“Incumbents Do Not Have a Veto!”

With those words, Asst. Sec Lawrence Strickling, head of NTIA, enables many applicants and others worried about the NOFA’s incumbent challenge clause breathe a little easier. And for those of us who’ve railed against this potentially destructive clause , there is also a bit of satisfaction for not giving up the fight.

Mr. Strickling and Jonathan Adelstein, Administrator for RUS, were responding to questions from the House Subcommittee on Communications, Technology & the Internet when Congresswoman Anna Eshoo (CA) pushed for answers about the clause. “I want to make sure there’s competition. If the incumbents can just knock out people because they don’t want any to come in, I don’t really think that’s the way for us to go.” (gotta love our Calif Congressional delegation)

Mr. Strickling gave a reassuring response from both gentlemen and a clearer picture of how this process will run.

Applications with infrastructure proposals have proposed to cover areas where there isn’t broadband coverage. Maps are being generated for these areas through a publicly accessible database so you can see the proposed coverage area. During the review period anyone, including incumbents, can submit a message on the site saying they agree or not that the areas currently are not receiving adequate broadband.

Because applicants had to provide detailed information to justify their claim that these areas need broadband, “incumbents have to provide a lot of information to overcome the presumptions that have been established by the applicants.” NTIA will evaluate the challenge if it feels the challenge and supporting material throws the proposal into dispute, but NTIA and not the incumbent will have final say in determining whether the app moves to final review.

Mr. Adelstein added, “We will demand real substantiation with any challenge. But also, we want to be sure that what applicants present is accurate. Claims have to be verified and substantiated.” Furthermore, RUS has over 400 offices across the U.S. and they will send people into the field to areas that incumbents challenge to test and assess the validity of any challenges.

Where does that leave us?

This isn’t a final knockout blow to the clause. Yet there is cause for some joy here.

First, NTIA/RUS is giving applicants the high ground and the presumption that you hold an unassailable position. The burden of proof to the contrary lies with the incumbent. If you’ve done your homework, and are continually gathering whatever data you can to reinforce the fact that people in your proposed coverage area don’t have adequate broadband, you can better fight off any challenge.

Second, political pressure matters here. When members of Congress such as Rep Eshoo say to NTIA/RUS they’re not going to be happy if they see proposals in their districts knocked out by incumbent challenges, you better believe this becomes a factor. Same holds true if governors start making phone calls. The Congressional and gubernatorial cards are in play.

Third, this challenge process will play out in a fishbowl. If, for example, incumbents are required to submit details on actual speeds delivered to make their case, there’ll probably be few challenges. Incumbents don’t want it proven in such a public fashion just how big the gap is between what’s advertised and what’s delivered. Can you imagine the kind of fallout that would generate?

Fourth, you can run a preemptive counter-challenge in thi fishbowl. Anyone can post a challenge on the Web site. But that means anyone can post a note saying “I live here and let me tell you how bad coverage really is.”

So what you do is round up a whole passel of people around computer in the libraries, community centers, the schools, and get their comments. Be sure they submit enough of the right information, such as address, who the incumbent is, etc. so their comments carry weight.

What can we expect?

In the end, everything comes down to how detail-y is NTIA/RUS’ definition of “substantiation.” I think any mid-sized incumbent will be hard pressed to respond if they have to do a lot of legwork in a short period of time (2 or 3 weeks) because they don’t have a lot of staff.

For the bigger ones, such as Verizon and AT&T, a lot depends on the specific requirements for making a challenge. Remember, these folks didn’t apply in the first place because they don’t want to open their kimonos for public inspection.

Another factor is whether or not the applicant can rebut the challenge. With the amount of work a lot of applicants have presented to make their case for an area not being served, incumbents have to realize they’re at a disadvantage. I think incumbents would fear the publicity of losing a public counter challenge, so in this case there would be few challenges.

On the flip side, if these public statements from NTIA about requiring lots of substantial are mostly posturing, and the eventual required data to make a challenge is minimal (i.e. presenting only advertised speeds), then all bets are off. Skimpy requirements will likely lead to lots of challenges. I’m banking on stronger.

Either way, your work is not yet done young warriors.

What We Can Learn from the Broadband GSD Ten

Granted, the Broadband GSD Ten is just a Snapshot of the dozens of communities running or partnering to run successful broadband networks. However, having observed this world up close and personal for four years, I can draw some lessons here for those who have applied for stimulus grants and those queuing up the Round 2 funding process.

1. It’s time for a strong push for public-owned networks, and networks run by public/private partnerships in which local governments are more than window dressing. Going through the list of stimulus applications, it’s uplifting and very telling that so many fall into one of these two categories.

