and we're going to be talking about the future of burlington telecom this is a very auspicious moment in the evolution of burlington telecom it's going to be voted on by the city council tonight and they will be voting between two applicants one is a multinational corporation based in toronto canada that's taking two cows and the other is  indeed the council accepts their bid so i wanted to kind of start off a little bit bit by noting the broader context of operators fit into the economy and it's my position that they occur where there's been market failure so markets can fail because they don't see a profit in a certain area of business for example rural electrification or rural tele telecommunications and it was actually quite recently that rural areas got electrification and got telephone contacts and it really took an  the federal government particularly during the new deal to bring electricity and to bring telephones to two rural areas because they simply weren't a profitable market for private industry the other big carriers of course where markets  the onion river co op which had been addressing such needs as treating workers well offering organic food offering food at a reasonable price and so that co op model was able to be expanded to move into the center of the city burlington from the old north and and has been thriving ever since of course just about to open a second branch down in the south end of burlington and perhaps another branch up in the north end as well so co ops then come where the market has failed and we know markets do fail they become  monopolize they don't they're not subject to competitive pressures and so they don't respond to their to their constituents or their clients just a quick couple of quick numbers here there's over thirty thousand co ops a u s d a did a study along with the university of wisconsin and found that they have more than three trillion in assets and half a million half a trillion half a trillion  and they pay over twenty five million in wages and if we add up revenue wages and benefits they generate one hundred thirty three and a half billion dollars in value added to their communities so this is as american as apple pie start i mean i think that i'm going to begin by saying i think also there are opportunities for cooperatives often when you have a group of like minded folk in business in different forms who may want to come in and not always in a pure failure for example for months state employees credit union the credit union world are also cooperatives and there we had i think a large group of employees who realized that not only was necessarily a failure but they could also bring you know their resources together to benefit their own group as opposed to working with an outside party and they see opportunities with that and i think that producer co op similar as well i think there's you know buyers come off some of the hardware stores for example have come together and i think that what defines them all together which was i think your question one becomes it's really a democratic controller democratic one member one vote usually creating a board of directors who then hires the management to manage it and that creates a governance level which again is at a local or within the group sort of mentality and i don't know meghan if you think about have some other thoughts as to where you go i well look at tainting the equity within the community you know a private corporation is formed around private ownership and order to at a local level you know you could keep it local but once it grows and starts to make a lot of profits you know generally there's a natural evolution where ownership is sold to other ownership and then ultimately if it goes public of course which is what we have with two cows then you have shareholders that are investing it investing in it essential for a rate of return so the co op is the ultimate model of keeping equity local and i don't imagine that you can look forward to golden parachutes is if you will leave the board if you take over why is that yeah we have a volunteer bo and as a result and we have an elected board as alan mentioned and so in the case of keep bt local right now as you said we have an acquisition board we are a small board and we've kept it that way for a lot of reasons it's been effective board with some great skill represented by the different members of the board but when we hopefully acquire broda telecom we would change the board through elections to add more skills i know several of your board members have had when one ok well we are taking calls our number is eight six to thirty nine sixty six but we'll take our first call hello you're on the air yes just one question i have nothing against the telecom concept and you mentioned earlier not telecom concept i'm sorry the co op concept you mentioned city market and how successful it was but you also fail to mention that the city of burlington propped up city market at the beginning and a lot of those facts and details are hidden we don't know if taxpayer money was used to prop up city market nobody has that information it's all hidden somewhere we never found that out but the only way that city market made it was by burlington propping it up for the same thing have to happen i the co op people take over throwing to tellico thank you yes part of course you so you know to respond to i think the caller's initial concern about city market i certainly can't speak i mean i have been on the board of city market came in after the store went downtown but i i really don't know exactly where the propping up would have been there was an open process about what you know the city would expect back in return from citi market and would have understood over the years is actually the city mark has returned to the city beyond what the original agreement  you know and i think that i can't get too deep i don't know really what to say more about that but i think something key in what we're doing here is that if we succeed this will be a cooperative that is not owned by the city government there won't be additional taxpayer liability at all for what we're doing we will be literally a cooperative which is a type of corporation that is separate from the city and we will have no arrangement other than the city has the option whether or not they want to keep an equity stake in our in our enterprise but other than that we will have no further the city will have no further potential claim or no further obligation once they close the sale and of course you're not a profit so it's interesting cooperative are really managed in a fashion such that the let's call it the profit of the excess instead of being returned to shareholders is within the cooperative either you know mostly in our case will be reinvested in additional capital basically updating equipment making sure that we build out the rest of burlington