A word to the wise: using public money to build a middle mile broadband network without any customers lined up to sign up is a disaster waiting to happen.

In April, the disaster arrived in the form of a Chapter 7 bankruptcy filing on behalf of the Florida Rural Broadband Alliance (FRBA), which threw away $24 million in federal grants on a network that was so unviable, the contractor that was supposed to run it apparently ran away instead, resulting in confusion and an eventual declaration it was “doomed to fail” anyway.

The sordid story started almost seven years ago when Florida’s Heartland Regional Economic Development Initiative (FHREDI) and Opportunity Florida (OF) — two non-profit organizations dedicated to spurring economic development across rural Florida, discovered federal grant money was available for rural Internet expansion as part of the Obama Administration’s 2009 American Recovery and Reinvestment Act. The two groups fashioned a broadband proposal they were confident would win approval. At the time, rural broadband across northwest and south-central Florida was dismal at best, with only 39% of homes covered. Largely unserved by cable and barely served with DSL from AT&T and other telephone companies, the two groups believed a wireless network would be the best solution for Hardee, DeSoto, Highlands, Okeechobee, Glades, Hendry, Holmes, Washington, Jackson, Gadsden, Calhoun, Liberty, Gulf and Franklin counties.

$24 million spent and nothing to show for it.

Although $24 million is not an insubstantial sum, it was clearly never adequate to build a comprehensive rural broadband network reaching homes and businesses. Instead, the two groups envisioned a “middle mile” network funded by the government, with central offices in Orlando and Tallahassee equipped with microwave dishes and computer servers. Unlike most middle mile networks, the one proposed by the FRBA would rely on a network of microwave towers instead of fiber optics, and would ultimately serve all of its customers over a wireless network.

When complete, the wireless network was supposed to deliver up to 1Gbps capacity throughout the region, relying on leased space on existing cell towers to support microwave links that would bounce signals from one area to the next. Initially promising to serve more than 174,000 homes and 16,400 businesses, the one immediate flaw noticed by those skeptical of the proposal was the lack of a definitive plan to sell Internet service to paying residential and business customers. The brochures suggested existing commercial Internet Service Providers would magically step into that role. Early critics called that “wishful thinking.”

Despite what some felt was an untenable business plan and an incomplete application, the group won its federal “BTOP” grant of $24 million in 2010 and began a very lengthy planning process using well-paid consultants to get the network fully scoped out and built. Within a year, controversy quickly threatened to swamp the project, and a congressional oversight investigation quickly found evidence of wasteful spending and put its funding on hold. That would hardly be the first allegation raised against the FRBA and those overseeing it. By 2013, the Columbia County Observer had run more than a dozen stories reporting irregularities and other problems with the project. Few were noticed more than the report Rapid Systems, Inc., one of the contractors on the project, had filed a $25 million lawsuit replete with soap operatic allegations against FRBA for not being paid for its work.

Rapid Systems CEO, Dustin Jurman and CFO/VP Denise Hamilton. (Image: Columbia County Observer)

Rapid Systems alleged everything from fraud and double-dipping to sexual promiscuity over what it called the “FRBA Fraud Scheme.”

At the heart of the lawsuit were allegations money was being misspent, “to pay inflated salaries to employees, who then fled to South America, and that grant money was used for inflated fees to consulting companies which were owned by FRBA principals.”

Rapid Systems claimed FRBA was very generous paying management consulting fees of $10,000 a month to an entity known as the Government Service Group (GSG), along with a pro rata share (3% of the grant) for a “Grant Compliance Fee” and an additional 13% of the grant as a “Capital Improvement Program Administrative Fee.” And you thought only Comcast and Time Warner Cable were creative conjuring up fees. When added up, it appeared just one consultant — GSG — would walk away with 16% of the entire grant — nearly $4 million in total “management fees” before a single broadband connection would be made.

The lawsuit also claimed the grant money was gorged on by the leadership of both non-profits, one who allegedly relocated to South America the lawsuit states in another aside. The two “were being paid fees in the amount of $8,500 a month to themselves cloaked as administrative and community outreach funds,” according to the lawsuit.

Phillip Dampier: To be a credible supporter of community broadband, it is responsible to call out the disasters so they are not repeated.

