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Former Head of Ajit Pai’s Broadband Group Arrested by FBI on Fraud Charges

Phillip Dampier April 16, 2018 Public Policy & Gov't, Rural Broadband, Video No Comments

Pierce (Image courtesy of: KTUU-TV)

FCC Chairman Ajit Pai’s choice to lead his newly created Broadband Deployment Advisory Committee (BDAC) was arrested last week by the FBI and charged with a multimillion-dollar investment fraud scheme.

Elizabeth Pierce, former CEO of Quintillion and ex-chair of the BDAC from its start until September, 2017 surrendered to authorities in New York City. Pierce was charged with wire fraud for allegedly tricking investors into putting more than $250 million into an Alaskan fiber optic project based on guaranteed revenue contracts prosecutors claimed Pierce forged herself to reassure investors Quintillion would benefit from telecom traffic revenue the fiber network never had.

To realize her plan to build a fiber optic system that would service Alaska and connect it to the lower 48 states, Pierce convinced two investment companies that she had secured signed contracts that would supposedly generate hundreds of millions of dollars in guaranteed future revenue from the system,” said Manhattan U.S. Attorney Geoffrey Berman. “Those sales agreements were worthless because the customers had not signed them. Pierce had forged counterparty signatures on contract after contract.”

To raise adequate funds to support Quintillion’s ambitious fiber optic network buildout, Pierce frequently appealed to outside investors. Several wanted evidence the fiber network would attract enough business from telecom companies to justify an investment. Pierce was accused of faking contracts with Alaska’s telecommunications companies from 2015 until 2017 to provide reassurance companies were committed to spend at least $24 million in traffic charges the first year the network began operation.

Pierce’s alleged scheme fell apart when Quintillion began invoicing clients based on the fake contracts. At least one protested, claiming it did not use Quintillion’s network. A subsequent internal investigation allegedly founds dozens of phony contracts kept in Pierce’s Google Drive account, with at least 78 moved to the service’s trash bin 48 hours before investigators began searching Pierce’s computer. Prosecutors were able to recover the deleted documents with a search warrant presented to Google.

Pierce may have attracted FCC Chairman Ajit Pai’s attention after publicly complaining the permitting process in Alaska took longer than building fiber cables from scratch and shipping them from Europe. Out of more than 380 applicants, FCC Chairman Ajit Pai picked Pierce in 2017 to head his new broadband advisory committee, tasked with eliminating or streamlining regulations and making life easier for broadband providers to persuade them to expand broadband rollouts.

“The Commission was fortunate to have an excellent and deep pool of applicants to serve on the BDAC,” Chairman Pai noted on the occasion of introducing the BDAC and Pierce to the public. Critics argue Pai’s BDAC has been stacked with industry, industry-funded or industry-friendly committee members that are influencing most of the public policy recommendations issued in the group’s final recommendations. At least two city officials resigned over concerns their views were not being taken seriously.

Pierce resigned from Quintillion in August 2017 and from the BDAC a month later for  “personal reasons.”

KTUU-TV in Anchorage reports Quintillion’s ex-CEO was charged with wire fraud. Nevertheless, the Alaskan fiber project is trying to carry on. (3:11)

AT&T Replacing Storm/Wildfire Damaged Copper Wiring With Fiber Optics

Phillip Dampier February 14, 2018 AT&T, Consumer News, Public Policy & Gov't, Verizon 1 Comment

AT&T is staying committed to its wireline network in the face of two significant natural disasters by replacing beyond-repair copper wiring with fiber optics.

The phone company has recently notified the Federal Communications Commission its existing facilities in parts of California that were damaged by last year’s wildfires will be replaced by fiber optic infrastructure.

Fierce Telecom notes customers affected by the Nuns, Tubbs, Redwood and Sulphur fires will be served by a new optical fiber network in portions of Sonoma, Ukiah, Santa Rosa, and Lower Lake.

“The circuits will be transferred to fiber based NGDLC systems,” AT&T said in a FCC filing. “The transfer of these circuits does not compromise the capacity of the cabinets.”

In Florida, as a result of last September’s Hurricane Irma, AT&T will migrate its irreparably damaged copper wire network that strings throughout the Florida Keys to a new fiber to the home network.

AT&T’s decision to maintain its wired networks comes in contrast to Verizon’s 2013 attempt to scrap its copper facilities on Fire Island, N.Y. and certain New Jersey barrier islands left devastated by Superstorm Sandy. Verizon hoped to replace traditional landline service with a wireless alternative known as VoiceLink. A firestorm of protests over the service’s limitations, sound quality, and reliability forced Verizon to scrap the plan in New York and install its FiOS fiber-to-the-home network instead.

