities in Burlington. "We're not necessarily looking for the highest bidder," says City Councilor Dave Hartnett. Photo: Church Street Marketplace by Don Shull Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

The Ting Blog reported on September 20, 2017 that Tucows is one of three finalists bidding to become the steward of the Burlington, Vermont fiber network. Burlington Telecon currently has about 5,800 fiber customers and is currently available to 16,000 residences.[152]

Ting's Bid

Ting welcomed the opportunity to bid on the contract. "We think that our community involvement, our customer-first approach and our commitment to the open Internet and net neutrality make Ting the right choice to work with BT to maintain the fiber network and continue to grow its footprint," writes Andrew Moore-Crispin in the blog post. "Ting is admittedly not a small local service provider. We could also never possibly be mistaken for a national conglomerate. We have the benefit of some scale in our business, with lots of lessons learned and efficiencies gained across our handful of markets. We also consider each market its own opportunity, with its own culture, needs, challenges and preferences. We are not looking to make Burlington work for our business. We want to make our business work for Burlington."

"If our bid is successful and we take responsibility for the BT network, you’ll find us an active community partner here in Burlington. Local events, cornerstone buildings, libraries, shared spaces, festivals and the like are what make a geography a community. We support these things and more in the Ting towns we serve. Whether it’s working with a local art space and providing gigabit fiber Internet at no charge or sponsoring a keystone community event, we don’t just think about marketing impact when we decide where to put our advertising and sponsorship dollars. We come out for things like farmer’s markets, community movie nights, festivals and things that defy simple categorization. We support and even create Makerspaces in the towns and cities we serve. We’re looking forward to talking to Generator Makerspace now that our bid is public information to see if we might work together, like we do with other Makerspaces in Ting communities."

"More than being a part of the communities we serve, we believe strongly in the open Internet and in net neutrality. We protect the open Internet in both word and deed. Tucows, Ting’s parent company, is run with the belief that the Internet is the greatest agent for positive change the world has ever known. We believe that better Internet infrastructure is what will help to keep North America at the fore. We believe that this national issue can only really be solved at the local level."[153]

Criteria

According to an article in the Burlington Free Press on March 14, 2017, three of the most important criteria the Burlington Telecom Advisory Board is looking for in a service provider are: affordable service, a local presence, and a long-term strategic vision for the future. Other criteria set out by the board include a commitment to net neutrality, the principle that internet service providers should not favor or block particular websites, a commitment to BTV Ignite, and a management team that will support expansion to underserved communities in Burlington.

"I think it's the right process," said City Councilor Dave Hartnett, D-North District, who sits on the advisory board. The process will allow the board to reach out to potential buyers who will match the values held by Burlingtonians, rather than hold an auction process. "We're not necessarily looking for the highest bidder," said Hartnett.[154]

Background

Burlington Telecom is for sale following a scandal involving the administration of former Mayor Bob Kiss, which secretly diverted $17 million from the city's general fund to the city-owned provider of internet, television and phone service. Mayor Miro Weinberger settled a $33 million lawsuit brought by Burlington Telecom’s main creditor, Citibank, in 2014, which requires the utility be sold after four years. “The city was in a very deep hole. In 2012, when it was being sued by Citibank for $33.5, plus penalties and interest in addition the $17 million of tax payer funds we didn't have access to, and we had our credit rating downgraded to junk bond status,” said Mayor Miro Weinberger. “Because we have fixed BT, we have restored the city's financial credit rating. That is something that saves us millions of dollars a year."[155]

Under the settlement, the city was allowed to pick the buyer as long as an undisclosed financial threshold is met. Settlement money came from Blue Water Holdings LLC, an entity backed by the Merchants Bank and created by Burlington businessman Trey Pecor. Blue Water bought the company and leased it back to the City of Burlington, which continued to operate it as a municipal utility. The sale must be finalized by January 2019, or Blue Water can pick the buyer.[156]

VT Digger previously reported on February 1, 2017 that under a plan developed by the Burlington Telecom Advisory Board, potential buyers must meet certain criteria and qualified buyers would make presentations to the Burlington City Council, which would then approve one buyer. The board planned to launch the sale process in March and select a buyer by July. “An alternative process would be like a ‘for sale’ sign,” Advisory Board Chair David Provost said. “We’re not looking for a buyer with the most money, or a big national and international footprint. There’s (public) fear of selling to a huge conglomerate, but I don’t think the criteria will allow that to happen.” The sale criteria was developed by the board with public comment, and approved by the City Council in April 2016. The purchaser must be financially sound and have experience running a broadband company and the buyer must go through a certificate of public good process to operate as a cable provider.[157]

Three Finalists

The Burlington Free Press reported on September 20, 2017 that City Attorney Eileen Blackwood had announced three finalists to buy Burlington Telecom: Ting or Tucows Inc., Schurz Communications Inc. — and Keep BT Local. Eight entities submitted bids to buy the telecom. The City Council chose four as finalists but one of the finalists has dropped out.. One finalist, Keep BT Local, has been public about their desire to buy the utility throughout the process. The cooperative, which is made up of local residents and business owners, has been passing out leaflets throughout the city and gathering signatures on a petition. At a late August council meeting, David Provost, the chairman of the Burlington Telecom Advisory Board, said the board had "serious concerns" about the co-op's financing model and lack of operating experience.[158]

Final letters of intent from the three finalists were made public on September 20. Now a public comment period will begin between until an October 2 special City Council meeting that the mayor plans to call. At that special meeting, the council is expected to take a vote further winnowing the field to two final bids. Then at a regularly scheduled October 16 meeting, the council is expected to select a buyer for the fiber network. Any sale of Burlington Telecom must be approved by the Public Utility Commission — formerly the Public Service Board — but city officials say that the commission doesn’t need to sign off on the deal before January for the city to retain a larger share of the sale proceeds. The city has previously said that none of the offers would result in major staff changes at Burlington Telecom; that the city would have the option to retain a “significant ownership interest”; and that the entity would continue to offer residents an alternative to other cable or broadband providers.

Two offers are from established telecommunications companies. Both are cash offers and would not require Burlington Telecom to take on any new debt. The final offer comes from Keep BT Local, a group proposing a cooperative member ownership model, which publicly identified itself early in the process. The two cash offers from telecommunications companies are within a few million dollars of each other, and are more than double the offer from Keep BT Local.[159]

According to the Seven Days both Ting/Tucows and Schurz are offering cash. Ting is offering $27.5 million, while Schurz is offering $30.8 million. Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership. "Keep BT Local's" offer also includes $10 million in debt financing it will pay back at 14 percent interest over 10 years. "14% is a very heavy burden to carry. If no standard lender will lend the funds, at any interest rate, that should tell you something. No business history and no collateral should also be a red flag," wrote Charles Haffter in a comment to the article. "Given where the current prime rate is, if this is correct, lenders must have no faith in the coops ability to run a successful telecom company."[160]

All three bids include commitment to building out Burlington's fiber network, commitment to net neutrality, commitment to investment in community initiatives like BTV Ignite, commitment to customer service and restrictions on future sales. The anti-monopoly future sales clause would mean that a company can't sell Burlington Telecom to another telecom that owns a big section of the market in the area, but does not restrict other types of sales. The city will be looking at a company's history of buying utilities to ensure Burlington Telecom doesn't get sold to a bigger company in the near future. According to the article in the Burlington Free Press, Ting/Tucows is a public company based in Toronto that has been operating for 2 years (Tucows has actually been in business since 1993). Schurz Communications is an Indiana-based company that has been in business for 144 years.[161]

An independent financial analysis of the bidders is currently underway and Council President Jane Knodell said on September 13, 2017 that she expects the document to be released to the public on September 25, 2017. "We can have meaningful public input," she said. The input will take the form of public comment sessions, written comments, and councilor engagement with constituents at neighborhood meetings.[162]

Additional Information

September 21, 2017: Ting Hosts Reddit AMA to Discuss Burlington Offer

Ting Bids on Burlington Telecon Fiber Network. Ting would host an AMA (Ask Me Anything) on Reddit from 3 to 4pm on September 21, 2017 to hear and respond to questions about their BT offer, business or "anything else you want to know."

The Ting Blog reported on September 21, 2017 that Ting will host an AMA (Ask Me Anything) from 3 to 4pm on September 21, 2017 to hear and respond to questions about their BT offer, business or "anything else you want to know."


Some of the most interesting questions and answers include the following:

Question:
Assuming you win the bid...
1. Burlington Telecom's prices right now are significantly lower than what you offer in your other locations. Currently, I am also aware of programs that subsidize access for low income families, as well as discounts for college students. Do you plan on raising prices in the area and getting rid of these programs?
2. Will you continue to maintain, upgrade, and expand the network in the years to come? Since Burlington will be just one of many cities (and probably your smallest) will we get as much attention from you as your other locations? Do you plan on expanding the network to neighboring areas like Winooski, South Burlington, Essex, Williston, Colchester, etc?
3. How many new jobs will be created in the Burlington area? Will anyone currently employed by Burlington Telecom be laid off? Will support be "centralized" to either your own call center at your headquarters or a call center in another country like India, or will we still be able to talk to someone from Burlington?
4. Will the people of the Burlington area have any say in decisions made about the network in the future? Will the people most "in charge" be residents of the Burlington area (people from here employed by you), or executives in an office hundreds of miles away in another country?
5. Will there be any possibility of you selling the network to another telco, possibly Comcast or Fairpoint? shudder
6. Had any of you heard of Burlington or been to Burlington or Vermont before the bidding talks started happening? If so, what were your impressions of us?

Answer from Elliot Noss
1. In our current FTTH markets we charge $89 for a gig. In Burlington it is $70 with contract and $83 without. So there is not really a significant difference. There are a bunch of things as follows:
  • We have committed to maintaining prices for 30 months. this does NOT mean in month 31 we will be raising prices. what is true is that there are currently tons of SKUs and we greatly prefer simplicity. we will be looking for some ("gamers package" I am talking to you!).
  • We believe that prices for telecom are too high in general and are likely to fall in the longer term, not rise. the inputs for these services are all essentially subject to moore's law so they should. and we are used to living in markets (like domain names) where falling prices are the expectation. television content is an (UGH) exception.
  • We are strong supporters of addressing digital divide issues and will be looking to implement specific programs to address these issues. we have started to do so in Charlottesville and expect to do so in every market we are in including (hopefully) Burlington. these programs need be developed for and with each community individually.
2. I think this was answered somewhere else and will look for a link. Basically, build baby build!
3. The best way to answer this is to say we are growing and need more good people. The best place to get a sense of this is to look at the slides in our presentation talking about our history with companies we have acquired and the people from those businesses. If we are really lucky, my successor will be a Burlingtonian!
4. We delegate a lot of authority to people on the ground, who will be people of Burlington! More importantly, we really try and make an effort to engage with the local community. Community leaders, groups and organizations, neighbourhoods and just people, to learn about what is important to them and what can most help. We believe that FTTH can be transformative and we want to be part of that.
5. No one here has any intention of selling to any of those large incumbents. shudder
6. I have been following the Burlington Telecom story for many years now and of course was familiar with the city otherwise. I have been three times now and love it!

Answer from Ross Rader
Regarding #3, Our plan is to keep customer service in Burlington and grow that operation to also help us in other cities. We run a distributed operation already - we have customer service staff in Charlottesville VA, Toronto ON, Starkville MS, St. Catharines ON, Nelson BC, and just outside of Chicago IL - a Burlington team will be a great complement to that.
I started in the customer service business in the 90's as a technical support rep for an early ISP, I'm really excited by the prospect of being able to sit down with everyone at BT so I can learn more about why the people of Burlington love BT so much already, what their magic service formula looks like and share as much as I can about what we've learned over the years. Everything I've heard about the Burlington team has been very positive and I think we'll learn a lot from them.
We believe that we can do a better job of servicing our customers than any one else - we don't outsource Ting Internet CS today and we've made an explicit decision not to go that route in the future. We've experimented with it elsewhere in the business and it really requires a different discipline and skills and even if you nail it, the results are just kind of meh. By focusing on delivering great service through our own staff, we can really get into the details of providing great service - and our track record shows it. Ting Mobile consistently ranks at levels consistent with the service delivered by Apple, Nordstroms and Zappos and Ting Internet tracks even higher than that. Working together, I think the two teams have a great opportunity to build on the already excellent results that we see from BT customer service.

Answer from Adam Eisner
I'll comment on 2. One of the commitments we've made is to continue to expand the network, both inside and outside Burlington. So we would certainly continue to expand inside the city, yeah. BT has also identified many of the areas you mention as possible expansion targets, and we've reviewed the initial plans and really like what we see. It's early, and we'd finish Burlington work first, but we'd get into surrounding areas as well.


Question:
This issue with 5, though, is if one of those incumbents decides they want to acquire you, as a publicly traded company your board has the legal obligation to accept the offer if it is sweet enough. As someone who follows business ownership and acquisition patterns quite closely, it's a real and significant risk that recalls the classic scene from Silicon Valley.
So, even if your as good as your earnest PR voices claim at the moment, your ownership structure leaves our community vulnerable. The co-op, on the other hand, would require a vote of all subscribers, which is a far more powerful structural firewall.

Answer from Elliot Noss
This is true about any ownership structure other than municipal ownership. Sadly, that is now precluded because history. We (Ting) can't change that, only try and make it the best it can be from here.
We have agreed to sale restrictions with respect to existing Burlington incumbents.
We cannot guarantee the future. What we do believe is that running an ISP is a challenging business and that we might be among the best in the world at it. We also aspire to learning (from you) all about what is best for Burlington. We aspire to combine the best of an amazing operation and customer service infrastructure (your customer service experience will get even better!) with a deep respect for the local nature and needs of the community.!


Question:
1. Do you feel having a headquarters outside of the country will hinder your ability to maintain the high levels of customer service and same day responsiveness that BT is known for?
2. Considering BT also does cable and phone service, are you going to support those customers or focus strictly on internet and fiber business?
And local staffing is a huge plus. If you win the bidding, what elements of the business will continue to be staffed locally? I assume you'll outsource call center type positions to your existing facilities.

Answer from Adam Eisner
1. We've got a long track record of working on a distributed basis - we're an "internet first" company, so it really is in our genes. For example, we have customer service staff in Charlottesville VA, Toronto ON, Starkville MS, St. Catharines ON, Nelson BC, Kirkland WA and Chicago IL - it will be real work, but we know what it will take to bring a Burlington team into that organization and foster its growth in positive ways. You point out that BT is already known for providing great customer service which is really exciting for me. I don't think for a second that we know everything about providing great customer service - there are always things we can improve - I'm really looking forward to the prospect of working with the BT team to see how they are achieving those great results, comparing that to what we are doing and sharing best practices in both directions.
2. And to your question about local staffing - I think it is important to point out that we wouldn't just be talking about entry level positions. We take great pride in our corporate values, one of which being that leadership and innovation can happen anywhere in the organization - that extends to all of the towns we work in - we're definitely not a "all the good stuff happens at HQ" kind of company. If our bid is successful, I can definitely see lots of opportunity for Burlingtonians to tackle other aspects of Ting's work, not just BT. (our proposal laid out a lot of this and underlined our track record in this area so I won't rehash it here...)


Question:
Being from waaay out of town, what do you know about the Burlington, VT, USA market and why should we trust such a fast-expanding shop to operate in our small sandbox?

Answer from Trish McLean
Hi - It's true that we're not local and we would never be able to be local on our own. But how we've approached it in our other markets is to get involved and do the work. While we have a small national team - I'm in marketing for example, most of what we do is driven by our local teams. We would never assume to simply know what's right for a community. We'll always listen. We've always done community meetings where people have a chance to get to know us and for us to understand their concerns. And then we do the best job we can delivering a great product and great customer service.
In terms of growth, we are expanding but not in my opinion too fast. As you know it takes a while to build a fiber network and there's many steps to setting up a market, lighting customers and then operating. I feel pretty confident in our ability to scale because so much of what we do is done by the local teams. Hope this helps -


Question:
I'm curious how exactly you will keep profits and ownership local. According to surveys in the city done last year, the #1 issue that was most important to this sale was keeping the Telecom local. As a publicly traded company, how can you give residents the service and local commitment we have come to expect, especially when your #1 responsibility is to your shareholders first and foremost?

Answer from Elliot Noss
The best way we can answer is to suggest you check out all our public facing customer feedback (reddit/facebook/twitter, etc.). We deeply believe that happy customers = good business and our shareholders have come to believe us. They didn't always, as you can see by our stock chart for many years. Eventually results win out.
It is worth noting that despite being public for over 17 years, we have never sold a share and never raised money. We are not a conventional public company. But our shareholders are as happy as our customers. And many people start in one of those groups and end up in the other!


Question:
Up 'til now I've only heard of Ting/Tucows in the mobile/cell service and the domain name industries. Moving into a traditional ISP role seems like a new venture. Has Ting/Tucows operated any residential or commercial ISP's before? What does Ting/Tucows seek to gain by purchasing Burlington Telecom? And why here, why now?

Answer from Elliot Noss
We have been doing this for a while. You can see the front door here.
Burlington is a more mature fiber market and it is once a market is penetrated that the REALLY interesting benefits can start to accrue. If we are lucky enough to be successful here, we can start to learn things about the benefits that fiber provides together, and we can spread those learnings to help make positive change in other communities.
Burlington is a natural to lead the nation in something like this!

Follow up Question:
I mean, from a business perspective, what does Ting seek to gain by purchasing Burlington Telecom? What's the bottom line?

Answer from Elliot Noss
The most important thing about it for us is operating a FTTH at scale (>50%). We believe that is where the magic happens. The opportunity to really take the impact of ambient connectivity to the next level and for what we learn together in Burlington to be a model for the rest of the country.!


Question:
It sounds like you're expanding rapidly. How can we be sure your corporate growing pains won't affect us? How will you be able to focus on our local needs and engage our rabidly interactive and opinionated citizens/subscribers/businesses on a regular basis?

Answer from Trish McLean
Burlington would definitely be a big deal to us, as you can probably tell, we're excited at the idea of getting involved.
Keep in mind with the local team we'll be accessible and engaged with the whole community. By that I mean, having community meetings, getting feedback, talking with partners and being available to respond via phone/email/social.

Answer from Adam Eisner
Fair question. It's not untrue to say we've been expanding quickly, for sure. That said, we've been scaling the business for quite some time. For example: we are actively building right now in Holly Springs and Charlottesville. We aren't building in Westminster because the City manages the build, but we're operating there. We are also building in Sandpoint, ID and Centennial, CO concurrently. So all of that is a long way of saying: we are comfortably building and selling in several markets at once right now, and it's going really well. All the systems, structures and plans we've put in place are designed to let us operate in multiple markets at once.
Now for the citizens part. ;) We do interact a lot with each municipal government, businesses and citizens. We're involved in multiple public private partnerships, and get that it's important a) that the partnerships successful for both municipality and Ting and that b) everyone is heard. I certainly see that as incredibly important here. To be honest, we manage that by getting out and being everywhere as much as possible with our local teams (which are led by a local city manager who knows the area inside out), holding events, communicating the heck out of build plans, and so on. We really do think constant communication is key.


Question:
Just wondering How vast your resources are in order to keep the kind of eye on BT that a local co-op with a singular focus can, especially when you have a number of other projects ramping up across the country?

Answer from Adam Eisner
This is a really good question. I think the answer is: each one of our operations are incredibly local. We're incredibly aware that you can't manage a local fiber operation remote. As a result, we have deep and expansive local operations in every market, including field ops/installations, city managers, marketing and support. They are local Ting employees, working out of local warehouses/operations centers and experience spaces we have built. They drive trucks we have procured locally. And so on.
Where we CAN add additional help and value from a remote/centralized operation is in operational muscle. For example: can use our experience managing multiple construction projects to build more, faster. (That's what we meant by "building footprints" in our presentation: we can cover large areas quickly and effectively because we have the experience and resources to do so). We can use the platforms we have to extend tools to customers, quickly. Those kinds of things.

Question:
As a supporter of Keep BT Local co-op's bid and how it'll keep OUR money circulating in OUR community rather than paying off your lenders, I was a little dismayed to see you co-opt their slogan on your slide decks for the PowerPoint. Not a great way to start your introduction to the community by usurping a truly local bid's own name and slogan. I sense you see the opportunity many of us saw years ago when we pushed to create BT, and now is being sold off by short-sighted politicians to out-of-state/out-of-country profiteers who see us as a long term Tucow cash cow. What's the expected return on your investment of $27M - 15%? 20%? 25%? What jacked up rates are you going to charge us after the 30 month "grace period" for Internet VOIP only?

Answer from Michael Goldstein
Hi Shay. I work for Ting.
I am going to try to address your comments and questions. If your intention is more to rant or campaign than to get to know us, that’s cool too. This is Reddit after all. Both the history and fate of BT are disappointing. Skepticism toward politicians and telcos is pretty fair. And doubts that anyone non-local will be quite as accountable to maintain jobs, offer great service at reasonable prices and generally play nice are completely understandable. We get it.
All I will say about us is this. We compete with multi-billion dollar telcos and cable companies in each of our Internet markets and in our national mobile business. We can’t outspend them. We can’t outscale them. In fact, they can pretty much copy anything we do on product or price. Our only competitive hope is to care more, to try harder, to be more honest and fair and to be more responsive. It’s all we got.
Please ask Charlottesville, Virginia, Holly Springs, North Carolina and Westminster, Maryland and ask any of our cellphone customers. You will find them all here.
Regarding your comments:
The choice to keep the bidding process secret was not ours. (As you’ll see, we prefer to engage early and often.) Here is the Mayor talking about why the City made that choice: http://www.burlingtonfreepress.com/story/news/2017/07/31/city-council-hears-burlington-telecom-bids-secret/520827001/
Those slides in the deck were a response to an explicit question from the City. How will you commit to keeping BT local? It’s not a slogan, we were repeating the question! ☺ The City is pushing every bidder to do just that in all the ways that really matter (jobs, accountability, community participation and contribution). We are thrilled to do it. Again, it’s what we are doing in the other towns and nobody asked us to.
You ask if we’ll jack up prices. Look at our business in other cities. Look at our mobile business. Look at how we have passed along rate cuts when we have reduced our own costs. Look at what I wrote about the pricing bullshit that goes on every day in our industry: https://ting.com/blog/ting-pricing-promise/
Again, I am not claiming that we don’t ultimately want to grow our business. I am not claiming that we are headquartered in Burlington. But if we don’t do right by the people of Burlington and any other town we service, they will go elsewhere and we won’t grow anything.

Follow up Question
Thanks for the reply and it was part rant part question. I have a lot of concerns a publicly traded company that is heavily invested in by some of the largest hedge funds taking control of our public utility. And, I don't see how you make a return on $30M without raising prices or cutting services or siphoning off money that would otherwise stay here if you were truly local. I say that not in hostility, but just as an observation of what's happened in Vermont with small telcos that come in with big promises to stay local and just get swallowed up in five to 10 years. You wouldn't be the first if/when it happens to you. The top criteria from residents in any sale was that BT remain under local control. Not just who's employed by it, but who's earning the profits. I wish you luck but I'll be sticking with the coop model, which has proven to be an extremely successful business model in Burlington - from housing to supermarkets to some of our biggest employers. Cheers.

Answer from Michael Goldstein
Shay, this is a great conversation. Thanks. I will tell you that our current bid for this size customer base at these current prices and levels of service is actually a perfectly good investment. As long as we treat customers well and they stick around for a while, there is nothing wrong with this breakeven analysis that would cause me to think that we need to charge more or spend less. Anyone who thinks differently is either doing different math or is less patient than we are.


Question:
What makes you guys the best candidate for buying BT? Or more specifically, what is unique that only you can bring in this offering?

Answer from Monica Webb
We’ve spent time in Burlington and engaged with the City at length. We’ve done a video about why we think Burlington and Ting would be great partners. In large part, it comes down to a fit of values between Burlington and Ting. We both feel passionately about strong local presence, outstanding customer service, the fastest, most reliable and most affordable Internet we can offer, and the myriad of issues that impact Internet users, including digital divide, net neutrality and consumer privacy.
But we admit that talk is cheap. Companies will say a lot of things to put themselves in the best light. So never mind what I’ve just said. Look at our track record. Look at the comments on https://reddit.com/r/ting. Look at our ratings on Consumer Reports, where Ting mobile has been rated #1 or #2 of all mobile companies the last three years running. Check out our Net Promoter Score (NPS), which is the percentage of our customers that would recommend us. Our NPS for Ting mobile is 70+, which is the top score in the world, and our NPS for Internet is >90, though it’s early days for measuring that. And look at our website (www.tucows.com/aboutus) and see what we have always stood for. We lobby, we agitate, we support and we actively engage on issues of concern to Internet users, beyond our customers.
We really think we would make a great steward for the amazing network and legacy of BT. But I would encourage everyone here to do their research. Kick the tires. And the only thing we can ask is that you evaluate all of your options in an informed way.


