Burlington Telecom - Champlain Broadband

Reinvesting in Burlington Telecom

Many of my constituents may have questions about whether or not the City of Burlington should reinvest in Burlington Telecom. Burlington Telecom was sold to Schurz Communications for
$30.8 million (the process began in 2017 and was finalized in 2019). Schurz Communications is a corporate company based in Indiana.

When I joined the Burlington City Council in the summer of 2017, I, along with some other city councilors and many community members backed the local co-ownership proposal “Keep
Burlington Telecom Local.” We fought really hard to keep the company local, as we learned about its potential. This model aligned with my beliefs of what a sustainable community should
look like with its own utilities such as clean water, electricity, and to some extent a fiber optic broadband network (built by the city) to supply our schools, city departments, local
businesses and residences.

As part of our due diligence on this issue, the council received a presentation from Schurz Communications around the benefits and risks of reinvesting part of the proceeds of our sale
into the company. It does not seem that those in favor of reinvestment are discussing the risks.

As you consider this issue for yourself, ask the questions about what we really want and need in our community related to stability and affordability. Here are some questions I have been
considering that you may wish to think about when you discuss the idea of reinvesting funds:

Has the city received advice from an independent entity different from Schurz on the idea of reinvesting in the company? The answer is NO. The city has not contracted with any
independent entity that has telecommunication business expertise and all projections for growth are assumptions from Schurz. If the growth projections are wrong, the financial growth could be overstated and the city could lose most or all of our investment.

Are we dealing with a local Vermont organization or an outside corporate organization? The answer is that Schurz is a corporation based out of Indiana with a corporate Board of Directors.
If the city invested in Schurz ($2.4 million of sale proceeds to purchase a 7.5% membership interest), we would have only one seat on the board of directors of the Schurz local affiliate
known as “Champlain Broadband Corporation.” Given this structure, it is important to add that some decisions are made at the bigger corporate level and those decisions might not align with
our local community values.

Are there additional risks? Yes, there are risks related to competition, potential changes in the ways that people communicate, i.e. if another technology is developed, risks of Schurz selling
the company, risks of lawsuits, and others. All these risks should be carefully considered before moving forward.

My view is that we are a city with many competing priorities, and as an elected official, I constantly hear that Burlington is becoming unaffordable. I believe that we need to strive for
stability, smart growth, and making decisions that will have a positive impact on future generations. We have already borrowed from our future via many bonds (water infrastructure,
high school renovation, etc.), and there are many additional projects that require substantial amounts of funding. It is imperative that we increase our tax base carefully without taking undue
risks. I personally believe we also need closure around the issue of Burlington Telecom and move forward as a community.

I’m happy to discuss my point of views with you and hear your thoughts.