Meanwhile, the public eagerly awaiting something better than the non-broadband AT&T and some independent phone companies were supplying in the region couldn’t get answers about the project’s progress. Neither could the media, which reported the business phone number for the FRBA would ring unanswered for hours or days. Those hired to provide community outreach about the broadband project were frequently unable to answer even basic questions about the network or its status, or where the principals involved in the project even met.

By 2014, Opportunity Florida’s Facebook page claimed the network was 90% complete. But the project now decidedly downplayed how many homes and businesses would get service. Instead, the middle mile network promoted itself as an institutional network, dedicated primarily to serving “community anchor institutions:”

The FRBA system provides lower cost, high capacity broadband to Community Anchor Institutions, commonly referred to as “CAIs.” CAIs include local government and public agencies including schools, libraries and hospitals. The NTIA grant was initiated with these unserved or underserved CAIs as the intended target. Most government and public services have moved, or are in the process of moving, to paperless transactions and record-keeping and need the additional broadband and Internet based capabilities. Another benefit of the FRBA system will be capacity to schools and libraries as both those institutions face online and digital mandates.

Commercial ISPs willing to use the network to offer service to individual non-institutional customers were invited to visit an Opportunity Florida webpage (now gone) for more information. There is no evidence any major ISP ever bothered. In fact, even institutional users didn’t seem very interested. We remain unclear if there was ever a single paying customer on the network, despite a report filed by the NFBA with the federal government that claimed through September 30, 2012, the NFBA had 11 anchor institutions, zero residents, and zero businesses hooked up to its network.

A year later, the Columbia County Observer went further and called some of those involved in evangelizing the project “clueless,” and based on the post-mortem of what has happened since, they may be right.

Those directly involved in the project have since displayed a stunning lack of knowledge about its operations and practices, or what has become of the $24 million:

The unfortunate “I see nothing, I hear nothing, I know nothing” brigade answers questions from the media.

• Gina Reynolds, the last executive director of FHREDI, which administered FRBA, claimed the network was running fine when she left in the summer of 2015 to start her own economic development consultancy. She may be among the very few that got out before the project ultimately fell apart. Although FHREDI managed to pay her for her services, it suddenly lacked any resources to pay anyone to replace her after she left;
• Greg Harris, a Highlands County commissioner and FHREDI director, disclosed at a recent county commission meeting FRBA was in Chapter 7 bankruptcy and the group that oversaw it — FHREDI, was being dissolved. But like the phoenix rising from the ashes, some of those involved in FHREDI and FRBA are now associating themselves with a new group called the Florida Heartland Economic Region of Opportunity (FHERO). Says Harris: “We didn’t really know what FHREDI was doing. They were spending most of their opportunity on FRBA and the rural broadband. It got away from what we really needed to focus on.”
• Terry Burroughs, an Okeechobee County commissioner, is FHERO’s chairman. But last year, the ex-telephone company executive was a FHREDI board member. His memory is excellent about where the taxpayer-funded equipment to run the network eventually ended up: in warehouses in Lake Placid and Tallahassee. But his answers were more vague when asked how things went so wrong. Burroughs tried to put substantial distance between himself and the failed wireless broadband network: “When I first got on the board, they were trying to negotiate with a contractor. Gina [Reynolds] was working with that, and it went on and on and on. There was probably a network at some given time, but I don’t think a last mile ever deployed. When I got there, the last mile was dark. … I never knew of a paying customer. They were trying to build a telephone company, and they were doomed to failure.”
• Paul McGehee, business development manager for Glades Electric and a FHERO director, did an even better job explaining he knew nothing, saw nothing, and heard (almost) nothing: “The operator who was contracted to run it as a company stepped away from it,” McGehee said, adding he could not recall the contractor’s name. The flaw in FRBA’s plan, according to McGehee, was that while the grant bought the equipment, there were no federal funds for operations. “No one wanted to step up and operate the network, and there was no way to pay the tower leases… The end product wasn’t a viable sustainable thing.”

Too bad nobody bothered to consider that before spending $24 million of the taxpayers’ money on a non-viable network.

Commissioner Jim Brooks didn’t seem too bothered by the admissions of total failure. After hearing an explanation about the network’s demise and the money spent on it, he told his fellow commissioners he “didn’t have a problem with it.”

