Wednesday, February 27, 2013

Will This Broadband Stimulus Oversight Hearing be Different? 02/27/2013 San Francisco - House Energy & Commerce Committee members are now opening the first oversight hearing of the broadband stimulus program in the new Congress.

The witness list and prepared testimony of the witnesses is available on the Committee's site, and the hearing is now streaming live.

Long term observers of the program are asking one key question: Will today's hearing actually accomplish anything?

Typically, since the first reviews on Capitol Hill of the $7.2 billion effort within the Recovery Act started in 2009, these oversight hearings have been nothing more than partisan banter. GOP members have consistently parroted claims of the nation's largest carriers that the program funds overbuilding of existing networks. Democrats have, not surprisingly, sprung to the defense of Obama Administration appointees at the witness table.

Today however may be different. If both Majority Republicans under Subcommittee Chairman Greg Walden (R-OR) and Democrats lead by Ranking Member Anna Eshoo (D-CA) actually dig into the substance of what today's witnesses have already put on the record in prepared testimony, the Committee may engaged in realm oversight of the effort.

If the facts presented are closely examined rather than used as partisan talking points, and if Committee staff engages in follow-on by tracking the handful of projects that today are truly poorly managed -- and worst -- we will finally see an oversight effort worthy of the United State Congress.

Friday, December 7, 2012

Feds Suspend Eagle-NET $100 Million Broadband Stimulus Grant 12/07/2012 San Francisco -  Federal grant managers overseeing the controversial $100.635 million Eagle-NET middle mile broadband stimulus project in Colorado have suspended funding for the statewide network effort.

In a letter dated yesterday, the Director of the Grants Management Division of the National Oceanic and Atmospheric Administration (NOAA) stated to the Vice President of Operations of Eagle-NET that the federal agency "is suspending your award, effective immediately."

The suspension was issued, "Due to ongoing concerns relating to your compliance with grant terms and conditions."

The project grant being administered by the Eagle-NET Alliance (ENA) was awarded in Round 2 of the Obama Administration's broadband stimulus program by the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce. 

Given the chronically short resources available to NTIA to oversee its issued grants under the program, NOAA personnel have been contracted by NTIA, a sister agency within Commerce, to oversee grant management issues.

New Network Design of Eagle-NET Triggers Suspension 
Of greatest surprise in the NOAA letter is the fact that the network project had earlier this year been cited for problems "regarding certain programmatic and financial issues surrounding ENA's award." On August 9, NOAA "placed ENA's award under a Corrective Action Plan (CAP)," which ENA responded to on September 14. It was actually the response to the federal inquiry which triggered the funding suspension.

Yesterday's letter tells Eagle-NET that "statements in the document raised additional concerns related to ENA's failure to consult with NTIA in advance on its new network design."  That new network plan, lacking NTIA review and apparently without having undergone environmental review, was "partially implemented" by ENA according to the letter.

No Previous Disclosure
Based on our review of published sources, our inquiries to the lead ENA spokesperson, past inquiries to NTIA, and on our off the record interviews with the major parties complaining about Eagle-NET, we have found no prior public disclosure of the August corrective plan issued by the federal agency to Eagle-NET. 

NOAA Eagle-NET Suspension Letter

Friday, October 5, 2012

NTIA Gives Slowroll to Congressional Complaint on Colorado’s Eagle-Net

Is One Federally Financed Network Overbuilding Others? 10/05/2012 San Francisco -  The National Telecommunications and Information Administration (NTIA) has declined to give a time frame for its response to a sharply worded letter issued  by  four Members of Congress against the agency’s stimulus funded  Eagle-Net Alliance (ENA) network in Colorado.

NTIA Chief Larry Strickling, Assistant Secretary of Commerce
“We received the letter and will respond accordingly,” stated a NTIA spokeswoman when asked by this publication about the agency’s planned response to the letter dated September 17.

 The letter was sent by four Colorado Republican congressmen and addressed to NTIA chief Larry Strickling. Mr. Strickling’s communications staff did not return a call for further clarification of the agency’s planned response.