as a key focus as well as have the potential if the business case makes extend the service range for burlington you know burlington telecom be on the borders and become much more than just burlington telecom but really become a more regional player but that needs to of course  you know business hurdles and the you know the idea that we are not for profit we do reinvest everything or the potential could be for patronage refunds in our situation that would be down the road because it's important that we invest first at this point but it does you know it does not mean that we're not a highly competitive you know industry business in a highly consent industry that's the way we work we're not out there you know simply you know just to tread water we're there to really extend the service and build the tech economy within burlington in the area absolutely i think that we feel very strongly that a cooperative can be a highly competitive business it can be an innovative business and one of the interesting strengths of our particular community is how many innovators we have i think it's one of the most innovative communities that i have ever lived in i've been here seventeen years and i'm continually amazed at the number of people that have talent bring to the table so i don't believe we need to outsource that right it's better to keep our ideas local use local governance invest our own ideas bring together tech leaders for example which was what we've been working on and order to get them behind not only how we manage and run it but also how we may ultimately invest in the tech economy so all of those things come together in a great innovative package i think everybody including the city government agree that the future of burlington is based on on small entrepreneurs ship on innovation on new corporations often tied to broadband access cheap  that investment can come in different forms it can be in kind of can be giving advertising to nonprofits this is good but what we see is that we can work with our local leadership to actually devise how we invest just because we are local we know who the local players are for example the burlington tech center this is where we need to train youth for the future of our tech economy you always need a lot of new people every tech business in this community needs well trained workers and so our cooperative is not just about you know making sure everyone's connected it's also about making sure that we can invest in youth for example the tech center and innovative business so we were hardwired into this community we're not just coming in with a few small investments now a number of people have brought up  the sort of the the issue of the city already having put sixteen point nine million dollars into into what appeared at that point to be a black hole that the burlington telecom was struggling and perhaps this relates to the to the caller's question which is what's the appropriate role of city government in terms of supporting a broad effort at stimulating the local economy well it turns out that that that stimulation did pay off in the wrong to and telecom is very successful i heard the the leader of that organization say that they have increased their what sort of what we know that private equity with these want to continue to grow to increase the cash flow but what how would you reach every subscriber  every how would you make every taxpayer a potential subscriber in the city a brewery because i think that's what they want the option for in return for the tax money that they realize was already been invested yeah i think we couldn't agree more if the city right now is approximately eighty percent passed by burlington telecom up until the point that they ran into default with citibank they've been building out and at that point i think they had to scale back and step back from that the first thing i'd say is that for the eighty percent of folks who are passed by burlington telecom within that group everyone has the opportunity if we end up being successful to become a member owner and to use the service we think with the fiber being what is what's passing the residences and the businesses in town that it provides a superior service to the alternatives and i think that we should be you know really working to provide the level of service and product that people are looking for so that more people again would begin to take that option again within that eighty percent even if folks don't take the option of a competitive service from burlington telecom they should be benefiting from the fact that the competition has been financed by the citizens of burlington through the prices that they're paying with some of the other providers and then with the other twenty percent that are currently passed i think that we have that as a strategic goal that is at the highest level for us to pass those other twenty percent and i think that burlington telecom as it exists right now has that same set of goals they have a strategic plan that hits almost all the rest of the city with fiber within the next three to five years a build out plan that is you know well thought out and has been developed at a time when they've had this growth the invention charles so that they're now in a position where they can fund that kind of investment and is that builds out the rest of the city will have that opportunity and i think that  given the local you know control in the local management i mean so the local hiring and local governance i think that that will continue to be a strategic goal of keeping all of the revenue that can be reinvested being reinvested into the community in particular and you know going you know further beyond burlington after that but i think that's how we get to reaching everybody and that's what some of the benefits are from people either opting to use burlington telecom or certainly having it as a competitive provider yeah just to say b t s goals now are to reach sixteen thousand subscribers that's a lot of subscribers it's a pretty large percentage is more than it would be more than double where they are now it's just about subject to the seventy five hundred it's certainly hope to achieve that if we were owners and that would help to alleviate some of the concerns that not you know not a majority of the city would be part of this so we can't look at it just at where we are now in this discussion that's at seven thousand subscribers roughly now we have to project out and take a look at what that would look like in the future and if we achieve sixteen thousand subscribers we would be covering a great great majority of the bidding for their services and that's required on a regular basis and can't be you know they can't just say we're going to go with burlington telecom because they're in town and local but i know the schools just went through a bidding process and you know took on all the services that