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Thursday, December 22, 2011

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, 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 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

Tuesday, December 13, 2011

San Jose Exits Controversial BayWEB 700 MHz Stimulus Project


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. 

Monday, November 28, 2011

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

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 

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

Thursday, November 24, 2011

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 

Tuesday, November 22, 2011

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, 2nd Edition (McGraw-Hill, 2012). He can be reached at john@infraseclabs.com


FCC: "'AT&T - T-Mobile Deal Would Mean Massive Job & Investment Loss"

StimulatingBroadband.com 11/22/2011 San Francisco - Federal Communications Chairman Julius Genachowski has begun a process which will result in the official rejection by the Commission of the proposed $39 billion acquisition of wireless carrier T-Mobile by AT&T.


FCC Staff Finds Jobs & Investment Loss in Deal 
"The record clearly shows that -- in no uncertain terms -- this merger would result in a massive loss of US jobs and investment," said a senior official of the Commission in the only direct quote released to media by Commission staff this afternoon.


The move is a clear signal that Genachowski and his two Democratic colleagues on the Commission will vote against approval of the controversial merger, when the actual item eventually moves before the Commission following both an administrative hearing and antitrust action in the federal courts.


Official sources at the Federal Communications Commission this afternoon held an on background briefing with media including this publication. Chairman Genachowski today put "on circulation" to his fellow Commissioners and staff 2 proposed Orders. The first argues for a finding of facts that the AT&T - T-Mobile merger would not be in the public interest. The second deals with the proposed $1.9 million acquisition by AT&T of Qalcomm's nationwide wireless spectrum in the heavily sought 700 MHz frequency range.  


Details from the media briefing confirmed the Chairman's call for an administrative hearing on the merger proposal, as first reported this afternoon by the Wall Street Journal's technology policy reporter, Amy Schatz. An administrative hearing held befoere an adminsitative law judge  (ALJ) of the Commission is triggered when staff and Commissioners reach a finding of fact that a proposed aqusition of radio spectrum licenses would not be in the public interest. The ALJ essentially conducts a civil trial at which AT&T would argue in favor of the acquisition, while oppents marshal facts against the deal. 


Qualcomm 700 MHz Spectrum Order
Senior Commission officials conducting the media call on background stated that no details relating to Genchowski's draft Oder on the AT&T - Qualcomm spectrum deal would be released until Commissioners had a chance to deliberate on the issue. Previous reports, and the Commission proceding on the issue, have identified the 700 MHz spectrum as covering upwards 300 million Americans.
 StimulatingBroadband.com

Friday, November 18, 2011

FCC Releases Universal Service Fund Reform Order

StimulatingBroadband.com 11/18/2011 San Francisco - The Federal Communications Commission today released its much anticipated Order reforming the Universal Fund and Intercarrier Compensation system. Taken together, the two complex systems of charges and funding support the operations of the vast majority of rural telecom carriers in the nation. 


In a move guaranteed to allow their private sector colleagues in the federal communi- cations bar to bill beaucoup hours over the weekend, Commission staff released the 759 page document at just past 6:00 PM this evening, Washington time.


The Commission adopted the Order at its meeting of October 27 by unanimous vote, but waited until today to release the full document as staff refined final text in the interim.


The Order launches the new Connect America Fund (CAF), first announced in the Commission's National Broadband Plan of last year. CAF is intended by the Commission to fund the build-out of extended broadband networks to rural areas, with a special emphasis on mobile broadband deployed by carriers eligible for funding.  


FCC-11-161A1 - Order




StimulatingBroadband.com

Friday, October 28, 2011

Strickling Says $80 Million from Louisiana Failed Broadband Project Goes Back to Treasury

StimulatingBroadband.com 10/28//2011 San Francisco - Assistant U.S. Commerce Secretary Lawrence E. Strickling says his agency did all it could to save the large broadband stimulus network project in Louisiana that was terminated earlier this week. In a statement to this publication of this morning however, Strickling puts the blame for the $80 million project collapse squarely on State of Louisiana officials in the Administration of Governor Bobby Jindal (R-LA). 