The four congressmen – Representatives Mike Coffman (R-CO-06), Cory Gardner (R-CO-04), Doug Lamborn (R-CO-05), and Scott Tipton (R-CO-03) - charged that the $100.635 million federally funded ENA network is directly overbuilding numerous small independent operating telephone companies (IOCs).

The House members also state that the ENA is failing to bring high speed fiber links to the state's areas that are most undeserved and fully unserved by broadband networks.

Eagle-Net Meets Congressional Staff
Following the letter’s release representatives of ENA's executive team met in Washington, as part of previously scheduled meetings, with congressional staff assigned to the letter’s authors. The charges made in the letter were the focus of discussions.

Eagle-Net’s communications Vice President, Gretchen Dirks and Business Development V.P. Chip White represented ENA at the meetings. When asked to describe the meetings by this publication, Ms. Dirks responded, “We thought they went very well.”

Before learning of the Washington meetings from other sources, this publication was informed by Ms. Dirks that ENA would have no written response to the congressional complaint. “As the letter you are referring to was addressed to the NTIA and not EAGLE-Net we are deferring to the NTIA and are not responding, and will continue to share updates as our efforts progress,” stated the ENA spokeswoman before we learned of the Washington meetings.  

Is One Federally Financed Network Overbuilding Others?
The most serious charge in the congressional statement is that the IOCs being overbuilt with the federal network grant are themselves recipients of federal rural telecom subsidized loans issued by the U.S. Department of Agriculture (USDA).

Critics of Eagle-Net, lead by the Colorado Telephone Association (CTA) say that ENA’s effort to provide broadband service to community anchor institutions (CAI) takes important revenue away from those small IOCs in the state – virtually all of which today hold USDA loans.

Federal rules protect the tax supported loan portfolio to telecom providers across rural America from precisely this type of federally subsidized overbuilding.

Under regulations of the USDA’s Rural Utilities Service (RUS), once a rural telecom carrier secures a federal loan for network construction under the Telecommunications Infrastructure Loan Program, the agency is prohibited from issuing any new loan for the same area.

This simple rule means that federal funds may not be used to subsidize competition against an existing federal network investment. The rule is part of a fundamental policy allowing federal loan supports to flow to rural telecom providers. That policy was inaugurated when President Harry Truman first allowed such funding for rural telephone cooperatives.

It was Truman that in 1949 signed into law amendments to the Rural Electrification Act (REA) which authorized REA loans to support rural telephone investments. REA is, of course, one of the signature programs of President Franklin Roosevelt’s New Deal.  

Rural telecom providers today are already telling Washington they are under significant financial stress. The the Universal Service Fund (USF) Reform proceeding of the Federal Communications Commission (FCC) which creates the new Connect America Fund has brought capital spending  by IOCs on network projects to a new low.

If a large BTOP network is truly about to start taking CAI based revenues from rural telcos in Colorado which have already invested in broadband facilities using federal loans, that lost revenue could mean the difference between survival and bankruptcy for some carriers. Bankruptcy for these rural providers would mean defaults within the RUS portfolio -- defaults triggered by a federal stimulus program designed to bring broadband to unserved rural America.

If a practice is prohibited by one set of federal rules issued by RUS, can the same practice be somehow allowed under those of NTIA?

Large Broadband Stimulus Award Under Round 2 Program Rules
Eagle-Net is one of only a handful of large broadband stimulus projects funded at more than $100 million under the $7.2 billion program within the American Recovery and Reinvestment Act of 2009 (ARRA).

Former Colorado Governor Bill Ritter (D-CO) announced the award, part of NTIA’s stimulus Broadband Technology Opportunities Program (BTOP), on September 13, 2010. The announcement came just 2 weeks before then U.S. Commerce Secretary Gary Locke issued the last awards from Commerce in the program. Final program funding awards were announced by RUS 3 days later to close out the entire broadband component of ARRA.

Those dates are significant for any close observer of the broadband stimulus effort. Eagle-Net and the scores of other awards made under Round 2 of the program were issued under a set of BTOP rules which streamlined the application review process, and gave greater emphasis to the goal of connecting CAIs.