September 26, 2017: City of Burlington Considers Inviting Telecom Bidder Who Withdrew His Proposal Back to the Table

Burlington Mayor Weinberger and City Council President Knodell issued a statement on September 26, 2017 regarding the potential fourth Burlington Telecom bidder who made withdrew his proposal from consideration. “After extended consultation with the City’s attorneys and Council discussion, there was a strong Council consensus that the City should explore whether the possible conflict of interest with the fourth bid could be resolved. If so, the fourth bidder will be encouraged to promptly submit a final LOI. Together we will be pursuing this outcome immediately.”[163]

The Bidder that Dropped Out May Be Back in the Running if a Possible Conflict of Interest Can Be Resolved

According to the Burlington Free Press, the drop-out bidder may be back in the running to buy Burlington Telecom following a rift between the mayor and some councilors over the circumstances leading to the bidder's withdrawal — if a possible conflict of interest can be resolved. If the conflict of interest is resolved, the fourth bidder will be encouraged to submit a final letter of intent promptly. Knodell said they are hoping to connect with the fourth bidder Tuesday. The council is set to narrow the field to two finalists next Monday. Mayor Weinberger said the bidder made an "independent decision" to withdraw, but that some communications from him may have prompted the decision. "I, as mayor, had some concerns about the fourth bidder and conveyed them to the bidder," he said last week. The potential conflict of interest was a concern raised by the mayor. Weinberger said the non-disclosure agreements prevented him from discussing the details of his communications but confirmed that he had "directly" communicated with the bidder.

The withdrawn finalist had been described by Burlington Telecom Advisory Board Chairman David Provost as "a private equity investor with valuable local relationships and extensive telecom experience and a vision for aggressive BT regional growth."[164] Knodell says 8 of the 12 councilors felt the bidder that pulled out was their first or second choice. "Someone should care as a citizen of Burlington because what if it was the best proposal? What if it was the proposal that worked best for the citizens of Burlington and gave us the best return? They have so much to offer the city in the way of new business formation, building a strong tech economy, and creating good jobs for young people coming out of our school system," Knodell said.[165]

City Councilors Knew who the Fourth Bidder Was

According to Vermont Biz, because of non-disclosure agreements, city councilors knew who the fourth bidder was and were able to review its proposal, but neither they nor the mayor could disclose who it was or what terms they were going to propose. Weinberger said in announcing the three bids that he had presented his concerns to the bidder and to the Council and that the bidder independently decided to withdraw. Weinberger said he could not disclose what his concerns were. "Many city councilors were concerned about how this company disappeared from the mix," said Councilor Kurt Wright. He and Knodell both felt the mayor had a hand in its withdrawal. "There was great, significant support for this company." "In my evaluation, they were the strongest from the point of view of business formation, business services, creating good jobs, building the tech economy," Knodell said. The company had been described as a local, "private equity" firm.

However, neither Wright nor Knodell described it as such or in any other way provided who was behind it or what its bid might have looked like. Wright, a Republican, ran for mayor against Weinberger, but lost by a comfortable margin (58 percent-37 percent in March 2012). Knodell is a Progressive. The mayor's office has been dominated by Progressives or Progressive leaning Independents for more than three decades (Bernie Sanders, Peter Clavelle, Bob Kiss) with a short interlude for one Republican Mayor (Peter Brownell, 1993-1995). Weinberger is the first Democrat since 1981. Wright is currently the only GOP member on the Council.

Possible Conflict of Interest for the Law Firm of Dorman & Fawcett

The mayor and city attorney have still not said publicly why the bid was withdrawn, but according to VT Digger an email from the mayor to city councilors, obtained by Seven Days, provides some insight. “You will see that, in the wake of the legal, regulatory and conflict of interest concerns that have arisen, Terry [Dorman] requested that [the bidder] withdraw its proposal. I support Terry’s decision and expect there will be further conversation about it in our session this evening.”

Terry Dorman, referred to in the email, is a member of the law firm Dorman and Fawcett that the city hired a few years ago to manage Burlington Telecom. Dorman and Fawcett have provided feedback to the city throughout the sale process and will keep 10 percent of the proceeds when Burlington Telecom is sold. The mayor has acknowledged that this is a potential conflict of interest — one that he said the city has managed carefully as it looks to find a buyer. Asked during a news conference announcing that the final bids would be made public, city councilors did not respond directly to a reporter’s question as to whether Dorman and Fawcett had connections to any of the bidders.[166]

One Local Bid Remains From 'Keep Burlington Telecom Local'

Knodell also discussed the one remaining local bid from Keep Burlington Telecom Local (KBTL). "The advantage by going with Schurz or Ting," Knodell said, "is they're well capitalized. They have resources." They are cash bids, Knodell said, "That's pretty attractive, in many ways," but BT would no longer be Burlington-based and their ultimate interests are related to their shareholders. "The relative weakness in [KBTL's] bid is, compared to Schurz and Ting, is that they are thinly capitalized."[167]

September 26, 2017: Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids

Burlington Business Leaders Hold News Conference to Urge City Council to Vote for Out-of-State Burlington Telecom Bids. The Lake Champlain Regional Chamber of Commerce held a news conference urging the city council to consider the two out-of-state bids, Tucows/Ting or Schurz Communication, over the Vermont-based co-op bid, Keep Burlington Telecom Local. "I've taken the time to review each (bid) and have come to the conclusion that the co-op proposal does not compare equally and favorably to the others and doesn't offer the citizens and its residents the protections, financial and otherwise, that are guaranteed by the other finalists," said Tom Torti (photo above left), President of the Lake Champlain Regional Chamber of Commerce since 2006.[168]

VT Digger reported on September 26, 2017 that the Lake Champlain Regional Chamber of Commerce held a news conference urging the city council to consider the two out-of-state bids, Tucows/Ting or Schurz Communication, over the Vermont-based co-op bid, Keep Burlington Telecom Local. "I've taken the time to review each (bid) and have come to the conclusion that the co-op proposal does not compare equally and favorably to the others and doesn't offer the citizens and its residents the protections, financial and otherwise, that are guaranteed by the other finalists," said Tom Torti, President of the Lake Champlain Regional Chamber of Commerce since 2006. Torti said he is a supporter of the co-op ownership generally, but KBTL’s offer relies on a $10 million loan with a 14 percent interest rate, which would leave the telecom “too highly leveraged” to be successful going forward. "It has nothing to do with the model and everything to do with financing."

Andy Montroll, a board member of Keep Burlington Telecom Local, said that if Burlington Telecom is sold to one of the telcos with offers on the table, decisions about its future will be left to out-of-state executives. Torti countered that Burlington Telecom required the clandestine bailout of $17 million in taxpayer money that the city spent improperly to prop up Burlington Telecom nearly a decade ago precisely because it was strapped with debt and didn’t have experienced managers, something he said is also lacking in the co-op’s bid.[169][170]


September 28, 2017: Mayor Miro Weinberger and City Councilor Joan Shannon Discuss the Bidding Process on 'The Mayor's Show'

Burlington, VT Mayor Miro Weinberger hosts his monthly show and discusses the upcoming sale of the city-owned Burlington Telecom internet, phone and television service provider with Burlington City Councilor Joan Shannon.

September 28, 2017: Fourth Bidder on Burlington Telecom Has Chosen to Remain Out of the Bidding Process

Fourth Bidder on Burlington Telecom Sales Process Has Chosen to Remain Withdrawn From the Process. "For now, we have withdrawn our bid," said Faisal Nisar of ZRF Partners adding that he was concerned that anything he said would complicate the city's sale process going forward. "They're going through an important process," he said. "I wish them well." Photo: Google Street View

Burlington Mayor Miro Weinberger and City Council President Jane Knodell made the following public announcement on the Burlington Telecom website on September 28, 2017: “Since Tuesday we have spent hours together and with other parties exploring whether there is a way in which the fourth bidder could re-enter the BT sales process. The bidder has chosen to remain withdrawn from the process. The City greatly appreciates the interest the bidder had in Burlington and the ideas and energy they brought to the process. Resolving this matter has delayed focus on the bids that are before the City Council for consideration. Instead of voting to narrow the field to two bids on October 2, as planned, the Council will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids. The Council will then vote to select two final bidders to conduct legal due diligence with on October 16.”[171]

Identity of the Fourth Bidder Revealed to be Faisal Nisar of ZRF Partners

City officials would not name the bidder or release more information, citing a nondisclosure agreement signed by all parties but according to Seven Days, the fourth bidder is Faisal Nisar, a 42-year-old investor who operates his own private equity business, ZRF Partners. Reached by phone last week at his New Jersey home, Nisar confirmed his involvement. He declined to speak further, citing concerns about the nondisclosure agreement he had signed with the city. Nisar's name has not previously been made public. Nisar and Dorman have ties. The two once served together on the board of a Massachusetts-based technology firm, Custom One Design. Dorman said he's known Nisar for 12-plus years in a professional capacity. The two also shared a friendship with Gary Evans, who consulted with BT from 2009 to 2013 and was key to its survival, according to Councilor Joan Shannon (D-South District).[172]

"For now, we have withdrawn our bid," Nisar said around 9 p.m. Wednesday. He declined to speak further citing both his non-disclosure agreement and his respect for the city and the Burlington Telecom sale process. Nisar, who lives in New Jersey, said he was concerned that anything he said would complicate the city's sale process going forward. "They're going through an important process," he said. "I wish them well."[173]

Nisar Submitted Bid for $17 million

Nisar had submitted a bid for $17 million, according to Kurt Wright (R-Ward 4). Ting is offering $27.5 million, while Schurz is offering $30.8 million.[174] Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership.

Appeal of the Fourth Bidder's Approach

According to some city councilors, Nisar's proposal had appeal. Nisar earned an MBA from Columbia Business School and then spent three years working at Merrill Lynch in New York City. Starting in 1999, he spent 17 years "managing investments in technology and media companies" at Baker Capital, a private equity firm in New York City, according to his LinkedIn profile. Nisar launched ZRF, the entity he used to submit a proposal for BT, in April 2016. Nisar's bid wasn't the highest, but it attracted "significant interest" from some councilors, according to Wright. "They had an aggressive plan in regard to economic development and small business development in the community," Wright said, noting that the company had also planned to expand beyond city limits. "Many of us were very interested in them as our No. 1 or No. 2 choice." According to Councilor Ali Dieng (D/P-Ward 7), Nisar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center, Dieng recalled.

The loss of the fourth bidder was "somewhat unfortunate," said Councilor Joan Shannon (D-South District). "I don't think they're nefarious actions." Instead, the controversy has made Nisar's bid "this kind of forbidden fruit, which makes it much more appealing than it would have been," Shannon said.[175] "I'm extremely disappointed; I was a huge supporter of ZRF," said Dave Hartnett (D-North District). "I'm not really quite sure where this leaves us." Wright said, it was clear that the damage had been done. ZRF wanted to hear from the mayor that he no longer had conflict of interest concerns, Wright said — and Weinberger couldn't give that assurance. "[ZRF] didn’t want to be dragged back in there under that cloud," Wright said. "They've already been jerked around a little bit here."[176]

Dorman & Fawcett Deny that Any Conflict of Interest Exists

At the heart of the questions about a potential conflict, according to councilors, is Dorman & Fawcett's involvement. But councilors were not specific. Dorman denied to Seven Days that any conflict exists. "There isn't one based on everything I know. We stand behind the work we've done," he said. The firm is dedicated to getting the city the best possible result, he said. The company's employee, Stephen Barraclough, has been running BT since 2010. All bidders expressed interest in retaining Dorman & Fawcett to manage BT, said city attorney Eileen Blackwood. Dorman has been entertaining offers for BT since he took the job, he said, and, when the city was ready to sell this year, he reached out to those who had previously expressed interest or seemed like a good fit.[177] Each of the four finalists had expressed interest in retaining the firm, city attorney Eileen Blackwood said at a September 20 press conference. Knodell said the decision is ultimately up to Dorman & Fawcett. "In many ways it'd be great if they would stay in, but I don't know the status of that conversation," she said.[178]

Ting/Tucows, Schurz, and Keep Burlington Telecom Local Are the Remaining Three Bidders

According to the Seven Days both Ting/Tucows and Schurz are offering cash. Ting is offering $27.5 million, while Schurz is offering $30.8 million. Keep BT Local is offering $10.5 million in cash with the city retaining a $1.5 million ownership. Elliot Noss, the CEO of Ting, said he had been following the Burlington Telecom story for years. He said he first reached out to the mayor's office in 2014 about the possibility of purchasing the utility and was put in touch with Terry Dorman, who he said has been his main point of contact and has "run the process." Noss said the signals he has received from Dorman, the mayor and other Burlington officials "struck a balance between being encouraging and noncommittal." Schurz's CEO, Todd Schurz, said he was approached by a "third party that knows BT and knows us." He declined to say who the person was, but a Schurz spokesperson, Brian Lynch, said it was not Dorman or anyone associated with their firm. They only met Dorman and other parties of the city after the formal sale process began, he said.

Katie Vane, a spokeswoman from Weinberger's office, said equivalent site visits were not made to ZRF or Keep BT Local because they were not operating telecom companies, and the point of the visits was to get a grasp of how their operations worked.[179]

Independent Financial Report Not Yet Released

On September 25, 2017 an independent financial analysis of the four bids was presented to city officials. Knodell said earlier this month, while announcing a new timeline that promised more transparency and a robust public process, that the analysis would be made public. However, it has yet to be released.[180]

The Selection Process Has Been Delayed Two Weeks

The controversy has once again delayed the selection process, which must be made by the end of the year for the city to maximize its share of profits from the sale. The city council originally planned to narrow the field to two on October 2 and pick a winner on October 16. Now, the council "will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids," officials said in a statement. The two finalists will then be chosen on October 16, the statement said.[181]

September 28, 2017: Ed Adrian Says Local Sounds Awesome and It Is, Until It Isn’t

Former Burlington City Council member Ed Adrian published an op-ed on Vermont Public Radio on September 28, 2017 that "an advocacy group called Keep Burlington Telecom Local, is once again promoting community ownership of BT. Local sounds awesome and it is, until it isn’t. We can’t afford to celebrate idealistic aspirations, no matter how lofty or pure, at the expense of taxpayers. My view is that we’re lucky to have excellent out-of-state bidders offering to buy and take over BT operations – because while our little City on the lake is capable of doing amazing things, I don’t believe we can compete in the telecom industry without help from the outside."[182]

September 29, 2017: Burlington Free Press Says City Hall Stumbled during Burlington Telecom Bid Process

The Burlington Free Press published an editorial on September 29, 2017 saying that the bidding process for Burlington Telecom lacked sufficient transparency. "When dealing with Burlington Telecom, City Hall has no room for missteps that even hints at anything less than a full effort toward absolute transparency," wrote Engagement Editor Aki Soga. "When dealing with Burlington Telecom, city residents have every right to demand that the people they elected to represent their interests conduct themselves with the utmost scruples."[183]

October 2, 2017: 'Keep Burlington Telecom Local' to do Reddit AMA

'Keep Burlington Telecom Local' announced on October 3, 2017 that Keep BT Local co-op board president Alan Matson is game to do an AMA Thursday, October 5, 2017 from 3-4pm. "It also sounds like at least a few of the other board members and other key volunteers will be available at that time to chime in about our bid to make BT subscriber-owned, so bring your questions, and hopefully it will be a good conversation!"[184]

October 2, 2017: Burlington City Council Discusses Burlington Telecom at Public Forum

Dorman & Fawcett Won't Operate Burlington Telecom After Sale

Seven Days reported on October 3, 2017 that during a public forum at City Hall on October 2, 2017 to discuss the sale of Burlington Telecom, Terry Dorman told the Burlington City Council that his law firm Dorman & Fawcett, hired in 2009 to help resuscitate the failing telecom and to facilitate a sale, will not continue to operate Burlington Telecom once the utility is sold. Dorman did not elaborate on the decision, which he announced as councilors questioned him and BT general manager Stephen Barraclough about the remaining three bidders. City council originally had planned to use Monday's meeting to select the top two bidders but that decision has been put off for October 16. The city must complete the sale by the end of the year to maximize its share of the profits.[185]

Attendees Offered Strong Words of Support to 'Keep Burlington Telecom Local'

Much of the forum centered on 'Keep Burlington Telecom Local' as attendees offered strong words of support for the co-op during public comment; some held signs saying "Hands Off Our Internet, Keep BT Local." The council also accepted a host of letters — almost all of which were in support of keeping the telecom locally owned. "We are now at a civilizational turning point, especially as regards war and climate change. The question is whether our operations will continue to be dominated by profit and bottom-line thinking, or whether we can reconceive our footings, and turn toward cooperative and community-based structures," wrote Marc Estrin as a comment to the story in 'Seven Days'. "Burlington Telecom's offer, though smaller, quantitatively, than that of the others, is far larger in its meaning and effect. I hope that the Burlington City Council will have the values and the vision to look past the bottom line to the real horizon."[186]

Burlington Could Face Possible Legal Risk with Selection of 'Keep Burlington Telecom Local'

But Burlington could face legal risk if it selects the $12 million bid proffered by KBTL, according to city attorney Eileen Blackwood. "We are definitely confirming that there is risk" that the city's creditor, Citibank, could take legal action if Burlington doesn't select a bid that would allow the bank to maximize its share of the sales profit, according to Blackwood. The co-op's bid is the lowest of the three remaining potential buyers. The council must choose between a $12 million offer from the Keep BT Local co-op, a $30.8 million offer from Schurz Communications and a $27.5 million bid from Ting. Blackwood said she could not specify how risky it might be. Councilors also had questions for Dorman about selling BT to the other, higher bidders. Of particular interest: Would the profit interests of Schurz and Ting trump the needs and desires of Burlington taxpayers? Dorman assured councilors that they can control the terms of the sale and write those terms into the contract. "I think the city has the opportunity to get whatever is important to the city in writing," said Dorman.[187]

According to VT Digger there are also questions as to whether Keep BT Local would be able to get regulatory approval from the Public Utility Commission, which must issue a certificate of public good to the eventual buyer.

The PUC must consider the purchasing company’s financial stability, management and technical expertise. The co-op purchase price relies on the city retaining a $1.5 million stake in Burlington Telecom. Burlington’s charter allows the city to enter a joint-venture to operate a telecommunications company, but the Public Utility Commission must determine that in such an arrangement, the risk is borne by other investors, not city taxpayers, the state or ratepayers. Making that determination is complicated because the $17 million the city improperly plowed into Burlington Telecom nearly a decade ago was a combination of taxpayer dollars and money loaned by Citibank, Blackwood said. In the intervening years, ratepayer money was invested in Burlington Telecom as well.
Were the city to invest in the new owner of Burlington Telecom, it would be difficult for regulators to parse whether Burlington’s investment would place taxpayer or ratepayer money at risk of future losses, Blackwood said. Both Ting/Tucows and Schurz would allow Burlington to purchase a stake in the new Burlington Telecom, but their offers don’t rely on the city retaining partial ownership. The settlement allows Bluewater to reject a buyer if it determines that a first-time operator does not have a “reasonable likelihood” of getting PUC approval, said Ralphine O’Rourke, an attorney with Primmer, Piper, Eggleston & Cramer whom the city has hired to help navigate the sale process. Blackwood said officials have not asked Bluewater whether it would make that finding for Keep BT Local, because they want to leave room to negotiate with the company should the city decide it wants to sell to the co-op. The regulatory uncertainty is a cloud over the sale process, because Burlington plans to pick a buyer by year’s end to maximize its return on the sale, while the PUC could take more than a year to issue a certificate of public good, Blackwood has said.[188]

October 4, 2017: City of Burlington Releases Independent Legal Analysis of Bidders for Burlington Telecom

On October 4, 2017 the City of Burlington released an Independent Legal Analysis of the bidding process for Burlington Telecom performed by Ralphine O'Rourke, Esq. of the law firm Primmer Piper Eggleston & Cramer PC (PPEC) and documented in a letter to the city dated October 2, 2017 regarding the "Carried Equity Interest in New Burlington Telecom Enterprise and Blue Water Approval Rights." O'Rourke was asked to provide her thoughts with respect to the City of Burlington's allocation of all, or a portion of, the net sale proceeds from the sale of Burlington Telecom to acquire an equity interest in the new BT enterprise upon the sale of the assets of BT by Blue Water Holdings, LLC and the City to a third party and also asked to consider what approval rights Blue Water has in connection with the sale of BT. Following is a summary of the report:

  • The City Charter expressly allows the City to establish a joint venture or other business relationship to provide telecommunications services;
  • Upon the City's exercising its authority to establish such a venture, it must be approved by the Vermont Public Utility Commission ("PUC");
  • The PUC, in issuing a certificate of public good ("CPG") for such a joint venture, must ensure that any losses from the business are not borne by the City's taxpayers, and in the event of complete abandonment or curtailment, that the costs associated with investment in the telecommunication network are not borne by the City's taxpayers;
  • In order to obtain a CPG to that effect, the City (and the other owner of New BT) will need to be able to demonstrate that no losses will be borne by City taxpayers as a result of the joint venture;
  • The PUC has numerous and substantial other standards that it considers in connection with issuing a CPG, which include considerations relating to the management experience and financial stability of the petitioner and
  • If the petitioner for the CPG is a first-time operator, Blue Water has the right to "reasonably determine" if such first-time operator would be able to timely obtain a CPG from PUC.[189]

Reference:

October 4, 2017: City of Burlington Releases Independent Financial Analysis of Bidders for Burlington Telecom

On October 4, 2017 Burlington Telecom released the independent financial analysis of the three bidders for Burlington Telecom performed by Jeffrey Small CPA which is contained in a letter dated September 25, 2017. Small was engaged to review the financial status of the above three named companies in regards to their financial stability and how that then integrates with their letters of intent to purchase Burlington Telecom. Following are the conclusions of the report:

  • If we assume a EBITDA of 3.5 million then an enterprise valuation of Burlington Telecom using the Industry average multiples of 8.1 it would compute to a market value of 28.35 million. If we use the enterprise valuation EV/Sales ratio and the 2018 budgeted sales of 10 million, we would come up with a valuation of 25 million for the enterprise value.
  • If we assume a FMV (fair market value) of between 25 and 30 million, then the Keep BT Local proposal would pass this equity interest to the Burlington subscribers of BT as owners/members. As stated in the Keep BT Local LOl "In recognition of the fact Burlington residents/taxpayers have already paid nearly $17 million dollars toward the development and operations of BT, there would be no additional cost for Burlington subscribers to become member/owners of KBTL." This means Burlington residents that are non BT subscribers will not get any benefit from any equity or value transfer.
  • In analysis these three companies from purely a financial strength standpoint, the strongest company is Schurz Communications, Inc. with Tucows, Inc. also being a strong company while Keep BT Local has weaknesses with various financial benchmarks. [redacted]
  • The cost of debt for Tucows, Inc. and Schurz Communications is well below the industry standard while Keep BT Local cost of debt is substantially higher than the Industry standard. [redacted]
  • Cash balance to be left at closing in the company would be zero in Keep BT Local and Schurz Communications. [redacted] Tucows, Inc. is silent on amount.[190]

Reference:

October 4, 2017: City of Burlington Releases Report from Burlington Telecom Advisory Board (BTAB)

On October 4, 2017 the city of Burlington released a report from the Burlington Telecom Advisory Board (BTAB) on the three bidders. The original report was written in July in order to give the full City Council the consensus view of BTAB members on the slate of bidders proposing to purchase Burlington Telecom (BT). The BTAB is made up of four City Councilors and four community members with relevant experience and has advised the City Council for many years on the decisions related to the future of Burlington Telecom.[191]

Members of BTAB include:

  • David J. Provost – Board Chair, Executive Vice President, Middlebury College
  • Clem Nilan - Board member, Former General Manager, City Market
  • Theresa Alberghini DiPalma - Board Member, Network SVP Marketing and External Relations, UVM Medical Network
  • Tim Halverson – Board Member, Owner EB Strong’s, Halverson Street Café
  • Joan Shannon – Board Member, (City Councilor, South District)
  • Karen Paul – Board Member, (City Councilor, Ward 6)
  • Jane Knodell – Board Member, (City Council President)
  • Dave Hartnett – Board Member, (City Councilor, North District)

Reference:

BTAB Evaluation of 'Keep BT Local Co-Op'

The KBTL proposal to date has been the weakest of the 8 respondents. The proposal submitted on 5th June was incomplete and a further update due on 30 June was also incomplete. The proposal relies very heavily on expensive debt and this weak capital structure has the BTAB very concerned about the risk of losing the asset again to the lender. We are also concerned that there is no management depth beyond the existing team. The BTAB is pessimistic that the PSB would ever approve this structure given the debt, lack of capital and lack of management experience in the industry. The BTAB has moved this proposal forward to the Council due to the significant public interest in the offer. However, unless KBTL can address the concerns of the BTAB we do not believe this to be a viable offer.