Assistant Commerce Secretary Lawrence Strickling at the UCANN 40
Conference of March 2011
 “NTIA is vigorously overseeing broadband grant projects to ensure they are completed on time, on budget, and deliver the promised benefits to the communities they serve. It is our goal to intervene early with projects that are getting off track and correct problems to ensure that taxpayer dollars are not wasted on projects that otherwise would fail," said Administrator Strickling via an email from his spokesperson of this morning to StimulatingBroadband.com.


"The Louisiana project, as originally submitted, promised great benefits to unserved and underserved areas of the state. However, after the state determined it was unable to implement the original project plan and fell significantly behind schedule, it proposed major modifications to its original proposal without adequate technical and financial details and a viable schedule for completing the project."


"We have worked closely with the state throughout the last several months to rescue this project but have now concluded that we have to move on. Accordingly, as a responsible steward of taxpayer dollars, NTIA terminated the grant and will return the funds to the U.S. Treasury," concluded the statement from the Assistant Secretary, who was appointed in 2009 by President Barack Obama. StimulatingBroadband.com

Jindal Administration Triggers Largest Broadband Stimulus Project Termination in Nation

Jindal's Administrative Chief Attempted Privatization of Federal $80 Million Investment, Echo of Wisconsin $23 Million Stimulus Giveback Seen


StimulatingBroadband.com 10/28/2011 San Francisco - The Administration of Louisiana Governor Bobby Jindal (R-LA) has triggered the termination of an $80.596 million broadband stimulus project by the U.S. Department of Commerce. The Louisiana Broadband Alliance (LBA) project was slated to support the major academic institutions of the state with expanded optical fiber networking capacity, and to provide middle mile 'big pipes' to numerous unserved communities in rural areas.
Louisiana Governor Bobby Jindal (R-LA)


In an October 26 letter, a grants officer at the U.S. Department of Commerce informed the Louisiana State Board of Regents, sponsor and legal owner of the project, that the $80.59 million Broadband Technology Opportunities Program (BTOP) grant for LBA "is terminated immediately."

Based on our tracking of the status of all such federal projects, the cancellation is the largest termination to date, by dollar value of federal funding, of any such project under the Obama Administration's $7.2 billion broadband stimulus program.


Louisiana's senior U.S. Senator, Mary Landrieu (D-LA), put the blame for the termination squarely on officials in Jindal's government. "Despite receiving the green light for more than $80 million in federal funds," said Landrieu in a press statement of Thursday, "the State fumbled the ball and was either unable or unwilling to complete the project, which could have been a tremendous boost to central and Northeast Louisiana." 


Similar Louisiana - Wisconsin Stimulus Givebacks
The scenario behind the termination is strikingly similar to that carried out in February by the administration of Jindal's fellow Republican Governor, Wisconsin's Scott Walker when the latter returned a $22.978 million BTOP award. Both administrations chose to turn back federal capital monies awarded for state construction of state university owned network facilities in favor of using private carrier leased lines for academic network expansion.


In the world of high capacity optical networks, both the Louisiana Broadband Alliance and the Wisconsin BadgerNet Converged Network are research and educational  networks (RENs). RENs often interconnect campus fiber rings across which are deployed shared supercomputer resources -- key elements of advanced research supporting leading centers of American innovation.  

900 + New Miles of Funded Fiber Gone
Project funding had been awarded in March 2010 for the new construction of 910 miles of optical fiber network routed to educational institutions across Louisiana.  Additionally, the project was planned to interconnect the existing state REN, the Louisiana Optical Network Initiative (LONI) to a similar public network in adjacent Mississippi. The award rolled out in Round I of the national program, and was issued in a rare joint statement by then Commerce Secretary Gary Locke and Senator Landrieu.    

According to yesterday's letter, the Louisiana termination resulted from delays in the environmental engineering phase of the project, and from the absence "of a strong deployment plan in place" a full year after the funding award of March 2010. Importantly, two allied efforts by Jindal's Department of Administration (DOA) to impose privatization strategies on the project after its award changed the project's business model, milestones, and cost structure. 

The termination statement concludes that this post-award "pattern of schedule delays, uncertainties and contingencies demonstrate a lack of management ability and control by Louisiana to get this project built on schedule and on budget.".