Serious Questions for Analysis
One of the lead detailed level questions now raised by the criticism of Eagle-Net is this: Did the loosened rules for broadband stimulus Round 2 allow a breach of the federal rules protecting existing public investment in rural networks to occur?

Another is this: In Eagle-Net's legitimate quest to secure revenue to make it a sustainable enterprise, has it short changed the undeserved and unserved areas of Colorado in violation of the founding purposes of the broadband stimulus parts of the Recovery Act? 

And another: Are the problems of Eagle-Net, as expressed by CTA and the Members of Congress, more indicators of the lack of adequate oversight of the BTOP program by NTIA and by Congress itself?  No less than the Inspector General of the Commerce Department has reported multiple times that NTIA's BTOP remains in serious need of better management and oversight.

EAGLE Net Colorado Letter

Thursday, October 4, 2012

USDA: 'We're Still Issuing Farm Bill Broadband Loans' 10/04/2012 San Francisco -  The Rural Utilities Service of the U.S. Department of Agriculture (RUS) is still accepting and issuing Farm Bill Broadband Loan Program loans under legal authority extended by the recently passed congressional continuing resolution (CR).

“We are operating under a continuing resolution, so the program will continue to make loans,” stated Mr. Jay Fletcher, USDA Rural Development spokesperson, in emailed answers to questions of this publication.

We estimate that a minimum of some $300 million - $400 million remains in "program level" loan capacity for carry over into the new federal fiscal year 2013, based on previous appropriations and authorized loan leverage rates.

Broadband service providers, including telecommunications wireline carriers, wireless providers, cable television operators, rural electric cooperatives, and municipal power departments serving rural areas are all eligible for Broadband Loan funding. Loans are extended at federally subsidized low rates of interest.

Questions about the Broadband Loan Program had been raised given the lapse of legal authority of the 2008 Farm Bill at midnight, Sunday, September 30th. The expiration of congressional authorization under the legislation resulted in the suspension of a number of high profile programs that support American agriculture. All of the Farm Bill programs, from crop subsidies to rural infrastructure support programs, are managed by the U.S. Department of Agriculture (USDA).

Spokesperson Fletcher explained that the Rural Utilities Service of USDA (RUS) will continue to both accept for review new Broadband Loan Program applications, and to process applications submitted prior to the Sunday's Farm Bill cut off date.   

The Republican controlled U.S. House of Representatives and the Democratic U.S. Senate have not reached a legislative compromise allowing the new 2012 Farm Bill to be voted into law. At the start of the new federal fiscal year on October 1, the scores of provisions and programs in the 2008 Farm Bill expired unless parts of the CR authorized them to continue on a temporary basis.

The CR was passed by vote of the Senate, concurring in previous House action, on September 26 and quickly signed by President Obama.

Vilsack Statement
Questions from the rural telecom industry emerged on Monday of this week as Agriculture Secretary Tom Vilsack issued a statement to the press which outlined a slew of signature USDA programs that had to be suspended at midnight.

U.S. Secretary of Agriculture Tom Vilsack
"Many programs and policies of the U.S. Department of Agriculture were authorized under the Food, Conservation and Energy Act of 2008 ("2008 Farm Bill") through September 30, 2012,” said Vilsack in the release issued by his media staff.

“These include a great number of critical programs impacting millions of Americans, including programs for farm commodity and price support, conservation, research, nutrition, food safety, and agricultural trade.”

“As of today, USDA's authority or funding to deliver many of these programs has expired, leaving USDA with far fewer tools to help strengthen American agriculture and grow a rural economy that supports 1 in 12 American jobs. Authority and funding for additional programs is set to expire in the coming months. Without action by the House of Representatives on a multi-year Food, Farm and Jobs bill, rural communities are today being asked to shoulder additional burdens and additional uncertainty in a tough time."

"As we continue to urge Congress to give USDA more tools to grow the rural economy, USDA will work hard to keep producers and farm families informed regarding those programs which are no longer available to them." 