Strengths
  • Member owned local co-operative – local solution
  • Long standing interest in acquiring BT assets
  • Removes uncertainty of future sale, if remains viable
  • Would seek to keep BT Management Team and Operations, if not possible, they have a contingency plan.
Weaknesses
  • Vision for BT beyond local ownership unclear
  • Financial offer at low end of valuation range
  • Funded with $10M of debt at 14% interest rate
  • Limited capital to grow BT’s operations
  • Currently the Maine Fiber investment is not finalized
  • Weak capital structure unlikely to obtain State approval
  • Assets exposed in event of financial challenges, exposed to losing the asset to Maine Fiber Company and BT failing.
  • LOI failed to capitalize on the coop model.
  • Consumer orientation could stifle business development
  • Liquidity challenge for City of Burlington if the City leaves its money in.
  • Only members benefit, not all taxpayers
Update From the July Report
  • The Maine Fiber investment is characterized as “not finalized” in the July BTAB Report, but KBTL has now received a commitment from Maine Fiber.

BTAB Evaluation of Tucows

A strong offer and proposal for the council to consider. One of the strongest offers in terms of price, customer service and capital. Name would likely change to Ting, and real control of operations would move from Burlington. No new debt, but it is a publicly held company and risk of a future sale would always be a possibility. BTAB offers Ting/Tucows as a finalist to the City Council with one reservation about its publically held status and a desire to continue to work with them to strengthen their proposal and minimize the risk to the City in the event of a sale of the Company.

Strengths
  • Highly profitable, high multiple, domain name business
  • Now focused on fiber as their next growth segment
  • Strong focus on customer service
  • Relatively new entrant in several muni fiber markets
  • Local presence and customer facing operations
  • Strategic investor offering second highest price
  • No new debt used for BT purchase
Weaknesses
  • Based in Toronto, publicly traded on NASDAQ
  • Fiber is relatively new and unproven future growth play
  • Control would be centralized outside of Burlington
  • No interest shown in meeting BT management team
  • Core business highly cash positive, but declining margin
  • Less control over sale, as a public company
  • Will change the name from Burlington Telecom to Ting
Update From the July Report
  • Ting has decided to keep the name BT and add a slogan to the brand symbol so that it reads “BT” with small text noting “Powered by Ting.”

BTAB Evaluation of Schurz Communications

An extremely strong offer and proposal for the council to consider. The strongest offer in terms of price, experience and track record of holding onto investment. Current operations would remain in Burlington. BTAB offers Schurz as a finalist to the City Council, with further parameters needed on the options for the unlikely event of sale in the future, to protect the City’s interest.

Strengths
  • 5th Generation, 150-year-old family investment fund
  • Strategic investor already in the fiber & cable business
  • No debt used for BT purchase
  • BT name, management team, staff and operations would remain, GM tbd
  • Strong commitment to and focus on customer service
  • Strongly decentralized local management approach
  • Culturally good fit, and a team that works well together
  • Highest financial bidder and likely long-term holder
  • Focused on continuing to grow BT – product/geography
  • Track record of investing/holding for the long term
  • Would be a good local corporate citizen, track record of giving back to community
Weaknesses
  • Other holdings include newspapers - challenging sector
  • Local ownership only through any City carried interest
  • Local control ceded
  • Inside family members control the board and the company
Update From the July Report
  • Schurz has now committed to devolving decision-making about BT to the Burlington management team wherever possible, in recognition of the community’s strong desire for local control.

October 4, 2017: City of Burlington Releases Letter from City Attorney Eileen Blackwood Regarding Concerns with Bidders for Burlington Telecom

On October 4, 2017 the city of Burlington released a letter to the Mayor and City Council from City Attorney Eileen Blackwood dated September 7, 2017 and updated October Z 2017 regarding Legal Issues involved in the sale of Burlington Telecom. According to the letter as the various proposals to purchase BT have been being reviewed, some legal issues have arisen that should be taken into account as the Mayor and Council consider the potential purchasers. One issue involves the role of the Public Utility Commission; the second involves the role of Blue Water, and the third concerns the role of Dorman & Fawcett. The first issue came up in the context of evaluating the various proposals for the City's carried interest I then asked our outside counsel Ralphine O'Rourke at Primmer, Piper for an independent opinion, particularly focusing on what risks would arise from a Council decision to roll over some or all of the City's net sales proceeds. Her legal memo is attached but is summarized below.[192]

Regulatory Concerns for Public Utilities Commission Approval and Carried Interest Investment

The purchase and sale agreement for this transaction will ultimately be subject to the review and approval of the Vermont Public Utilities Commission (PUC) (formerly known as the Public Service Board), which must grant the buyer a Certificate of Public Good (CPG) before the sale can close. In its process, the commission will give great weight to the opinion of the Department of Public Service (DPS), particularly in relation to the statutory and so-called EMCO criteria that the PUC will ultimately evaluate. Those PUC criteria are set forth in the criteria for sale of Burlington Telecom, adopted by the Council April 25, 2016, and in Attorney O'Rourke's attached memo.

Rejection of the sale by the PUC would put the City in a very difficult position, as by the time that decision is made, the City will have missed important deadlines in the agreement with Blue Water, and will be in a substantially weaker negotiating position with future prospective partners than it is in today. Given the regulator's criteria and role, the City must consider how the PUC will view this transaction. • Both the DPS and the PUC are likely to more easily approve an entity with a demonstrable track record of success in managing a municipal telecom and demonstrable access to capital, rather than a first-time cable operator, as they are charged with considering both the financial stability and operational experience of the proposed company. The regulators are likely to subject to greater scrutiny an entity formed solely to purchase BT, which has no experience actually operating a telecom business, than they would more established and better capitalized companies.

  • The regulators are likely to look favorably upon the return on the City's existing investment into BT that will flow from a higher sales price and may not support a City decision to accept a lower valuation without strong justification, as returning less benefit to the taxpayers.
  • Two of the finalist bids currently before the Council would allow the City to opt to reinvest its "net sales proceeds" in a carried City interest in the future BT entity and one requires that reinvestment. However, in considering that carried interest, the PUC will still have to evaluate the existing charter provisions about our telecom authority, as Attorney O'Rourke describes in her attached memo. If the PUC believes the City investment is speculative and could result in losses, it may hesitate to agree to a carried interest Even if the PUC allows some carried interest, it may require the City to take some of the net sales proceeds in cash in order to ensure that the taxpayers have seen some return and may require certain legal protections against losses (more fully described in Attorney O'Rourke's memo). The legal team recommends that whatever proposal is taken to the PUC should include the option to take the entire net sales proceeds in cash if the PUC requires that[193]

Blue Water Approval

An additional challenge to be considered is that Blue Water has an interest if the sale is to a first-time operator.

In the BT Management and Sale Agreement with Blue Water that was approved by the Council in 2014 (and called out again specifically in the criteria for sale of Burlington Telecom adopted by the Council on April 25, 2016) is the City's right to direct the sale of BT to a "Qualified Purchaser" that has the "capability of operating a telecommunications company of size and service similar" to BT and is "reasonably expected to satisfy any statutory criteria in order to obtain a certificate of public good from the PSB. Such a purchaser "may be a first time operator if [Blue Water] reasonably determines such first-time operator to be able to timely obtain a certificate of public good from the PSB."

An option that involves a first-time operator (that is, an entity that has never operated a telecom), therefore, faces the added risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[194]

Potential for Perceived Conflict of Interest

Dorman & Fawcett (D&F) has been wearing many hats over the past few years, and from time to time the issue of conflict of interest has arisen. D&F agreed to defer its fees during these past several years, allowing them to accumulate and be paid at the sale, in return for receiving 10% of Blue Water's interest in the net sales proceeds. From the City's perspective, this arrangement seemed to give D&F an incentive to find a purchaser, at a good price, who could receive a CPG in a timely manner; their interest therefore seems aligned with the City's interests. However, the Council's April 2016 Resolution on the BT Sale Criteria specifically acknowledges that others may perceive D&F's financial interest as creating a conflict of interest, or the perception of such a conflict, such as an interest in accepting the highest offer. That is a perception the City has kept in mind throughout this process.

Initially, some of the bidders had included a continuing role for D&F after the sale, either as operator or with the option to roll over its sale proceeds into an equity stake in the future entity. Because of concerns that this continuing role could be perceived as a potential conflict of interest, D&F has informed all the finalists that none of the bids should be based on D&F's having a continuing role in the new entity beyond a transition period.[195]

Other Legal Interests

In 2014, the City entered into a settlement agreement with Citibank that was "predicated on the assumption that the [financing with Blue Water] is intended as a bridge to the eventual arm's-length sale of the System to a private entity." After the closing of that sale, the City is to share 50% of its portion of the net proceeds of the sale with Citibank Citibank, therefore, has an interest in what the net proceeds consist of, and the City must evaluate in good faith how the finalist's proposals will address Citibank's interest A proposal that fails to treat Citibank's interests equivalently to the City's so that it realizes its 50% share is likely to face legal challenges.

In 2009, Burlington taxpayers sued the City and its former CAO Jonathan Leopold for having spent $17 million of taxpayer money on BT, despite the charter provisions requiring that taxpayers not suffer from BT's losses. The claims against the City were ultimately dismissed, but some taxpayers may raise new claims if the City chooses a bid that they believe is not as beneficial to the taxpayers (as opposed to the subscribers of BT) as another option. Thus, the interests of taxpayers, as well as those of BT subscribers must be considered. When BT is sold, the employees of BT will end their employment with the City. Currently, the City's pension plan has an unfunded liability, a portion of which is attributable to those BT employees. For the year ending June 30, 2016, that amount was $1.lmillion, but it fluctuates from year to year depending on market conditions and other factors. When BT is sold, the City will need to contribute to its pension plan from the net sales proceeds some amount to cover that liability, and as soon as the City's new actuaries are on board, there will be a better estimate of what that amount will be. However, it is likely that the City will need to take at least some portion of its net sales proceeds in cash.[196]

Summary

From a legal perspective, the state regulatory agencies are more likely to approve a proposal that involves an established, independent company with experience in telecom operations and a significantly higher valuation and access to capital and would look less favorably on one that involves a new company with a much lower valuation. . The state regulators may hesitate to allow the City to roll its entire net sales proceeds into the new entity, and if rollover is allowed, will likely require protections against losses. Blue Water, Citibank, and non-subscriber taxpayers all have interests that must be considered to avoid legal challenges.[197]

Reference

October 4, 2017: Burlington City Council President Jane Knodell is Undecided but Leaning Towards Voting For 'Keep Burlington Telecom Local'

The Burlington Free Press reported on October 4, 2017 that City Council President Jane Knodell said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed. "If you think that's so important, then you're going to be willing to take a chance," said Knodell. Knodell said she was still raising concerns about the financing model the co-op has proposed. Knodell said if KBTL could lower the 14% interest rate on the $10 million in debt that 'Keep Burlington Telecom Local' will be taking on, she believed the path forward would become much more viable.

Another Councilor, Max Tracy, said he had some unanswered questions, though his top choice was also the co-op. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process.

According to the Burlington Free Press, Councilor Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.[198]

About City Council President Jane Knodell

According to a profile of Knodell in 'Seven Days' written in 2015 Knodell is the longest-serving Progressive councilor serving her 19th nonconsecutive year on Burlington's governing body. The Stanford-educated economist has taught at the University of Vermont since 1986, during which time she's also authored papers such as "Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking." She stepped down from the city council after she was appointed UVM's provost in 2010 but returned in 2013, shortly after resigning from that position. "She's less loquacious than your average politician, but when Knodell does talk — in a slightly gravelly voice and at a professor's measured pace — councilors listen," writes Alicia Freese. "She's probably the smartest person at the table," said Progressive Councilor Max Tracy. According to Freese, Knodell can be blunt during policy debates. Drawing on her fiscal acumen, she's challenged Mayor Weinberger on subjects ranging from the fate of Burlington Telecom to the future of the Burlington Town Center mall. But her opposition generally takes the form of probing for answers rather than waging personal attacks. She's been especially vocal about the city-run Burlington Telecom, insisting that it remain locally owned and that city officials try to recoup the $17 million still owed to taxpayers.[199]

According to the Burlington Free Press, Knodell, a Progressive, had the endorsement of the Democratic Party in the 2017 election. The cross-party endorsement came at the urging of Mayor Miro Weinberger, who also criticized the "hijacking" of the Progressive Party by what he called a reactionary fringe. Knodell said she believes in marrying the economic development agenda espoused by the mayor with the Progressives' equity agenda.[200]

October 5, 2017: 'Keep Burlington Telecom Local' Unable to Hold Planned Reddit AMA, Postpones One Week

'Keep Burlington Telecom Local' announced on October 5, 2017 that they would be unable to hold their scheduled Reddit AMA (Ask Me Anything) that they had planned for October 5, 2017 and had postponed it for one week because something unexpected had come up for Board Chair Alan Matson. "We were planning on doing the AMA today, but board chair Alan Matson had something unexpected come up and can't make it, so we're rescheduling the AMA for next week, same time and place (Thursday, 10/12 from 3-4pm). Apologies for the inconvenience, and looking forward to your questions and discussion then!'[201]

Ting/Tucows previously held an AMA on September 21, 2017 to address the community's concerns and respond to issues raised by citizens of Burlington and current customers of Burlington Telecom. There were 92 questions and answers on Ting/Tucows' AMA and another 32 on their pre-AMA.

Schurz Communications, the third bidder for Burlington Telecom, has not made any announcement on whether they plan to hold an AMA to address issues raised by the community and respond to concerns from Burlington citizens.

The Burlington City Council will select two finalists to go forward in the selection process at their meeting on October 16, 2017.

October 6, 2017: VT Digger Writes: 'Parent Company of Burlington Telecom Bidder Registers neo-Nazi Site,' Tucows Responds

VT Digger published a story on October 6, 2017 that a domain name reseller WSMDomains registered a domain name to a neo-Nazi website Stormfront. WSMDomains is one of the 40,000 third party-resellers to domain name wholesaler Tucows, the parent company of Ting, a mobile phone and fiber internet service provider, which is among three finalists looking to purchase Burlington Telecom.

According to VT Digger Internet companies are under increasing public pressure to deny service to groups that promote hate speech but are under no legal obligation to do so.Tucows CEO Elliot Noss says domain registration is a “fundamental protocol” on the internet, part of its basic infrastructure, and website content issues should be addressed by the hosting company or the reseller before a registrar considers taking action. “I’m comfortable saying we object to the content more than most. That makes these issues even more difficult,” said Noss. To deny Stormfront access to Tucows’ domain registration services would be the equivalent of a phone company cutting its service, or a municipality telling them they can’t use public roadways, said Noss. “The great irony, in the Burlington context, is this is a net neutrality issue."[202]

In August, Tucows announced it would stop providing domain privacy protection services to the Daily Stormer, another neo-Nazi website. "Tucows was never the webhost nor the registrar for the domain. Tucows provides a domain privacy service for millions of domains belonging to our wholesale domain resellers and to other registrars. The domain in question was transferred to one of our registrar partners and the privacy service was automatically applied," said Tucows in a press release on August 15, 2017. "The process of balancing free speech and the ugly opinions that people share is neither easy nor pleasant. Every day we receive many, many complaints about the content on any number of the 24 million domains on our platform. Let us be exceptionally clear: we find the content of many of these pages patently abhorrent and evidence of the worst that humanity can stoop to. Nevertheless, there are legal mechanisms and processes in place for dealing with issues of free speech and we consider it our responsibility to follow them. We have and will act in what we call “exigent circumstances” where there is an imminent threat of violence or crime. GoDaddy responded to the Daily Stormer appropriately under these circumstances. However, these circumstances aside, we have found that the clearest path forward, to protect freedom of speech and expression, is to act where we have evidence that due-process has been observed. When such is provided to us, we act on it."

October 10, 2017: What Members of the Burlington City Council Think About the Burlington Telecom Bidding Process

What Members of the Burlington City Council Think About the Burlington Telecom Bidding Process. The Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

The Burlington Free Press reported on October 10,2017 that the Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

Alan Matson of KBTL said he is still working to win councilors’ support ahead of next week’s vote but doesn’t have a count for how he expects that to play out. If Democrats line up behind Weinberger — a fellow party member — that leaves enough votes unaccounted for to swing the process in either direction, he said.

City Council President Jane Knodell has already said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed." Another Councilor, Max Tracy, said he had some unanswered questions, though his top choice was also the co-op. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process. Councilor Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said.[203]

Following are the members of the Burlington City Council sorted by party affiliation with any public information on their background and the way they may be planning to vote.[204]

Update: Here is how the members voted on October 16, 2017.[205]

Democrats - 4 Members

  • Joan Shannon - South District - Member of Burlington Telecom Advisory Board (BTAB) - Joan Shannon said she would be looking at the hurdles each bid would have to overcome to get approval from the Public Utility Commission. "We're obligated to select the bidder who has the best chance to get through the regulatory process," Shannon said. [Voted for Ting on October 16, 2017]
  • Karen Paul - Ward 6 - Member of Burlington Telecom Advisory Board (BTAB) - According to a profile in the Burlington Free Press in 2014, Paul is a CPA who ran for office in 2008 to contribute her financial skills to the Council and has worked to address challenges including uncovering the city's audit and working to put into place more transparent budgeting procedures. "I am inspired to run to continue working to address our pension underfunding and restoring our City’s credit rating." To our knowledge, Paul has not expressed an opinion of the Burlington Telecom bid process or how she will vote.[206] [Voted for Ting on October 16, 2017]
  • William "Chip" Mason - Ward 5 - Mason has been supportive of Mayor Weinberger's approach to the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had asked to be removed from the process, "the Democratic mayor stood flanked by Chip Mason (D-Ward 5) and Richard Deane (D-East District), who said they'd stay focused on the remaining bids," according to an article in Seven Days that appeared on September 26, 2017. [Voted for Ting on October 16, 2017]
  • Richard Deane - East District - Dean has been supportive of Mayor Weinberger's approach to the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had asked to be removed from the process, "the Democratic mayor stood flanked by Chip Mason (D-Ward 5) and Richard Deane (D-East District), who said they'd stay focused on the remaining bids," according to an article in Seven Days that appeared on September 26, 2017. [Voted for Ting on October 16, 2017]

Progressive Party - 3 Members

  • Jane Knodell - Central District (City Council President) - Member of Burlington Telecom Advisory Board (BTAB) - City Council President Jane Knodell has already said that she was undecided but leaning towards voting for the co-op 'Keep Burlington Telecom Local' to win the bid to run Burlington Telecom. "Some people are more risk-averse than others," said Knodell adding that some councilors might want to stay away from what they would see as a high-risk option, while others would say that there may be risk, but there might also be a lot of potential for return if the co-op model could succeed." Knodell said on October 12, 2017 it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[207] Knodell is the longest-serving Progressive councilor serving her 19th nonconsecutive year on Burlington's governing body. The Stanford-educated economist has taught at the University of Vermont since 1986, during which time she's also authored papers such as "Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking." She stepped down from the city council after she was appointed UVM's provost in 2010 but returned in 2013, shortly after resigning from that position. "She's less loquacious than your average politician, but when Knodell does talk — in a slightly gravelly voice and at a professor's measured pace — councilors listen," writes Alicia Freese. "She's probably the smartest person at the table," said Progressive Councilor Max Tracy. According to Freese, Knodell can be blunt during policy debates. Drawing on her fiscal acumen, she's challenged Mayor Weinberger on subjects ranging from the fate of Burlington Telecom to the future of the Burlington Town Center mall. But her opposition generally takes the form of probing for answers rather than waging personal attacks. She's been especially vocal about the city-run Burlington Telecom, insisting that it remain locally owned and that city officials try to recoup the $17 million still owed to taxpayers.[208] According to the Burlington Free Press, Knodell, a Progressive, had the endorsement of the Democratic Party in the 2017 election. The cross-party endorsement came at the urging of Mayor Miro Weinberger, who also criticized the "hijacking" of the Progressive Party by what he called a reactionary fringe. Knodell said she believes in marrying the economic development agenda espoused by the mayor with the Progressives' equity agenda.[209] [Voted for KBTL on October 16, 2017]
  • Max Tracy - Ward 2 - Max Tracy says he has some unanswered questions, though his top choice is KBTL. "It’s going to be a challenge for whoever we choose," said Tracy about the regulatory process going forward. He added that he expected continued negotiation and the city to help the winning bid through the process. Tracy Wright has been highly critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process, according to a story in Seven Days, Tracy compared Weinberger to former mayor Bob Kiss, who secretly propped up the telecom with $17 million in city funds. Like Kiss, Weinberger was "making decisions in secret without council or public consultation as well as ... not taking personal responsibility for mistakes that were made with regard to BT," Tracy wrote in a message to Seven Days that day. "He is, simply put, a hypocrite." According to an article in Seven Days published on October 11, 2017, the thirty year old Tracy is know as "the council's most combative Progressive." According to Seven Days, "even though his activist efforts have been largely unsuccessful, Tracy sees himself as more than a gadfly. He's looking long-term to win policy changes that benefit working-class Burlingtonians and to shift the conversation in the direction of Progressive values."[210] [Voted for KBTL on October 16, 2017]
  • Sara Moore - Ward 3 - Moore has been critical of certain aspects of the way Mayor Weinberger has handled the Burlington Telecom negotiations. After Weinberger asked the fourth bidder to withdraw without input from the council, Moore said "It's hard not to consider that maybe he's trying to limit what people know about the way that this is playing out."[211] [Voted for KBTL on October 16, 2017]

Independent - 3 Members

  • Sharon Foley Bushor - Ward 1 - Bushor is the longest serving member of the Burlington City Council having served 30 years. According to a profile in Seven Days in 2012, Bushor is Burlington's hardest-working City Councilor and no one carries out a councilor’s duties more conscientiously than Bushor. “She immerses herself in details,” says Bill Keogh, who served alongside Bushor for 16 years. “She studies all the documents and brings up items the council might otherwise miss.” To our knowledge, Bushor has expressed no position on the current bidding process for Burlington Telecom or how she may vote.[212] [Voted for KBTL on October 16, 2017]
  • Adam Roof - Ward 8 - Roof has been somewhat skeptical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process, according to a story in the Burlington Free Press, Roof, who attended the announcement and met with the mayor afterwards, said he was reserving judgment on the situation until he had more clarity on what exactly had happened. "If the mayor made a unilateral decision instructing a bidder to be removed, I would have a problem," he said. "It’s a worthwhile question to ask."[213] [Voted for Ting on October 16, 2017]
  • David Hartnett - North District - Member of Burlington Telecom Advisory Board (BTAB) - According to an article in the Burlington Free Press on July 31, 2017, Hartnett said that the City Council is trying to come up with the best deal for the taxpayers of Burlington with regard to the bid process for Burlington Telecom, as well as not interfere with the ongoing operations of the company. "We’re really pushing hard to stay on this timeline," Hartnett said. He was optimistic about the city's ability to meet the deadline.[214] [Voted for KBTL on October 16, 2017]

Democrat/Progressive - 1 Member

  • Ali Dieng - Ward 7 - Dieng has been critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process on September 26, according to a story in Seven Days, Dieng cast blame for keeping the sales process under wraps and not listening to public feedback — most of which has been in favor of the co-op . Dieng said that the fourth bid from Nizar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center. [Voted for KBTL on October 16, 2017]

Republican - 1 Member

  • Kurt Wright - Ward 4 - Wright has been critical of Mayor Weinberger's handling of the Burlington Telecom bidding process. After Weinberger announced that one of the bidders had withdrawn from the process on September 26, according to a story in Seven Days, Wright alleged that Weinberger had asked the fourth bidder to withdraw without input from the council. "There was a breach of trust," Wright asserted. [Voted for Schurz on October 16, 2017]

October 10, 2017: Burlington Mayor Miro Weinberger Recommends City Council Choose Ting/Tucows or Schurz Communications

Burlington Mayor Miro Weinberger Recommends City Council Choose Ting/Tucows or Schurz Communications. Burlington Mayor Miro Weinberger (left) and David Provost, chairman of the Burlington Telecom Advisory Board, held a news conference on October 10, 2017 to recommend that the City Council move forward with Ting/Tucows and Schurz Communications excluding the effort known as Keep Burlington Telecom Local (KBTL).

The Burlington Free Press, VT Digger, Seven Days, and Vermont Biz reported on October 10 and 11, 2017 on Burlington Mayor Miro Weinberger's public announcement at a press conference on October 10, 2017 that he recommends the City Council move forward with Ting/Tucows and Schurz Communications excluding the effort known as Keep Burlington Telecom Local (KBTL). Weinberger did not endorse either of the proposals by Ting/Tucows and Schurz, but said both should remain when the City Council winnows the finalists down to two choices Monday night. The financial offers by those two companies are substantially higher than that made by the Keep Burlington Telecom Local co-operative, according to Weinberger.

A 2014 settlement with Citibank, the network’s main creditor, requires the city to sell Burlington Telecom. A separate agreement with a holding company that bought Burlington Telecom’s assets, and is leasing them back to the city, allows Burlington to direct the sale. For the city to keep the largest possible share of the proceeds, it must select a buyer by the end of the year. KBTL is offering $12 million; the fiber company Ting is offering $27.5 million; and broadcaster Schurz Communications is offering $30.8 million.[215][216][217][218]

Mayor Says "The KBTL Proposal is Not Viable"

According to Mayor Weinberger, KBTL's $12 million bid is doomed by legal, financial and regulatory concerns, and is inferior to the $27.5 million offer from Ting and the $30.8 million put up by Schurz Communications. "Fundamentally, at this point, the KBTL proposal is not viable," Weinberger said. David Provost, who has spent the last eight years as the volunteer chair of the Burlington Telecom Advisory Board, went further adding that the KBTL bid was “the weakest” of the eight received and was forwarded to the City Council only because “we thought it was important to keep a local option available.”