C Spire Partners With Entergy to Bring Fiber Service, Smart Grid to Rural Mississippi

Phillip Dampier February 13, 2018 Broadband Speed, C Spire, Consumer News, Rural Broadband No Comments

C Spire, an independent wireless company providing service in the southern United States is partnering with electric utility Entergy to jointly construct a new fiber optic network in remote sections of Mississippi to manage an electric smart grid and fiber broadband service.

C Spire will own and build the network, with Entergy contributing construction costs, according to C Spire vice president of government relations Ben Moncrief. The partnership grants Entergy leasing rights to use the fiber optic network to develop smart grid technology for rural Mississippi electric customers. Five individual fiber routes will be build, each with a capacity of 144 or more strands of fiber. Entergy will have exclusive use of its own fiber strands, but C Spire will get most of the capacity to power its backhaul facilities, including its network of cell towers, and eventually deploy the network for commercial and institutional users, with the possibility of expanding service to home and small businesses customers if there is adequate demand.

The fiber network will be uncharacteristically placed in some of the most rural parts of the state’s push to redevelop its rural economy to support digital businesses. C Spire itself has been in transition over the last five years, diversifying its core cellular business into fiber to the home broadband, phone, and television service targeting underserved, smaller communities across the state.

“A robust broadband infrastructure is critical to the success of our efforts to move Mississippi forward by growing the economy, fostering innovation, creating job opportunities and improving the quality of life for all our residents,” said Hu Meena, CEO of C Spire.

C Spire/Entergy Mississippi’s new fiber project

The construction project will involve placing fiber optic cable along five separate routes:

  • Delta: 92 miles of fiber through Sunflower, Humphreys, Madison and Hinds counties and near the cities of Indianola, Inverness, Isola, Belzoni, Silver City, Yazoo City, Bentonia, Flora and Jackson.
  • North: 51 miles in Attala, Leake and Madison counties, including the communities of McAdams, Kosciusko and Canton.
  • Central: 33 miles in Madison, Rankin and Scott counties and near the towns of Canton, Sand Hill and Morton.
  • South: 77 miles passing through Simpson, Jefferson Davis, Lawrence and Walthall counties and near the towns of Magee, Prentiss, Silver Creek, Monticello and Tylertown.
  • Southwest: 49 miles in Franklin and Adams counties near Bude, Meadville, Roxie, Natchez and Eddiceton.

C Spire got the idea to collaborate with the electric utility after the Mississippi Public Service Commission inquired if Entergy’s plans to build a fiber optic smart grid network could also be used to develop improved broadband service for rural Mississippi. Entergy and C Spire decided to collaborate on the project to deliver both services over the same network.

Loveland, Col. Advances Municipal Broadband Without Public Vote to Avoid ‘Circus of Lies’

Fort Collins residents saw their mailboxes filled with mailers last fall opposing community broadband, paid for by the state’s cable lobby.

The Loveland, Col. City Council approved Tuesday four measures that include a $2.5 million spending authorization to lay the groundwork to allow the city to develop a new public broadband network.

The city plans to move quickly, spending $300,000 to develop an in-depth business plan for the service, which the city may run itself. The money will also be spent on researching financing options and a general outreach campaign to explain the service to local residents. Another $2.2 million will cover the development of a detailed solicitation for proposals to build the fiber network an exploration of bonding options.

Some Council members were adamant they will not repeat the mistakes of other Colorado towns by taking muncipal broadband up for a public vote. Several Loveland City Council members commented on a campaign of demagoguery and distortion practiced by incumbent cable and phone companies in Fort Collins and Longmont, which financed expensive campaigns to try to block municipal broadband proposals from getting off the ground. Both industry-funded campaigns failed.

For one Council member, the extensive lobbying campaign in 2017 to smear Fort Collins’ proposal municipal network backfired.

Councilman John Fogle had previously supported requiring a public vote if Loveland decided to get into the broadband business. But then last November he witnessed Fort Collins endure a well-financed effort by the Colorado Cable Telecommunications Association and the Fort Collins Chamber of Commerce to defeat a similar broadband proposal. He changed his mind.

“It’s not an even playing field when incumbent industries will spend $900,000 at the drop of the hat to perpetuate … a monopoly,” Fogle said, noting that local governments cannot spend taxpayer dollars to fight lobbyists and defend their proposals.

Ball: We don’t need a public vote.