A multitude of articles that have documented this disaster (including our own from September 2011) illustrates what can happen when over-enthusiastic consultants overwhelm projects with happy talk not recognized as such by a board that has little or no understanding of the technology, the broadband business, or, in this case, the project itself. The claims and projections consistently simply bore no reality… to reality. What is even more concerning is some of those consultants didn’t work for free, and may have tapped a substantial portion of the total available grant for themselves.

It is also remarkable and disappointing to read candid assessments about a project “doomed to failure” from those with direct knowledge and or involvement only after the liquidator from the federal government turns up. As stewards of public taxpayer money, one expects more than a shrug of the shoulders and a quiet shuffle dance out of FHREDI into a new, reincarnated “rural economic development” initiative. How can we trust the same mistakes won’t be made again?

We remain strong supporters of community broadband, but messes like this hand potent ammunition to corporate-ISP-funded think tanks that use these kinds of failures to sully all public broadband projects. We must call out of the bad ones to be seen as credible supporting the good ones. It also never hurts to learn from others’ mistakes.

Among the biggest reasons this project was a flop (beyond the dubious skills of those in charge of overseeing it) was its size, scope, and technology choice. The biggest challenge to any rural broadband project is always “the last mile” — the point where the connection leaves a regional fiber network and reaches a nearby neighborhood’s utility poles and finally enters your home. It also happens to be the most costly segment of the network, and often the hardest to fund with government subsidies. But it is the one that makes the difference for individual homeowners and businesses who either have broadband or don’t.

Rural Floridians endure more broken promises for better broadband.

Like too many middle mile projects of this type, the story initially fed to the press and supporters is that such networks will somehow alleviate rural broadband problems. Only later do supporters realize they are actually getting an institutional middle mile network that will offer service to hospitals, schools, and public safety buildings — not to homes and businesses. Ordinary citizens cannot access such networks unless a commercial ISP shows interest in leasing it to resell, which is unlikely. The closest most will ever get to experiencing an institutional network they paid for is staring at the fiber cable stretched across the utility poles in front of your house.

FRBA was too ambitious in size and scope, and a credible consultant should have advised those in charge to get credible evidence that a network built with grant money could be sustained without it going forward. If not, scale back the project or don’t apply for the grant.

This project proposed a wireless backbone to power a large regional wireless network. Winning support among anchor institutions was predictably difficult, because many already have existing contracts with commercial telecom companies. With government funding available in many instances, an institution can get full fiber or metro Ethernet service easier than a rural farmer can get 6Mbps DSL from a disinterested phone company.

The evidence shows there were few takers — institutional or otherwise — of what FRBA had to offer. Did the project organizers not see this lack of interest as a problem as the network prepared to launch? After launch, there were almost immediate signs it lacked enough of a customer base to sustain itself. Did the project backers assume the government would bail out the network or dump millions more into it to make it viable to sell to homes and businesses? Such assumptions would have been irresponsible.

There are too many underutilized middle mile or institutional fiber networks already built with taxpayer dollars that remain off-limits to those who paid to build them. Utilizing those networks by extending grant funding for last mile projects would be helpful, as would sufficient subsidies to assure middle mile construction is followed by last mile construction and actual service. We remain big believers in fiber to the home service. Although expensive, such projects are best positioned for success and future viability and can take advantage of the massive amount of dark fiber already laid in many areas. Some cities prefer to run the networks themselves, others contract day-to-day operations out to independent operators. Either would be preferable to a network that took six years to build and fail, without any evidence it could attract, support and sustain enough customers to support anything close to viability.

Cox Communications will push broadband speed upgrades as high as a gigabit to customers over an upgraded network heavy on fiber and much lighter on copper coaxial cable.

In an effort to stay competitive and reduce operational and maintenance costs, Cox will begin major upgrades of its cable plant, removing as much copper and as many signal amplifiers as possible to simplify upkeep and make future upgrades simpler.

Cox chief technology officer Kevin Hart told Light Reading he wants to push fiber optics deeper into Cox’s network, bringing optical fiber closer to the neighborhoods where customers live and work. This will allow Cox to reduce the number of customers sharing the same bandwidth. It also eases Cox’s forthcoming upgrade to DOCSIS 3.1 technology.

