Funding Broadband by Turning Users Into Investors

Let’s explore a different strategic approach to funding.

In 2009 I came across National Community Development Services, Inc. (NCDS), which specializes in boosting the economic health of communities through a process they term economic development fundraising. The concept is simple, really, and can be applied to broadband projects where one of the main goals is to use the network to improve economic development. Build a financial sustainability strategy based on a campaign to recruit investors for the network.

As I find interesting guests to invite to be on my radio show, Gigabit Nation, I’m finding a theme that keeps recurring in slightly different forms, but with the same bottom line – fund a network by convincing local businesses, not-for-profits and other organizations to underwrite the costs. One variation to that are co-ops, such as the Mountain Area Information Network (MAIN) that I’m highlighting on tomorrow’s show.

We’re not talking investors as a euphemism for “subscribers,” but people who invest more than the price of service in exchange for a piece of the action. This aligns with my position that communities need to treat broadband networks as a business venture.

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Eliminate Weeks from Your NOFA 2 Prep Time!

Promotional Announcement

Some of you have followed my blog for months and know I’m pretty spot-on with my assessment of the broadband stimulus terrain, and broadband strategy in general. I bring this expertise to my evaluations of the few 3rd-party services I select to complement mine. Here are two that pass the test.

Eliminate weeks of the most time consuming and tedious work needed to complete the roughest part of the NOFA application with ID Insight and RidgeviewTel services. These services also increase the accuracy and impact of your application plus help you build a sustainable broadband network after you receive funding.

ID Insight’s BroadBand ScoutSM pulls details from millions of online retail transactions nationwide to enable you to determine broadband penetration down to the census block on connection type (broadband, dsl, cable, dial-up, etc.), data speeds and carriers. Give us the names of counties in your proposed service area, and we deliver the data for you to create or verify broadband coverage maps.

RidgeviewTel adds your BroadBand Scout data to their dBOSS Broadband Network Management Platform to:

  • aggregate the majority of necessary data NOFA 2 requires; 
  • format the data for GIS systems to visually render locations on a map;
  • apply the data through imaging and layering of the various data to create maps of broadband usage, unserved areas, RF propagation and the number of potential customers per mile for fiber networks; and
  • return the NOFA-required data to you in the formats needed to upload these files directly to NTIA’s and RUS’ NOFA application servers

Successful.com facilitates the logistics between you and both companies, provides valuable analysis services if needed and ensures that everything is in order when you submit your application. You can purchase our services together or a la carte.

E-mail or call us today (510-536-4522) for more details. March 15 isn’t that far away.

Handicapping NOFA 2

The good news is that the new NOFA rules are out. The bad news, if you have Attention Deficit Disorder, is that there are two of them and each one seems as long as the first NOFA rules. But at least there are welcome changes. Here’s an overview and a look at who does well as a result of these. 

First, I think it’s wise to let each group have its own rules. Many of the frustration people have had with the NOFA, Round 1 stem from the rules being a quick blending of procedures from agencies with two different purposes and ways of doing business. That led to the rules contradicting each other in places, or otherwise breeding confusion.

In terms of focus, NTIA is addressing middle mile primarily and this makes sense because it gives NTIA a bigger bang for their buck, allowing them to bring broadband to large geographical areas through each award. Rather than spend time reviewing 30 proposals for $1 million each, better to review one proposal for $30 million. There’s less administrative hassle on the backend where NTIA has to manage each funded project to completion.

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Taking Action on the New NOFA Rules

Welcome to NOFA 2 and the 60-day march through hell (for some) to $4 billion. After Friday afternoon’s sudden delivery of the preliminary set of NOFA rules, I made the comment that it is good that the agencies are going their separate ways. Trying to keep the NTIA/RUS marriage together for the sake of the kids didn’t make sense

Then I looked at draft of the NOFA for NTIA and RUS. That’s nearly 200 pages! My brain glazed over. No wonder they waited until Friday before a 3-day weekend! Then at midnight, I got an e-mail from the New America Foundation with incredibly thorough summaries of NOFA 2 highlighting changes from NOFA 1 and other valuable details condensed into 85% fewer pages. Read the summaries before the actual NOFAs.