Mayor Praises KBTL's Role in the Process

However Mayor Weinberger repeatedly thanked the co-op group for its involvement and said it made the bidding process better, saying KBTL's involvement — dating back to before the sale process began, when the group was just advocating local control — improved community engagement and forced other companies to make offers that reflect the city’s values. “In part because of the KBTL-inspired community engagement, both the Schurz Communication and Ting proposals are very strong, and ultimately accepting either will result in big wins for Burlington Telecom customers, taxpayers and the city itself,” Weinberger said.

Mayor Weinberger's Complete Statement

“I appreciate the hard work of the KBTL Board and other volunteer supporters to present the City with an option for local ownership,” said Mayor Miro Weinberger. “KBTL’s focus on local issues throughout this process has helped shape the City’s goals and will positively impact BT’s future no matter which bid the City selects. Regrettably, however, the KBTL offer is simply not a viable option for the City to pursue. Selecting it would result in legal action and substantial taxpayer financial exposure, threaten to undo years of BT progress and put Burlington Telecom’s future on very uncertain footing. The KBTL focus on securing local benefits has improved the two very strong proposals from Ting and Schurz. These proposals would secure a bright future for BT, put the days of broadband monopoly behind us for good, lead to substantial reinvestment in our community, return millions of taxpayer dollars, and create the possibility of meaningful City ownership in the future company.”

City Bank Will Almost Certainly Sue the City of Burlington if the City Council Chooses KBTL

Mayor Weinberger said he has strong legal concerns if the KBTL proposal moves forward. Weinberger said Citibank, which is set to receive a portion of proceeds from the purchase of Burlington Telecom, has told city attorneys that the potential risk for legal action has increased to “near certainty” if the city accepts a bid that’s less than 50 percent of the other two bids, as is the case with KBTL's proposal. Some co-op supporters acknowledge that risk, Weinberger said, but want the city to be part of the solution in overcoming potential financial problems as it did with the development of City Market. The difference, Weinberger said, is that state law prohibits the city from subsidizing telecom operations.

Weinberger added that even though the co-op bid meets a minimum threshold dollar figure included in the agreement with the holding company, that doesn’t mean the city can accept a low offer without consequence. “Citibank is saying the gap between the proposals is too great and does not satisfy a commercial reasonableness test that all contracts (to buy Burlington Telecom) must abide by,” Weinberger said. “We are now advised by our attorneys that what was characterized as a risk of legal action by Citibank at the last City Council meeting has now become the near certainty of legal action, and real legal exposure to the city, should we attempt to move forward with a bid that’s less than 50 percent of the two other bids."

Weinberger added that not only would the City of Burlington face the high probability of a lawsuit from Citibank if the City Council chooses KBTL, but that the city could be sued by residents of Burlington who do not believe that choosing KBTL protects the city's interests.

The City also has financial concerns with KBTL's proposal, with KBTL relying on a $10 million loan at 14% interest. Questions also exist as to whether the KBTL board can put together an experienced and competent management team, something the mayor said is already included in the other offers.

Ting/Tucows and Schurz Communications Have Strong Proposals That Will Benefit the City

Mayor Weinberger emphasized the positives found in the proposals from Ting/Tucows and Schurz Communications. According to Weinberger, both proposals include a pledge to build out the system so that it can reach portions of the city where service is not now available and both Ting/Tucows and Schurz Communications are committed to strong privacy policies, net neutrality and to having an office and "major staff presence" in Burlington. "Ultimately, accepting either will result in big wins for Burlington Telecom customers, taxpayers and the city itself," Weinberger said.

Weinberger added that selling to Ting/Tucows or Schurz Communications could also head off potential lawsuits from taxpayers who are out $17 million after the previous administration improperly plowed money into a then-struggling Burlington Telecom. The mayor could veto the Council's decision, but would have no authority in the decision other than that selling to Ting/Tucows or Schurz Communications would allow the city to recoup roughly $6 million of that money while ensuring Burlington Telecom continues to offer fast, affordable internet service.

Both Ting/Tucows and Schurz Communications Need to be Chosen So the City Has Leverage to Negotiate With Them

Mayor Weinberger urged members of the Burlington City Council to accept both the Ting/Tucows bid and the Schurz Communications bid so that city officials can do a final blitz of negotiations with the two companies. If the City Council chooses KBTL as one of the two companies to go forward in final negotiations, then the city will have little leverage to get a higher "best and final" offer from the remaining out-of-state company said Hugh Pickens, an industry analyst who owns stock in Tucows and has been following the Burlington Telecom bid process closely.

Alan Matson Says Weinberger's Recommendation is Not the Death Knell for KBTL's Proposal

Alan Matson, chairman of the Keep Burlington Telecom Local board, said after Weinberger’s news conference that the mayor’s position “makes it tougher” for his group to move its plan forward. “I don’t necessarily see it as a death blow. It sure doesn’t help us," said Matson. According to Matson, KBTL has a strong proposal in place despite a lack of experience in running a telecom company. “I couldn’t be more confident of our management plan, that our management plan will be as strong as anything put forward,” Matson said. According to Matson, Weinberger's recommendation is not necessarily the death knell of KBTL's proposal. "He's one voice in this process," Matson said of Weinberger. While it certainly doesn’t help the co-op’s cause to have the mayor oppose its bid, “The death blow will be a full City Council vote,” Matson said.

Matson added that the idea that Citibank can take this type of action to influence the sale at the last minute is further evidence of the need for local control, so Burlington Telecom will not continue to be at the mercy of outside entities. “There will be pressures on any company that has multiple locations and multiple lines of business that may or may not favor Burlington at some point or another," said Matson.

October 12, 2017: 'Keep Burlington Telecom Local' responds to Questions on Reddit AMA

on October 12, 2017, Alan Matson, Chairman of 'Keep Burlington Telecom Local' board, responded to questions on KBTL's Reddit AMA.

Question: People have stated that KBTL lacks expertise in the ISP business, how would you refute that?

Alan Matson: Several things...but the key is that KBTL's being led by a Board of Directors. If we are successful, the Board will hire a general manager who actually runs the telecom. This hire is truly what should be looked to for the expertise. Second...on our board are three business folk who have all started up successful businesses plus a lawyer who has a practice that includes telecom and has submitted CPGs for telecom companies in Vermont. As for the point of who would we hire for a manager.....our intent has always been to keep the existing management in place...if at all possible...and that continues to be our plan.



Questions: What challenges to would you anticipate in gaining PSB approval if selected?

Alan Matson: While I'm not the lawyer on the Board, I understand that there are two issues that have been raised about PSB (Now Public Utilities Commission "PUC") approval. They are management and financial stability. Additionally...there are two CPGs in play here....phone and cable. I'll start with phone...this CPG should not be an issue. Phone CPGs pretty much ask some simple questions about prior bankruptcies. The cable CPG will be the tougher one...on the management front, we are quite confident that our bid is successful that the PUC will have no issues with our management. It's tough to say more at this point. On the financial front....we have submitted Pro-forma financial info to the City as regards our bid, and right now nobody is saying that it doesn't work or that the assumptions are wrong. Also...the PUC tends to encourage competitive providers which BT is in this situation.



Question: As I understand it (and I am not paying much attention) your bid is much less than the others. Why should you get the franchise?

Alan Matson: Key is the value to the City as a whole and not just the headline bid number (of which the City only gets 25% over $6 million). Also, the total $$ value of the bid is only one of the criteria listed in the sale criteria.



Question: Why is the mayor being such a dick to you guys?

Alan Matson: I can't speak to motives, but the mayor is only one part of the decision process here, and our offer continues to provide for the City benefits that don't exist in the other bids. We're continuing to highlight those benefits, as well as highlighting what we think are misrepresentations about all three bids. Basically, we think the risks of our bid are being exaggerated, whereas the risks of Tucows and Schurz are being overlooked. For example, Tucows does not currently manage any cable companies, nor do they have the cash on the balance sheet to purchase BT which makes debt issuance likely. Schurz, on the other hand, has a recent history of buying and selling media properties (including a cable company in Florida last year) and uses data caps in their pricing model for at least one of the cable companies.



Question: I've been a supporter of KBTL for quite a long time, if you'd asked me as recently as a month ago I'd have said that you guys should win the bidding process with no doubts in my mind. Between the several events of the past month I have to say that you are now my last choice. I've read the proposals. I've examined the available financials. I've listened to what the Mayor has to say and taken the time to understand why he said it. Most importantly I've read the Ting/Tucows and KBTL AMAs.

People have been up in arms about the Mayor saying that the city should reject your offer. If that was all he said I would agree, however, he clearly stated that his reason for wanting to reject your bid is that accepting it would open the city to additional legal risk. That means that KBTL is effectively asking the city and it's tax payers to not only accept significantly less money ($7.5 million allocated to the city from your bid vs approximately $11 million from Ting and $11.5 million from Schurz) but to accept significant legal risk on your behalf. It's quite possible that legal fees and an eventual settlement with Citibank could exceed the $7.5 million paid to the city from your bid. This would effectively mean having the tax payers pay you for the honor of giving you a profitable business with significant valuable assets.

Alan, you and the other directors should be ashamed of your AMA. This AMA represented a significant chance to engage with the community you seek to serve, and you failed to do so in any meaningful way. In your AMA you also went out of the way to disparage your competition, something I have not seen from either Ting or Schurz, and something that I find highly unprofessional.

First, you state that Ting (Tucows) has no experience managing a cable company, while failing to mention that you and your board also have no experience managing such a company. In fact you have no experience managing a telecom company of any kind. In the quoted sentence you also mention that Ting doesn't have sufficient assets on hand to purchase Burlington Telecom for cash, and that they would very likely issue debt to do so. You're a business person, so you know that large asset purchases are almost always debt financed, it is absolutely the normal course of business. In fact it would be much more remarkable if Ting were to make this purchase entirely with cash. What you're doing is attempting to frighten people who are less business savvy than yourself. Shame on you!

When asked an incredibly important question about your total lack of expertise or any experience at all in running a telecom company you fail to provide a concrete plan. Instead what your prospective customers get is a vague answer of "Our current plan is to probably keep existing management... maybe." Given this answer I have way less faith in your ability to manage Burlington Telecom than I already had.[219]

October 13, 2017: 'Keep Burlington Telecom Local' Pushes Its Case on the Steps of City Hall

'Keep Burlington Telecom Local' Pushes Its Case on the Steps of City Hall. Chairman Alan Matson called the 14% interest rate KBTL will be paying on its $10 million loan from Maine Fiber “no doubt higher than what we’d like” but said the loan was structured with lower payments in the first years and higher as time went on.

VT Digger reported on October 13, 2017 that supporters of 'Keep Burlington Telecom Local' rebutted arguments against their bid on October 13, 2017 at a press conference held outside City Hall, and reiterated they were “very actively pursuing” a purchase of the city’s internet, cable and telephone service provider. KBTL Chairman Alan Matson called the 14% interest rate KBTL will be paying on its $10 million loan from Maine Fiber “no doubt higher than what we’d like” but said the loan was structured with lower payments in the first years and higher as time went on. Matson said the co-op could buy out the loan after three years and negotiate with a new lender. Matson also cited co-op board members and supporters with managerial and legal skills, including appearing before the Public Utility Commission, which must approve any sale.

City Council will narrow the three bidders down to two finalists on Monday night. City Council President Jane Knodell on October 12, 2017 said it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[220]

October 13, 2017: Ting/Tucows Clarifies Some Points in its Burlington Telecom Offer

Tucows CEO Elliot Noss sent a letter to David Provost, Chairman of the Burlington Telecom Advisory Board and Terry Dorman on October 13, 2017 clarifying some points in their offer:

Re: Concerns about Tucows as a publicly-traded company
Over the last 24 years, Tucows’ has succeeded by providing our customers with a great experience for a fair price. Actions like suddenly raising prices, enacting data caps, selling customer information, or cutting back on service would damage the reputation our entire company is built on, and would be inconsistent with our actions for over two decades. We have simply never done these things. Treating customers and employees right leads to company success. Investor success follows, but does not lead our decisions. Our investors understand and value this choice, and would expect us to do nothing less for Burlington Telecom and the people of Burlington.

We also think it’s important to note that Ting does not follow a traditional cable or media model. We are a progressive Internet company, with a genuine customer-centric approach to running our business. We’re open to operating differently--and better--than cable, telecom, and media companies, and this model has won us devotion from customers in our other markets and in our mobile business, as well as awards for our city-friendly partnerships, from community broadband organizations. We fought for Net Neutrality before it became a discussion topic. We also worked against SOPA/PIPA and have been actively engaged in every issue to protect consumer interest and an Open Internet since the beginnings of the Internet, and we will continue to do so, in Burlington, if we are chosen.

Re: Burlington Telecom staff retention
We would need every current BT employee to continue running the operation, and we hope they stay. Our expectation is that the headcount and opportunities for Burlingtonians to grow over time as the network expands and gains more subscribers, and that employees would have access to expanded career options.

Re: Burlington Telecom’s importance within the Ting Internet family
Of Ting’s five cities, BT would immediately become our largest and most developed market. The comprehensive experience of the BT workforce, through both good times and lean ones, would bring significant insights to Ting, and underpin our ability to develop a winning model in Burlington for how ubiquitous gigabit fiber can transform a community through spurring entrepreneurship and innovation, and improving overall social and economic outcomes.

Re: Annual $250,000 community commitment
We would like to underscore that Tucows’ local commitment would be $250,000 per year to programs in Burlington that support municipal, economic development and entrepreneurship. This type of hyper-local community support is a signature strategy that Ting Internet is renowned for in all of our markets. The Burlington commitment includes:
  • $60,000 per year to BTV Ignite
  • $50,000 per year to free TV advertising for local startups and community events
The remainder would go to programs developed with local community involvement such as:
  • Free service to select, local non-profits
  • Sponsorship of local events and programs
  • Low-income Internet service subsidies
  • Internship programs
  • Zones offering free gigabit-powered, state-of-the-art Wi-Fi
  • Additional public, educational and government (PEG) access channels
  • Free co-working space
  • Small business challenges

Re: Lifeline support for low income households
In our community commitment, we cited low-income Internet service subsidies. That will absolutely include continuing BT’s support for the Federal Lifeline Broadband program. However, we do not think the Lifeline program is enough, and we have started to work on innovative approaches with local communities that provide more effective solutions to the digital divide, and we would expect to bring these lessons to Burlington.

Re: Assets and liabilities
Tucows’ offer is for all of the assets required for the current operations of Burlington Telecom. It assumes a zero cash balance at closing.[221]

Reference:

October 16, 2017: City Council to Decide on Burlington Telecom Finalists at October 16 Meeting

'City Council to Decide on Burlington Telecom Finalists at October 16 Meeting. The Burlington City Council will meet at 7 pm EST on October 16, 2017 to select two finalists to buy Burlington Telecom. A final decision will be made by the Council October 30. Two out-of-state bidders, Ting and Schurz, and one local bidder, KBTL, are the finalists.

Vermont Biz reported on October 16, 2017 that the Burlington City Council will meet at 7 pm EST on October 16, 2017 to select two finalists to buy Burlington Telecom. A final decision will be made by the Council October 30. Two out-of-state bidders and one local bidder are the finalists. Last week, Mayor Miro Weinberger urged the City Council to advance to the final round the bids from Ting/Tucows and Schurz Communications. This was expected as they were the high bidders. The third bidder, Keep Burlington Telecom Local (KBTL), presented a bid that would provide less than half the cash and a high debt load. The chairman of the BT advisory council already had advised against the KBTL bid because of that. The bid from the Canadian company Ting was $27.5 million; Schurz from Indiana was $30.8 million; and KBTL was $12 million, with $10.5 million in cash, including $10 million financed at 14 percent interest. All the bidders offered a way for the city to retain a minority stake in the "new" BT. KBTL would run the fiber-based telecom as a for-profit co-op, which would include current subscribers. BT provides Internet, phone and television service.[222]

City Council President Jane Knodell said on October 12, 2017 that it was “very probable” the co-op would be one of the two selected. The co-op has had broad public support, Knodell said.[223] The Burlington Free Press reported on October 16, 2017 that the Burlington Progressive Party voted unanimously to support the Keep Burlington Telecom Local bid on Sunday, saying it offers "the greatest long term value to Burlington residents." The party cited the success of other cooperatives, including City Market, in Burlington.[224]

According to a story on Vermont Public Radio, each councilor will get one vote Monday night and the two proposals with the most votes will advance to the final stage of the sale process.[225]

October 17, 2017: Burlington City Council Narrows Sale of Burlington Telecom to Ting/Tucows and KBTL

Burlington City Councils Narrows Sale of Burlington Telecom to Ting/Tucows and KBTL. The Burlington City Council voted to advance the bids of Ting/Tucows and KBTL in the process to buy Burlington Telecom with six of councilors voting for KBTL, five voting for Ting/Tucows and one voting for Schurz which has now been eliminated from the sale process. City Council President Jane Knodell (right in photo) led the Progressive Caucus in voting for KBTL. However Knodell signaled that Ting may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. "I will vote for it tonight, but I don't think it's there yet," said Knodell. “Please don’t rest on your laurels. Keep working hard.”

The Burlington Free Press, Sevens Days, VT Digger, Vermont Public Radio, WAMC, and My Champlain Valley reported on October 17, 2017 that the Burlington City Council voted to advance the bids of Ting/Tucows and KBTL in the process to buy Burlington Telecom with six of councilors voting for KBTL, five voting for Ting/Tucows and one voting for Schurz which has now been eliminated from the sale process.

City Council Hears Supporters of KBTL

The city released more than 200 pages of emails from residents sent to btfeedback@burlingtonvt.gov, the dedicated email address set up for residents to share Burlington Telecom input. People who chose to weigh in overwhelmingly — though not unanimously — expressed a preference for local ownership. The public comment period was dominated by people speaking in support of Keep BT Local’s bid to buy Burlington Telecom. Many of those speaking in support of Keep BT Local spoke passionately about the benefits of having Burlington Telecom run by a local company and criticized Mayor Miro Weinberger and some city councilors for not supporting the co-op’s bid. “When [Weinberger] said that the offer of Keep BT Local was not viable I felt really sad,” said Diane Pearson. “I came tonight to to ask each of you one question before you vote tonight: how can our community not be viable and what can be more viable than our community?

About 150 residents crowded into Contois Auditorium to voice their support for the co-op's bid. They stood along the walls and sat on the floor, bearing signs with slogans in favor of Keep BT Local. "How about we keep our internet & just sell Miro instead?" read one, taking a shot at Mayor Miro Weinberger. Read another, "Hands off our internet." "This is probably the biggest issue you've ever voted on," former Progressive state legislator Dean Corren told the council. "Decades from now, it will seem silly that we considered having something other than local control over the telecom." Others urged the council to consider the extensive public support for the co-op. Among the lawn signs placed in yards around the city, "You've never seen a sign saying, 'Give it to Tucows,'" said Charles Simpson, referring to Ting's parent company. People applauded and laughed.

A few people spoke in favor of the other bids, arguing that Burlington has an obligation to all its taxpayers in the sale — not just the Burlington Telecom subscribers who would become co-op members. Others questioned whether the debt-financing is workable. John Callow said that the prior mismanagement of Burlington Telecom needed to be considered and the council should consider the proposals from Schurz and Ting/Tucows. “They both offer tremendous amount professional experience and have demonstrated they can compete in a marketplace around the country,” Callow said. “Contrast that with the local option which is somewhat undervalued.

Taxpayers Speak at Public Forum

The public forum prior to the city council’s deliberation was dominated by residents pleading with leaders to keep the local bid in the running.

  • Dave Mahr: "I live in the new North End. You will hear a number of emotional pleas in support of Keep Burlington Telecom Local. But I urge you to take the advice of a Nobel Prize winning economist, Richard Thaler, and base your decision on the facts and figures versus your emotions.”
  • Dean Corren: “Not only is the coop a very viable offer but it is the only one that meets the key criterion of keeping control local.”
  • John Caulo: “I wanted to speak in favor of the Schurtz and Ting proposals. We’ve got two proposals that are fairly equally valued. Contrast that with the local option which is somewhat undervalued. This transaction and whom you select will have a bearing on the future vitality of our community.”
  • Tom Hyde: "I’m from Ward 6 and I think it’s really important that the reason that we’ve been told that City Bank would sue the city if the Keep BT Local bid is accepted, that should be disclosed.”

Discourse, at Moments, Turned Less Civil

Councilor Adam Roof said he was disappointed that the discourse had, at moments, turned less civil. He wrote he has received calls that he characterized as political threats and harassment. "Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would 'have a target on my back' and that 'capitalist pigs will be slaughtered,'" he wrote in an email that went out to about 20 or 30 people shortly before the meeting. He blasted the threats as both tasteless and ineffective, but said he was encouraged that the "majority of Burlingtonians are kind and thoughtful people who realize that far more unites us than divides us."

Mayor's Recommendation Disregarded

Mayor Miro Weinberger had urged councilors to block the advancement of the co-op in the bidding process, arguing that KBTL isn’t financially viable, lacks managerial experience and would face legal and regulatory hurdles. At a news conference last week he said a lawsuit from Citibank is a “near certainty” should Burlington accept the co-op’s low offer.

Dean Corren, a former Progressive state representative, gave remarks that typified those of co-op supporters. He referred to Ting and Schurz as “Comcast by any other name,” highlighting a major concern among advocates for local ownership who fear no deal with a corporate buyer would bind a telecom giant should it purchase them in the future. “You cannot run a city based on threats of corporate litigation,” Corren said. Corren was not the only Keep BT Local supporter who took aim at the mayor. Ward 8 Independent Adam Roof addressed the emotion that has been swirling over the deliberations. “I am not fearful or scared or intimidated by the CitiBank potential lawsuit. Nor am I intimidated or fearful or directed by the mayor and his opinions. I do think that KBTL for me has a long way to go to mitigate the concerns that I have especially around the financial dynamics.”

Weinberger defended himself against criticism. The settlement, he said gave the city control over the future of Burlington Telecom. Citibank had initially sought to force the fiber network into receivership. “We heard frequently tonight that it’s important to fight the banks and not be afraid of litigation. I just hope we all remember the history. We did fight. I did fight,” Weinberger said.

Progressive Caucus Voted Unanimously to Support KBTL

The Burlington Progressive Party voted unanimously Sunday to support the Keep Burlington Telecom Local bid, saying it offers "the greatest long term value to Burlington residents." The party cited the success of other cooperatives, including City Market, in Burlington.

Some of the councilors who cast their votes for the co-op warned the supporters who packed Contois Auditorium that they still had some concerns. City Council President Jane Knodell, despite her vote for the co-op, said it was a "reasonable" position to be worried about the risks facing the co-op's bid and said that Monday's vote might not translate into continued support when the council picks a winner at the next City Council meeting on October 30. "I will vote for it tonight, but I don't think it's there yet," said Knodell, adding that she had started out as a skeptic toward the co-op, but it was growing on her.

Concerns About KBTL Continue

Ralphine O'Rourke, a private attorney hired by the city to assist with the sale of Burlington Telecom, told Weinberger and the council that she and Eileen Blackwood, the city attorney, had spoken with Citibank's lawyer. O'Rourke wrote that the lawyer, Kevin Fitzgerald, told them the co-op's offer would "not meet the City's obligations to Citibank." She added that the bank was uninterested in equity in the co-op-run company. "In terms of our providing you with a risk assessment regarding the possibility of whether Citibank would bring a claim, it has moved from quite possibly to definitely," she wrote.

The co-op addressed the question of Citibank's potential legal challenge on its website. "It is our position that the potential problem with Citibank can be cured, but it requires cooperation with City Council and the Mayor," the co-op wrote. "We are fully prepared to respond to this concern and are confident that with the City’s help we can clear these hurdles." The co-op’s board has said it believes it has a financially sound proposal that will pass regulatory muster. On Monday, KBTL announced an “Executive Transition Advisory Board” to help guide it through the next phase of the bidding process. Among those on the executive transition team are Avram Patt, a former Washington Electric Co-op general manager, and Carina Driscoll, a former state representative, city councilor and Sen. Bernie Sanders’ stepdaughter.

Councilors also expressed concerns about the financial viability of Keep BT Local's bid. The co-op's $12 million offer would be financed by a $10 million loan with a 14 percent interest rate. "It’s not about fear [of litigation against the city], it's whether there’s legitimate concerns about whether Keep BT Local can pull it off," said Kurt Wright (R- Ward 4) as he explained his unwillingness to support the co-op. "I don’t take those considerations lightly."