“We’re […] taking fiber deeper as a part of our multi-year network transformation plan, working towards a node-plus-zero architecture that allows us to take fiber to the home, and allows us to bring gigabit speeds on demand. And of course we’re aligning around DOCSIS 3.1,” Hart said.

Cox is planning its first rollout of DOCSIS 3.1, which gives cable companies to ability to offer gigabit download speeds, in the fourth quarter of this year. It will choose one of the smaller communities it serves as a test market. If all goes well, Cox will push DOCSIS 3.1 across all of its markets between 2017-2020, likely focusing on Phoenix and San Diego first.

Cox is evaluating DOCSIS 3.1 cable modems from a number of vendors, with Arris and Technicolor likely contenders.

Cox continues to support data caps and usage-based billing in some of its markets and has become one of the stingiest with data allowances:

Customers in Cleveland, Ohio are the unluckiest of all, because they also face an overlimit fee when they exceed their allowance: $10 for each additional 50GB block of data. Some customers in Cleveland’s downtown area have found a loophole around the data cap, however. If they access the Internet over Cox WiFi and Cable WiFi hotspots, it does not count against one’s allowance at this time.

Oman has declared an all-out war on the digital divide, with the country’s broadband provider pledging every citizen will have broadband access within four years, using any means necessary.

With around 50% of the population living in Muscat, the capital of the Arabian Gulf nation, Oman has a pervasive rural broadband problem. The country is hurrying to rid itself of aging copper wire phone infrastructure, replacing it largely with fiber optics, which will reach 80% of the population by 2020. The absolute monarchy that rules Oman has made it clear it considers broadband service an essential utility, as important as electricity and clean water.

Sultan Qaboos bin Said al Said, who has led the nation since 1970, decreed Oman must gradually create a knowledge-based economy, particularly as dependence on fossil fuel revenue is expected to diminish during the 21st century. Sultan Qaboos has presided over the Vision 2020 plan, which seeks to cultivate Oman’s information and communication technology economy.

To accomplish this, every inch of the sultinate must have access to fast broadband speeds.

Talib Al Rashadi, business relations manager at Oman Broadband, made it clear he intends to bring Internet access through fiber optics, wireless service, and even satellite to the remotest sections of the country.

“The speed that we used to have one year ago was not more than 20 or 25Mbps,” said Al Rashidi. “Today, we have speeds of 100 to 150Mbps and even gigabit speeds. This is a very high speed, which enables some other applications, such as smart cities, smart governance and others.”

But that is just the beginning. By 2018, all major population centers of other governorates outside of Muscat will be covered with fiber to the home service. Oman is widely expected to pass the United States and Canada in broadband performance and coverage within the next four years. But it will need to do something about the cost of service to be recognized as a true world leader. An unlimited 60Mbps broadband line costs the equivalent of $156 a month. Although many Omanis’ enjoy a high standard of living, broadband at that price remains expensive.

The long wait for fiber optic broadband in the city of Boston is finally over.

In a surprise announcement with Boston Mayor Martin J. Walsh and Verizon officials, Verizon announced it will commit to at least $300 million in investments over the next six years to bring fiber to the home service to residents of the metro area.

Construction of the fiber-optic network will be completed on a neighborhood-by-neighborhood basis according to customer demand. Initially, the project will begin in Dorchester, West Roxbury and the Dudley Square neighborhood of Roxbury in 2016, followed by Hyde Park, Mattapan, and other areas of Roxbury and Jamaica Plain. The city has also agreed to provide an expedited permitting process to encourage the project.

“Boston is moving faster than our current infrastructure can support, and a modern fiber-optic communications platform will make us a next-level city,” Walsh said in a statement.

“This transformation isn’t just about advanced new fiber-optic technology — it’s about the innovative services this platform will allow people to create and use, today and in the future,” Verizon Wireline Network president Bob Mudge said in a statement.

Bringing FiOS inside the city of Boston will challenge the de facto monopoly Comcast had held for years. The only alternative most residents have is Verizon DSL.

The dramatic turnaround came six months after Verizon adamantly told the Boston City Council Verizon FiOS expansion was dead. Verizon announced it would stop FiOS expansion in 2010 to concentrate on its existing FiOS commitments and better marketing the service to attract more customers.

The sudden end to FiOS expansion six years ago caught many cities by surprise. As a result, in several areas, the fiber service is only available in select suburbs and not city centers.