Heartfelt thanks to New America are very much in order from all of us trying to slog through all this info. Dudes and dudettes – thank you!!

For my part, since New America breaks down what NOFA 2 is all about, I’m giving you some tips on what to do about these rules so you can get a good proposal across the finish line. There’s barely two months to the March 15 deadline for your proposal, so I’m not prettying this post up. This train’s leaving the station. You can complain to the Fed’s conductors later about whatever injustices you spot.  

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Want Better NOFA Rules? Here’s Your Chance.

Yesterday NTIA and RUS announced the release of their Request for Information (RFI) to get feedback on the rules that will govern this last funding round(that’s right, only one funding round). This RFI is actually a straightforward, logical document. That’s good. If you’re short on time you can get to those points that concern you most.

Ok, here’s my first recommendation to overarch all the rest I have. The next NOFA should be as concise and clearly presented as this RFI. Seriously. That’s the one takeaway from most people’s complaints. Simplify! Do that and a lot of folks around the country might nominate Strickling (responsible for NTIA) and Adelstein (heads RUS) for sainthood.

I’m going to run through many of the RFI points in order (sort of), and give you a couple of thoughts on where I feel we should go with these. Some of the questions here are so logical or obviously rhetorical they speak for themselves. 

I. The Application and Review Process

A. Streamlining the Applications

  • RUS and NTIA need to create criteria for what kind of projects they want to fund, or not fund, describe the funding options (grants, loans, both) and tell people to apply to one agency or the other. Period.
  • Create, in editable PDF file, format one application form in four parts, one for each category of broadband project: middle mile infrastructure, last mile infrastructure, public computing center and broadband adoption. People reviewing all four categories of projects need the same data: 
  1. background info on the applicant to prove they are a viable (i.e. not fly-by-night) fiscally solvent and responsible public, commercial or nonprofit entity;
  2. demonstration of constituent need;
  3. demonstration of ability to meet constituent need;
  4. what do applicants plan to do with the grant money; and
  5. how to applicants plan to financially sustain the project after the grant money runs out. For the infrastructure projects, you probably want a section to address the technological viability of the proposed project.
  • Regarding new entities, consortia and public-private partnerships, yes you want different information from a nonprofit consortium than a telecom company. But you can gather this in how you word or assign questions in the form (e.g. in lieu of P & L statements for prior three years, ask for specific details on how a new nonprofit’s management team  has proven in the past an ability to run successful projects). 
  • Good luck on the specifications of what is a Service Area. It’s tricky meeting the need to have some uniform delineation of an area where you plan to deliver service that makes everyone happy, particularly when you talk about wireless. However, the specifications NTIA/RUS use should be applied to incumbent carriers that provide data for broadband maps, submit challenges to proposals, etc. If an applicant has to bust their chops presenting data down to the census block or city block, so should anyone who challenges their proposal.

B. Transparency

  • Details on an applicant’s proposal should all be out there for the public to read, including some level of breakdown of the proposed costs, though it makes sense to present it in a “drill down” fashion starting with the executive summary. 
  • Details on the organizations’tech patents/secrets should not be out there.
  • Exposing finances is a tricky issue. Private companies don’t have to disclose a lot of that information in general, but in this case they’re taking public money. I’m going to punt on this one.
  • Where I’m most concerned about transparency is with the procedures used by the agencies in managing the grant process. Volunteers who are reviewing these grants should not be anonymous. This incumbent challenge process needs to be spelled out in detail when the NOFA first comes out. Everyone should be able to follow – and comment on – an incumbent’s challenge from initiation to final determination to grant or deny the challenge. Applicants should be able to easily find out where they stand as the NoFA process moves along.

D. Expert review process  Kill it. Follow RUS’ lead and contract with a company that can get the job done with a maximum of efficiency.

II. Policy issues

A. Funding Priorities and Objectives

This reflects one of the biggest problems with the broadband stimulus program: NTIA and RUS are caught between the competing forces of politics, good public policy and sound technology implementation process. The politics demand quick money distribution and signs that expenditures equal feet on the street working. Sound public policy demands attention to long-term results. Sound tech procedure was turned on its head from the get go, so accept that this is relegated to the backseat.

