A Closer Look at Burlington Telecom - WCAX.COM Local Vermont News, Weather and Sports-

A Closer Look at Burlington Telecom

Burlington, Vermont - November 5, 2009

Greg Jenkins signed up as a Burlington Telecom customer almost immediately after the service became available in his New North End neighborhood. He is a loyal customer who says the company has never let him down.

"Even if the power goes out you still have internet because the box in our garage has a built-in battery," he says.

While some customers complain of problems with their cable, Jenkins say it is not a big deal. "I do get pixallation. It usually doesn't last very long and it's pretty minor like in the corner," he says.

Jenkins is one of the many Burlington residents who told the city council two weeks ago he is upset the company used $17 million in city money, but hopes Burlington Telecom survives.

Burlington Telecom director, Chris Burns, says the company needed the additional money to cover capital expenses as it works to build its all-fiber network in every part of the city. He says the initial investment of $33 million dollars was not enough. "Some of the early estimates weren't based on firm engineering quotes," says Burns. "They were rough order magnitude estimates."

Telecom expert, Steven Shepard, says its common for a company to spend more on its build-out than planned. "I haven't found one yet that has come it at budget, or even under budget," says Shepard.

Shepard says the question now is how will the company make up for that expense and growing operating deficits? In 2006 the company ran up a $1.7 million operating deficit, in 2007 it was $2.8 million, and in 2008 it was $3.8 million. Add on $5 million in non-operating losses and BT closed out 2008 more than $8.6 million in the red. Now that number has grown to $17 million. "They're in a market where the cost of delivering service lines is going up, the revenue line is going down," says Shepard.

What will make the company profitable, he says, is to deliver a type of service that no one else does. Burlington Telecom thinks the answer lies in its all-fiber network. "We were one of very few fiber-to-the-home companies," touted Burns at a recent press-conference.

Shepard points out that very few people actually pay attention to how their internet, cable, and phone gets to them. What they pay attention to is what type of service that delivery method brings them. Plus, all telecom companies are now building fiber networks. "There was a time when a company could say I have a fiber network, I'm therefore better, and they'd be right, but not today," says Shepard.

Some customers say the fiber has done nothing for them anyway. Many people complain of interrupted TV service. "A few weeks ago, the whole BT was down for half hour, phone and cable. And probably internet but I don't have that," says Beth Cane, who lives in the city's south end. Cane says getting through to customer service is "like trying to get into Fort Knox."

She is not the only one complaining. Rob Lyman says he is "not happy" with Burlington Telecom's service. "I watched a trailer for an on-Demand movie and the whole system froze up and required a reboot of BT's box. When I called the help desk they said they've known about this problem for 6 months and didn't know when it would be fixed," he says.

The city says Burlington Telecom needs to expand to other towns to make money. Negative reviews like that can make it hard for Burlington Telecom to pick up new customers, but what makes it harder says Shepard is the fact that BT does not offer anything different than Comcast, BT's main competitor.

Shepard says Burlington Telecom needs to think outside the box and figure out a type of service that its competitor does not have. He gives the example of a file backup service that automatically backs up anything you save on your computer like a Word document, picture, or email.

Shepard says expanding to other towns will cost more money so Burlington Telecom better be sure it can draw in enough customers to make up for that expense. With a unique service, he says the company has a better chance of making money both in and out of Burlington.

He points out though that Burlington Telecom is not the only company in the situation of needing to offer something new and different. It is an industry-wide problem.

Bianca Slota - WCAX News

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