Councilors May Change Their Votes in Final Vote on October 30

Councilors said that their votes Monday night weren't necessarily an indication of their final choice. The two finalists will continue to refine their offers before the council selects the winning bid on October 30. While half of the City Council voted for Keep BT Local, some of them made it clear that their vote to move the co-op into the next stage of the sales process didn’t guarantee they’d support the bid in the final vote. Several councilors who voted for Ting said they appreciate the benefits of local ownership that the co-op offers, but those benefits won’t be realized if Keep BT Local can’t survive the in the short term. City Councilor Karen Paul, D-Ward 5, said the co-op’s pro-formas pencil out, but they include no cushion for the unexpected. A recession or other economic disruption could tank a co-op owned Burlington Telecom, she said.

East District Democrat Richard Deane emphasized that this is not the final vote the council will make regarding the sale of Burlington Telecom. “I think we need to be certain of four critical points. That those two candidates that we choose are financially stable, that the chosen firm must have proven managerial and technical expertise. Third they have to have the best chance to be favorably evaluated by the Public Utility Commission. Finally they must offer the best assurance the $16.9 million of taxpayer funds that were inappropriately allocated by a previous administration are returned.”

City Council President Jane Knodell said even though she started out a skeptic of the bid from Keep BT Local, it was growing on her. But Knodell also was clear to point out she still thought the proposal needed work. “I’m here tonight to support Keep BT Local but also to say keep working because there will be hurtles and … I think the people that are saying we are very worried about the financing that is legitimate,” Knodell said. Knodell reviewed the bidders’ pro-formas, or 10-year projections. The information is not public, because it includes proprietary information about the bidders. Currently, Burlington Telecom is paying for growth out of profits. Keep BT Local would have a difficult time keeping up with debt payments under that scenario, Knodell said. “It can be done, but it has to be flawless,” she said of the co-op’s plans for Burlington Telecom. Her message to the co-op board: “Please don’t rest on your laurels. Keep working hard.”

Though Knodell didn’t vote for Ting, her comments signaled that it may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. The council president said she thinks Burlington should choose a buyer who can help the local tech economy flourish, something Ting has made the greatest commitment to thus far, pledging $250,000 to specific local efforts including BTV Ignite. “The next Skype could come out of Burlington. I think we need to be thinking quite big when it comes to this sale,” Knodell said.[226][227][228][229][230][231]

October 25, 2017: Five Burlington Council Members Travel to Toronto to Visit Tucows

VT Digger reported on October 25, 2017 that in a trip has been in the works for weeks, five Burlington City Council Members. Adam Roof, Chip Mason, Karen Paul, Richard Deane, and Joan Shannon traveled to Tucows' headquarters in Toronto to perform due diligence to get a sense of the company’s culture and operations before casting their final vote on October 30. All of the councilors making the trip voted to advance Ting’s bid at the council’s Oct. 16 meeting. “I’ll be the first to say the optics aren’t ideal,” said Adam Roof adding that the trip is being paid for by Burlington Telecom. “There will be no inappropriate courting,” Roof said. “This is a due diligence trip through and through.” Mayor Miro Weinberger and members of the Burlington Telecom Advisory Board made a similar trip to the headquarters several weeks ago.

State Rep. Selene Colburn, who supports KBTL, said the trip was available to all city councilors but that the group going is essentially the Democratic caucus and a representative for the Democratic mayor — all of whom have publicly supported Ting over the co-op. “They didn’t create this dynamic, but now it’s the Democrats and the mayor’s office going to meet with Ting,” Colburn said. Brian Lowe, the mayor’s chief of staff, said such due diligence visits are typical when the city is negotiating a major transaction, and it was open to any member of the council. "The responsible step here is for all Councilors to see Ting's operations first hand," wrote Dave Gibson in a comment to the article. "I'm stunned to learn that they hadn't already. Meetings in Burlington with a select few cannot provide an accurate feeling for the culture of a company. How could any Councilor not choose to visit informally with employees in their space."[232]

October 17, 2017: How Members of the Burlington City Council Voted in Narrowing Burlington Telecom Sale Candidates

How Members of the Burlington City Council Voted in Narrowing Burlington Telecom Sale Candidates. The Burlington City Council will have the final say on which two of the three remaining bidders for Burlington Telecom will proceed to the next step. Voting will take place on October 16, 2017. The final decision on the winning bid will also be made by the Burlington City Council. The mayor could veto the Council's decision, but would have no authority in the decision other than that.

The minutes of the October 16, 2017 meeting of the Burlington City Council showed that members of the Council voted in narrowing the Burlington Telecom Sale Candidates as follows:[233]

  • KBTL: Sara Moore, Sharon Bushor, Jane Knodell, Max Tracy, Dave Hartnett, Ali Dieng
  • Ting: Karen Paul, Adam Roof, Chip Mason, Joan Shannon, Richard Deane
  • Schurz: Kurt Wright

Democrats - 4 Members

  • Joan Shannon - South District - Ting - Member of Burlington Telecom Advisory Board (BTAB) - Shannon, who supported Ting, praised the company for advocacy regarding net neutrality and the commitments the company has made toward the community, such as BTV Ignite. "It's extremely important that we grow our tech economy," she said.
  • Karen Paul - Ward 6 - Ting - Member of Burlington Telecom Advisory Board (BTAB) - Paul said KBTL’s pro-formas pencil out, but they include no cushion for the unexpected. A recession or other economic disruption could tank a co-op owned Burlington Telecom, said Paul. Paul requested an outside analyst to weigh the benefits and risks of the co-op bid that are "out of the realm of conventional economic analysis," including net societal benefits.
  • William "Chip" Mason - Ward 5 - Ting - Mason brought up that Citibank has indicated that it may sue the city again if it believes it hasn't received its share of profits. In a discussion on Facebook on October 14, Mason posted that "BT survived because: (i) the city settled with CitiBank for $10mm and agreed to give them 50% of the sale proceeds in an arms length sale; and (ii) because Bluewater agreed to purchase the equipment and lease it back to the city in exchange for 40% of the sale proceeds. The value of BT has been established by 2 independent bids of $28mm and $30.5mm. KBTLs offer is $12mm which nets those we agreed to share proceeds with much less. CitiBank has already indicated that they will bring suit against the City if it accepts the lower offer and intervene in the PUC proceeding. CitiBanks claim could be as high as $4.5mm and would have to be paid by the taxpayers which the PUC will not allow. We also have two different residents who have threatened to bring suit if we accept the lower offer. I, too, appreciate the decision of a prior council to lease to City Market but the vote on BT is not the same. There were not threats of litigation. Onion River had been in business for over 20 years and the city was not precluded by charter from helping. I would welcome the opportunity to speak to you or anyone else about these issues. The mediated settlement agreement with Citibank and the agreement with Bluewater are public and approved by City council after much debate. The threat of litigation arises because of the disparity in the bids which wasn’t known until offers were submitted. If KBTLs offer were twice as high this would be a non issue. We were months away from trial in federal district court facing a claim for $33 million and the loss of the assets. Absent the settlement BT would have been sold and we would have had no say and not the possibility of some return to the taxpayers. I am not patronizing any participant in this conversation or my constituents. The reference to the best interest of the city refers to the fiduciary duty each councilor has when taking action. Each councilor comes to that decision in his or her own way. The threat of litigation is not my opinion."[234]
  • Richard Deane - East District - Ting - Deane emphasized that this is not the final vote the council will make regarding the sale of Burlington Telecom. “I think we need to be certain of four critical points. That those two candidates that we choose are financially stable, that the chosen firm must have proven managerial and technical expertise. Third they have to have the best chance to be favorably evaluated by the Public Utility Commission. Finally they must offer the best assurance the $16.9 million of taxpayer funds that were inappropriately allocated by a previous administration are returned.”

Progressive Party - 3 Members

  • Jane Knodell - Central District (City Council President) - KBTL - City Council President Jane Knodell, despite her vote for the co-op, said it was a "reasonable" position to be worried about the risks facing the co-op's bid and said that Monday's vote might not translate into continued support when the council picks a winner at the next City Council meeting on October 30. "I will vote for it tonight, but I don't think it's there yet," said Knodell. Knodell said even though she started out a skeptic of the bid from Keep BT Local, it was growing on her. But Knodell also was clear to point out she still thought the proposal needed work. “I’m here tonight to support Keep BT Local but also to say keep working because there will be hurtles and … I think the people that are saying we are very worried about the financing that is legitimate,” Knodell said. Knodell reviewed the bidders’ pro-formas, or 10-year projections. The information is not public, because it includes proprietary information about the bidders. Currently, Burlington Telecom is paying for growth out of profits. Keep BT Local would have a difficult time keeping up with debt payments under that scenario, Knodell said. “It can be done, but it has to be flawless,” she said of the co-op’s plans for Burlington Telecom. Her message to the co-op board: “Please don’t rest on your laurels. Keep working hard.” Though Knodell didn’t vote for Ting, her comments signaled that it may be the bid she ultimately supports if the co-op can’t sufficiently improve its offer. The council president said she thinks Burlington should choose a buyer who can help the local tech economy flourish, something Ting has made the greatest commitment to thus far, pledging $250,000 [per year] to specific local efforts including BTV Ignite. “The next Skype could come out of Burlington. I think we need to be thinking quite big when it comes to this sale,” Knodell said
  • Max Tracy - Ward 2 - KBTL - Tracy voiced strong support of the bid, saying the community had long set forth a criteria for local ownership and adding that the city should support the co-op in overcoming any hurdles. Tracy said public input was what ended up tipping the scales in favor of Keep BT Local. Tracy read emails submitted by the public. According to Tracy, 186 support the co-op, compared to 20 for Ting and 16 for Schurz. Tracy posted on his Facebook page on October 16, 2017 that "We need lots of advocacy and big turnout for the next meeting on 10/30."[235]
  • Sara Moore - Ward 3 - KBTL

Independent - 3 Members

  • Adam Roof - Ward 8 - Ting - Roof addressed the emotion that has been swirling over the deliberations. “I am not fearful or scared or intimidated by the CitiBank potential lawsuit. Nor am I intimidated or fearful or directed by the mayor and his opinions. I do think that KBTL for me has a long way to go to mitigate the concerns that I have especially around the financial dynamics.” Roof said he was disappointed that the discourse had, at moments, turned less civil. He wrote he has received calls that he characterized as political threats and harassment. "Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would 'have a target on my back' and that 'capitalist pigs will be slaughtered,'" he wrote in an email that went out to about 20 or 30 people shortly before the meeting. He blasted the threats as both tasteless and ineffective, but said he was encouraged that the "majority of Burlingtonians are kind and thoughtful people who realize that far more unites us than divides us."
  • David Hartnett - North District - KBTL - Hartnett cast a vote for the co-op while adding he had concerns about all three bids. "I was probably the first councilor to speak up and say they weren't financially viable," he said about the co-op. "I'm willing to give them one last chance." In spite of the "major hurdles" the co-op faces, "You’ve worked hard to earn my respect," said Hartnett. "I’m a hometown guy and I’m from Burlington."
  • Sharon Foley Bushor - Ward 1 - KBTL

Democrat/Progressive - 1 Member

  • Ali Dieng - Ward 7 - KBTL - During the proceedings Dieng, referring to the fact that one of Ting/Tucows 40,000 domain resellers had sold a domain name that was used for a neo-nazi web site, told the Council that "I hear members of this council supporting entities that are hosting white-supremacy web sites, that are hosting neo-nazi web sites." Dieng added that he had received threats from some members of the Burlington City Council. "I have received so many threats just because of this issue. When I was coming here I was so excited that I will join other people who are so excited about this city. How can we partner and make this happen for the residents of Burlington. I'm going to tell you the truth. I was disappointed by some members of this council, by some members at this table, who gave me some threats about this vote. If you vote this way, it will follow you in the next election in March. Think about that."

Republican - 1 Member

  • Kurt Wright - Ward 4 - Schurz - "It’s not about fear [of litigation against the city], it's whether there’s legitimate concerns about whether Keep BT Local can pull it off," said Kurt Wright (R- Ward 4) as he explained his unwillingness to support the co-op and its $10 million loan with a 14 percent interest rate. "I don’t take those considerations lightly."

Reference

October 28, 2017: Ting and KBTL Present Final Pitches for Burlington Telecom

VT Digger reported that Ting and KBTL released their final letters of intent on the eve of the Burlington City Council meeting on October 30 to select a buyer for Burlington Telecom. Mayor Miro Weinberger said Friday that he still believes KBTL has not done enough to address the financial, regulatory, legal and operational concerns he and others have raised and that Ting's bid had substantively improved, putting into writing a pledge to invest $50 million in Burlington Telecom over the next decade. Weinberger said in addition to having industry leading customer service and support, Ting’s plans to grow its business in Burlington will be a boon to the local tech economy. Ting will also make Burlington a hub for research and development on ambient connectivity, holding out the potential for more tech jobs in the future, helping city and state to retain skilled young people, including graduates of Champlain College’s cybersecurity program, said Tucows CEO Elliot Noss. The majority of Burlington’s business community is supporting Ting’s bid as well with the Lake Champlain Regional Chamber of Commerce saying that beyond the capital and experience Ting offers, there are legal and regulatory issues with the co-op bid that make it a risky proposition.

Meanwhile at a news conference and rally on the City Hall steps Friday, close to 40 co-op supporters urged councillors to go with Keep BT Local’s $12 million offer, over the $30.5 million final offer from Ting. They said the benefits of local ownership outweigh the larger sale price, arguing that Ting, which is a subsidiary of the publicly traded Canadian company Tucows, would manage Burlington Telecom in the interest of its shareholders — not local residents and subscribers. “They will bend and sway and blow in the wind in whatever direction their stockholders and equity investors demand, so that they can make more money,” said co-op backer Melinda Moulton, CEO of Main Street Landing. To shore up concerns raised by the City Council as to how KBTL would survive an economic downturn or pay unexpected costs while strapped with millions in debt, the co-op secured a lower 8 percent interest rate from Maine Fiber which was previously 14 percent. To secure the lower interest rate, KBTL agreed to make additional payments contingent on Burlington Telecom’s financial success that would essentially bring payments up to a 14 percent interest rate, but only if things are going well, said KBTL board chair Alan Matson.

Ting has committed in its letter of intent to put $250,000 annually into community benefit projects. KBTL has pledged to make a similar investment as co-op board member Andy Montroll said it would match Ting’s offer of $250,000 per year. That commitment isn’t explicitly reflected in the co-op’s letter of intent. Both Ting and KBTL said they would retain all current Burlington Telecom employees. Noss said one aspect of Burlington Telecom’s future is being “trivialized” in the sale process is the actual day-to-day operation of a fiber network. “People are acting like operating an ISP (Internet Service Provider) is just instant soup, like you just add water, but it’s more complicated. You need fresh vegetables and the right spices,” Noss said.[236]

Reference

October 30, 2017: Citibank Threatens to Sue if Burlington Council Chooses KBTL

Citibank Threatens to Sue if Burlington Council Chooses KBTL. Citibank's legal counsel sent a forcefully worded email containing a threat to sue the city of Burlington if the city council selects Keep BT Local's bid to take over Burlington Telecom. The co-op's offer is "not even remotely commercially reasonable and not qualified," said Kevin Fitzgerald.

Seven Days, the Burlington Free Press, WCAX, and WPTZ reported that Citibank's legal counsel sent a forcefully worded email containing a threat to sue the city of Burlington if the city council selects Keep BT Local's bid to take over Burlington Telecom. The co-op's offer is "not even remotely commercially reasonable and not qualified," Kevin Fitzgerald wrote in an email Sunday night to city attorney Eileen Blackwood. A city council decision in favor of the KBTL bid would be "vigorously opposed by Citibank on several fronts including but not limited to immediate litigation." A representative of Citibank wrote to Burlington's lawyers over the weekend to say choosing the co-op's offer would "be a profound, willful and bad faith breach of Burlington's patent contractual, legal, equitable and fiduciary obligations owed to Citibank, including a breach of the implied covenant of good faith and fair dealing, and will be vigorously opposed by Citibank on several fronts including but not limited to immediate litigation."

Blue Water Expresses Concerns

The city has also received a communication from Michael Furlong, a lawyer representing Blue Water, expressing concerns about the co-op's bid, said Councilor Chip Mason, D-Ward 5. Furlong wrote that Blue Water, the local group that purchased Burlington Telecom and leased its assets back to the city in 2014, would not insert itself into the city's decision making process, but has serious concerns about whether the co-op can make it through the state's regulatory process. Blue Water has the right to disapprove of a finalist under certain circumstances, such as the city choosing a first-time telecom operator as a buyer. Mason said he believes Furlong's email confirms that they will use that right. "KBTL is a first-time operator of a telecom system, lacks management experience, and its proposed debt financing reflects junk bond credit or worse," Furlong wrote in an email. "The City’s comparison of bidders found KBTL does not meet four of the 13 criteria considered, and the City’s outside financial and technical consultants found KBTL’s bid proposal inferior to other remaining bidders."

KBTL Inaccurately Portrayed the Terms of Their Loan

KBTL inaccurately portrayed the terms of their loan in a final proposal the group submitted to the city last week. KBTL, which plans to borrow $10 million of its $12 million bid from the Maine Fiber Company, said in a new written offer to the city last Thursday that it secured its loan at 8 percent interest, significantly lower than the original 14 percent. But that's no longer true, KBTL board chair Alan Matson confirmed Sunday afternoon. "We were unable to reach an agreement with Maine Fiber on an 8 percent base interest rate that included contingent payments based on the future success of Burlington Telecom," Matson wrote in a Facebook post on Monday afternoon. "While Maine Fiber agreed in concept to this idea and worked hard to support the idea, we were never able reach an agreement on a structure that was materially different (in almost all scenarios) from the 14 percent loan that we have already committed to with them." The terms of the loan, he said, are the same as they were during October 16 council vote. Matson confirmed the information with Terry Dorman, head of Burlington Telecom operator Dorman & Fawcett, in a series of emails on Sunday morning.

"I have to admit, I am frustrated. This is exactly what I feared, Chip Mason (D-Ward 5) told Seven Days on Sunday afternoon. "We’re less than 30 hours away from a supposed vote and the terms are just now being determined. That’s not OK." City Councilor Adam Roof, I-Ward 8, who went to Toronto last week to research Ting's operation, said he has a "ton of respect" for the co-op and does not want to get into a finger-pointing match. But, he said, lowering the interest rate would have been a "material change." "Does it impact the assessment? Yes, it does," he said. Roof voted for Ting in the preliminary vote and said he plans to vote for Ting again on Monday night.

Some KBTL Supporters Still Adamant

Councilor Max Tracy, P-Ward 2, said he will be voting for the co-op and believes the local choice to offer the best long-term benefit for the city. He said his understanding of the settlement does not require the city to pick the highest offer. "We'd have a very strong case if Citibank brings litigation," he said. Tracy added that the language about Blue Water's right to refuse a buyer is "vague." Council president Jane Knodell (P-Central District) said she'd vote for KBTL and expected a 6-6 tie at Monday's meeting — meaning a winner may not be chosen then. What happens if that is the case is unclear, according to Knodell. "We have to look at our different options about what our next steps are," she said. The co-op's last minute change didn't affect her decision, she said, though she added, "They might have gotten a little bit ahead of themselves." "I think the city of Burlington needs to get its fair share of [Burlington Telecom's] future profits," Knodell said of her vote. "Ting does not provide that."

Outcome of October 30 Vote Still Unclear

It is not exactly clear what happens if there is no winner. Several councilors said they believed Monday's vote may result in a 6-6 tie, and it was unclear how the council will proceed in the case of a tie. The mayor supports the Ting bid but he does not get a vote, so he cannot break the tie. In a statement he said, "Delay, or selecting the well-intentioned but very weak KBTL offer, exposes the City to serious legal and financial risk." Although Weinberger does not cast a deciding vote, he could use his veto power.[237][238][239][240]

October 31, 2017: City Council Postpones Vote On New Burlington Telecom Owner

City Council Postpones Vote On New Burlington Telecom Owner. Tucows CEO Elliot Noss answered questions in front of the City Council and gave a two minute statement during the public comment session. He said he saw his company's bid as "stewardship" of Burlington Telecom. During questioning, Noss said that if Ting were to re-sell the utility, the new owner would have to abide by the full terms of the agreement between his company and the city.

Seven Days, the Burlington Free Press, NBC5, CBS3 and VT Digger reported on October 31, 2017 that in an anticlimactic ending to a four-hour meeting, the Burlington City Council decided in an 8-3 vote to wait another week to pick a new Burlington Telecom owner when councilors will skip public forum and pick up where they left off.

Karen Paul Recuses Herself from Voting

Councilor Karen Paul (D-Ward 6) recused herself from Monday's vote. Paul had previously backed Ting. Paul said as the meeting began that she had discovered "a professional conflict" over the weekend relating to her work as a CPA at McSoley McCoy & Co. Paul refused to describe the conflict, though she said that the issue "has nothing whatsoever to do with the parties interested in purchasing Burlington Telecom." Paul declined to comment further on the nature of her conflict of interest, or how long the conflict existed before coming to light. City Attorney Eileen Blackwood, when asked, said she does not believe that Paul's conflict could have impacted prior votes.

"To hear the news, that possibly there’s a city councilor that sat through this whole process that had a conflict of interest" raised concerns, said Councilor Dave Hartnet. He added later, "It's not responsible for the council to move forward tonight." In her remarks recusing herself, Paul said she has been working on Burlington Telecom for eight years and would have preferred to vote for the final choice. "This is not the position I would like to be in," she said. However, Hartnet said he still had concerns, saying that Paul could have influenced other councilors and that he was worried about voting without getting more legal information. "I don't feel good about that," Hartnett said.

Motion to Postpone Passes on Second Try

Councilor Dave Hartnett pushed to postpone the vote after two hours of public comment. Hartnett's motion came after Councilor Karen Paul recused herself, citing a professional conflict of interest. Paul voted for Ting in the preliminary round of voting two weeks ago and has served on the Burlington Telecom Advisory Board. Hartnett, who told the Burlington Free Press earlier Monday afternoon that he planned to vote in favor of selecting the co-op, Keep Burlington Telecom Local, said he would not cast a vote even if the council decided to move forward. During a recess, Hartnett said he was concerned after learning from Burlington's legal team that there was a possibility that councilors who voted for the co-op could be personally sued by Citibank. The lawyers tried to reassure councilors that they wouldn't be liable, Hartnett said, but he was still concerned.

Hartnett's motion failed on the first vote. But after councilors had the opportunity to ask Ting CEO Elliot Noss and the co-op's Chairman Alan Matson questions, Councilor Kurt Wright moved to reconsider postponing. The council voted 8-3 to adjourn the council meeting and postpone the vote on the second try. "I think it's wise to do this," City Council President Jane Knodell (P-Central District) said of the delay. "The council has done a lot of listening, but it hasn’t had the opportunity to do very much talking to each other. There are aspects of this decision that have not been explored, have not been fleshed out."

KBTL Supporters Address Council

Keep Burlington Telecom Local has gathered support from a vocal segment of residents and won the votes of six city councilors in a preliminary vote earlier this month. Ting, a subsidiary of Toronto-based Tucows, won five votes. KBTL supporters urged the need for local control of the telecom. "The number one criteria was local control," said David Lansky, a member of the KBTL board."I don't understand how Tucows and Ting can meet that criteria." "I don't support selling off our assets to the highest bidder," said state Rep. Brian Cina (P-Burlington). "Please don't let big business interests and out of state banks intimidate you. We need to protect what is ours." “Don’t sell our franchise, stay with democracy and don't let Citibank dictate what we do in Burlington Vermont,” said Joe Patalano.

Burlington Telcom Employees Urge Vote

In an emotional plea, Abbie Tykocki, director of PR and marketing for Burlington Telecom, urged the council to hold the vote. "We are not pawns on a political chess board," she said as she criticized the council for not actively seeking BT employees' input in the sale decision. "We are citizens of Burlington and we are stressed ... I ask you, I implore you ... to put this to a vote."

Mayor Weinberger Urges Vote

Mayor Miro Weinberger also asked for a final decision. "I believe the council has a fundamental responsibility and that is to vote," he said. "We have a chance tonight to end a long, long journey that has been very strained and very problematic." He noted that it was Ting supporters who were ready to vote and KBTL backers who were now questioning their initial decision. In a statement released ahead of Monday's meeting, he said that selecting Ting would "ensure a strong and affordable future for BT," pointing to the possibility of a credit rating increase and the promised economic investment. He called the co-op bid "well-intentioned but very weak." "The Council should not let slip away tonight's hard-earned chance to finish the job," Weinberger said. The mayor urged the council to vote on Monday night, saying that it was "time to see we have the political will" to make a tough decision. "Ting is committed really to regional, economic development that I think is quite exciting,” Weinberger said. “This proposal has a 10-year plan to invest $50 million in capital investment, building out the fiber network, not just in Burlington, but likely in other parts of Chittenden County."