You should probably accept that the number of jobs created to building these networks is not going to be overwhelming in the big picture, nor will many of them get into full swing before March or April, so pay lip service to the political forces and move on. That leaves you with the good public policy approach.

Broadband’s biggest economic impact is its ability to accelerate the economic development of a community. Therefore NTIA/RUS should structure its NOFA  policies to reflect this. Set the rules so applicants have to present broadband proposals in any of the four categories suggested above in the context of how their respective proposals enable economic development goals. How will proposals:

  1. improve local businesses’ability to generate new business and new jobs,
  2. increase the number of new businesses that move to an area,
  3. improve current and/or future workers’ ability to contribute to their personal and their community’s economic development, and
  4. impact the overall economic viability of the community.

This is a more opened-ended approach than government types may be used to dealing with, and it makes strict numerical calculations of a proposal’s worthiness difficult. But put the right people on the job of reviewing these applications and you can make this work. Also, in the application form, demand that applicants present a detailed cost-benefit analysis that independent economic development or community development groups chosen by the agencies can verify. I’ll come back to this further down.

B. Program definitions

The use of the term “remote” needs to go. By the amount of criticism the agencies have received on this, it’s apparent that using it is a no-win situation.

Un-served, underserved and broadband need to be consolidated into a criteria that embodies the concept “either a community has enough broadband coverage at a speed sufficient to improve personal and community economic development, or it doesn’t.” A community doing its needs analysis correctly will determine what constituents need to accomplish with broadband to impact economic development (e.g. distance learning, job hunting for unemployed workers, telemedicine applications for seniors). They should likewise be able to prove there is enough broadband available or there isn’t.

To say that having the bare minimum amount of speed is better than having nothing is a false argument. For any network to be able to have a meaningful impact on many of the economic development goals I mentioned, the bare minimum is nothing.

If the agencies require applicants to tie speed to need and balance cost with impact, you will address the truly underserved areas. Un-served, if you’re going to keep this category, needs to include in its definition actual speeds received – or not. Allowing advertised speeds to count is a travesty. 

E. Sale of Project Assets

The question posed here, should NTIA/RUS be more flexible in determine whether an applicant can sell or merge their business, is so obvious, I have to comment. Hell yes, be more flexible!! Jiminy Cricket on a crutch, this is the high tech industry! Stuff happens, usually as an insane and totally unpredictable pace. You don’t want applicants using grant money as a wildcat investment fund, but you also have to be real about the nature of the data communication business.

F. Cost Effectiveness

If you want to know if a project application presents reasonable costs, this is where a panel of experts makes sense. Get a handful of people on a panel who are in the business of building networks, but don’t have proposals in the queue, and have them review the basic information regarding a questionable application’s proposed features and costs. The panel needs to be diverse in terms of the type of organizations they work for, and should include people who’ve specifically built community broadband networks.

Trying to establish standard criteria to measure cost effectiveness when there are so many variables that affect cost is difficult. Getting people who’ve done this type of work directly, or were involved with managing companies that built these types of networks, gives you the best ability to make accurate assessments.

There are some elements not covered in the RFI that have caused everyone involved heartburn, such as the question of open access and net neutrality requirements. In my next post I’ll suggest a few things to add when you file your comments that aren’t addressed in the RFI .

Planning for Round 2 NOFA Funding?

If you’re considering taking a shot at broadband stimulus funding in Round 2, I can help you put your best proposal forward. Contact me today to get your plan in the winner’s circle!

Gates Foundation Proposal – Linchpin to National Broadband Strategy?

A few days ago the Bill & Melinda Gates Foundation sent analysis data to the FCC postulating that $5 – $10 billion could install fiber networks in most of the anchor institutions (hospitals, medical facilities, schools) in the U.S. The FCC quickly issued a public request for comment to validate the financial and technology assumptions in the Foundation’s analysis.

My strategic mind scooted past the numbers to ponder a question that should always be near the top of people’s thinking on broadband: does wiring 98,400, or 80% of all U.S. anchor institutions, that lack Net access make good business sense?

The premise behind the Foundation’s report – wire of all these institutions first and great things will happen – in my view is a great strategic approach to reap broadband’s promised benefits. It should be the core for our national strategy plan, as well as a central strategic objective for those applying for stimulus grants. In one fell swoop you resolve three critical issues: financially sustaining the network, fostering economic development and generating widespread broadband adoption.