Friday, February 17, 2012

Happy Birthday Broadband Stimulus 02/17/2012 San Francisco - President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) into law 3 years ago today, within the first month of his presidency.
President Barack Obama signs the American Recovery and Reinvestment
Act at a Denver ceremony of February 17, 2009 while Vice President Joe Biden
looks on.  Photo: Pete Souza, The White House
For our industry, the stimulus gave us both the National Broadband Plan and the $7.2 billion spending injection of the broadband stimulus program. Taken together these 2 efforts amount to the greatest net positive benefit delivered by government to the sector since the 1996 passage of the Telecom Act. 

This publication has been, and will remain, critical of the broadband stimulus where we find fault in either overall program execution, or in a handful of truly flawed awards. In the 3 years of the stimulus we have attempted to reach beyond the platitudes of left or right by reporting on both accomplishments and problems where we see them. 

We do this because anything of great value is worthy of great improvement. We do this because the goal of bringing  broadband to every American is important for our country. We see every day the broadband stimulus has helped put Americans back to work. The program gave the nation a road map of how and where to extend broadband to all of rural America, if we are smart enough to follow it.

Could the broadband initiatives within the stimulus have been better conceived and executed? Of course they could. Many of us work daily to apply lessons learned from the stimulus to the new funding proposals that enlightened members of both parties are working to implement. 

In all of this we pose a simple question, and give a simple answer:  Would the American telecom industry or rural communities choose to roll back the clock and take the broadband sections out of the ARRA legislation the President signed 3 years ago?  

Not on your life.

Monday, February 13, 2012

White House to Honor 3 Broadband Stimulus Awardees

3 Exemplars of the Program Previously Awarded Total of $212 Million in Stimulus Funds; 
2 Middle Mile RENs, 1 FTTP Project Honored 02/13/2012 San Francisco - Three awardees of the Obama Administration’s broadband stimulus program will be honored as Champions of Change in a White House ceremony this Wednesday, February 15. The event, which will highlight recipients of federal broadband and transportation infrastructure investments, is part of the national Winning the Future public relations campaign of the Administration. Winning the Future is the branded title of the fiscal year 2013 federal budget released by the President today. 

Key personnel at North Carolina’s MCNC Golden LEAF Rural Broadband Initiative, Merit Network, Inc. of Michigan, and South Dakota’s Venture Communications Cooperative will each be designated as a White House Champion of Change in an afternoon program. The Champion of Change effort, coordinated by White House Senior Advisor and Obama confidant Valerie Jarrett, was launched separately last year. 

North Carolina’s MCNC

“MCNC is honored with recognition by the White House as a Champion of Change.  MCNC’s work is greatly supported by our Governor, North Carolina’s General Assembly, the NCREN Community, the Golden LEAF Foundation, and by a great team at MCNC,” said Joe Freddoso, President and CEO of MCNC in a statement to this publication of today.

Gov. Purdue (l) with MCNC 's Joe Freddoso at project ground breaking
of October 8, 2010. Photo: CommScope

“Two members of the MCNC team have really led our work that led to receiving this recognition; MCNC’s CFO Patricia Moody and VP of Network Initiatives Tommy Jacobson deserve special recognition. MCNC’s two BTOP projects working as the Golden LEAF Rural Broadband Initiative is and will continue to provide the broadband infrastructure required to help our state be successful and remain competitive now and for years to come,” concluded Freddoso.

The MCNC chief, a veteran of the North Carolina high tech sector, has been the driving force behind the successful stimulus-funded expansion of the state research and educational network (REN) by the administration of Governor Bev Purdue (D-NC). While Purdue announced last month that she is not seeking reelection, the statewide expansion of MCNC will be one of the signature technology projects of her tenure. Like her Democratic colleagues Deval Patrick in Massachusetts and Jay Nixon in Missouri, Purdue has taken a hands on role in state broadband developmental initiatives, especially the federal broadband stimulus effort under Obama.

The North Carolina initiative was funded with two broadband stimulus middle mile grants totaling $104 million from the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce, and further matched with $40 million in locally raised funding. MCNC won $28.2 million in funding in Round 1, and $75.5 million in Round 2 of the federal program. 

Michigan’s Merit Network, Inc.