Privatization Agenda Proposed After Award
According to the letter, Jindal's DOA attempted to convert grant funded state owned last mile fiber connections slated for scores of community anchor institutions (CAIs) to investor-owned carrier circuits to be installed by existing providers. In this way, the federal grants officer saw that the project's promised "benefits will be contingent on last mile providers to provide the services to CAIs". 


As project delays continued, an alternative plan was floated to substitute for the entire fiber build. 'Alternatively, Louisiana then proposed significant modifications to the project to exclude the construction component and to make up for its schedule delays by pursing and alternative design centered on the purchase of indefeasible rights-of-use agreements (IRUs) from private providers," reads the Commerce letter. 


Under the stimulus package legislation, and rules of NTIA for BTOP, funds are to be expended for the capital construction of large networks and the telecom equipment to operate them. Funds may not be expended under the program for operating costs, like those incurred in carrier line rental. While technically IRUs can be accounted for as fiber capital leases, by definition run counter to the legal purposes of the program's funding by Congress.  


Additionally, the letter went on to document that the "DOA Office of Information Technology (OIT) will provide IT project oversight to ensure that implementation of the BTOP grant will not be in direct competition with private providers." Although noisome to many elements of the U.S. telecom sector, there is no legal requirement that BTOP-funded networks do not, in any all cases, compete with existing providers. 


As the role of DOA in the management of the LBA project increased, NTIA actually had to demand an inter-agency Memorandum of Understanding (MOU), be executed between the Regents and DOA to clearly lay out the project responsibilities of each agency. Previously, LBA and LONI had been administered solely by the Regents

Former Jindal chief of staff Paul Rainwater was appointed by the Governor to head DOA in June 2010 with what many observers of Louisiana's government state is a clear privatization agenda. Most recently Rainwater has been at the center of a political firestorm in the state over the potential privatization of state employee health insurance, and the issuance of a legislative subpoena to Rainwater's agency for documents about the plan. 

Louisiana BTOP Cancellation Letter 10-26-2011

Thursday, October 27, 2011

FCC Releases Summary of USF Reform Order

StimulatingBroadband.com 10/27/2011 San Francisco - In keeping with its arcane practice of releasing final written regulatory orders days and sometimes months after they are voted on, the Federal Communications Commission has so far issued only an executive summary of its important Universal Service Fund / Intercarrier Compensation reform Order.

The Order and Final Notice of Proposed Rulemaking, of ultimate importance to American's rural telecom providers, was adopted by unanimous vote by the Commission this morning. The 7-page Executive Summary, released to the media by the Commission's Office of Communications following this morning's open meeting, is comprised of 26 paragraph sections which address 17 key points.

In a simultaneously issued press release, the Commission summarized the Order's thrust in 4 areas:
·         INCREASED CONSUMER BENEFITS: The FCC estimates that, over the next six years, the Connect America Fund will expand broadband access to over 7 million residents of rural areas who are currently unserved, and will put the country on the path to universal broadband within a decade. The Mobility Fund will expand advanced mobile broadband access to tens of thousands of road miles, where millions of people work, live, and travel, and will include dedicated support for Tribal areas. Intercarrier compensation reform will eliminate hidden costs in consumer bills, providing economic benefits to long distance and wireless consumers across the nation of $2.2 billion annually in the form of lower prices, better value for the money, or both. Expanded broadband access will generate approximately 500,000 jobs over the next six years. As part of this reform, some consumers may pay, on average, an additional 10 to 15 cents a month on their bills; but for every dollar in cost, reform will provide $3 in benefits for consumers. And no additional charges can be imposed on consumer phone bills that are at or above $30 a month (inclusive of most fees consumers pay on their bills), nor can such charges be imposed on low-income consumers served by the FCC’s Lifeline program. Any new charges will begin to decline after six years.



·         COMMIT TO FISCAL RESPONSIBILITY: A firm annual budget set at current levels—$4.5 billion—will prevent growth in the Fund and help protect consumers from increased contribution fees. Programs that provide subsidies where they are not needed are eliminated, and compensation for corporate overhead expenses is reduced. Market-based mechanisms, including competitive bidding, will be used to distribute money more efficiently.