Financial sustainability

The Foundation’s analysis estimates the cost to install fiber in every institution but doesn’t include the costs of keeping it operational. In my assessment, I’m taking their premise and assuming you’re going to build a network business, not just create little islands of fiber access. For one thing, money for ongoing  operations has to come from somewhere. To make that money, communities will do best by integrating their institutions’ fiber cabling into one network if possible.

If your ultimate objective is to create a communitywide broadband network, then these institutions have to become anchor tenants that actually pay for network services, with libraries being the one possible exception (more on their role in a bit). In many underserved rural and urban areas, low population density and/or low income make it difficult to get enough individual subscribers to pay for a network’s operating expenses (OpEx,) even when the network is built mainly on grant money.

If you look at successful networks already in place, anchor tenants collectively produce most of the revenue because each one spends more per month for services (maybe $1,000, $2,000/month or more) to replace older slower communication technologies, and capitalize on new computing technologies. Extrapolating the Gates premise, you boost communities’ main institutions over the big hurdle of broadband buildout with financing, and thus make it easy for them to become anchor tenants. 

It’s important you include local government since it is the mother of all anchor tenants. Some are burdened with so much ancient legacy communication technology, a small town of 84,000 people can justify the network costs because they save $700,000 or $800,000/year replacing that old technology with fiber. You shouldn’t have much trouble building an ROI case here.

Furthermore, local government can build a wireless network on top of the fiber that produces an even greater financial bang for the buck. New York City, Minneapolis, Providence, RI and Oklahoma City are major cities that built or subscribed to citywide wireless networks to run hundreds of mobile government workforce applications and reduce government operating costs.

While it’s true that adding local governments would add to the cost projected in the Foundation report, governments can show a significant return on investment to underwrite their portion of the buildout and the OpEx.

Economic development

Once you have your anchor institutions wired and wireless, they become a catalyst to drive economic development. Santa Monica proved that once a local government and other anchors have a network that’s saving or generating money, it’s less expensive to extend that network to your largest 10 – 12 businesses. Word of mouth sells services.

This network extension builds on itself. As infrastructure goes out to the biggest companies, you attract new businesses looking to move or expand to small towns and rural areas. Network costs stay reasonable so small businesses in rural and urban areas can afford to tap into the infrastructure. Each anchor tenant can build a wireless hub that attracts shoppers and tourists, which impacts the neighborhood’s economic picture.

Broadband adoption

Anchor institutions, particularly when you include libraries in the mix, address one of the more vexing challenges of broadband – getting individuals to subscribe. It can cost hundreds of dollars to win and keep an individual as a subscriber. It’s months before each subscriber becomes profitable. Many people have no interest at all in getting on the Internet.

Rather than bust your rump and your budget chasing after these individuals, leverage the anchor institutions. If each institution provides content, services and applications that enable their constituents to benefit without having to fight traffic, stand in line or sit for hours with a phone locked to their ears, individuals will subscribe to the network.

As part of the strategy for broadband adoption, anchor institutions hold the key, so be creative in structuring relationships with them. Libraries especially hold promise in this area because they already are a central point within communities for people who want to use the Net to do research or hunt for jobs. 

This discussion, of course, may all be for naught if no one can figure out where the $10 billion is coming from to invest in the anchor institutions. I was hoping Bill and Melinda would round up 9 or 10 of their similarly heeled golfing buddies and put together a broadband investment group. But none of the press articles indicated any such luck. It may be hard to get a second chunk of change out of Congress on the heels of this $7 billion, but stranger things have happened.

For the moment, we can speculate as to the possible sources of funding, but at least this is a strategic path that shows promise. What are your thoughts?

Round 1 and 2 NOFA Applicants

Fine-tuning your business plan as you move to next stage of the Round 1 funding process? Getting you plans in order so you can pursue funding in Round 2? I can help you put your best proposal forward. Contact me today (510-536-4522) to get your plan in the winner’s circle!