Verizon’s unions have also pushed for further FiOS expansion, but today’s announcement is expected to have no impact on plans by the Communications Workers of America and the International Brotherhood of Electrical Workers to strike Verizon starting early Wednesday morning.

The partnership also covers Verizon Wireless and its plans to attach wireless equipment to city street lights and utility poles without a lengthy permitting process.

Verizon was also likely offered a much easier time securing a license to offer cable television service, a stumbling block Verizon has experienced in several large cities.

Echoing Google Fiber, Verizon will try to win itself some free marketing and buzz by giving residents a chance to compete to see what neighborhoods get FiOS first. A free online registration process will be used to assess demand and help Verizon prioritize its fiber-optic network construction schedule.

Verizon will also support digital initiatives for the income-challenged, including a $100,000 Digital Equity contribution to the city, offered to support a mobile hotspot lending program at the Boston Public Library enabling Internet access to families on an as-needed basis.

Boston neighborhoods marked “A” will be upgraded to FiOS first, followed by “B” and so on. The upgrade effort is expected to take at least six years.

The worst enemy of some advocacy groups writing guest editorial hit pieces against municipal broadband is: facts.

Raul Lopez is the founder and executive director for Latinos for Tennessee, a 501C advocacy group that reported $0 in assets, $0 in income, and is not required to file a Form 990 with the Internal Revenue Service as of 2014. Lopez claims the group is dedicated to providing “Latinos in Tennessee with information and resources grounded on faith, family and freedom.”

But his views on telecom issues are grounded in AT&T and Comcast’s tiresome and false talking points about publicly owned broadband. His “opinion piece” in the Knoxville News Sentinel was almost entirely fact-free:

It is not the role of the government to use taxpayer resources to compete with private industry. Government is highly inefficient — usually creating an inferior product at a higher price — and is always slower to respond to market changes. Do we really want government providing our Internet service? Government-run health care hasn’t worked so well, so why would we promote government-run Internet?

Phillip Dampier: Corporate talking point nonsense regurgitated by Mr. Lopez isn’t for the good of anyone.

Lopez’s claim that only private providers are good at identifying what customers want falls to pieces when we’re talking about AT&T and Comcast. Public utility EPB was the first to deliver gigabit fiber to the home service in Chattanooga, first to deliver honest everyday pricing, still offers unlimited service without data caps and usage billing that customers despise, and has a customer approval and reliability rating Comcast and AT&T can only dream about.

Do the people of Chattanooga want “the government” (EPB is actually a public utility) to provide Internet service? Apparently so. Last fall, EPB achieved the status of being the #1 telecom provider in Chattanooga, with nearly half of all households EPB serves signed up for at least one EPB service — TV, broadband, or phone service. Comcast used to be #1 until real competition arrived. That “paragon of virtue’s” biggest private sector innovation of late? Rolling out its 300GB usage cap (with overlimit fees) in Chattanooga. That’s the same cap that inspired more than 13,000 Americans to file written complaints with the FCC about Comcast’s broadband pricing practices. EPB advertises no such data caps and has delivered the service residents actually want. Lopez calls that “hurting competition in our state and putting vital services at risk.”

Remarkably, other so-called “small government” advocates (usually well-funded by the telecom industry) immediately began beating a drum for Big Government protectionism to stop EPB by pushing for a state law to ban or restrict publicly owned networks.

Lopez appears to be on board:

Our Legislature considered a bill this session that would repeal a state municipal broadband law that prohibits government-owned networks from expanding across their municipal borders. Thankfully, it failed in the House Business and Utilities Subcommittee, but it will undoubtedly be back again in future legislative sessions. The legislation is troubling because it will harm taxpayers and stifle private-sector competition and innovation.

Or more accurately, it will make sure Comcast and AT&T can ram usage caps and higher prices for worse service down the throats of Tennessee customers.

EPB’s broadband pricing. Higher discounts possible with bundling.

Lopez also plays fast and loose with the truth suggesting the Obama Administration handed EPB a $111.7 million federal grant to compete with Comcast and AT&T. In reality, that grant was for EPB to build a smart grid for its electricity network. That fiber-based grid is estimated to have avoided 124.7 million customer minutes of interruptions by better detection of power faults and better methods of rerouting power to restore service more quickly than in the past.