Similarly, Michigan’s Merit Network, Inc. is an existing statewide REN which is being expanded to be an open access middle mile network, with $102.928 million in grant funds also issued by the National Telecommunications and Information Administration (NTIA) of Commerce as part of the stimulus package. Like MCNC, Merit receiving grant monies in both Round 1 and Round 2 of the program. 

"I am grateful to have Merit recognized for the work we are doing," said Merit's CEO Dr. Don Welch in a statement issued this afternoon to this publication.  "Our vision of equal opportunity for access to information regardless of  geography is coming to fruition and this reinforces our belief in the importance of this effort," said Dr. Welch, who has headed Merit since 2006.

Merit CEO Dr. Don Welch (l) and then Michigan Governor Jennifer Granholm
at August 2010 event announcing Round 2 award to Merit Network.
Photo: Melanie Maxwell,
"Projects like this that create 21st century infrastructure will have benefits far beyond just the laying of the fiber and those who dig the trenches," said then Michigan Governor Jennifer Granholm (D-MI) at a ceremony in August 2010 announcing the funding round 2 award of $69.6 million.

"This will be huge for Michigan's future in terms of education, giving all children access to the globe, and in terms of entrepreneurship, by giving everybody the chance to transact business online. There are so many corners of Michigan that up to this point have not had that opportunity", concluded Granholm, who now teaches at the Goldman School of Public policy at UC Berkley.

South Dakota’s Venture Communications Cooperative

At the White House event this Wednesday, Ms. Janelle Jesson will receive a Champions of Change award on behalf of Venture Communications of Highmore, South Dakota. Jesson has been doing the all important work providing the internal accounting function for federal funds used in Venture’s funded fiber network expansion project.

                           RUS Administrator Jonathan Adelstein, Randy Houdek – Venture, RUS                                                    State Director Elsie M. Meeks, Bryan Roth – TrioTel, and then U.S. Rep. Stephanie Herseth Sandlin (D-SD-AL) at the 2010 award event. Photo: USDA
Venture, is a member-owned telephone cooperative organized in 1952, just 3 years after Congress and the Truman Administration allowed federally funded rural electric cooperatives to move into telephone network construction using federal subsidies. 

The cooperative received a total of $5.230 million in grant and loan stimulus funding from the Rural Utilities Service of the U.S. Department of Agriculture (RUS) to build out a Gigabit Passive Optical Network (G-PON) Fiber to the Premises (FTTP) network.

Venture is matching the federal investment with another $1.7 million in locally secured capital. The grant / loan combination award was announced by RUS Administrator Jonathan Adelstein at the annual convention of the South Dakota Telephone Cooperative Association (SDTA) annual convention on August 26, 2010, within days of the end of Round 2 awards cycle. At the time, the Administrator also awarded a separate $12.3 million grant / loan combo package to TrioTel Communications of Salem, SD.

The cooperative is now constructing the FTTP system in the exchanges of Cresbard, Faulkton and Orient, serving the rural communities of Faulkton, Orient, Cresbard, Wecota, Burkmere, Norbeck, Millard, Devoe, Miranda and Polo.

Thursday, December 22, 2011

Open Range to Auction $100 Million of Assets on January 11 & 12 via Webcast 12/22/2011 San Francisco -  Two asset recovery firms retained by Open Range Communications, Inc. -- Heritage Global Partners and Counsel RB Capital Inc. -- will conduct a  webcast auction of surplus assets held by the bankrupt wireless broadband provider.

No, not these guys, but Open Range Communications, Inc.
did finally get a new sheriff in town.

According to this morning’s press release on Business Wire, the webcast “auction will be held on Wednesday, January 11 and Thursday, January 12, from 10 am MST, through 5 pm MST at and in person at the company’s headquarters in Greenwood Village, CO.”

Open Range, which had been rolling out a WiMAX network using wireless broadband equipment from Alvarion Ltd. (NasdaqGS: ALVR), in 2008 secured a $267 million Broadband Program Loan issued by the Rural Utilities Service of the U.S. Department of Agriculture (RUS). 

The failed loan, from the Farm Bill Broadband Loan Program, was awarded in the last months of the administration of former president George W. Bush. It is the largest single loan awarded by USDA for the support of rural telecom infrastructure in the history of any such federal programs since their inception in 1949.

