Tuesday, May 4, 2010

360 Networks Petitions Congress on Stimulus Overbuilds, Challenges XO Communications

360networks to Launch Congressional PR As Overbuild Challenges Grow 05/04/2010 San Francisco - 360networks is joining the growing list of telecom carriers loudly expressing serious concern about the use of federal broadband stimulus dollars to fund overbuilds of existing investor-owned networks.

Next week the firm will mount a public relations offensive on Capitol Hill against what it sees as the wrong tact being taken by the Obama Administration.  Late last week the firm posted an "Open Letter to Congress" which accuses competitor XO Communications of seeking a Round 2 broadband stimulus grant to overbuild the existing 360networks optical fiber route from Seattle to Chicago.

XO Communications is an active applicant for $206.464 million in broadband stimulus funds from the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce.  XO Holdings, Inc. (OTC BB: XOHO.OB), controlled by corporate raider / equity investor Carl Ichan, proposes with its project titled Northern Lights: Building Broadband Communities, to build 2,227 fiber route miles through 8 states as a NTIA sanctioned Comprehensive Community Infrastructure (CCI) project. 

360networks is today privately held, operating one of the largest regional wholesale long haul fiber th network in the Western U.S.  The firm, which like XO has been substantially recapitalized following bankruptcy in the telecom bust era of 2001 - 2004. 360 Networks began as a subsidiary of the Ledcor Group of Companies of Vancouver, BC.  It has waged a quiet campaign to date on the overbuild issue.  It has not issued any press statements, and has only posted its Open Letter on its corporate site. We have learned from a company spokesman however that the carrier will bring its case to Congress on Monday, May 10, with the publication of its statement in CQ Today and RollCall.  Both are influential  Capitol Hill news services read daily by Members of Congress, their staffs, and lobbyists. 

Network overlay map produced and published by 360Networks.
(click to enlarge)
As first reported on April 30th by Rob Powell of Telecom Ramblings, 360networks published its 1 page statement entitled "Broadband Stimulus Has Missed the Mark" late last week.  The company writes that while it initially "lauded" the Recovery Act's goals "of bringing broadband service to unserved and underserved markets," it now sees the effort as having gone awry.  "Unfortunately, many approved projects have strayed from these goals and will use taxpayer dollars to replicate existing broadband infrastructure."

Focusing its concern on the XO Round 2 initiative, 360networks says "Current applications continue to seek funds to overbuild existing infrastructure.  In one such application, Northern Lights, seeks in excess of $200 million to build fiber optic lines along a 2,200 path already served by three of the country's leading providers, each with abundant capacity."  The statement is signed by Chris Mueller, Vice Chairman.

Company spokesperson Scott Fincher had agreed to make Mr. Mueller available to us for an interview on the issue yesterday.  He later stated that the firm would have no further comment until the statement runs in the 2 Washington based journals next week.

The statement carries a graphic overly map (above) of 360networks fiber route now in operation along railroad right-of-way across the northern tier of states, overlaid with XO's network route proposed for stimulus funding.  It appears to us that 360networks accurately rendered XO's proposed route,based on XO's map published on its corporate site (below).  

XO Communications map of its proposed 2,227 mile fiber route project.
(click to enlarge)

As of this posting,  XO Communications, has made no public statement in reponse to the allegations of 360networks, nor have company spokespeople answered any of our repeated requests for a statement.

Correction: We previously and erroneously stated that 360 Networks was still a subsidiary of Ledcor Industries Limited, of British Columbia. Ledcor had founded 360 Networks during the telecom boom era. 360 Networks is today privately held, and not affiliated with Ledcor. We apologize to the firms for our error.
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