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Vermont Municipal Fiber Network Is On The Road To Profitability

Burlington Telecom started off with a small fiber network that served city buildings and now offers voice, data, and video services to city residents. Wireless is on the agenda.

Many cities have run into problems when they enter the telecommunications market, whether wired or wireless. But Burlington, Vt., seems to be making it work. A city department 10 years ago slowly started to deploy a municipal fiber network, which is up and running and beginning to provide triple-play services of voice, data, and video. It also hopes to eventually provide a hefty profit for the city, and wireless services.

While many other municipalities have jumped head first into races to build their own networks -- most of them wireless -- with often-dismal results, Burlington Telecom gradually and methodically cobbled together the pieces of its network, starting with fiber.

"We are going to build a wireless network," said Tim Nulty, BT director, in an interview. "But the best way to build wireless is to build fiber first. That way we already have backhaul [capability] and every telephone pole is a potential antenna site."

Like many municipalities seeking to deploy their own networks, the challenges in Burlington, the largest city in Vermont with 39,000 residents, were daunting. It had to convince state and city politicians and the town's voters that the network was a good idea, as well as fend off criticism from established telecom providers. And early financing problems nearly sunk the project.

After picking its way through complicated political and financial minefields, BT developed a city-owned network that will supply Burlington citizens with low-cost triple-play broadband and, when its debt is retired in 15 years, should provide the city with 20% of its general fund.

"BT will be able to pay down its debt very quickly," said Christopher Mitchell, of the Minneapolis-based Institute for Local Self Reliance. "On the cost side of the equation, Burlington once faced massively growing telecommunications expenditures. It now views the telecommunications sector as an important source of new revenues." Mitchell, who is director of the Institute's Telecommunications as Commons Initiative, has written a report on BT and views the city's effort as a model for municipalities working to build their own triple-play network.

Mitchell said the involvement of Nulty, a veteran of the telecommunications industry and a former venture capitalist, was key to the success of BT. He joined BT in 2002. In addition to his background as former chief economist for the U.S. Senate Commerce Committee and as a World Bank senior project manager, Nulty had startup experience as a telecom entrepreneur in Eastern Europe.

"Nulty was highly critical of the original 'build-everything-at-once' plan and developed a multi-phased, modular plan entitled 'Build the Barn You Can Afford' inspired by observations of economically-wise Vermont farmers," Mitchell wrote in his report. "It called for building a small network serving the local government's Internet needs first. This approach would build out the network more slowly, but with much less risk."

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