The auction, which was recently approved by the federal bankruptcy judge hearing the case, “will feature large quantities of state-of-the-art networking, test equipment, IT equipment and office furnishings as well as more than 350 cell towers located throughout the United States,” according to this morning's release. Previous action by the Court had directed a liquidation of the firm's assets that resulted in a paltry $2 million "stalking horse" bid response by the small Minnesota-based wireless Internet service provider (WISP) called

“This auction is an opportunity for local or regional wireless telecom providers to purchase technologies and equipment to expand their services and better serve their customers,” said David Weiss, VP of Heritage Global Partners. “We are pleased to represent Open Range, and leverage our global webcast platform and vast experience in selling assets around the world, concluded Mr. Weiss” 

Open Range filed for Chapter 11 federal bankruptcy protection on October 6 after over a year of watchful waiting by the industry, officials at RUS, and company subscribers in rural areas of the country.

As first reported by this publication on September 15 of last year, Open Range's ability to operate across its proposed 17-state footprint was put at high risk as the Federal Communications Commission ruled against the provider's spectrum lease with satellite carrier Globalstar, Inc. (NasdaqGS: GSAT). RUS restructured a reduced loan package earlier this year.

Heritage Global Partners is led by Ross and Kirk Dove. The firm supports large and small companies with buying and selling of assets. 

Offices of Open Range Communications, where the on-site portion of the auction will be held, are located at 6430 S Fiddlers Green Circle #500, Greenwood Village, Colorado.

Additional information is available at:  

Our Take: Congress Needs to Answer Two Questions 
We hope that the current investigation by Congress into what happened at Open Range, going back to the Bush Administration, doesn't descend into partisan bickering like virtually everything else in Washington. 

Open Range needed a new sheriff in town from the day the one single $267 million loan package was issued. We think the initial loan itself, at an absurdly ambitious funded level, was the first mistake. Congress needs to ask the tough questions as to why a large, single, and risky loan ever was approved.

We think that RUS under the current Administration tried to be the new sheriff in town.  Why the provider went bankrupt after the renegotiated smaller loan package was issued is the second key question. It is one that needs to be understood by any of us that would presume to know anything about how rural broadband will be implemented in our country.

Open Range finally got its new sheriff, in the person of a federal bankruptcy judge. Like the law arriving after a bloody range war, it was too little too late.

Tuesday, December 13, 2011

San Jose Exits Controversial BayWEB 700 MHz Stimulus Project

Early 700MHz LTE Public Safety Network Project Now Expected to Fail 12/13/2011 San Francisco - The City Council of San Jose, California late this afternoon voted unanimously to reject further participation in, and funding of, the controversial federal stimulus supported wireless project called BayWEB. The interoperable regional 700 MHz LTE public safety broadband network was planned to serve scores of municipalities and counties in the greater Bay Area of Northern California.

San Jose, with a 2010 population of 945,942, was slated to be the largest single municipal jurisdiction in that regional array of governments.

Today's vote by the 10-member City Council puts the controversial project at nearly fatally high risk of both grant funding cancellation by the U.S. Department of Commerce, and similar no funding votes by local jurisdictions across the region. Either or both scenarios would cause the project, awarded $50.6 million by Commerce's National Telecommunications and Information Administration (NTIA) to fail. 

Impact on Motorola Seen
Such cancellation, which we now estimate to be highly probable, would be a major blow to the effort of Motorola Solutions, Inc. (NYSE: MSI) to leverage its current 80% share of the American land mobile radio (LMR) public safety wireless equipment market into an equally dominant position in the emerging opportunity in 700 MHz LTE systems.

BayWEB is one of only a handful of federally funded 700 MHz LTE efforts in the nation. Project lead Motorola, Inc. was awarded a $50 million broadband stimulus grant by the U.S. Department of Commerce in August of 2010. Within days of its award, San Jose and Santa Clara County, began raising detailed and serious questions about public ethics, funding, and procurement issues related to BayWEB. This publication was the first to report, on September 29, 2010, that the initial selection process for Motorola to represent a spate of area governments in by the regional public safety network was overseen by four ex-employees of Motorola itself. 