Every time some incumbent or one of their sock puppets goes on record saying that the private sector alone holds the answer for broadband, call ‘em on it and list five or six or ten cases in which local governments are getting stuff done.

2. When you look at the main stakeholder groups whose needs are being met by these networks on the GSD Ten list, it’s pretty clear that these are the end-user organizations that should dictate broadband speeds. Look at how incumbents have bent the FCC’s ear this past week demanding the FCC use speeds lower than even the pathetic 760K in the NOFA to define broadband. Incredible!

You cannot talk about using broadband to advance economic development, telemedicine and all these other profound objectives, and define minimum broadband speed as anything less than multiple megs per second. The future calls for more speed, not less!

3. People wrapped up in the discussion about how do you increase broadband adoption need to contact these governments with successful networks to understand that institutional customers drive adoption. If people can get most of their government services online rather than inline, more individuals will subscribe. If medical facilities use the network to dispense information and services that keep more people healthy, more individuals will subscribe.

We must frame the arguments for broadband stimulus awards and national broadband strategy so they are less about individuals, and more about these major stakeholders who collectively are the foundation of network financial sustainability. Once you meet the needs of these institutional customers, you pay for the network PLUS individual and residential subscriptions increases will follow.

4. Local government needs to step up as the anchor tenant. Most of the GSD Ten identify city and county government as one of the primary stakeholders contributing to the financial sustainability of the network. Just a couple of weeks ago I saw an RFP for a network in which the government said they’re not going to contribute financial resources or be a subscriber to the network.

In the anchor tenant role, local government impacts a network’s success on several important levels. Financially. Influencing the decisions of institutional customers and the business community to become network subscribers. Driving individual and residential adoption.

5. When studying these communities, take note of how you can “leapfrog” technologies to bring broadband to your area. Santa Monica started by using fiber it had at the time to improve the city’s communication infrastructure, then sold excess fiber capacity to businesses to finance network expansion, and now they’re ready to leapfrog into greater buildout of wireless. Allegany and Franklin Counties started with wireless and can leapfrog from this into fiber as they bring in more fiber to facilitate expanding wireless capabilities.

In three or four years, more people will be advancing broadband with the understanding that it’s a hybrid of wired and wireless, which I believe ultimately makes for the best and most comprehensive broadband solutions. But to get there, a lot of you who don’t get stimulus funding and others need to consider the leapfrog approach for the short term, both for fiscal and logistical realities.

6. When you delve into how these GSD Ten communities made their networks successful, it should be clear to those who haven’t caught on yet that you can’t – and shouldn’t – approach ROI the same way private sector companies do. These networks must earn enough to cover a lot of your operating expenses. However, they don’t have stockholder dividends, crushing administrative and operations costs or the marketing burden to become a national playa.

Those incumbents who point out the standard P & L arguments when bashing community networks, and the NOFA rules that reflect this thinking, are trying to force a square peg into a round hole. It doesn’t work that way. Wilson, NC has a 12-year timeline on getting its money back. They and other governments, unlike the private sector, can operate in this financial ROI timeframe because they operate differently. What’s more, every year their communities reap significant financial AND intangible benefits that justify the expense.

There are some other lessons here from this first GSD Ten list. Call me sometime and we can talk about it.

Please take a minute to help me keep this blog’s content focused on your needs, and answer two quick questions for me.

The Broadband GSD Ten – September

The GSD Ten highlights communities from among the dozens that are Getting Stuff Done with effective broadband networks. This monthly listing challenges false assumptions from detractors by presenting strong testimony to the fact that local government can indeed operate successful networks.

As a primer, read this post that debunks three leading myths about these projects, and explains why many of the broadband stimulus grant proposals are for community-run networks. Then check out this month’s GSD Ten.

These networks are a good cross section of those run by local governments, public utilities and public/private partnerships in which everyone has skin in the game. I also pulled in a mix of city, county and regional networks, as well as Prestonburg, KY’s limited-reach network that covers its downtown area.

Franklin County, VA

Population: 52,000 Square miles: 721
Network Type: Fixed wireless, unlicensed Sq Miles: ~650
Date started: January, 2006 Network owner: Public/private
Initial investment: $90,000 Source: Fed. grants, General Fund
Business subs: 250 – 300 Individual subs: 1,500 – 2,000
Speeds offered (down/up): 1.5 – 3.5 mbps/1.4 – 2.0 mbps
Institutional stakeholders subscribing:

  • County government
  • Libraries
  • Public safety

Key contributors to sustainability:

  • County government
  • Individual/residential subscribers
  • All business subscribers collectively

Wilson, NC

Population: 49,000 Square miles: 23
Network Type: Fiber Sq Miles: 23
Date started: November, 2006 Network owner: City government
Initial investment: $28 million Source: Bank loans
Business subs: 200 Individual subs: 3,400
Speeds offered: 10 – 100 mbps
Institutional stakeholders subscribing:

  • City government
  • 4-year colleges
  • Public safety
  • medical facilities
  • community college
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • Individual/residential subscribers

Cedar Falls, IA

Population: 38,000 Square miles: 29
Network Type: Hybrid fiber-coax Sq Miles: 29
Date started: January, 1996 Network owner: Public utility
Initial investment: $8 million Source: G.O bonds
Business subs: 400 Individual subs: 11,000
Speeds offered (down/up): 8 mbps/512K (home) 8 -100 mbps (commercial)
Institutional stakeholders subscribing:

  • City government
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • Individual/residential subscribers
  • All business subscribers collectively

Allegany County, MD

Population: 73,600 Square miles: 430
Network Type: Wireless (900MHz, Wi-Fi, 4.9GHz, 5.XGHz) Sq Miles: 430
Date started: June, 2005 Network owner: Gov’t. + stakeholders
Initial investment: $5 million Source: OpEx, other savings, grants
Business subs: 55 Individual subs: 1,400
Speeds offered: 1 – 3 mbps (residential) 10 – 100 mbps (commercial)
Institutional stakeholders subscribing:

  • City government
  • County government
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • County government
  • City governments
  • K-12 public schools
  • 1 or more of top 10 private companies
  • Libraries

Tacoma, WA

Population: 196,000 Square miles: 49
Network Type: Hybrid fiber-coax Sq Miles: ~ 28
Date started: December, 1999 Network owner: Public utility
Initial investment: $96 million Source: Tacoma Power surplus
Business subs: 6 retail service providers Individual subs: 18,000
Speeds offered (down/up): 3 – 15 mbps/256K – 1 mbps
Institutional stakeholders subscribing:

  • City government
  • County government
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies
  • Community colleges

Key contributors to sustainability:

  • City government
  • County government
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • All business subscribers collectively
  • Individual/residential subscribers
  • Community colleges

Cambria County, PA

Population: 152,593 Square miles: 693
Network Type: Wireless (900MHz, Wi-Fi, 5.XGHz) Sq Miles: 693
Date started: June, 2008 Network owner: County government
Initial investment: $10 million Source: Capital lease from bank
Business subs: 100 Individual subs: 700
Speeds offered: 1 – 15 mbps (30 mbps wholesale)
Institutional stakeholders subscribing:

  • City government
  • County government
  • Public safety
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • County government
  • Public Safety

Pulaski

Population: 8,000 Square miles: 6.6
Network Type: Fiber Sq Miles: 10
Date started: March, 2007 Network owner: Public utility
Initial investment: $8.5 million Source: G.O. bonds
Business subs: 160 Individual subs: 1,450
Speeds offered: 10 – 30 mbps
Institutional stakeholders subscribing:

  • City government
  • County government
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • Individual/residential subscribers
  • All business subscribers collectively

Scottsburg, IN

Population: 5,900 Square miles: 5
Network Type: Fixed wireless Sq Miles: City + portions of 9 counties
Date started: April, 2004 Network owner: City government
Initial investment: $5 million Source: Grants, OpEx savings
Business subs: 128 Individual subs: 1,726
Speeds offered (down/up): 128k – 3 mbps
Institutional stakeholders subscribing:

  • City government
  • County government
  • Libraries
  • Public safety
  • Community colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • City governments
  • 1 or more of top 10 private companies

Santa Monica, CA

Population: 84,100 Square miles: 8.3
Network Type: WiFi hotzones, 2 Fiber Sq Miles: 8
Date started: November, 2004 Network owner: City government
Initial investment: $530,000 Source: OpEx savings
Business subs: 9 Individual subs: 0
Speeds offered: 1 – 3 mbps (wireless) 10 mbps – 10 Gbps (fiber)
Institutional stakeholders subscribing:

  • City government
  • Community colleges
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability:

  • City government
  • Community colleges
  • Libraries
  • Public safety
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Prestonburg, KY

Population: 4,600 Square miles: 11
Network Type: WiFi Linear Miles: 2
Date started: January, 2008 Network owner: City government
Initial investment: $10,000 Source: City budget
Business users: 3890 (incl tourist customers) Individual users: 4752
Speeds offered: 3.5 mbps
Institutional stakeholders subscribing:

  • City government
  • Community college
  • Libraries
  • K-12 public schools
  • 4-year colleges
  • Medical facilities
  • 1 or more of top 10 private companies

Key contributors to sustainability: The city underwrites cost of network operations. The cost is justified through a tax revenue increase generated by new businesses and increased shopping in the downtown area.

Click here to read lessons we can learn from these communities.

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