Happy Birthday Broadband Stimulus

StimulatingBroadband.com 02/17/2012 San Francisco - President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) into law 3 years ago today, within 3 weeks of taking office.

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. StimulatingBroadband.com

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

StimulatingBroadband.com 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, AnnArbor.com

"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. StimulatingBroadband.com

Open Range to Auction $100 Million of Assets on January 11 & 12 via Webcast

StimulatingBroadband.com 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 www.hgpauction.com 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 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 TotheHome.com.

“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: www.hgpauction.com.  

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. StimulatingBroadband.com

San Jose Exits Controversial BayWEB 700 MHz Stimulus Project

 An Exclusive Breaking News Report from StimulatingBroadband.com

Early 700MHz LTE Public Safety Network Project Now Expected to Fail

StimulatingBroadband.com 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. 

BayWEB Goes BOOM

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. 

StimulatingBroadband.com

LightSquared Gets Real: Signs First Deal with an ILEC

StimulatingBroadband.com 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. 
 StimulatingBroadband.com

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

No Bid Procurement Contract for BayWEB Network, Negotiated in Secret, 
Released Here 

StimulatingBroadband.com 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



Resources:

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. 

  StimulatingBroadband.com

AT&T Withdraws Merger Application, Reserves Right to Come Back

StimulatingBroadband.com 11/24/2011 San Francisco - AT&T, Inc. and Deutsche Telekom AG yesterday withdrew their application to the Federal Communications Commission for approval of AT&T's $39 billion takeover of T-Mobile USA.

Will T-Mobile get the $4 billion breakup fee?

The two wireless carriers reserved their rights to both defend their position in the ongoing antitrust suit of the U.S. Department of Justice against the deal, and to pursue new filings with FCC for a possible different approach to the acquisition.


AT&T stated in its press release of this morning that it and DT "are continuing to pursue the sale of Deutsche Telekom's U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice either through the litigation pending ....or alternate means.  As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval."

 AT&T will take a pretax accounting charge of $4 billion in 4Q 2011 to cover possible breakup fees due to DT if the deal does not go through. 



 The withdrawal notice was issued via the Commission's electronic filing system (WT Docket No. 11-65) yesterday, and was first reported in a joint company release of this morning.


As of this story posting, the filed withdrawal statement has not been posted on the FCC site. (Updated: The letter was posted by FCC staff on 11/25, and is copied, below.)


The move followed by one day the announcement by the Commission that Chairman Julius Genachowski launched procedural moves that guarantee FCC disapproval of the AT&T acquisition. The FCC proceeding began with a Commission Notice of  April 14th this year.  


This Tuesday FCC senior staff told the media that Commission Chairman Julius Genachowski placed two draft Orders with fellow Commissioners that strongly signal an eventual denial of approval of the deal by the federal regulatory body. In the non-transparent continuing practice of FCC, those draft Orders were placed "on circulation" with Commissioners and selected staff while withheld from public view.


AT&T - T-Mobile Merger Withdrawal


  StimulatingBroadband.com 

DHS - FBI Say No Cyber Intrusion at Illinois Water Utility

StimulatingBroadband.com 11/22/2011 San Francisco - By John McNabb *


Federal authorities today issued a statement that they found no credible evidence that a previously reported incident of cyber hacking against a public water treatment facility in Illinois had occurred. The statement, issued at 5:30 pm (ET) today reads verbatim, as follows:

John McNabb of Infrastructure Security Labs

“ICS-CERT/FBI UPDATE

After detailed analysis, DHS and the FBI have found no evidence of a cyber intrusion into the SCADA system of the Curran-Gardner Public Water District in Springfield, Illinois.

There is no evidence to support claims made in the initial Fusion Center report - which was based on raw, unconfirmed data and subsequently leaked to the media - that any credentials were stolen, or that the vendor was involved in any malicious activity that led to a pump failure at the water plant.  In addition, DHS and FBI have concluded that there was no malicious traffic from Russia or any foreign entities, as previously reported.

Analysis of the incident is ongoing and additional relevant information will be released as it becomes available.”

In the initial reporting on this incident, an unidentified alleged foreign hacker had ostensibly damaged a pump at the Illinois water utility. This reported incident, and the subsequent hacking of a South Houston wastewater facility to show how easily it could be done, resulted in dozens of news stories, blogs, and commentary worldwide.

This wide scale reporting, although now factually proven incorrect by the competent federal agencies, brought needed attention to the vulnerability of public drinking water facilities to attacks by malicious hackers.  Just because this Illinois incident was not the real thing does not diminish the fact that drinking water facilities are vulnerable to cyber attack. Far more needs to be done, both by government and industry, to properly secure this critical infrastructure.

             * John McNabb is Principal of Infrastructure Security Labs, which researches security of critical infrastructures. He was an elected Water Commissioner for a small New England drinking water utility for 13 years. His current research focuses primarily on security of drinking water infrastructure. He has presented papers at Defcon 18 (Cyberterrorism and the Security of the National Drinking Water Infrastructure), Defcon 19, Black Hat, and ShmooCon. Among his works is a chapter on drinking water security in the book Weapons of Mass Destruction and Terrorism, 2^nd Edition (McGraw-Hill, 2012). He can be reached at john@infraseclabs.com

  StimulatingBroadband.com