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. 
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