Friday, September 21, 2007

 

City owned telecom networks

Burlington TelecomEarlier this week, Bill St. Arnaud circulated a piece that describes the newly released business case study on the fibre network built by the city of Burlington, Vermont.

The piece starts off with a quote by the project leader, Tim Nulty, who is described with powerful CV credentials as: Former Chief Economist, U.S. Senate Commerce Committee, Former Chief Economist, U.S. House Energy and Commerce Committee, Former World Bank Senior Project Manager, Former Telecommunications Entrepreneur in Eastern Europe, ...
I’m very familiar with many government owned telecom operations throughout the world, over many years, and across many different forms of government, and I can tell you that governments generally do not subsidize publicly owned telecommunications. They milk telecommunications - these systems generate a lot of revenue.
My frustration in reading the business case is that the document then proceeds to describe a number of ways that taxpayers provide hidden subsidies to this project.

Of course, they aren't called subsidies and the business case authors don't seem to recognize these benefits as costs to tax payers, but let's look at some examples.
The $2.6 million price tag for the first phase, a 16.5 mile fiber-optic system (144 strand single mode) was relatively low because Burlington owned the 2.5 miles of underground conduit and 33% of the poles needed for aerial cables.
In other words, the project received access to taxpayer owned infrastructure - a form of subsidy.
BT brought in Koch Financial Corp. to finance the network and lease it back to the City via a tax-exempt municipal capital lease
Tax-exempt? Meaning less taxes generated? Does that sound like a taxpayer provided subsidy?

Still - Burlington Telecom is an interesting case study for fibre to the home. Comments?

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Posted by Mark Goldberg @ 9/21/2007 06:38:00 AM
Comments:
Burlington, Vermont officials might argue that these 'subsidies', as you call them, are really investments in the future designed to bring the biggest and best info-tech pipeline to its citizens, public institutions, and business sector. They might coninue by saying that this investment will have positive economic development impacts as well as positive socio-economic impacts.
Posted by Anonymous Anonymous : 1:50 PM, September 21, 2007
 
Isn't that simply restating that they are subsidies? Subsidies are always meant to invest in the future and create positive economic and social impacts -- or else they are illegal.

The debate, rather, is about whether these particular subsidies are wise ways of achieving those ends.
Posted by Anonymous Anonymous : 2:40 PM, September 21, 2007
 
Mr. Goldberg: Before you jump to conclusions and make general assiertions you should make some effort to check you facts. US Federal law requires owners of utilities to provide access to their poles on a non-discriminatory basis. Vt law adds to this a charge for such access. Burlington Telecom gained access to poles and conduits on precisely the same basis as any private company can (and does). BT paid exactly the same make-ready costs and exactly the same pole attachment price as (for example) Comcast. The same thing goes for all other aspects of BT's economic relationship to the City: e.g. it pays property tax on exactly the same basis as private companies, it pays for all services it gets from the City (e.g. power, water) on the same basis etc. Indeed, Vt. law requires precisely that.

In short: you are wrong--dead wrong about your basic facts. That you made no attempt even to find out before posting your statement is indicative of precisely the irresponsibility which disturbs so many citizens about the blogoshpere!

with regards: Tim Nulty
Posted by Anonymous Anonymous : 9:05 AM, September 22, 2007
 
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