Councilman Rich Ball went even further, declaring unless he died or resigned, he would never support a public vote.

“We have the wonderful opportunity to collaborate or we can be the little city that I grew up in that always got beat … by Fort Collins and Longmont,” Ball said.

Many local residents supporting the Loveland public fiber network applauded the decision of local council members not to be tricked into an unfair fight with the well-financed telecom industry.

“I don’t want the Council to spend even five minutes entertaining Comcast’s circus of lies and distortions. I hope those TV ads run last fall in Fort Collins from that fake group sponsored by the Chamber of Commerce taught our state a lesson on what cable monopolies will do to protect their monopoly,” said Loveland resident Susan Collins. “They’ll do whatever it takes and you can lose if you play their game. We already had a vote when we elected our City Council. If people don’t like what they are doing, they can vote them out again.”

But Mayor Pro Tem Don Overcash expressed concern and requested the four measures be amended to require voter approval, believing the Council may be exceeding its authority.

“If citizens want to expand our powers to meet their needs, they have the right to do that,” Overcash said.

A handful of residents also worried they would be paying for a network they won’t use, choosing to stay with their local cable or phone company provider instead.

Loveland, Col.

Councilman Jeremy Jersvig complained that his fellow Council members were making “dictatorial” motions to move forward on the fiber network that, in his view, did not consider public opinion.

But Council members who support Loveland’s public fiber proposal noted:

  • In a 2015 election, 82 percent of Loveland voters said “yes” to overriding a state law banning local governments from providing telecommunication services, such as high-speed internet. Other Colorado communities have gone through similar votes.
  • The vote allowed the city to explore making high-speed internet available throughout the Loveland area, independently or in partnership, and without raising taxes. City Council will make the final decision on whether to provide this service, and what model to use if so.
  • Ultra-fast internet service, with speeds greater than 1 gigabit per second, would be delivered through a citywide fiber-optic network, which is faster than what the local cable or phone company will provide.

Fidelity Communications Caught Running Astroturf Website to Kill Broadband Competition

Sock Puppet “consumer group” opposing municipal broadband in Missouri is outed by their own website.

Fidelity Communications, a small Missouri-based independent cable operator providing service in Missouri, Oklahoma, Arkansas, Louisiana and Texas, has been outed as the creator and backer of a ‘grassroots’ group trying to prevent West Plains, Mo., from launching a public broadband network that would directly compete with Fidelity.

West Plains, a community of 12,000 in south-central Missouri, runs a public fiber network originally envisioned connecting city buildings, a local medical center, fire, police, and highway offices together. Local cable company Fidelity Communications had shown no interest in providing fiber connectivity in West Plains, so city officials explored the idea of building a city owned and operated fiber network itself. As word spread around town that fiber broadband was under consideration, locals began lobbying city officials to open the network up for private commercial and residential users as well.

By January 2016, supported by a dozen major employers willing to participate as network “anchors,” the city of West Plains got into the internet provider business.

West Plains has been challenged by a lack of digital infrastructure and has seen at least 500 jobs disappear over the past few years. Inadequate service from cable company Fidelity Communications, which suffered from frequent speed slowdowns and service interruptions, drove demands for an alternative.

Local officials have been extremely cautious about entering the broadband business, and have been reluctant to grow their network too quickly. The goal of the network these days is to provide robust and reliable high-speed internet access essential for the local digital economy and the jobs it creates. But city administrator Tim Stehn is also concerned about being a careful steward of the community’s finances.

“Of course, as a city administrator, I’m concerned, because if we would go completely to all businesses and residents, we’re looking at a high price tag that is estimated at $15 million,” Stehn told Christopher Mitchell in a 2017 interview for Community Broadband Bits. “What scares me the most is the customer service aspect of this. If we’re going to do this, I want to make sure the city is successful and that we can respond at serving the customer service. That’s the piece that really scares me the most.”

West Plains’ fiber network has grown carefully over the last few years, both in terms of its reach and its capabilities. At the outset, the network offered 25/25 Mbps dedicated connections primarily to business customers. But where West Plains’ fiber loop passes residential homes, the city has also been willing to provide service to local homeowners as well.

Last September, the city announced a three-month trial of the city’s 1 Gbps Gigabit Passive Optical Network (GPON). Up to 80 businesses and 14 homes in the Southern Hills district were invited to participate. West Plains’ GPON network offers participants a shared 1 Gbps connection. City officials were confident that even though the network is shared, there will be plenty of capacity available — much more than what DSL and cable broadband networks offer. The results of the pilot are designed to ascertain how much peak usage traffic the network will face and help local officials decide on what kinds of speed tiers to offer going forward.

