Things aren't looking too good for municipal service provider Burlington Telecom as its primary lender CitiCapital will repossess the service provider's telecom equipment, shutting down service for thousands of its telecom subscribers.
Burlington, Vt.'s mayor Bob Kiss said that while Burlington Telecom will have to return the equipment after it comes to terms with CitiCapital, they may be able quickly replace it.
"We think we'll be able to actually replace the equipment that will be given to CitiCapital with new equipment, so we can be able to continue Burlington Telecom services," Kiss said.
Kiss added that that "the equipment was the collateral for the lease, and so in that sense, once the equipment is returned, that fulfills the requirements of the lease."
While both Kiss and Bill Keogh, Burlington City Council President, are confident the telecom will be able to continue providing service with substitute equipment, a number of questions still remain.
Not only is there no set timeline on when the city has to take out the equipment, but no plan has been proposed on where it will get a partner or the money to put in new equipment to continuing providing its wireline voice, TV and Internet services.
Even though Burlington Telecom has struggled to pay its bills--including $17 million it borrowed illegally from its own taxpayers--on time, Keogh believes they will be able to find an investor "because there's a future in fiber optic cable."
Burlington Telecom's troubles are a blow to the municipal service provider industry--one that's constantly challenged by incumbent service providers that are keen on preventing such entities from ever getting off the drawing board.
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