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

Public utilities can run smart grids and not sell television, broadband, and phone service, leaving that fiber network underutilized. EPB decided it could put that network to good use, and a recent study by University of Tennessee economist Bento Lobo found EPB’s fiber services helped generate between 2,800 and 5,200 new jobs and added $865.3 million to $1.3 billion to the local economy. That translates into $2,832-$3,762 per Hamilton County resident. That’s quite a return on a $111.7 million investment that was originally intended just to help keep the lights on.

So EPB’s presence in Chattanooga has not harmed taxpayers and has not driven either of its two largest competitors out of the city.

Lopez then wanders into an equally ridiculous premise – that minority communities want mobile Internet access, not the fiber to the home service EPB offers:

Not all consumers access the Internet the same way. According to the Pew Research Center, Hispanics and African-Americans are more likely to rely on mobile broadband than traditional wire-line service. Indeed, minority communities are even more likely than the population as a whole to use their smartphones to apply for jobs online.

[…] Additionally, just like people are getting rid of basic at-home telephone service, Americans, especially minorities, are getting rid of at-home broadband. In 2013, 70 percent of Americans had broadband at home. Just two years later, only 67 percent did. The decline was true across almost the entire demographic board, regardless of race, income category, education level or location. Indeed, in 2013, 16 percent of Hispanics said they relied only on their smartphones for Internet access, and by 2015 that figure was up to 23 percent.

That drop in at-home broadband isn’t because fewer Americans have access to wireless broadband, it’s because more are moving to a wireless-only model. The bureaucracy of government has trouble adapting to changes like these, which is why government-owned broadband systems are often technologically out of date before they’re finished.

But Lopez ignores a key finding of Pew’s research:

In some form, cost is the chief reason that non-adopters cite when permitted to identify more than one reason they do not have a home high-speed subscription. Overall, 66% of non-adopters point toward either the monthly service fee or the cost of the computer as a barrier to adoption.

So it isn’t that customers want to exclusively access Internet services over a smartphone, they don’t have much of a choice at the prices providers like Comcast and AT&T charge. Wireless-only broadband is also typically usage capped and so expensive that average families with both wired broadband and a smartphone still do most of their data-intensive usage from home or over Wi-Fi to protect their usage allowance.

EPB runs a true fiber to the home network, Comcast runs a hybrid fiber-coax network, and AT&T mostly relies on a hybrid fiber-copper phone wire network. Comcast and AT&T are technically out of date, not EPB.

Not one of Lopez’s arguments has withstood the scrutiny of checking his claims against the facts, and here is another fact-finding failure on his part:

Top EPB officials argue that residents in Bradley County are clambering for EPB-offered Internet service, but the truth is Bradley County is already served by multiple private Internet service providers. Indeed, statewide only 215,000 Tennesseans, or approximately 4 percent, don’t have broadband access. We must find ways to address the needs of those residents, but that’s not what this bill would do. This bill would promote government providers over private providers, harming taxpayers and consumers along the way.

Outlined section shows Bradley County, Tenn., east of Chattanooga.

The Chattanoogan reported it far differently, talking with residents and local elected officials on the ground in the broadband-challenged county:

The legislation would remove territorial restrictions and provide the clearest path possible for EPB to serve customers and for customers to receive high-speed internet.

State Rep. Dan Howell, the former executive assistant to the county mayor of Bradley County, was in attendance and called broadband a “necessity” as he offered his full support to helping EPB, as did Tennessee State Senator Todd Gardenhire.

“We can finally get something done,” Senator Gardenhire said. “The major carriers, Charter, Comcast and AT&T, have an exclusive right to the area and they haven’t done anything about it.”

So while EPB’s proposed expansion threatened Comcast and AT&T sufficiently to bring out their lobbyists demanding a ban on such expansions in the state legislature, neither company has specific plans to offer service to unserved locations in the area. Only EPB has shown interest in expansion, and without taxpayer funds.

The facts just don’t tell the same story Lopez, AT&T, and Comcast tell and would like you to believe. EPB has demonstrated it is the best provider in Chattanooga, provides service customers want at a fair price, and represents the interests of the community, not Wall Street and investors Comcast and AT&T listen to almost exclusively. Lopez would do a better job for his group’s membership by telling the truth and not redistributing stale, disproven Big Telecom talking points.