The community’s progress since 2016 has not gone unnoticed. As Stop the Cap! has documented before, one of the best ways to force a stubborn incumbent phone or cable company to upgrade their network is to threaten to compete with it. Last September, Fidelity Communications suddenly announced it, too, was now offering gigabit internet service — at least for download speeds — within West Plains.

The residential service features 1 Gbps download speeds with 10 Mbps uploads, with a flat price of $79 per month, fees and Wi-Fi included, taxes may still apply. The higher speeds support multiple video streams, high-end online gaming, unlimited wireless devices and rapid transfer of huge data files, along with the capability to handle other bandwidth-hungry applications.

Over the past several months, Fidelity completed network upgrades, acquired 1 Gig-capable customer modems and freed up the bandwidth necessary to support the new 1 Gig speeds. These improvements will bring convenience and ease to those using the Internet in West Plains.

“As time goes on, technological demands keep increasing,” said Don Knight, Missouri general manager for Fidelity. “Fidelity intends to meet that demand by providing broadband speeds not normally available in rural areas.”

West Plains receiving gigabit service from two gigabit providers should be welcome news for local residents and businesses. But it apparently was not good news for Fidelity, which does not appreciate the competition.

Stop City Funded Internet has references to “Fidelity” — the area’s local cable company in certain file paths to images and other documents on its website.

StopCityFundedInternet.com was registered on Dec. 13, 2017 (and last updated Jan. 23, 2018, concealing the identity of the entity that registered the domain name behind an anonymous proxy service provided by Namecheap, a well-known domain name registrar.)

When the website went live, it claimed to be a “collection of fiscally conservative Missourians who believe that the role of government is to provide essential services that enhances the lives, safety and prosperity of local communities as opposed to leveraging taxpayer funds on high-risk endeavors that compete with services already provided by the private sector.”

This “independent” website coincidentally promotes the products and services of Fidelity Communications.

The website appeared to borrow heavily from a similar (failed) campaign to stop municipal broadband in Fort Collins, Col. The most common message of anti-municipal broadband campaigns is ‘taxpayer dollars will be wasted on failing broadband networks that take away from investments in schools, local infrastructure spending, and reducing crime.’ The Stop City Funded Internet campaign hit on all three of these messages, along with what it claims are examples of “failed” public broadband projects. The group’s website links to several “news articles” about municipal broadband that are actually opinion pieces typically written by industry-funded groups and individuals.

“West Plains is already a “Gig City,” with other private internet providers,” the website claims, without referring to Fidelity Communications directly. “In fact, residents already have access to a Gig connection for $80 per month. $80 per month is a price that is in line with many other cities around the country. The City of West Plains should focus its limited taxpayer funding on more pressing priorities, like fixing our roads and bridges, improving public safety and supporting our schools. And spending taxpayer dollars subsidizing a broadband utility would mean fewer resources for other services residents need and enjoy.”

The group invites those who oppose public broadband to register for e-mail updates, which will likely involve a $15 million bond and public referendum that would be needed to build out the city’s fiber to the home network to the entire community.

Isaac Protiva of West Plains found something unusual about the sudden appearance of the group and its website, which had no presence in the community before. For one, the group seemed to have an ample budget to spend on targeted Facebook ads for local residents. The ads promote the group’s website and Facebook page. That isn’t the case for Protiva’s own website: Internet Choice West Plains, which promotes the public broadband effort out of his own pocket.

Protiva also discovered certain elements on the group’s web page directly referenced “Fidelity:”

  • Header image: The main image from the homepage has a file name of “Fidelity_SCFI_Website_V2”
  • Privacy Policy: An image from the Privacy Policy page was hosted, or stored, on a website named “Fidelity.dmwebtest.com”

The website’s attempt to painstakingly avoid any connection to Fidelity Communications makes it a classic industry-sponsored astroturf operation. A private company secretly finances an “independent consumer group” that falls in line with the company’s public policy agenda. Many companies even brazenly reference such groups as evidence that their business views are in line with those of the public. In this case, the website developer accidentally outed the operation.

After Protiva began to publicize his efforts to document Fidelity’s funny business, the company initially responded by trying to hide the evidence. The website owners disabled the Internet Achive’s ability to snapshot the website’s history to scrub evidence of the accidental ties to Fidelity, Protiva claims. He also claims the group is heavily censoring its Facebook page.

Presented with strong evidence of the connection between Stop City Funded Internet and Fidelity Communications, the company finally came clean in a Facebook post:

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