Joan Shannon (D-South District) called for councilors to respect the public who had shown up, as well as Ting CEO and president Elliot Noss, who had traveled from Toronto for the meeting. Four members of the Burlington Telecom Advisory Board, led by chair David Provost, urged the council to adhere to the board's recommendation. In June, the board ranked KBTL as the weakest of eight proposals. "Just know that our guidance, suggestions and recommendations are not political," Provost said. "They were developed with the best interests of Burlington in mind."

Tucows CEO Elliot Noss Speaks

Tucows CEO Elliot Noss answered questions in front of the City Council and gave a two minute statement during the public comment session. He said he saw his company's bid as "stewardship" of Burlington Telecom. During questioning, Noss said that if Ting were to re-sell the utility, the new owner would have to abide by the full terms of the agreement between his company and the city.

Some Burlington citizens spoke in favor of Ting. "If KBTL were to advance tonight as the winning offer," said Burlington resident Russ Scully, " I think we know that there’s a number of events that are gonna ensue; starting with a lawsuit from Citibank.” “If Keep Burlington Telecom Local is my new management company, I'm done,” said Ted Adler, a Burlington resident. “It doesn't have the backbone. It doesn't have the experience.”

The Blame Game

After the city council meeting, the mayor and councilors traded recriminations. WCAX reported on the back and forth:

"A bomb dropped on the process," said Kurt Wright, R-Burlington City Council. Wright is on the Mayor's side in backing Ting, but he says the Mayor is going about breaking the council's deep divide all wrong. "I think this just taking the attitude of -- as it seems the mayor has done -- which is kind of my way or the highway attitude -- I don't think that's getting us to a good place right now," "I would say that unfortunately the mayor has participated in the process in a way that hasn't helped the process," said Council President Jane Knodell, P-Burlington. Knodell is in the Keep BT Local camp. She says this is the most divided she's seen the council -- and the public -- since Mayor Weinberger was first sworn in nearly six years ago. "I don't think it's productive to revisit the past because we are where we are, but I would hope the mayor would take some responsibility for how we got in this polarized place," she said.

"We are where we are because of a series of city council decisions," said Mayor Weinberger. He says councilors chose Ting and KBTL as finalists even though he pushed them to ditch KBTL from the final 2 and keep the bid from Schurz. Even councilors who are now complaining say if Schurz was in the mix now it could have brought consensus. "Unfortunately they chose not to do that, and at this point I think its very difficult to go backwards."

"You also have to know what went on behind the scenes," Wright said. He says councilors warned the mayor and his democratic allies that keeping Ting in the mix would only elevate support for KBTL among councilors because so many constituents support its local control message. And that's what happened. Wright says a meeting Sunday between some councilors and the Mayor before the vote should have been about finding a compromise. "Our thought was, lets try to work through that," Wright said. "The Mayor really didn't want to hear any of that." Wright says the meeting ended badly. The mayor agrees but says that is just because he told the councilors that he and the public expect the City Council to choose the next owner of Burlington Telecom from the two finalists the City Council selected. He calls this a long, strenuous and expensive process.[241][242][243][244][245][246]

Reference

November 1, 2017: Tucows Gets Personal in Bid to Buy Burlington Telecom

Katie Jickling, a reporter for Seven Days, a Burlington, VT based Independent Newspaper, traveled to Toronto with five members of Burlington City Council to sit in on meetings between Council members and Tucows to hear Tucows' sales pitch to choose a new owner for its municipal telecom company, Burlington Telecom. Following are some excerpts from the article which is well worth reading in its entirety:

With this reporter in tow, the Burlington contingent arrived at the former carpet factory just before 9 a.m. for a day of meetings and tours. About 200 of Tucows' 500 employees work in the two-story brick building on the west side of the city. Inside, whiteboards, rows of computers, potted plants and sleek office furniture give the place a hipster techy vibe. Company milestones are advertised on wall hangings that resemble championship sports banners. The coffee maker is programmed to tweet the news of each fresh brew. Councilors met with eight leaders from the company's various departments in a first-floor conference room. After introductions, small talk and coffee served in company mugs, the Canadians broke the ice.

An opening line from the vice president of sales and marketing, Michael Goldstein, revealed that the company has a good idea of what it's up against in Burlington. "We usually spend time thinking we need to dress more like grown-ups," he quipped. "Now we're trying to dress less like an evil corporation." Noss described the ideal Ting city as one with universities and plenty of bookstores and coffee shops. "So Burlington is perfect," he said. Over the next seven hours, company reps played up Tucows' "hyper-local approach."

Tucows was in sales mode. After lunch Friday, the group video-conferenced with the company's Oregon-based director of field operations. Other employees explained the nuts and bolts of fiber mapping and installation — tools they'd use to bring fiber to Burlington's most inaccessible homes. Noss sat at the head of the conference table, energetically presiding over events like a master of ceremonies. He highlighted a company ethos that he said would jibe with Burlington's culture: an appreciation for good coffee, an adherence to net neutrality, health food in the company kitchen and, of course, the cow theme. The councilors interviewed the Tucows leaders. They asked about the decision-making processes, local control, customer service and Burlington jobs. How was the company's relationship with its shareholders? Would Tucows end up selling BT to a large corporation such as Comcast? With the exception of a 2002 sale of an electronic library, "I've never sold anything," Noss assured them.[247]

Reference

November 2, 2017: What Happens If There is Tie in Vote on Burlington Telecom Owner?

Vermont Biz reported on November 2, 2017 on what may happen on October 30, 2017 when the Burlington City Council votes on whether KBTL or Ting will operate Burlington Telecom. City attorney, Eileen Blackwood, answered the following questions for Vermont Biz:

Q: If the Council vote is a tie how is that resolved? (Does the mayor vote?)

A: “The Mayor cannot vote on a Council matter, as he is not a Councilor. City Council would have to determine the method for resolving a tie in keeping with Robert’s Rules of Order.”

Q: Can the mayor veto a council decision and then what happens?

A: “The Mayor can veto a Council decision. Council could overturn a veto with a two thirds vote, but if the veto was sustained, the item would fail.” (Blackwood during the Council meeting said if the veto were sustained, then the original vote would be as if it never happened)

Q: If a councilor recuses herself can a substitute be brought in and who decides on who that is (this happens on some boards and courts)?

A: “There are no substitutes.”

Q: If a councilor quits how is she replaced (would the mayor choose as the governor would)?

A: “We would have to determine what the Charter dictates with regards to Councilor resignation.”

Q: Does Blue Water have the right to refuse to go along with the Council's decision and under what conditions?

A: “Blue Water does have the right to disapprove of a finalist under certain circumstances, such as if the City were to choose a first-time telecom operator as a buyer.”[248]

November 2, 2017: City Councilor Karen Paul Quits Job to Vote on Burlington Telecom Sale

Seven Days, the Burlington Free Press, and WCAX3 reported on November 3, 2017 that Burlington City Council member Karen Paul has resigned from her job and plans to vote on the Burlington Telecom sale at the Burlington City Council meeting on November 6, 2017 after recusing herself for an unexplained conflict of interest at the City Council meeting on October 30, 2017. According to WCAX3, with Paul back in the mix -- sources say the council is back to being evenly split between the bid from Ting and the bid from Keep Burlington Telecom Local.

Paul, a staff accountant with the accounting firm McSoley McCoy & Co., announced the decision in an email to other councilors and Mayor Miro Weinberger. "This morning, effective tomorrow, I have resigned my position with my employer which was the source of that professional conflict," Paul wrote in the email sent around 4 p.m. Thursday. "I intend to vote on the sale of BT assets on Monday evening." "After eight years of working to address Burlington Telecom’s challenges ... I never imagined that I would find myself in a position where I would not be able to cast a vote on this most important decision," Paul wrote in her email. "I have worked to identify ways to resolve the conflict and have determined that there is only one way I can resolve the conflict," she said, referring to the resignation. City attorney Eileen Blackwood "informed me that I may join the debate on this agenda item," Paul added.

When Paul recused herself during Monday's meeting, she said little about her conflict of interest. She did say it had come to light over the weekend and that the issue "has nothing whatsoever to do with the parties interested in purchasing Burlington Telecom." Councilors were unsure about the nature of the conflict, council president Jane Knodell (P-Central District) said on Thursday morning, before the news had been released. "It’s hard to know how serious the nature of the conflict is," Knodell said. "The timing of the discovery of the conflict is hard for me to understand." According to Knodell, councilors are not required to specify what the conflict is in order to recuse themselves.

Mayor Miro Weinberger lauded her decision. "Karen is an extremely hardworking and devoted City Councilor," Weinberger said in a written statement to Seven Days. "Her resignation shows just how committed she is to Burlington."

Paul joined McSoley McCoy & Co in January 2016 after running her own money management company, Paul Financial Services, for 20 years, according to her company bio.

City Attorney Eileen Blackwood said her office had reviewed votes Paul had cast regarding Burlington Telecom, both on the city council and the Burlington Telecom Advisory Board. When a person discloses a conflict of interest, the city's legal department looks if the person had cast any decisive votes. Blackwood said she was not aware of any times where Paul had cast a decisive vote on the telecom issue.[249][250][251]

November 6, 2017: Burlington City Council Deadlocks, Directs KBTL and Ting to Try to Negotiate Joint Venture

Burlington City Council Deadlocks, Directs KBTL and Ting to Try to Negotiate Joint Venture. Both sides seemed amenable to working together after the lengthy impasse. "There is some philosophical alignment about doing what's best for the community," said Monica Webb, Tucows' head of market development and government affairs. Webb said she wasn’t going to make a judgment on how long Ting/Tucows would stay in the sale process if the groups weren’t able to come to an agreement on how to move forward together.

The Burlington Free Press, Seven Days, VT Digger, WCAX3, MyNBC5, WAMC, and VPR reported that the Burlington City Council deadlocked twice in a 6 to 6 vote between KBTL and Ting and finally ended the impasse by directing the two companies by an 11 - 1 vote to spend the next week discussing a joint venture between the two companies to operate Burlington Telecom. The formal resolution was put forth by Ward 7 Democrat/Progressive Ali Dieng. “The city council hereby requests that the Keep Burlington Telecom board, KBTL local, and representative from Ting/Tucows develop a joint venture proposal and deliver it to the city council and mayor.” Councilor Karen Paul offered amendments to clarify some language in the clauses. Both companies were amenable to the changes.

Under the resolution, the joint venture proposal will be delivered to the City Council next week, where councilors will be able to vote on what's brought forth. If the council votes down the joint proposal, or if the two finalists can't come to an agreement, the Council "could resolve to re-open the Burlington Telecom sale process including and not limited to the four initial bidders; KTBL, Tucows/Ting, Schurz and ZRF."

Only one councilor – Dave Hartnett – voted against the resolution. Hartnett said he had mixed emotions and he had been prepared to flip his vote from Keep BT Local to Ting/Tucows. “Now the board of directors of KBTL sells themselves out to Ting, I find that very ironic I really do, Hartnett said. “I think it was a bad decision. Ting’s not the right partner for Burlington in so many ways and there are better partners including the two that we could add back into this.”

City Council Asks KBTL and Ting to Present Joint Venture at Next Council Meeting

The agreement passed the the City Council instructs the two bidders to come up with a proposal that would benefit the city of Burlington and BT subscribers, as well as create a governing structure for the combined group. Both sides seemed amenable to working together after the lengthy impasse. "There is some philosophical alignment about doing what's best for the community," said Monica Webb, Tucows' head of market development and government affairs. “We talked about some broad concepts that both parties would be agreeable to and we suggested that we work out more details over the coming week,” Webb said. Neither group made any firm commitments about what a joint venture would look like, but after the meeting Webb expressed optimism, mentioning that Ting/Tucows have public-private partnerships in other cities as well.

"Our view is to hold true to [the co-op model] as much as possible," said Andy Montroll, vice chair of the KBTL board. "We don't know whether there's a place to go with this," but he added that the group is "looking forward to attempting something." "What we're looking to do is what's best for our community and if there's a desire that Keep BT Local and Ting speak we're certainly happy to do that. We don't know what the end results would be but having conversations and trying to see if there's a mutual way to work through this is certainly an option that we'd be open to looking at.”

Montroll said KBTL and Ting are holding their first meeting Tuesday. City Council President Jane Knodell said last week that "given the condition of the bids to date, neither option in its current form” meets the needs of the city. "I personally feel the best outcome would be some model that combines the strength of these two options," she said, referring to the Tucows and KBTL bids. Councilors took out language ensuring that the Ting and KBTL joint proposal be a cooperative, a major feature of the KBTL proposal. “I’m disappointed that the language ‘through a co-op model’ was eliminated,” said KBTL supporter Max Tracy, P-Ward 2. “I wish you great luck in trying to reconcile these two very different proposals.” Councilor Kurt Wright says the council will have its final vote on who will buy the cable and internet provider on November 27th. “It boils down to...do they come up with framework for an agreement?” said Wright. “If they don’t, then we go to this new process, or we still go to this new process that the council doesn’t support.”

City Council President Knodell Makes Case Against Ting

The meeting began with lengthy monologues from each councilor defending their respective decisions. Council President Jane Knodell (P-Central District) relied on her background as a University of Vermont professor when she started the council meeting with a economics lecture on what she saw as the weaknesses of the Tucows offer. “We have before us two potential buyers of BT (Burlington Telecom) that are in many ways opposite of each other. Ting is a wholly is wholly owned by a publicly traded corporation based in Toronto called Tucows and KBTL (Keep Burlington Telecom Local) is a new consumer cooperative based in Burlington. There's a stark trade off here. Ting is reasonably well capitalized although not the strongest on this account that we have seen that Burlington loses control of the asset altogether. KBTL offers total local ownership and control of the asset but it lacks an upfront equity base on which to run the company.” She described the bid as creating inadequate returns for Burlington and a "loss of local control." “I just have to say, I am not feeling the love,” she concluded, to whistles and applause from the pro-KBTL crowd.

Councilor Adam Roof says Burlington Telecom Staff Have "a strong preference for Ting"

Councilor Adam Roof, I-Ward 8, said Burlington Telecom's staff had shared that they have "a strong preference for Ting" during a meeting last Thursday. "They also shared concerns about the KBTL bid and their ability to quickly execute a full build-out of Burlington and beyond," he wrote. The telecom's director of marketing and public relations, Abbie Tykocki, briefly addressed the council shortly before the meeting adjourned, stating that the sale process had been hard on her and her colleagues and asking that they not be made into political pawns. Tykocki, on Monday afternoon, said that while telecom employees were free to speak about their personal preferences, it would put the staff in an awkward position to make an endorsement of either finalist. "It’s inappropriate for us to state a preference for one bid or another," she said. "However the councilors interpret the information they got from us is entirely up to them."

South District Democrat Joan Shannon cited numerous concerns about the local coop’s bid including potential litigation. “KBTL was only advanced because of public interest. Moving KBTL forward will mean either it is vetoed by the mayor, vetoed by Bluewater or vetoed by the PUC (Vermont Public Utility Commission). The clear choice between these two options is Ting.”

Mayor Weinberger Meets With Representatives from Ting/Tucows and KBTL

Because of the resolution governing how the voting process worked after each of the votes the council had to take a recess. After the first tie vote, the council broke for a 15 minute recess and briefly returned only to have to break again when the vote was tie. During the break after the second vote – which was supposed to be only 10 minutes but lasted over 40 minutes – a group of city councilors, Mayor Miro Weinberger and representatives from both Ting/Tucows and Keep BT Local met behind the glass doors in the city hall lobby. The city attorney looked on to ensure there wasn't a quorum of councilors, thus triggering public meeting laws. After a few minutes, Knodell strode out, muttering: "There's some kind of bullshit going on in there." But in spite of Knodell's misgivings, the group reached an agreement. When the council reconvened, Tucows' Webb and KBTL's Montroll said they had agreed to work together. The councilors voted on the compromise, giving the two organizations four days with which to come up with the joint venture agreement. Knodell envisioned a Tucows proposal with some revisions based on KBTL's community-based model.

What Will the Joint Proposal Look Like?

What a final proposal will look like is unclear. According to Seven Days the two bidders seem to be diametrically opposed: KBTL has no telecom experience but strong local support, while the Toronto-based Tucows has experience operating a telecom — in addition to more secure financial footing. The council seemed resigned to compromise. "I'm strongly committed to the cooperative model, but we have to try to come to some mutually beneficial solution," said Council Member Max Tracy.

If the two groups cannot reach an agreement by Friday, two other bidders, Schurz Communications and ZRF Partners, will be invited back and the council will select a buyer from those four on November 27. But if the agreement is reached by Friday, the council will vote on the joint venture proposal next Monday. If the joint Ting and KBTL proposal is rejected during the next council meeting, the council will open the bidding process back up during the following meeting Nov. 27. Ting and KBTL will be back in the running, along with the two previous finalists, Indiana-based Schurz Communications and Faisal Nisar, who runs a private equity firm in New Jersey called ZRF Partners. However, Nisar has said he no longer wants to be considered as a potential purchaser of Burlington Telecom. Ting representative Monica Webb said she wasn’t going to make a judgment on how long Ting/Tucows would stay in the sale process if the groups weren’t able to come to an agreement on how to move forward together.[252][253][254][255][256][257][258]

Reference

November 8, 2017: Burlington City Council President Jane Knodell Contacts Eliminated Bidder ZRF, Says ZRF and Schurz Are Willing to Re-Enter the Bidding Process

Burlington City Council President Jane Knodell Contacts Eliminated Bidder ZRF. ZRF Partners is a New Jersey Domestic Limited-Liability Company that was formed on April 1, 2016 by Faisal Nisar. A search of the internet does not show that ZRF has any prior experience operating a telecom. Before ZRF withdrew from the bidding process over concerns about a conflict of interest, ZRF's initial bid was $17 million while Ting is now offering $30.5 million, Schurz was offering $30.8 million at the time it was eliminated and KBTL is offering $10.5 million in cash with the city retaining a $1.5 million ownership.

The Burlington Free Press reported on November 8, 2017 that according to Burlington City Council President Jane Knodell, the two bidders for Burlington Telecom who have already been eliminated have been contacted and are willing to come back to the table and re-enter the bidding process if Ting/Tucows and KBTL are unable to develop a joint proposal that is acceptable to the City Council. Mayor Miro Weinberger said that he had concerns about extending the timeline to choose a buyer for Burlington Telecom. Burlington's share of the profits drops to 17.5 percent if a purchase agreement isn't signed by December 31, 2017. Weinberger, who has made comments supporting Ting, said that the fact that the co-op and Ting were having a conversation reflects the "common ground" between the two.

The two bidders who were already eliminated from the bidding process are Schurz and ZRF. ZRF Partners, an equity investment firm run by Faisal Nisar, withdrew days before the names of the four finalists were made public, after the mayor said he raised concerns about a conflict of interest. ZRF's initial bid was $17 million while Ting is now offering $30.5 million, Schurz was offering $30.8 million at the time it was eliminated and KBTL is offering $10.5 million in cash with the city retaining a $1.5 million ownership. "ZRF will make certain changes that address issues raised with them by the mayor in late September," said Knodell. Schurz was eliminated from the process on October 16, 2017 after if only received one vote by the City Council while KBTL received 6 votes and Ting/Tucows received 5 votes.[259]

According to an article in Seven Days on November 8, 2017, Knodell acknowledged that she had several phone conversations with ZRF Partners over the last few weeks.[260]

Some City Councilors Say the Appeal of ZRF's Proposal is its Community-Oriented Approach

According to some city councilors, the appeal of ZRF's proposal was its community-oriented approach. Faisal Nisar, the principal at ZRF, earned an MBA from Columbia Business School and then spent three years working at Merrill Lynch in New York City. Starting in 1999, he spent 17 years "managing investments in technology and media companies" at Baker Capital, a private equity firm in New York City, according to his LinkedIn profile. Nisar launched ZRF, the entity he used to submit a proposal for BT, in April 2016. Nisar's bid at $17 million, wasn't the highest, but it attracted "significant interest" from some councilors, according to Councilor Kurt Wright. "They had an aggressive plan in regard to economic development and small business development in the community," Wright said, noting that the company had also planned to expand beyond city limits. "Many of us were very interested in them as our No. 1 or No. 2 choice." According to Councilor Ali Dieng (D/P-Ward 7), Nisar was attractive for his creative and community-oriented approach. Nisar had promised to invest heavily in BTV Ignite and proposed partnering with the Burlington High School's technical center, Dieng recalled.

"I'm extremely disappointed; I was a huge supporter of ZRF," said Dave Hartnett after ZRF withdrew from the bidding. "I'm not really quite sure where this leaves us." Wright said, it was clear that the damage had been done. ZRF wanted to hear from the mayor that he no longer had conflict of interest concerns, Wright said — and Weinberger couldn't give that assurance. "[ZRF] didn’t want to be dragged back in there under that cloud," Wright said. "They've already been jerked around a little bit here."[261]

Risk of Choosing a First Time Operator Like ZRF or KBTL

According to Bizapedia, ZRF Partners is a New Jersey Domestic Limited-Liability Company that was formed on April 1, 2016 by Faisal Nisar.[262] According to a Linkedin profile of Faisal Nisar, the founder of managing director of ZRF Partners, ZRF Partners is a private investment and advisory firm focused on building value through operational and strategic improvements. A search of the internet does not show that ZRF has any prior experience operating a telecom.[263] According to the Burlington Free Press, the option of choosing a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom), is the risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[264]

November 8, 2017: David Provost, Chairman of Burlington Telecom Advisory Board, Says Bidding Process Has Simply Become Political

The Middlebury Campus reported on November 8, 2017 that David Provost, chairman of Burlington Telecom’s Advisory Board and Executive Vice President for Finance and Administration at Middlebury College, says the bidding process for Burlington Telecom has simply become political. “The piece that’s too bad about what’s going on now is it’s simply become political,” said Provost. “We sent forward KBTL with the key understanding that its bid didn’t meet the financial standards,” Provost said. “If we sent them to the council, that would give the co-op a longer chance.

Provost Says Benefits of KBTL Would Go to Maine Fiber

KBTL plans to borrow $10 million of its $12 million bid from Maine Fiber at a 14% interest rate. Although the supporters of the co-op think the city should own as much of Burlington Telecom as possible, according to Provost, over the next five years $25 million will go back to the firm. “The irony of them saying ‘keeping it local’ is that all of the money is going to Maine,” says Provost.

Knodell Says Selection of Ting/Tucows Would Benefit its Stockholders

Council President Jane Knodell doesn’t think that Ting’s proposal will be able to adequately provide the returns to Burlington that the people deserve. “What we’re giving up is local ownership and local control. Because that’s very valuable to me, I think we need to be compensated,” Knodell said. “We should get more of our returns.” According to Knodell, the co-op would directly provide returns to taxpayers in the form of dividend checks or, if the co-op were able to provide it, through lower prices. The caveat is that Burlington residents who don’t use BT as their provider won’t recoup the same benefits. Another concern of Knodell’s is the discrepancy in value of Ting’s earnings in Burlington as compared to those in the stock market. As a publicly shared firm, the majority of gains will thus end up with the shareholders, rather than Burlington residents. “The company is poised to have very strong growth in subscribers and growth in profits,” Knodell said. “They will benefit from that. Burlington taxpayers will not, because they will no longer be the owners.”

Stiff Time Pressure on City Council to Resolve the Impasse

There is stiff time pressure on the City Council to resolve the impasse over Burlington Telecom’s control. According to Provost, the city can control who purchases the telecommunications company only up until December 31. After that, the decision is transferred to the leadership of Blue Water. Blue Water also has the right to disapprove of a finalist under certain circumstances, such as the city choosing a first-time telecom operator as a buyer.[265]

In the Burlington Telecom Management and Sale Agreement with Blue Water that was approved by the Council in 2014 (and called out again specifically in the criteria for sale of Burlington Telecom adopted by the Council on April 25, 2016) is the City's right to direct the sale of BT to a "Qualified Purchaser" that has the "capability of operating a telecommunications company of size and service similar" to BT and is "reasonably expected to satisfy any statutory criteria in order to obtain a certificate of public good from the PSB. Such a purchaser "may be a first time operator if [Blue Water] reasonably determines such first-time operator to be able to timely obtain a certificate of public good from the PSB."

November 8, 2017: Council Member Joan Shannon Criticizes Jane Knodell for Contacting Eliminated Bidder ZRF

Council Member Joan Shannon Criticizes Jane Knodell for Contacting Eliminated Bidder ZRF. Councilor Joan Shannon has criticized phone calls from City Council President Jane Knodell (above) to ZRF Partners over the past weeks, which, she said, "wreak havoc on the process." "Councilors should not be negotiating with anybody," Shannon said.

Seven Days Reported on November 8, 2017 that Councilor Joan Shannon (D-South District) has criticized City Council President Jane Knodell's phone calls to ZRF Partners over the past weeks, which, she said, "wreak havoc on the process." "Councilors should not be negotiating with anybody," she said. The council had hired the head of Dorman and Fawcett, Terry Dorman, as negotiator for a reason, Shannon said. Shannon said Knodell's conversations with other bidders were part of a political charade by councilors who voted for Keep BT Local but now are backing off that support. "President Knodell isn't exactly rooting for @KeepBTLocal & @TingBurlington to successfully negotiate," Shannon tweeted on Wednesday. "I hope KBTL supporters like Schurz because it looks like that's where we're headed."

