Earlier 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?
Technorati Tags:
Burlington Telecom, FTTH