NTIA Awards First Four Grants for Broadband Mapping

I was almost too giddy to speak. The first four stimulus grant awards for broadband mapping were announced yesterday for the states of California, Indiana, N. Carolina and Vermont. If a majority of the remaining states that receive grants employ similar mapping procedures of these four, NTIA and taxpayers stand to get plenty of bang for their stimulus buck.   

The California Public Utilities Commission (CPUC) gets approximately $1.8 million to collect and verify the availability, speed, and location of broadband across the state, plus $500,000 for the cost of statewide broadband planning activities over four years. The Indiana Office of Technology (IOT) receives approximately $1.3 million.

In N. Carolina the Rural Economic Development Center, Inc. (e-NC Authority) is awarded approximately $1.6 million plus about $435,000 for the cost for broadband planning activities in that state over five years. The Vermont Center for Geographic Information (VCGI) is awarded approximately $1.2 million.

This is a victory of sound mapping processes over the straightjacket of the  conventional wisdom regarding mapping that makes broadband advocates ill. These four awardees were selected because their proposals met or exceeded program requirements in three key areas: data collection, verification and collaboration. In a minute I’ll show how this leads to greater ROI for broadband investments.

The conventional wisdom, driven in large part by incumbent telcos and cable companies, is that you can’t get good broadband mapping data unless service providers (incumbents) give it to you. And because incumbents don’t want to give you the data you need, this mapping process has to be tedious, expensive and nearly void of independent verification. Indeed, when some critics said $50 million is adequate, $350 million was set aside for states to do mapping because of the expense of prying the data loose.   

For seven months, community broadband supporters watched with increasing trepidation as the embodiment of this flawed conventional wisdom, Connected Nation, secured deals to pursue mapping on behalf of states such as Texas, Florida and Minnesota. NTIA’s announcement today indicates that the agency is going to, as much as is possible, fund states that do mapping right.

 Why these award winners matter to community broadband 

I believe that, by selecting these particular four states for initial awards, NTIA establishes the benchmark by which future applications will be reviewed and grants awarded. Other states can view these winning procedures to modify their own proposals. And I believe NTIA will actually push back on those applications that follow the conventional wisdom, again, using the first awardees as the models for what should be.

California and N. Carolina have been at this game longer than most states (I assume the same for Indiana and Vermont as I learn more about them). Early on they rejected the notion of relying solely on service providers and have been collecting data from other sources, including directly from constituents through telephoning and in-the-field surveys. You cannot collect more accurate data than when you go straight to the people who do or don’t have broadband. N. Carolina plans to use Web and GIS tools to collect additional extensive data in a process they expect to be effective and surprisingly inexpensive.

Verification is critical to a superior mapping strategy and subsequent broadband deployment. The lack of independent verification leads to situations such as you have in West Virginia. Connect West Virginia (Connected Nation) produced a map showing 90%, 95% broadband penetration while the state ranks nearly last among U.S. states for broadband adoption. NTIA’s awardees will use multiple methods and independent verifiers to conduct data verification work. 

Collaboration is the third important ingredient for mapping success. The four awardees are pulling together state and local partners to execute the mapping exercise with maximum efficiency and minimizing some of the process implementation costs. Unlike the incumbents that shroud all of their data in non-disclosure agreements, these collaborative efforts create for the public a true, comprehensive picture of broadband availability.

When states use what e-NC Authority’s Ex. Dir. Jane Smith Patterson refers to as a multi-modal broadband data collection, you get better-detailed, accurate maps. This in turn enables you to make decisions that lead to (hopefully) the most appropriate broadband technologies going into appropriate communities in a way that yields the best results for your broadband investment. 

Ultimately, these state maps will be woven into a national broadband map that should be the cornerstone for the FCC’s national broadband strategy. I don’t expect that all state maps will be perfect, though I may bet you beer that my state’s map (CA) will be better than your state map. I’m sure some mapping awards will make me want to wretch. But I do have greater confidence in getting a decent number of high-quality maps than I did a couple of months ago. 

 Shout out

I have to send a special shout out to e-NC Authority. Here is a state agency that in July of this year was sold down the river in favor of Connected Nation by some of its own state legislators (at the behest of AT&T). You can read the ugly details here. Luckily for the good guys and gals, the state’s governor wasn’t swayed. She gave the nod to e-NC to represent and go after the NTIA grant.