Knodell acknowledged that she had several phone conversations with ZRF Partners over the last few weeks, but said she did not negotiate anything. "To characterize my conversations with anyone as negotiations is absolutely wrong and baseless," said Knodell. "The council has been very divided. I felt it was prudent to keep our options open."

While communications with bidders without council approval do not explicitly violate council rules, they obscure a process meant to take place in the public eye, Shannon said. Knodell had not told the council about her communications, Shannon added. In an interview last Friday, Mayor Miro Weinberger also said that he had discouraged councilors from reaching out to bidders. "That's not something I support," he said.

Councilor Kurt Wright Also Reached Out to Schurz

According to Seven Days Councilor Kurt Wright (R-Ward 4) also reached out to Schurz and defended those calls. "Obviously we should not be negotiating, but it's important to be prepared, because we know there's a timeline," Wright said. "If we sprung it on them, then we'd be getting criticism of, how are we going to do this on the tight timeline?" "I think we should stay on the high road here," Wright added, urging councilors to focus on the negotiations at hand.[266]

Questions Remain About the Process

"Why was there a deadlock vote of 6-6 on Monday?" wrote Ken Grillo as a comment to the story in Seven Days. "If the vote was taken the week before, KBTL would have won 6-5 since Karen Paul had recused herself. Instead at least 3 of the 6 KBTL supporters chose to postpone what would have been their winning vote. Why did they do that? Maybe those KBTL supporters really didnt want KBTL to win. Why was Jane Knodell keeping the communication channel open with ZRF? She chose KBTL as her top candidate and could have voted them in on Oct 30. Instead she chose to postpone a winning vote for KBTL. I dont get it." "We need a new city council," added Ellen Joans. "What a mess."[267]

November 10, 2017: Ting and KBTL Fail to Reach Agreement on Joint Venture

NBC5 reported on November 10, 2017 that Ting and KBTL said they negotiated but could not come to an agreement on a joint venture after the Burlington City Council set a deadline of 5 p.m. November 10, 2017 for a deal. The two sides said they were open to the idea of operating the company together but were disappointed a deal could not be reached by the deadline. City council said if there could not be an agreement, it would invite the other two bidders, Schurz and ZRF, back into the process. A final decision could be made at the regularly scheduled meeting on November 27, 2017.[268]

Mayor Miro Weinberger released a statement tonight saying he was disappointed. "While I'm dissapointed a Ting proposal to allow the co-op to own up to 20 percent of the new Burlington Telecom - in addition to the previously negotiated city ownership interest - narrowly failed to secure KBTL board approval, the effort speaks well of both organizations."[269]

"We had a series of good meetings with Elliot Noss and Monica Webb about how Ting and KBTL might be able to work together to purchase and operate BT," wrote KBTL board member David Lansky in an email to Mayor Miro Weinberger and the city council, referring to Tucows' CEO Noss and Webb, its head of market development and government affairs. "Throughout these meetings we experienced the Ting representatives as generous with their time, thoughtful, sincere, respectful, and open to discussion and consideration of a broad collection of options. We were unable to reach agreement on a way to work together that is acceptable to both parties." In an interview with Seven Days, Lansky would not specify the sticking points in the negotiations. "We tried to do something incredibly ambitious — form a collaboration between two organizations that have very different structures, histories, cultures — in five days," he said. "There's no one to blame. There are no bad people here." Lansky would not completely rule out returning to the negotiating table with Tucows at some point. "I don't want to close the door on anything," he said. "Until there's a closed deal, everything is possible."[270]

According to WCAX5, former Burlington Mayor Peter Clavelle was a key player in the negotiations. The Progressive is the city's longest-serving mayor and he led the charge to create Burlington Telecom 15 years ago. Current Mayor Miro Weinberger invited Clavelle to assist in talks this week. Clavelle was also key in landing an agreement to redevelop the Burlington Town Center mall.[271]

November 13, 2017: Tucows' Michael Goldstein Gives His Personal Opinion on how the Burlington Telecom Sale Process Has Gone So Far

Tucows' Michael Goldstein Gives His Personal Opinion on how the Burlington Telecom Sale Process Has Gone So Far. David Hartnett (above left) "admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that “public company” versus “family owned” are just words that elicit emotional reactions, not valid, substantive concerns." Hartnett voted for KBTL in both the council's previous votes and on November 6 said "Ting’s not the right partner for Burlington in so many ways and there are better partners including the two that we could add back into this.”

On November 13, 2017 Michael Goldstein, Ting's vice president for sales and marketing, posted a long comment on a Burlington message board on the website Reddit. In his message, Goldsten specified he was speaking on behalf of himself but said the negotiated deal would have been a great outcome for Burlington.

Hi. I am with Ting. I’m not sure if anyone is still following this thread. I think we’ve made all the public statements we need to make at this point. But I figured I would use this (relatively discreet) placement for just a few blunt, final thoughts. (By the way, I'm not sure if my colleagues here will even agree with how blunt I am about to get. So let's say formally that these opinions are my own!) For me, there are two distinct objectives in the idea of local ownership: Ensure that local interests are served in the operation of the business Maintain a local investment in what seems to be a valuable asset with upside I truly believe that KBTL was a valiant effort to deliver on both those. (Truly. It’s pretty tough to root against the co-op even when you are bidding against the co-op.) In the end, they were not able to secure sufficient financing to deliver on that local investment. And I think the city should have always been wary that they would bring much to the table to improve operations of the business toward the goal of best serving those local interests.

Regarding those interests, it is so important to separate “local” as a romantic idea from “local” as a set of crucial, tangible needs. I have heard those needs to be:
  • Maintain reasonable pricing
  • Deliver an outstanding customer experience
  • Grow jobs
  • Contribute meaningfully to the city and the startup community

I have always believed that Ting’s track record long before this process started and everything we have said and done throughout the process has actually indicated that we are the best bet to deliver on all four. You maintain reasonable prices and grow jobs when you are able to operate the business successfully. It is partly an ethic and partly a competence. We bring both. You deliver an outstanding customer experience when you combine the values that BT and Ting share with infrastructure and tools that turn those values into great execution. We bring that and the folks at BT were thrilled at how much better they could do their jobs with our help. We are contributing meaningfully to the communities in which we currently operate and nobody even made us promise to do it! It’s just the right way to succeed in a local business. Having said that, we have made concrete promises to do just that in Burlington.

The idea of Ting and KBTL negotiating a deal was smart. You ended up with everything we would bring to the operations, an asset valued at $30.5 million and up to 40% local ownership of that asset (up to 20% for the city, up to 20% for local investors or members, starting with the co-op). I think it was a great outcome for Burlington. But it was not accepted by the co-op board.

Now you really have to ask yourself what game the progressives on council are playing and what they are really trying to achieve for Burlington. Heck, more specifically, you have to ask what Dave Hartnett is trying to achieve. He voted for two rounds for KBTL and then admitted that he never considered them viable. He has preached the importance of local interests and yet somehow justifies an elaborate scheme to bring back Schurz, a cable company out of Indiana with an awful record on customer satisfaction. He admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that “public company” versus “family owned” are just words that elicit emotional reactions, not valid, substantive concerns. Maybe the board goes back to a private equity firm that would just look to sell BT again in a couple of years (most likely, to a large cable company because that would be the richest possible buyer). Again, that would do nothing to serve local interests. You also need to ask yourself what the co-op really wants to achieve.

In fact, I think the process worked. You had eight solid bids. The co-op’s presence absolutely helped move all bidders, including us, on key points and helped you get to a great outcome. You got to a fair, market-driven value of $30.5 million, a strong operator, hard promises to deliver on your key interests and, perhaps most importantly, up to 40% ownership going forward. The co-op is prepared to lose (because at this point their voters have admitted that they didn’t manage to come up with a viable bid) rather than accept that compromise. The council is prepared to glorify bidders that were never in the city’s best interest to begin with just to deny the mayor a victory. I think the idea of 100% local ownership was a great idea. But I think you have a pretty good fallback in Ting. You have a fair price and you have someone that has proven and promised that it would share your values and serve you well. I think folks should still be demanding that the council stop playing political games and deliver the responsible choice.[272]

November 13, 2017: Burlington City Council Makes Third Attempt to Decide Who Blue Water Holdings Will Sell Burlington Telecom to

Burlington City Council Makes Third Attempt to Decide Who Blue Water Holdings Will Sell Burlington Telecom to. In their third attempt to decide the buyer for Blue Water's Burlington Telecom, Burlington City Council has decided to allow all four original bidders for Burlington Telecom to resubmit their bids for consideration and has created a subcommittee to figure out how the voting process will work in the next round.

Seven Days, the Burlington Free Press, and NBC5 reported on November 13, 2017 that in their third attempt to decide the buyer for Blue Water's Burlington Telecom, Burlington City Council has decided to allow all four original bidders for Burlington Telecom to resubmit their bids for consideration and has created a subcommittee to figure out how the voting process will work in the next round. In addition to Ting/Tucows and KBTL, previously eliminated bidders ZRF and Schurz Communications are once again joining finalists Keep BT Local and Ting Tucows in this round and will have until Monday to resubmit their bids. The City Council hopes to make a final decision on who will buy Burlington Telecom by November 27, 2017.

Four Member Subcommittee Appointed

A four-member committee, composed of Jane Knodell (P-Central District), Kurt Wright (R-Ward 4), Chip Mason (D-Ward 5) and Adam Roof (I-Ward 8), is tasked with deciding by the end of the week how the council will narrow four finalists to one buyer at a meeting scheduled for November 27. Knodell voted for KBTL at the first City Council meeting on October 17, 2017, Mason and Roof voted for Ting, and Wright voted for Schurz.

Roof said many members of the public had reached out to express frustration with the twists and turns of the process. "The process undoubtably has had twist and turns," said Roof. “It calls for a group of four councilors to consider options of how the council will proceed with voting during our meeting on the 27th. It clarifies the roles and standards of negotiation from this point forward. It further clarifies under what circumstances councilors may interact with the bidders. It sets in a clear fashion items that will help this council and the public make a fully informed decision on the 27th. Looking forward I think this resolution lays out how and when we will get to the finish line.”

The resolution also directs councilors to refrain from contacting bidders individually. That decision follows a controversy last week when Joan Shannon (D-South District) criticized Knodell and Wright for communicating with bidders.

The council adopted the measure by an 11-1 vote. Councilor Ali Dieng was the only opposing vote.

City Council Can Perform Due Diligance on All Four Bidders

The city council will have the option to meet with Burlington Telecom staff, visit the headquarters of each bidder and get a legal and financial analysis of all bids. Some councilors already visited Tucows in Toronto. The bidder proposals will be made public soon after they are submitted.

KBTL Releases New Plan to Raise Funds

On November 13, 2017, KBTL released their new plan to raise additional funds by selling cooperative shares for $500 each, which co-op board member David Lansky said could increase the cash the co-op has and possibly could lead to the co-op's raising its $12 million bid. Half the share price would be granted to each Burlington account, while the remaining $250 would be payable at $5 per month. Customers using the subsidized lifeline program would pay $1 per month.

Ting Will See What Happens at Next Council Meeting

Monica Webb, Ting's director for market expansion and government affairs, declined to discuss whether the Canadian-based company would offer an updated bid or stay in the process and said the company would "see what happens" at Monday's council meeting. "Honoring the existing democratic process and the result it created would be ideal," she said.

Tucows CEO Elliot Noss told analysts and shareholders at Tucows' Third Quarter Earnings Conference Call on November 9, 2017 that "Burlington is a great example of the difficulty in predicting the flow of any potential transaction. There is always uncertainty. It is just in this case much of it happens publicly and the big decisions are shown live streams on YouTube. We have no update other than what was public in the City Council Meeting last Monday and we will see what happens next in the City Council Meeting this Monday. We remind that this is all available live streamed on the internet."

Schurz Will Have a Chance to Tell its Story More Clearly

Schurz Communications CEO Todd Schurz said in a phone interview with Seven Days' Katie Jickling that the company would improve its public relations campaign now that it's been given a second chance. Schurz praised the process as "robust" but said that earlier this fall, "half-truths and mischaracterizations" had circulated about his company's customer service, prices and the political affiliations of his family members. This time around, Schurz said he'd try to tell Burlingtonians the company's story more clearly. "We’d like to learn from our mistakes," he said.

Schurz received one vote out of 12 in the initial City Council meeting when the company was eliminated. "[Dave Hartnett] has preached the importance of local interests and yet somehow justifies an elaborate scheme to bring back Schurz, a cable company out of Indiana with an awful record on customer satisfaction," said Tucows executive Michael Goldstein speaking not for Tucows but as an individual. "[Hartnett] admitted to me that Ting is the best bet to keep prices low, keep satisfaction high, grow jobs and contribute meaningfully to the community and to be going strong exactly as we are many years into the future. He admitted that 'public company' versus 'family owned' are just words that elicit emotional reactions, not valid, substantive concerns."

Corporate Transparency of Schurz and Ting/Tucows

Hugh Pickens, an analyst who owns stock in Tucows and follows the company closely, says that corporate transparency is one aspect of the contrast between Schurz and Tucows that does not appear to have received much attention from Burlington City Council. Corporate transparency describes the extent to which a corporation's internal actions, plans, and policies are observable by outsiders as a consequence of SEC disclosures and regulation and the set of information, privacy, and business policies concerning corporate decision-making and operations available to employees, stakeholders, shareholders and the general public. Tucows CEO Elliot Noss is on the record as saying that he always tries to provide as much transparency as possible into Tucows plans and operations to allow investors to track Tucows' business. "Tucows has a high degree of corporate transparency as evidenced by the information available on my web site Tucows Analysis," says Pickens. "Burlington residents, who have expressed a high degree of concern about the future of Burlington Telecom after the sale, will have much less insight into the policies and intentions of a privately owned business like Schurz which is not required to file reports with the SEC or provide quarterly earnings reports and conference calls for analysts."

ZRF Has No Comment

According to Seven Days, Faisal Nisar, head of ZRF Partners, did not respond to requests for comment. "Maybe the board goes back to a private equity firm that would just look to sell BT again in a couple of years (most likely, to a large cable company because that would be the richest possible buyer)," said Tucows excutive Michael Goldstein speaking for himself and not as a representative of Tucows in a comment on Reddit. According to the Burlington Free Press, the option of choosing a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom), is the risk that Blue Water may reject that purchaser. That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[273]

December 31 Deadline Looms

The city's share of the proceeds will drop from 50 percent to 35 percent if the purchase agreement is not signed by the end of the year. Friday, Knodell said she expects there to be some wiggle room. Mayor Weinberger said he was concerned there will be no council decision to select a winning bidder until late November, but he added it is "premature to concede that we will miss this long-established deadline."[274][275][276][277]

November 21, 2017: Tucows updates offer to acquire BT business

Reuters released a press release from Tucows reporting that "Nov 21 (Reuters) - Tucows Inc:

  • Says ‍on Nov 20, city of Burlington D/B/A Burlington Telecom released updated bid letter of co regarding co’s bid to acquire all assets of BT​

November 20, 2017: ZRF and Schurz Team Up With Joint Venture

ZRF and Schurz Team Up With Joint Venture. According to Council Member Joan Shannon, ZRF/Schurz have not committed to operating Burlington Telecom for more than five to ten years. "The family biz was not looking to flip," said Shannon. "But this is not the 'family biz' offer. This is an investor offer from ZRF."

Seven Days, the Burlington Free Press, My Champlain Valley, and VT Digger reported on November 20, 2017 that Schurz Communications and ZRF Partners, previously eliminated in the bidding for Burlington Telecom, have gotten back in the running — this time as partners with a $25 million joint bid that would invest heavily in the local tech economy. Tucows put forward a $32.5 million proposal, up $2 million from its previous offer. And the co-op Keep BT Local raised its bid from $12 million to $18 million — though the co-op has yet to raise the $6 million difference.

Schurz and ZRF Joint Bid Finalized in a Week

Schurz CEO Todd Schurz and Faisal Nisar, founder of ZRF, met in Chicago for the first time last Tuesday, Schurz said in an interview in the Burlington Telecom offices. They agreed to move forward together last Friday. Under the proposal, ZRF which has no previous telecom experience and at this time has only one employee, would have full management control of the joint entity. Schurz would have a minority ownership. "Our strengths complement each other's weaknesses," Schurz said. "We've listened to what the community is saying," Nisar said. Nisar refused to answer questions about the conflict of interest on Monday. "We're trying to look forward, not backward," he said. "We don't think there will be any issues with the current proposal."

The joint proposal came about through Gary Evans, an adviser to Nisar and the retired CEO of Hiawatha Broadband Communications, which Schurz bought last month. Evans connected Nisar and Schurz last week, Schurz said, and the two men spoke for "hours" about their vision. Evans has served as a consultant for Burlington Telecom.

ZRF/Schurz Looking to 'Flip' Burlington Telecom in 5 - 10 years Says Joan Shannon

According to Council Member Joan Shannon, ZRF/Schurz have not committed to operating Burlington Telecom for more than five to ten years. "The family biz was not looking to flip," said Shannon. "But this is not the 'family biz' offer. This is an investor offer from ZRF."[278]

New Bid from KBTL

KBTL submitted updates to its offer Monday, including increasing the price from $12 million to $18 million based on being able to raise $6 million. If the equity can't be raised, the co-op would offer notes or carried interest to each of the parties due to receive proceeds of the sale, but is willing to reduce the price back to $12 million if the parties are unwilling to accept.

Ting Has the Highest Bid

Ting's latest offer is the highest remaining bid. It is offering just over $32 million total and promising to make Burlington a regional hub for its business.

Net Neutrality

With the recent news that the Federal Communications Commission said it plans to repeal regulations that ensure equal internet access, commonly called net neutrality rules, critics worry that without these rules, internet providers will be able to speed or slow internet access, or charge extra fees for streaming services. Ting has pushed to retain net neutrality rules, and Keep BT Local has said it would retain them as well. The ZRF Partners and Schurz letter of intent released Monday did not directly address net neutrality.

City Council Will Vote on November 27

Councilors are grappling with getting all this new information to the public. “The real challenge I have is, does the community have enough time to digest it, or does the council have enough time to communicate it,” said Councilor Adam Roof. Councilor Karen Paul said that traditionally major proposals like the ones bidders released Monday are public for at least two weeks before the council acts on them. “Are people going to feel that too much was done too quickly? I’m sure people are going to feel that way,” Paul said.

The council is scheduled to vote on a final buyer on November 27. The meeting is scheduled to begin at 5:30 p.m., 90 minutes earlier than usual, according to the city council president. During Monday’s meeting, councilors will first vote for their two top bidders. The bottom vote getter will then be out, and in the second round each councilor will vote for one bidder until a winner is selected, Roof said. There will be no mechanism for a tiebreaker, Roof said. “We have to figure it out. There will be no delays, no games,” Paul added. “We have to stop doing this.”

Even After the Council Chooses a Buyer the Process is Not Over

Even after the council chooses a buyer the process is not over. The Mayor can veto a Council decision. Council could overturn a veto with a two thirds vote, but if the veto was sustained, the item would fail. The Mayor is thought to favor Ting. Blue Water can also reject a first-time operator like ZRF or KBTL (that is, an entity that has never operated a telecom). That risk of rejection may increase if Blue Water believes it is negatively affected by a lower purchase price.[279][280][281][282][283]

Reference

November 28, 2017: Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom

Progressives Dump KBTL, Select Schurz as Buyer for Burlington Telecom. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

The Burlington Free Press, WCAX, Vermont Public Radio, NBC5, Seven Days, VT Digger, and MSN reported on November 29, 2017 that in a final vote in an 8 hour marathon session that ended at 2 am progressives voted in a Schurz Communications/ZRF partnership beating out co-op Keep BT Local by a vote of 8-2. ZRF and Schurz decided on a joint venture with ZRF as majority stakeholder after they were brought back into the process earlier this month, when the council couldn't decide between Ting Tucows and KBTL. In an 11th hour reversal Schurz became the majority stakeholder in a new joint proposal with ZRF that was presented to the council after it became obvious there were serious questions about ZRF's secret investors, who would make the decisions when ZRF chose to sell the utility after a few years, and whether Citibank would sue if the council chose ZRF's $25 million bid. The decision to go with Schurz followed a 90-minute public forum and hours of debate in which many spoke out in frustration over the process.

Faisal Nisar of ZRF Unable to Answer Questions About Secret Investors

During initial questioning of Faisal Nisar of ZRF, concerns emerged about secrecy around the investors who would be financially contributing to purchasing Burlington Telecom, who would make the decisions when ZRF chose to sell the utility in a few years, and whether Citibank would sue if the council chose ZRF's $25 million bid. Nisar was unable to give satisfactory answers to the questions put to him, prompting observers to conclude that the ZRF/Schurz bid might not prevail if it went to a vote.

Schurz and ZRF Switch Places in Backroom Deal

The City Council began the night with three bids. Keep Burlington Telecom Local, the cooperative that sprung up with the sole goal of buying the utility and Ting, the wireless services and fiber internet arm of Canadian-based internet services company Tucows, Inc. were the two finalists who the council deadlocked over at the beginning of November. Both ZRF and Schurz were eliminated earlier in the process, but were invited back after the council reached an impasse in deliberations between Ting and the co-op. Under a proposal submitted last week, ZRF, a private equity firm, would own and operate Burlington Telecom, with Schurz as a $10 million investor. There were two commercial bidders for Burlington Telecom in the final round: ZRF Partners with financial backing from the formerly independent bidder, Indiana-based Schurz Communications, and Toronto-based Ting. Ting offered $32 million, ZRF $25 million, and KBTL offered $12 million to $16.5 million.

Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. He said he believed it was the only way to avoid another deadlock.

Schurz and ZRF Switch Places in Backroom Deal. Schurz's eventual winning bid, with ZRF Partners as minority owner, did not exist when Monday's City Council meeting commenced. At the start of the meeting, ZRF Partners was listed as the major bidder with Schurz as a minority partner. The flip came about after Councilor David Hartnett approached Schurz and Nisar in the hallway during a recess and asked them to consider switching who would be the majority owner. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.

During a break at the meeting, ZRF and Schurz decided to flip their bid, making Schurz the primary owner and ZRF an investor in the cable and internet provider. This changed ZRF's $25 million offer to nearly $31 million. The winning offer, a hybrid of previous bids submitted to the city, did not exist when the meeting began on Monday evening, but was worked out in the hallways and backrooms of City Hall while the council was in recess. Some broad strokes of the deal were presented to councilors, such as the dollar amount of the cash offer: $30.8 million, and that Schurz would be the controlling partner while ZRF's promises of community investment would remain. Other details, like ZRF's exact role as a minority partner, were left unfinalized. The new letter of intent will be submitted later on Tuesday, said Ralphine O'Rourke, a lawyer representing the city, during the meeting.

During a recess, city attorneys worked with Faisal Nisar, founder of ZRF, and Todd Schurz, of Schurz Communications, to mark up a previously released proposal. It was posted online at 1:40 a.m. Tuesday.

The selection of the Schurz bid came as a surprise – especially since the bid that the council considered at the start of the meeting wasn’t the same bid that they ultimately voted on. At the start of the night, ZRF was offering $25 million, with $10 million coming from Schurz, who would be a minority partner. But after councilors raised concerns, ZRF and Schurz renegotiated their proposal in the halls of Contois Auditorium and presented a new proposal to the council. While Todd Schurz, CEO and President of Schurz, admitted that since the new deal had been worked out in about 15 minutes, there are still some details to nail down. But essentially, he said his company would make the same offer they had originally made to buy Burlington Telecom. “What we’re proposing is taking elements out of Schurz’s last LOI [Letter of Intent] and melding them with the LOI that you received from us Monday of last week and the updated one today," Schurz said. “So it would be the old Schurz price of $30.8 million… and all the elements of the ZRF bid.”

"I had to do the right thing," Nisar said after he decided to essentially "step aside" and give up his own bid to allow the city to reach consensus. Councilor David Hartnett said he approached Nisar and Schurz with the idea because he was concerned about the council reaching an impasse over Ting and Keep Burlington Telecom — again. "I'm okay with giving up transparency knowing we can get a better operator," Hartnett said about the last minute change. When the councilors reconvened, they made a final decision with no public input on the winning bid.

But some councilors did not agree with Hartnett's assessment. "I feel incredibly uncomfortable with this," said Councilor Max Tracy, speaking about the 11th-hour switch. "It’s just a slap in the face to the public process that’s happened here."

Ranked Choice Voting System Favored Schurz

Shortly before 2 a.m., the council voted twice. In the first round, councilors could cast two votes using a ranked choice voting system where the lowest vote-getter would be eliminated. The top two vote-getters moved on to the second round. The first round ended with 8 votes for Schurz, 7 votes for Keep Burlington Telecom Local, and 5 votes for Ting. "It was the ranked choice voting system," wrote poster on Reddit. "The Schurz voters on the Council had a bullet proof strategy provided that the ranked choice voting system remained intact. That's why two of the other Councilors abstained...they didn't think it was a fair method at that stage and they knew Schurz was already the winner. It sucks. It was more about spite than anything, as evidenced by Hartnett's manchild routine." All Schulz and KBTL's six supporters on the council had to do was vote for Schultz and KBTL to eliminate Ting even though progressives had no intention of voting for KBTL in the final round.