The City is 1 of 3 spectrum license holders for the system, along with Oakland and San Francisco, under the current 700MHz waiver procedure for public safety agencies of the Federal Communications Commission.

In a 10-page Memo to the Council, supported with another 113 pages of exhibits, City Fire Chief William McDonald and mayoral aide Michelle McGurk issued 4 recommendations, all of which were adopted by the body's unanimous voted following about 20 minutes of discussion. Three of the suggestions urged the City to continue participation in regional network development with the BayRICS Joint Powers Authority (JPA) which now governs BayWEB. 

San Jose Fire Chief William McDonald (l) with Mayor Chuck Reed at
September 11th memorial ceremony this year.
The fourth recommendation to Council was to vote not to sign the project's master contract between the regional governments and Motorola, the so-called Build Operate Own and Maintain (BOOM) Agreement. 

Chief McDonald and senior aide McGurk, in the memo supported by Mayor Reed, wrote they advised against City signing of the contract, "Given the significant compromises made in developing the BOOM Agreement, the lack of guarantee that the funds invested will result in a system that meets public safety needs throughout the 10-years of the contract, and the fiscal risks to the Authority and its members."

The BOOM Agreement, first issued as a draft by Motorola to Almeda County Sheriff Gregory Ahern in September 2010, has been negotiated over the intervening 15 month between one designated regional body after another and Motorola. Those negotiations, with both the public and private entities at the table, have been conducted in secret sessions to which the press and public was not allowed access. The first draft of the BOOM Agreement was released by employees of the City of San Francisco following a California Public Records Act (CPRA) request by Reed's office early this year. 

Monday, November 28, 2011

LightSquared Gets Real: Signs First Deal with an ILEC 11/28/2011 San Francisco - LightSquared LLC today announced its first wholesale wireless services deal with an incumbent local exchange carrier.   The signed agreement with Louisiana based EATEL demonstrates that LightSquared, the ambitious privately held national broadband venture of Harbinger Group chief Philip Falcone, has crossed an important threshold of business credibility.

According to a LightSquared release of this morning, the two firms “announced that they have entered into a wholesale agreement that will allow EATEL to offer its subscribers high-speed wireless data and voice services using LightSquared’s nationwide 4G-LTE network.”

While Lightsquared has previously announced a plethora of other distribution agreements with a variety of retail sales channel partners, none of them have been with a traditional regulated operating telephone company. 

EATEL is, according to rural telco funding experts JSI Capital Advisors, the thirty-eighth largest telco in the United States.  JSI’s Phone Lines 2011 directory, the bible of American telecom independent operating companies (IOCs), lists EATEL with 11,542 broadband subscribers and 28,854 access lines as of December 2010.

“LightSquared’s network not only allows EATEL to offer our existing customers wireless broadband services, it also gives us a critical competitive advantage as we expand our services into new markets,” stated John D. Scanlan, EATEL president, in today’s release.

Who cares about a rural telco with less than 30,000 access lines, or a seemingly star-crossed national wireless start-up that engenders more conservative conspiracy theories than the Federal Reserve Bank? 

Anyone who cares about the future health of the independent rural telecom sector should care. Rural incumbent carriers face a continuing decline in access line customers, looming changes in Universal Service Fund subsidies for rural high cost operations, and then growth of wireless services in and near their service footprints.  They typically lack access to licensed spectrum or the economies of scale to bring up and wireless offering.

Taken together, these factors mean that many rural carriers don’t have the quadruple play – voice telephone, Internet access, video services AND a wireless offering – to compete against new entrant cable operators and overbuilders. “EATEL, founded in 1935, is the incumbent local phone carrier in the Ascension and Livingston Parishes of Louisiana where it provides innovative products including high-speed Internet, phone and television service over a fiber-to-the home (FTTH) network,” according to the LightSquared statement.

“With LightSquared, EATEL will be able to offer its growing customer base world-class wireless service that will enable EATEL to build on its long heritage of providing local communities with cutting-edge connectivity.”