I talked to Ms. Jane on the phone soon after I heard the news about the award and my office lit up from her smile. She and her team’s worked hard since 2001 developing good broadband maps. They had to fight naysayers, AT&T obstruction, serious budget cuts and treacherous political hacks (but I repeat myself), yet they came out on top. Karma rocks! e-NC won’t be gloating, though. They’re already working towards making their stimulus fueled project a model for the nation, then having NTIA and RUS come on down for some southern hospitality and technology showcasing.

I’ll be writing more about these states and their respective efforts in a week or so. Stay tuned.

A Little Self-Promotion Always Helps

If you’re planning to build a community broadband network, call me (510-536-4522) or e-mail. I have a ton of knowledge that can help you create a great plan, write a great NOFA app and implement your plan.

Time to Rummmmmble for Net Neutrality!

Who’d a thunk it. The next big broadband flashpoint appears to be net neutrality. Incumbents and their lobbyists have gone ballistic, with rhetoric that went from 0 to High Moral Outrage within a day. Friday the Republican Congressional leadership went directly to the President’s doorstep to complain about net neut, so that means some hum dinger political fireworks are likely in the offing.     

I threw in my first commentary on the topic in the mix last week.

Hearing all the bluster from big incumbents about how unfair net neutrality rules are and how much they contribute to the demise of innovation, methinks “The lady doth protest too much.” Underneath their pushback is the underlying threat that, without incumbents’ support, these rules are DOA.

The giants put a similar fine whine out on the table when they didn’t apply for broadband stimulus grants. But alas, they were “full of sound and fury, signifying nothing,” as 2,200 applications poured in from others stepping into the breach. There are plenty of local governments and smaller service providers that can profitably build networks and offer Internet services that consumers and businesses want, and without being tripped up by net neutrality.

If you look at history, it’s often been small, initially anonymous companies that drove technology innovation, creativity and competition. The biggest companies were often the slowest to innovate but the fastest to obstruct, if not outright kill innovation. (You can read the rest of this Fierce Broadband column here)

You’re going to read a lot about net neut in the upcoming weeks. One of my contacts at the Benton Foundation mentioned how surprised he was at all the media coverage, saying you don’t usually see this much until after the FCC has made rules, not when they’ve just proposed some.

My main take on things is that those of us who support community broadband need to get on the stick and pushback on all this incumbent noise. If they are allowed to discriminately throttle content on the Internet based on their financial self-interests, broadband advancement in the U.S. is hosed. 

As David Isenberg says on his blog

Network Neutrality has never been about the idea of too much bandwidth on a limited network. That’s dinosaur feces. It’s always been about whether the telcos and cablecos could leverage ties between their network and certain apps to make discriminatory, anti-competitive profits.

The strength of the Internet is that it accepts all traffic without a “will it make money” test. That’s why a Pez dispenser collector could grow a hobbyist site into eBay. It’s how two Stanford students could grow their thesis into Google. It’s how an Israeli apps company that wanted to reduce its phone bill invented Internet telephony….the reality is that if we ever say “Goodbye Net Neutrality” we’ll also be saying, “Goodbye Internet.”

Check out David’s blog. Be sure to scroll down to “Making Network Neutrality Sustainable, Revisited” This post isn’t as long as it seems and it’s very good.

At every opportunity, we have to call the incumbents on their silly allegations, fear mongering and distortions of reality. Here’s a good write-up on debunking industry talking points.

Needless to say, the road to net neut is going to be a rough one, long and definitely winding. As one of my more cynical media contacts Karl Bode stated, “At this point, I’ll believe any real, tough consumer-friendly rules coming from Uncle Sam when I actually see them. Just too many lobbyists, too few consumer advocates.” Luckily, Karl gets past (or harnesses, depending on your take) his cynicism occasionally to write some real scathing push-back pieces – and doesn’t mind if you quote him.

Tying all this back to the broadband stimulus program, this month NTIA/RUS have opened the doors via an RFI soliciting feedback on the NOFA rules. Get over there and put your two-cents in. Be sure that top of your list is “keep net neut in the NOFA!!” If incumbents won’t play in the stimulus sandbox, tell them to get out of our way! We’ve got business to attend to.

“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.

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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