they can provide to the schools so they are already providing competitive pricing for the schools and you know i think the city has externally a contract with burlington telecom and is looking to extend that right now we expect that would be part of the overall transaction and i think that you know my understanding is that burlington telecom and the city are really looking to create a contract that looks like a partnership between the two and so that will be for anyone who comes in but you know it's going to be something that is a focus for the telecom because you know the city government my guess is probably the largest client for burlington telecom at this point u v a medical center is not a client to burlington telecom from what i understand i think that i think would be a great opportunity i think that i've seen that the city has really worked closely in discussions with the hospitals but i don't know that they've gotten you know really to the point of having any service and again the university itself is interesting they're almost their own cable and the cable but have piece of their own internet and fiber provider because they host a part of the internet called internet two which provides academic services so the universities while probably will net the university itself will probably not end up being served by burlington telecom in too many you know in too many scenarios they could really partner well because they have their students distributed across the city and i think if there was a good partnership in the fiber backbone for kind of work on a daily basis and the the understanding is that if we were to acquire burlington telecom that we would continue to support all of the public educational and got mental access groups and help perhaps i mean again these would come down to the decisions of new boards but the idea would be as cable continues to decline that would mean that facilities just like this would be potentially having to fight more and more for their revenue and as a board we see that that's something we don't want to see happen and that we want to support these these vital facilities for our community river phone call so  air thanks for taking my second call or i've got away from the feed from the feed back on the t v you know and maybe i can actually hear what i'm trying to say my second have we landed at this point for the final proposal yeah yeah the the final loan is going to be the same loan that we've had in place through our entire proposal period we had worked in we had gotten you know an understanding that we thought we could put in place a loan that had a lower fixed rate of eight percent and then had incentive payments based on the value of burlington telecom going forward but as we worked on that transaction with main fiber our strategic financing partner we really only got to a situation where while it it was sort of structured like that it really was going to be a fourteen percent loan in almost all circumstances and our approach is we're trying to make our proposal as straightforward as possible and unfortunately we weren't able to achieve that and so we have the same proposal we've had all summer  which is in our you know we have the commitment letters and the letters of understanding and whatever agreement and term sheets and everything in place we just said you know this proposal is really the same as what's already in existence we shouldn't change it so that's where we are you talked about it as a bridge loan and some of which which are so what you know what that would mean is we structured it well it's a ten year payback loan we structured it with main fiber we said you know we're an acquisition group you're pricing us like an acquisition group not necessarily you know it's like you know homeowner and you know a car owner you pay different rates for different types of purchases that you make an acquisition financing is you know at best difficult to come across and work with and finding a strategic partner who was putting up capital for us was very powerful but we also said to them you know we understand this expense and if we have a couple years of operating experience behind us our interest rate should you know fall off a cliff at that point we want to refinance and so we have the ability after year three to prepay the loan and you know that's if we are you know not even getting close meghan to the sixteen thousand you know line that would take us there but just if we're really you know managing company and maintaining the business within burlington we would have the ability to refinance at lower basically a year or three and mean fiber while they would like to be invested in this for ten years understand our position and have agreed to that so that's that's where the term bridge comes in if there were penalties or yeah at that point it would be you know a straight fourteen percent pay off and you know we would for three years and we would move on and they might move on as well although one thing about maine fibrous have got a lot of expertise in building out fiber networks and that's another reason that we have them as a strategic partner i think they well understand how to build out fiber and that expertise along with understanding the value of expansion was going to and will make them a true value partner as we go deeper into burlington as well as beyond for expertise and and and the criteria for p s e really would not in any way exclude our bid especially if we were to become owners of an act which we would be in this case of burlington telecom which is a highly valued asset in our community that is operating very well at this point so under the criteria of ownership and responsibility for an existing entity it's our understanding that this would not be a problem and i think there's two key variables that i think the mayor touched upon at that point one was potential management you know that how would they look at management and the second one i think was related to financing and i think that  with you know the modeling in the pro forma work we've done which is far more conservative than even the strategic plan put forward by burlington telecom our financing works at these levels and we think that would be a fairly straight forward discussion to have with the p s c and on the management front i think one thing that you know some some folks need to you know or maybe not been putting quite the correct understanding on and meghan touched upon this is an operating entity that has a strong management team that has recently received its additional certificates of public good in the past year and so it's well understood the business is well understood by the see and you know our view is that we want to keep as much of the existing management place in place as possible and we've built that into our modeling to do that it's a good close yeah ok so yeah i've just been indicating that we have