Rural rate of return carriers, many of which are USDA legacy borrowers paying down loans from the Broadband and Telecom Loan Programs of the Rural Utilities Service (RUS), are prudent operators. For one of the larger such ILECs in the nation to sign with Lightsquared must be seen as a stamp of approval from the sector for the oft-criticized venture.
“EATEL is exactly the type of company that LightSquared is building its wholesale network to serve,” said Sanjiv Ahuja, chairman and chief executive officer of LightSquared.

“We believe EATEL and the many other ILECs around the country provide critical and valuable communications services to their communities, and their customers deserve the benefits including ubiquitous connectivity and lower prices enabled by partnering with LightSquared,” concluded Mr. Ahuja.

Friday, November 25, 2011

BayWEB Contract Documents Show $50 Million Stimulus Project at Risk of Cancellation

No Bid Procurement Contract for BayWEB Network, Negotiated in Secret, 
Released Here 11/25/2011 San Francisco - Key documents relating to the controversial $50 million stimulus-funded public safety wireless project called BayWEB demonstrate that the project is at high risk of funding cancellation by the U.S. Department of Commerce. 

BayWEB is one of only a handful of 700 MHz LTE public safety regional interoperable wireless systems to be funded to date by the federal government. It is the only such network funded by a federal agency -- the National Telecommunications and Information Administration (NTIA) of the Department of Commerce -- under which the grantee is a private sector company rather than a governmental body.

Since the fourth quarter of 2010, the project's grantee, Motorola Solutions, Inc. (NYSE: MSI), joined by an ever-changing array of public entities slated to benefit from the project, have been holding non-public bilateral negotiations. Terms under discussion include equipment pricing, build out scheduling, eventual ownership conditions, operating subscriber costs, and the network design topology itself.

In simple terms, the key no-bid procurement contract for a $50 million federal grant-funded model wireless system has been negotiated in secret for a year. Earlier this week this publication launched its third round of requests, both informal and under provisions of the California Public Records Act (CPRA), to secure the current draft of the negotiated instrument called the Build, Operate, Own and Maintain Agreement (BOOM Agreement). 

This morning the draft BOOM Agreement dated November 21, and its existing Exhibits were released to this publication pursuant to our CPRA. The releasing agency is that of a county government which is a public member of the new entity, called BayRICS, which now manages the project along with MSI. The first draft of the BOOM Agreement, dated September 24, 2010 had been previously released by the former managing public agency, the Bay Area UASI, under a CPRA request made by the Office of Mayor Chuck Reed, of the City of San Jose.

The three documents are attached below. 

The most recent BOOM Agreement draft demonstrates that the BayWEB project remains at high risk of project cancellation by NTIA, given the scope of critical portions of the contract still under negotiations, and the tight project deadlines required by federal stimulus timelines.

We publish the documents here now, to be followed by our analysis, and by commentary from public parties to the negotiations, and from the industry. We publish now, given the significant industry concern expressed about the secret negotiations, lack of transparency around the process, and confidential criticism of the negotiations that have reached us from communications agency professionals here in the Bay Area.

BayWEB Draft BOOM Agreement - 11-22-2011
Draft BOOM Agreement 11-22-2011 - BayWEB Project

BayWEB Draft BOOM Agreement Exhibits - 11-22-2011
Draft BOOM Agreement - BayWEB Project - Exhibits 11-22-11

BayWEB Draft BOOM Agreement - 09-24-2010
Draft BOOM Agreement - BayWEB Project - 09-24-2010

The BayWEB Examination is our compendium of information on the project. We believe it is the most comprehensive such collection available. We have assembled links to all media coverage of the issue, to online documents secured by us from confidential and open sources, to documents secured by others and by this publication under federal and state public records filings, and to our own published reporting.

Note on awardee identification: The project grant was applied for by, and subsequently awarded to, the entity Motorola, Inc., formally traded as (NYSE: MOT). Motorola, Inc. was split into 2 new and separate companies, which both began trading on January 5, 2011.  The network infrastructure side of the business, all public safety equipment lines, and the network integration / management services divisions became Motorola Solutions, Inc. (NYSE: MSI). We have retroactively re-tagged our BayWEB stories with the MSI ticker symbol.
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