Sovernet sale

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(HOST) For commentator Tim McQuiston, one of the biggest stories of the holiday season was the sale of Sovernet to Atlantic Tele-Network of Massachusetts.

(MCQUISTON) On December 22nd, ATN bought the Bellows
Falls telecommunications company for twelve point seven million dollars. And a merry Christmas it was to the owners of Sovernet.

Sovernet was one of the state’s first Internet service providers. It was formed in 1995. Back then it provided dial-up service. Since then, it has expanded to provide not only dial-up and high-speed Internet service, but regular telephone service as well. Bundling these telecommunications services has been especially attrac-
tive to small businesses across the state. That success has
made Sovernet ripe for a takeover.

Sovernet’s revenues were twelve point nine million dollars with a profit of two point one million. Not bad. The standard sale price ratios for a business are typically one times annual revenues or seven times profits. So the Sovernet owners got a bit less than that.

ATN pointed out in its press release that Sovernet has seen diminishing results from its dial-up service. That makes sense,
of course, as more and more people switch to high speed connections.

So along with the big news of the sale itself, the diminishing of dial-up was what caught my eye. The thing is, Vermont still really relies on dial-up. What appears to have happened in recent years is that Vermonters who can’t get high-speed are not necessarily signing up with dial-up. If you search the Web with dial-up you know why. It’s painfully slow.

According to the most recent statistics from Vermont’s Public Service Department, Vermont’s Internet access is still better
than the national average. But we’re growing more slowly.

According to statistics from 2003, more Vermonters use the Internet than the national average, but fewer use high-speed: twenty-two percent nationally to only seventeen percent here.

Looking at a map of high-speed access across Vermont, there are significant weak spots: The Northeast Kingdom, along the spine of the Green Mountains, Bennington County, Orange County and upper Lamoille County all have large spaces not covered by DSL, cable or wireless.

The good news is that the sale of Sovernet, like the recent sale
of Adelphia Cable to Comcast, must be approved by the Vermont Public Service Board. In the Adelphia case, which the PSB just approved, Comcast is required to expand its lines into rural areas by fifteen hundred miles.

Now, Sovernet for the most part only rents lines from Verizon,
it doesn’t own the lines like the cable company. But you can bet that the PSB will require ATN to expand its high-speed access somehow.

And please note, high speed is not just for the convenience of residential users. It’s an economic development tool. As with
cell phone coverage, we can’t build on the image of Vermont
as a place you can bring your work, and even your entire business, home with you, if you can’t get a high-speed connection.

That’s what is really at stake here.

This is Timothy McQuiston.

Timothy McQuiston is editor of Vermont Business Magazine.

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