After Ting was eliminated, the final vote was 8-2 for Schurz. Councilors Sharon Bushor and Sara Moore, who have supported the co-op throughout the process and voted KBTL as their first choice and Schurz as their second in the first round, both chose Schurz in the final vote. Dieng and Tracy cast their votes for the co-op, while Deane and Shannon declined to cast votes for either option. Deane said he considered his vote a "No" vote, rather than abstaining. "I did not feel it was responsible on my part to vote for something I did not understand," he said, citing the lack of public support and his own lack of understanding of a bid that had come together only hours before. Shannon also characterized her vote as a "No," rather than an abstention.

"The outcome is a disappointment to me and those councilors who supported Ting or KBTL and believed that they were the best option for Burlington," wrote Councilor Chip Mason. "The winning bid represents a compromise as neither KBTL nor Ting were able to generate majority support from the City Council despite months of effort. I am committed to insuring that the final agreement and relationship with Shurz/ZRF is favorable to the City of Burlington, its taxpayers and BT customers and provides all of the protections we demanded, and they agreed to, on net neutrality, privacy, anti-monopoly future sale, right of first refusal and put right."

Dave Hartnett's Behavior Criticized

Dave Hartnett's Behavior Criticized. "The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."

Joan Shannon questioned Schurz's commitment to net neutrality, and ZRF's refusal to divulge the investors funding the purchase and the meeting grew testy when she raised questions about councilors who met individually or in small groups with Nisar and Schurz. "You're out of control, Councilor Shannon!" yelled Councilor Dave Hartnett, pointing her finger at her. At another point in the proceedings, Hartnett shouted an expletive and stormed out of Contois Auditorium during the first long break from public deliberation, with Councilor Chip Mason following close behind. Reporters could overhear the two talking in the hallway. Hartnett told Mason he did not want to vote for any of the three bidders. “This is crazy,” Hartnett said to Mason.

Shannon told reporters about a meeting between Nisar, City Council President Jane Knodell and Councilor Kurt Wright at the Burlington Airport last Wednesday. The rendezvous appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders, creating the impression that they were speaking for the whole council, and undermining the work of the city’s negotiator, Terry Dorman. When asked about the meeting, Wright said everything was on the level. “All we were ever told is we couldn’t meet individually,” Wright said. Wright explained that Dorman set up the meeting, and he checked with city attorney Blackwood. They met at the airport out of convenience, because Nisar was leaving town. They talked about potential problems with Nisar’s bid, Wright said. Later, when Nisar was in front of the council, Shannon asked him about the meeting. After initially dodging the question, he tepidly said he did not meet with councilors. Several councilors tried to interject, sensing Nisar was in hot water. “You’re out of control, Councilor Shannon. You’re going down the wrong path,” screamed Hartnett.

"The rendezvous (between Kurt Wright and Jane Knodell with Nisar) appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders," wrote Eileen Andreoli at VT Digger. "Yet Kurt Wright's response was, 'All we were ever told is we couldn’t meet individually.'"

"The actions of Councilor Dave Hartnett have been particularly distressing" said former City Counciler Tom Ayres. "Bellowing expletives, storming out of meetings, personal attacks, and self-congratulation have unfortunately become standard fare for Councilor Hartnett, regardless of whether the topic is BT, commission appointments, transportation initiatives, smoking in parks, or support for organized labor. Given Daves frequent pronouncements trumpeting transparency, it was particularly hypocritical for him to play a closed-doors role in leading Schurz/ZRF to the BT trough. Kudos to Councilor Joan Shannon for standing up to Dave."

"It's not only the corruption of a secret, last-minute, unwritten, and unformed bid that Knodell, Wright, and Hartnett concocted," said one comment on Seven Days. "It's also the unhinged personal behavior of one councilor throughout the night -- yelling and storming out of the meeting; yelling at and berating the Mayor; interrupting and bellowing while Shannon had the floor (asking fair and appropriate questions about the brand new, secret bid), and accusing them both of lying. Shouldn't he have been ejected from the meeting for such behavior? But I guess Knodell needed his vote for Schurz so she did nothing."

Motives of Progressives Questioned

Motives of Progressives Questioned. "Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework."

"Regardless of the merits of Ting, they became associated with the Dems, and as such, had to be opposed at all costs," wrote Dave Gibson. "Pretty sad. Anti-Dems teamed up and pulled out all the stops from jigging the voting process to shameful verbal assault on Joan Shannon as she tried to do her job to vet the 12th hour orchestration last night. They chose to sacrifice BT to avoid allowing Dems to win a fight - that really wasn't theirs in the first place. While Progs selected their choice (before offers were even revealed), Dems as a Party did not choose anyone - it just appeared that way because a majority of Dems chose Ting. So for Anti-Dems, I guess its Party before City. We've seen this in Congress over the past 8 years of Obama, and here we see it in Burlington. Burlington is smart and engaged however. Those tactics are revealed in this environment, and they back fire. Just watch. We will not forget."

Later in the week, City Council President Jane Knodell tried to brush off questions about the process by saying she was too busy with her day job and a sick dog to speak at length about details of the winning bid, but said she fully understood what the city council did, and that she assumed "other councilors did their homework." Knodell said she pushed for Schurz over Ting because Schurz is a family-owned company, and because it would allow "a locally-based, Burlington-centric telecom." Local control and ownership has been a major consideration, with many Burlington residents telling the Burlington Telecom Advisory Committee that it was their primary concern at a meeting at the start of the year. "It’s not the same as local control, it’s not the same as local ownership," Knodell said. But, she said, Schurz has a philosophy of decentralization.

Many Uncomfortable with Lack of Transparency in Process

Many Uncomfortable with Lack of Transparency in Process. "Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall.

Councilor Max Tracy said that he was uncomfortable with how the bid had been negotiated. “We came into this meeting thinking we were going to be debating one LOI and midstream, out of the view of the public, we got a completely different LOI that was negotiate out there in the hall,” Tracy said. “I think it’s incredibly unfair to the citizen of Burlington who have not had a chance to look at this LOI…it’s just a slap in the face to the public process that’s happened here.”

"Before highlighting the substantive and procedural outcomes from last night’s City Council meeting, I wanted to apologize for being unable to convince a majority of my fellow councilors to support what I believed to be the most viable of the bids for Burlington Telecom - the bid from Ting/Tucows," wrote Council Member Chip Mason. "I believe Ting offered the highest return for the Burlington taxpayers, a commitment to bringing jobs and investment to Burlington, a proven record of excellent customer service, competitive pricing and a commitment to net neutrality and privacy protections. I am disappointed that I was faced with the choice of voting in a flawed and opaque process, in a last minute setting, with little public vetting of a bid that changed several times over the course of the evening. My fiduciary and ethical responsibility to you obligated me to select an adequate but imperfect entity to purchase BT last night. Ultimately, I believe that I made the right fiduciary decision for Burlington, its residents, taxpayers, BT customers and employees. I am also sorry that the way we reached this compromise and the decision to move forward and vote was deeply flawed and confusing."

Councilors Max Tracy and Ali Dieng, who voted in favor of KBTL were uncomfortable with the lack of transparency in the process. “Burlington residents are going to wake up tomorrow morning and be furious that they did not get to weigh in,” Tracy said.

"I can't think of a less transparent process than coming up with-- after years of developing offers and months of bringing finalists to the table-- develop a new offer on the backs of envelopes and napkins after midnight," Shannon said.

"Keep BT Locals proposal was the weakest from the outset of deliberations this past spring, when I was still on the council. It was troubling to hear Councilors Tracy and Dieng imply that all for-profit entities are conspiratorial capitalists interested only in fattening up BT for Comcasts ultimate consumption. This was disingenuous on three counts: first, Ting/Tucows has a reputation in both Canada and the U.S. for being precisely the kind of successful, socially responsible company Vermonters have long championed. Second, the advocacy for KTBL was a slap in the face to the present employees of BT, who strongly preferred Ting. And third, the power-to-the-people rhetoric ignored the fact that it was a Progressive administration that got Burlington so deeply mired in the BT debacle in the first place," said former City Counciler Tom Ayres. " The reported failures of Schurz to commit to net neutrality and ZRF to reveal its investors should be subjects of grave concern for the City Council as it ponders a final BT purchase agreement in the coming days."

"Burlington, once again, got backdoored," wrote Faried Munarsyah. "Last night's last-minute hallway deal-making handing an important public utility to a private entity that did not exist when the meeting started, happened when most members of the public who came to spoke at the public input portion (KBTL supporters outnumbered Ting's 6-1, none had spoken in favor of ZRF/Shurz) had mostly left. Some of those remaining, including myself, a state rep, and a reporter - were literally locked out of City Hall. Of all the sketchy political maneuverings I've seen the council engaged in my 20+ years here, this one takes the cake. The mayor and Shannon saw their pet privatization project blew up in their faces when the other Miro democrats chose expediency after the old guard Knodell, Wright, and Hartnett parlayed the public's genuine, and their own fake support for KBTL and Bushor's signature flippability to squeeze Ting out, scoring a political victory. Those four should really have their own party designation (the City Council OG, anyone?) At least Shannon stuck to her guns, Mason and Paul made a lot of noise about unfairness and how they couldn't, in good conscience, explain how all this is OK to their constituents, yet in the end voted for it anyways."

According to an editorial in the Burlington Free Press, Burlington residents have every right to wonder what happened to the promise of an open and public process for picking a buyer for Burlington Telecom. "By taking the vote before the revised Schurz offer could be fully vetted by residents and other stakeholders, the City Council essentially negated the months-long public process for the sale of the one-time municipal Internet telecom,"said the editorial. "The move was a power play – Schurz and its minority partner, ZRF Partners, had the money that gave them the financial nimbleness to revise their offer. Competing bidders were left with no time to cook up their own counter proposals." "Now this last minute back room deal brings a dark horse over the finish line," wrote Michael Long. "Revealing the feather weight of public input and of serving the public interest or of valuing democracy."

Progressives Dump KBTL

Progressives Dump KBTL. KBTL was the big loser in the process receiving only two votes in the final tabulation from Councilors Max Tracy and Ali Djang. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

KBTL was the big loser in the process. KBTL only received two votes in the final tabulation from Councilors Max Tracy and Ali Djang after Councilors Richard Deane and Joan Shannon abstained from the final vote after voting for Ting. "Just two weeks ago KBTL had the opportunity to partner with Ting with 20% equity in the joint venture but the partnership failed to materialize after the motion to partner with Ting failed to pass the KBTL board by a single vote," said BTWatcher. "I am amazed at how obtuse the board members of KBTL have been. KBTL didn't realize until the game was over that they had been nothing more than 'useful idiots' of the Progressives who dumped them as soon as they had served their purpose. Now KBTL has nothing and city of Burlington is left with a buyer who has received poor ratings for customer service, has lobbied against net neutrality, and as a closely held family owned company has little transparency."

Mayor to Sign Letter of Intent with Schurz

Council Chair Jane Knodell said Mayor Miro Weinberger will sign a letter of intent within the next week to finalize the sale. The city attorney said council must sign the agreement by Dec. 31. The vote authorized Mayor Miro Weinberger to enter into a purchase agreement with Schurz and Nisar. Weinberger promised he would not sign without a "very tight and well-written" document. "This is a surprise to me," he said. "I had no idea this was going to transpire." He called the process a spectacle and said he believed the people of Burlington deserved to weigh in, but said he believed the new Schurz/ZRF bid was a stronger offer. The council will vote to approve the signed purchase agreement next month according to the planned timeline.

Weinberger said this was the most challenging vote he's seen the council take. “While I was as surprised as anyone by last night’s outcome, I am relieved that after weeks of uncertainty, the City Council has finally selected a winner that does not breach prior Council-approved Burlington Telecom agreements that would have exposed the City and taxpayers to another round of lawsuits," he said. "With last night’s vote, we are now in a position to close the book on Burlington Telecom’s decade of financial challenges and achieve long-term benefits for BT customers, taxpayers and the City."

"In the coming days, I will be working hard on behalf of Burlingtonians and BT employees to negotiate in writing what Todd Schurz and Faisal Nisar verbally committed to at last night's City Council meeting" said the Mayor in a statement. "I will ensure that the final agreement includes clear provisions regarding internet affordability, customer service, net neutrality, bridging the Digital Divide, and other items that reflect our community's values." According to an editorial in the Burlington Free Press, the mayor, in essence, is saying that the city chose an offer without locking down the details and without knowing the details of the final agreement, there is no way of knowing the full impact on the community.

The final letters of intent — documents outlining promises Schurz is making to the city — aren't public yet, as the mayor's office and city attorney are negotiating with Schurz. Weinberger said his office on Wednesday received the documents — an amalgamation of previous bids. He said it's unrealistic to expect a sales agreement to come to a council vote by Dec. 18, the last scheduled meeting of the year, but is optimistic that unless something goes wrong, the city will find a way to make the end of year deadline. The city's share of the proceeds will drop from 50 percent to 35 percent if the purchase agreement is not signed by the end of the year.

Questions Remain about Schurz Offer

Questions Remain about Schurz Offer. According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. (Todd Schurz is sitting at table on left. ZRF head Faisal Nisar is on right.)

According to an editorial in the Burlington Free Press, the timing of the final Schurz bid left the public with no time to question the bid and evaluate the various provisions to consider their impact on customers and the community, as well as on the city’s balance sheet. Major questions remain. Councilor Joan Shannon asked Schurz who would operate and manage Burlington Telecom and Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. “I wasn’t expecting to answer that question," said Schurz. Schurz said that under the bid, his company would pay cash to the city, retain existing BT staff, and allow 20 percent — or potentially higher — city equity. Schurz will not increase broadband costs for five years. "The last [deal] we didn't have all sorted out because it took us four days. This one was 15 minutes." Schurz told the council when he stumbled over questions.

Tuesday afternoon, Katie Vane, a spokeswoman for the mayor, said she did not expected Schurz and ZRF would provide updated documents to the city until the end of the week. She said, prior to releasing the documents publicly, the mayor and the city attorney planned to review the documents, which are expected to be a hybrid of already-submitted bids, to make sure what was conveyed at the council meeting is represented on paper.

According to Councilor Chip Mason the details of the Schurz bid were: (1) Schurz is the owner and ZRF an investor; (2) purchase price of $30.8 million with a potential increase based upon 2018 performance; (3) the City of Burlington has the right to roll over cash proceeds from the sale into a 20% ownership interest in BT; (4) committed to full buildout of Burlington and neighboring communities on same time frame as proposed by BT; (5) $250,000/year contribution for 7 years to create a technology innovation fund and $50,000/year contribution to basic technical skills education for workforce/high school students; (6) no price increases on broadband for 60 months; (7) greed to anti-monopoly future sales restriction (no sale to Comcast); (8) committed to net neutrality; (9) put right in favor of the City if it rolls over to equity; and (10) a right of first refusal in favor of the City on the future sale of BT.

Jess Aloe reported that Burlington Telecom will also have a local board who will play a role in financial and strategic decisions, Schurz said. Who will sit on that board has yet to be determined, although the midnight summary put together by the city's lawyers had as members Schurz himself, Nisar, possibly Gary Evans, the former CEO of Hiawatha Broadband and has consulted for Burlington Telecom, and an industry expert appointed by the city.

Questions remain about Schurz's policy on net neutrality. In 2015, Brian Lynch, who serves in a dual role as Schurz's senior vice president in charge of the broadband division, signed a letter as general manager of then-named Antietam Cable arguing that it would be too arduous for small rural telecommunications companies to be subject to the FCC's regulations, and that they supported a free and open internet without blocking content. In July 2017, Lynch sent another letter to the Federal Communications Commission recounting how pleased the company was that the commission was considering rolling back the regulations because being regulated had caused them to pull back on their expansion plans. In his September letter of intent that was submitted for the eliminated October bid, Todd Schurz said he was committed to net neutrality for Burlington Telecom. [284][285][286][287][288][289][290][291][292][293][294][295]

Reference

November 29, 2017: Elliot Noss Says "We love the community of Burlington but at this point it’s crystal clear that a small but powerful group did not want us there

Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 thanking Redditors for their support of the Ting initiative in Burlington:

I would like to say first that we really appreciated the BTV Redditors. You’ve been fair, and you’ve pushed us to explain our bid and our positions and asked forthright questions of us. In terms of further actions, there are none. Burlington is behind us. We love the community of Burlington but at this point it’s crystal clear that a small but powerful group did not want us there. It would not have made for a constructive relationship. At some point I imagine we will post something longer, but for now you have all our best wishes. Thank you Burlington![296]

December 12, 2017: Burlington Council Member Dave Hartnett Apologizes for His Outburst at Previous City Council Meeting

Burlington Council Member Dave Hartnett Apologizes for His Outburst at Previous City Council Meeting. Councilor Hartnett apologized for his outburst at the council meeting on November 27 when he attacked fellow Councilor Joan Shannon as she posed questions to the head of ZRF about their bid, their inability to answer questions about their secret investors, their plans to flip Burlington Telecom in five to ten years, and the meetings between council memebers and ZRF. "You know I crossed the line," said Hartnett.

WAMC reported on December 12, 2017 that at the meeting of the Burlington City Council on December 11, 2017 Councilor Hartnett apologized for his outburst at the council meeting on November 27 when he attacked fellow Councilor Joan Shannon as she posed questions to the head of ZRF about their bid, their inability to answer questions about their secret investors, their plans to flip Burlington Telecom in five to ten years, and the meetings between council memebers and ZRF. "You know I crossed the line," said Hartnett. "There's a code of conduct that a councilor should adhere to and I you know was disrespectful and you know I crossed the line and you have to step up to the plate and just apologize. My actions are reflection on the council so I apologized to the entire Council as well."

A final copy of the agreement to purchase Burlington Telecom is expected to be released by December 15 and the City Council meets again on December 18. A special council meeting could be scheduled on December 27. The city council started and ended its meeting in executive session to discuss the purchase and sales agreement with Schurz Communications to obtain Burlington Telecom. Because the purchase agreement is being reviewed by lawyers, the public deliberative agenda could only include discussion of the company’s Letter of Intent, or LOI, according to Ward 4 Republican Councilor Kurt Wright. “The LOI is already crafted. That's basically done. Whoever won the bid we would have had to spend significant time throughout the month of December with attorneys on both sides working on the final purchase and sales agreement. Because really the LOI we had already seen the LOI from Schurz weeks earlier. And that's what they worked from on the night that we passed it except they added some elements from the ZRF LOI which actually strengthened it. So this was not what's being characterized the way it's being characterized.”[297]

December 12, 2017: Charlotte Dennett writes: Answers Needed About Schurz Communications

Answers Needed About Schurz Communications. The chaos surrounding the last-minute offer by Schurz Communications to buy Burlington Telecom brings questions concerning the progressive councilors who pushed for Schurz and if they fully vetted Schurz before choosing them. Shay Totten, a former reporter for Seven Days and a proponent of KBTL, has done his own sleuthing into Schurz’s campaign donations and has concluded that Schurz is “a conservative media company from the Midwest whose owner Todd Schurz donates tens of thousands of dollars to some of the most conservative members of Congress who oppose gay marriage, raising the minimum wage (even opposed raising the federal wage to $7.25 an hour), In 2016 alone, the Schurz family gave to such illustrious Koch-brother backed candidates as: Sen. Todd Young, Sen. Mitch McConnell, Sen. Roy Blunt and many more.” Totten claims that he sounded this warning to city councilors, but to no avail. " What are its ties, if any, to Gray TV (which took over Vermont’s largest TV station, WCAX, earlier this year) and Sinclair Communications," says Dennett, "and does it share in their Trumpian conservative vision of buying up local and radio TV stations throughout the U.S.?"

Charlotte Dennett wrote an op-ed for vtdigger on December 12, 2017 about the chaos surrounding the last-minute offer by Schurz Communications to buy Burlington Telecom and about how it seems the councilors — and possibly even Mayor Miro Weinberger – had not fully vetted Schurz before choosing them. According to Dennett , since Schurz is privately owned and not publically traded, it is difficult to find information on its business dealings except through news stories and press releases but internet searches do reveal that Schurz is much bigger than a “family-owned business,” and has been flipping properties during the media acquisition craze of the last four years along with right-wing media companies that have come to be called “Trump TV.”

Shay Totten, a former reporter for Seven Days and a proponent of KBTL, has done his own sleuthing into Schurz’s campaign donations and has concluded that Schurz is “a conservative media company from the Midwest whose owner Todd Schurz donates tens of thousands of dollars to some of the most conservative members of Congress who oppose gay marriage, raising the minimum wage (even opposed raising the federal wage to $7.25 an hour), In 2016 alone, the Schurz family gave to such illustrious Koch-brother backed candidates as: Sen. Todd Young, Sen. Mitch McConnell, Sen. Roy Blunt and many more.” Totten claims that he sounded this warning to city councilors, but to no avail.

Dennett says that if the City Council wants to rectify the fiasco of Nov. 27 and regain the trust of Burlington voters, it should at the very least allow another public hearing before it votes on the final agreement with Schurz.

What, for instance, has Schurz been doing with the $430 million it gained from finalizing its 2016 sale to Gray TV other than offering $30 million to buy Burlington Telecom? What are its ties, if any, to Gray TV (which took over Vermont’s largest TV station, WCAX, earlier this year) and Sinclair Communications, and does it share in their Trumpian conservative vision of buying up local and radio TV stations throughout the U.S.? More questions should be asked of Councilor Hartnett, who, methinks (as Shakespeare would say) “protested too much” when Councilor Shannon began to ask questions about the last-minute deal. Did he, and Republican Kurt Wright (whose 2012 campaign for mayor Hartnett ran) know more about Schurz than either of them let on? Why were they, of all the councilors, the only holdouts for Schurz and seemed unconcerned about transparency in order to get the winning bid?[298]

December 15, 2017: City Council to Delay Final Burlington Telecom Vote Until December 27

City Council to Delay Final Burlington Telecom Vote Until December 27. "Photo Finish," says Hugh Pickens. (BTWatcher). "Will the City Counsel, Schurz/ZRF, and Mayor Weinberger make it across the finish line together to meet the December 31 deadline when the city's portion of the net proceeds decreases from 50 to 35 percent," asks BTWatcher. "Watch this space and see." City Council President Jane Knodell (P-Central District) says she's "not really concerned" about the possibility of additional delays and lost revenues. "I think things are going well and we're working through [remaining issues]." Photo: Wikipedia

Katie Jickling wrote in Seven Days on December 15, 2017 that although councilors were scheduled to approve the $30.8 million sale of Burlington Telecom to Schurz Communications and ZRF Partners on December 18, 2017, councilors will meet in executive session at the December 18 meeting so they can clarify details of the deal, according to council president Jane Knodell (P-Central District). Afterwards, the council will release the purchase and sale agreement, which it now expects to vote on at a December 27 meeting. Knodell would not say what questions remain about the bid, though she did say they'd be made public once the proposal is released. If the sale isn't completed by the end of the year, the city's portion of the net proceeds decreases from 50 to 35 percent. Knodell said she's "not really concerned" about the possibility of additional delays and lost revenues. "I think things are going well and we're working through [remaining issues]," she said.[299]

December 23, 2017: Hugh Pickens writes: Tucows Dodges Bullet, Loses Burlington Telecom Bid

Tucows Dodges Bullet, Loses Burlington Telecom Bid Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 thanking Redditors for their support of the Ting initiative in Burlington and noting that "it’s crystal clear that a small but powerful group did not want us there. It would not have made for a constructive relationship."
Tucows stock has risen 13.47% since losing Burlington Telecom "It looks like the market is saying that Tucows dodged a bullet when they lost the bid," says Hugh Pickens, a long term investor in Tucows who closely follows the stock noting that the stock has risen 13.47% since losing the Burlington Telecom contract and has closed at a new high of 68.60 "Tucows will have other opportunities in the future. The market is saying that Tucows is better off not allowing themselves to become permanently entangled in the overpoliticzed atmosphere in Burlington."

Hugh Pickens wrote on December 23, 2017 that it now appears that Tucows dodged a bullet when they lost the bid for Burlington Telecom on November 28, 2017. Tucows CEO Elliot Noss made a post to Reddit on November 29, 2017 noting that " Burlington is behind us" and thanking Redditors for their support of the Ting initiative in Burlington. "It’s crystal clear that a small but powerful group did not want us there.," said Noss. "It would not have made for a constructive relationship."[300]

In the four weeks since Tucows lost the competition, Tucows stock rose 13.47% closing at a new high of 68.60. "It looks like the market is saying that Tucows dodged a bullet when they lost the bid," says Hugh Pickens, a long term investor in Tucows who closely follows the stock. "Tucows will have other opportunities in the future. The market is saying that Tucows is better off not allowing themselves to become permanently entangled in the overpoliticized atmosphere in Burlington."

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