·         DEMAND ACCOUNTABILITY: In order to receive Connect America Fund support, carriers must demonstrate they are deploying broadband to their customers. These networks must meet performance criteria that enable the use of common applications such as distance learning, remote health monitoring, VoIP, two-way high quality video conferencing, Web browsing, and email.



·         ENCOURAGE DEPLOYMENT OF MODERN NETWORKS: Intercarrier compensation distorts investment in technology and discourages investment in modern Internet Protocol networks. It is also unfair to consumers, forcing wireless and long distance customers to provide billions of dollars per year in hidden subsidies to phone companies. Reform will ensure fairness to consumers, promote competition, and foster innovation in communications services.  In addition, the Order takes immediate action to end wasteful and costly gaming of the intercarrier system, including schemes such as phantom traffic and traffic pumping.


The 7-page document is attached:
FCC Executive Summary - USF-ICC Order & FNPRM

Friday, October 21, 2011

Vilsack: Jobs Act Will Put 1.9 Million Americans Back to Work

USDA Office of Communications via StimulatingBroadband.com 10/21/2011 San Francisco - 
By Agriculture Secretary Tom Vilsack 

U.S. Agriculture Secretary Tom Vilsack

Recently, both houses of Congress took action to support tens-of-thousands of American jobs by ratifying trade agreements with South Korea, Colombia and Panama, as well as passing trade adjustment assistance to help train workers for the 21st century economy.  And last week, the President signed them. 

These agreements are a win for the American economy.  For American agriculture, their passage will mean over $2.3 billion in additional exports, supporting nearly 20,000 jobs here at home for folks who package, ship, and market agricultural products.

That’s why President Obama made these trade deals a key part of his jobs agenda.  And once they are implemented, they’ll level the playing field for America's farmers, ranchers and growers.  They’ll open up opportunities for our businesses and immediately secure new markets as the majority of American products exported to Korea, Colombia and Panama become duty-free. 

These trade agreements help build on the success story of American agriculture – already a bright spot in the American economy – by continuing record exports that support more than a million jobs here at home. 

In the past months, I’ve crisscrossed the United States talking about trade and another opportunity for Congress to create jobs for the American people —President Obama’s American Jobs Act.  The bill would cut taxes for small business owners and middle-class Americans.  Private forecasts suggest it would put 1.9 million people back to work next year.

Right now, Congress is looking at the bill piece-by-piece, starting with a proposal to prevent teacher layoffs, keep police officers on the beat and keep firefighters on the job.  $35 billion in assistance to states would support nearly 400,000 educator jobs – keeping teachers in the classroom.  And it would keep cops and fire fighters in place to protect our communities. 

In the same way that they supported trade deals to create jobs and help agriculture, I know that members of Congress can step up and take action to pass the American Jobs Act. 

If we’re going to get Americans working again, folks in Washington DC need to come together and find solutions that work for everyone to build our economy that makes, creates, and innovates products that the rest of the world needs and wants.  In doing so, America can be an exporting nation – a key to rebuilding America’s middle class.


  StimulatingBroadband.com

Monday, August 22, 2011

USDA to Release Broadband Loan Awards in 16 States

StimulatingBroadband.com 08/22/2011 San Francisco - Administrator Johnathan S. Adelstein, head of the U.S. Department of Agriculture's Rural Utilities Service (RUS), will this morning announce the award of new RUS funding for rural networks in 16 states.
Johnathan Adelstein at an event in Iowa in July.

Today's announcement marks the first time since the award of its final broadband stimulus grants and loans last September, that RUS will issue broadband loans outside of its more traditional and longer lived Telecommunications Loan Program.

According to USDA, the 16 states which host the telecom carriers and other service providers receiving the loan packages to be announced this morning are: Alabama, Arkansas, California, Illinois, Kentucky, Louisiana, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Texas, Virginia, West Virginia, Wisconsin, and Wyoming.

In large measure, the announcements mark at least a partial victory for Adelstein, his staff in the Rural Development section of USDA, and Agriculture Secretary Tom Vilsack. As first reported by this publication, USDA has been fighting a pitched battle against Republican efforts on Capitol Hill to eviscerate the initial $1.445 billion "program level" funding target of the Obama Administration for the Broadband and Telecom Loan Programs, together with smaller grant programs, for this fiscal years.

Under lobbying pressure from the National Cable Television Association, the powerful trade group representing the nation's largest cable multiple system operators (MSOs), GOP House appropriators eventually left intact the $690 million program level funding for the Telecom Loan Program, yet were successful in reducing the Broadband Loan Program by more than half of the Administration's goal of $700 million.

Comm Connect Infrastructure Awards August 2011

Tuesday, May 10, 2011

IG of Commerce: NTIA Botched $50 Million Motorola Stimulus Award Review

Todd Zinser, Inspector General,
U.S. Department of Commerce


StimulatingBroadband.com 05/10/2011 San Francisco - The U.S. Department of Commerce badly botched its internal review of the controversial BayWEB $50.6 million wireless broadband stimulus grant to Motorola Solutions, Inc. (NYSE: MSI). So says the Inspector General of Commerce, Todd Zinser, in a 15-page report issued last Friday, May 6.



The report is the first promulgated by a federal inspector general about a specific project award under the $7.2 billion program of the Obama Administration.  


Zinser's report is sure to raise further questions about the management of the program on Capitol Hill, especially among its Republican critics. It is however Zinser's second and now pending report on BayWEB, to be issued sometime in the future, that will keep municipal and state officials in California up at night as the IG further probes allegations lodged against the project.


IG Investigation Triggered by Silicon Valley Governments
The effort by Zinser's Office of Inspector General (OIG) was triggered by a formal request for an investigation filed last November 1 by Dr. Jeff Smith, the County Executive of Santa Clara County, California. Smith, the chief administrative officer of the largest jurisdiction in Silicon Valley, wrote at the time "this investigation is warranted and necessary in order to ensure that public funds are administered in a transparent and fair manner at all levels of government."  


Smith, together with City of San Jose Mayor Chuck Reed, initially filed a complaint about the BayWEB project on September 8. 


'No Process in Place' at NTIA for Stimulus Award Reviews
IG Todd Zinser wrote that "No process for independent review of complaints" about
stimulus awards is in place at the National Telecommunications and Informa- tion Administration (NTIA). The agency manages the $4.7 billion portion of the program appropriated by Congress to the Commerce Department. 


Zinser found the lack of independent review capability continues to today, although the first formal complaint about the BayWEB public safety project was filed last September. At the time that filing was made, "NTIA did not have procedures in place to handle complaints and inquires about awards".  


More damning are the findings of Zinser that NTIA made repeated missteps when the serious allegations about BayWEB were raised.


NTIA, said Zinser, "did not perform sufficient research before it responded" on October 1 to the charges lodged by Reed and Smith. On that date, NTIA broadband stimulus director Anthony Wilhelm issued a letter to the officials which, according to the IG, stated "NTIA had no information that called into question the recipient's ability or intent to execute the project in accordance with the terms of the grant." 


Four days later this publication was first to report the the statement of NTIA chief Lawrence E. Strickling which defended the award, saying, "While we would take into consideration the result of any legitimate inquiries conducted by local jurisdictions that concern a grant, NTIA and the Department of Commerce has thoroughly vetted this project," said Strickling at the time.


NTIA repeatedly made errors, according to the OIG report, as it was forced by the Valley governments to continue its review of BayWEB into this year. Strickling again responded to San Jose and Santa Clara County with a terse letter of February 24 long on rhetoric, and short on substance. He concluded that missive saying, "It is vital all interested parties move forward with all dispatch to ensure that the citizens of the entire Bay Area benefit from this project."


IG to Issue Second BayWEB Report, Procurement Irregularities Continue
Zinser sums-up this exchange and the previous ones between the NTIA Administrator and the local governments by stating, "Overall we found that NTIA did not respond in a manner sufficient to resolve Santa Clara's and San Jose's requests for investigation of the BayWEB award."


NTIA's work to review BayWEB was however sufficient enough for Administrator Strickling to travel to meet with the project's lead sponsors the next week in Alameda County, irrespective of the ongoing federal probe.


At that meeting, to which the press was not invited, Mr. Strickling urged local govern- ments to move ahead to work with Motorola to negotiate a specialized Build Own Operate and Maintain (BOOM) document which exists outside the normal public procurement requirements of California law. 

OIG 11 024 I_BayWEB Final Report 5-6-11

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. 

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