John Badal, CEO of Sacred Wind Communications

NBC Universal and American Express today announced Sacred Wind Communications (Albuquerque, N.M.) as the winner and most inspiring small business in the “Shine A Light” program, determined by public vote.

Sacred Wind Communications will receive $50,000 in grant money and $50,000 in marketing support from American Express, and will be featured on MSNBC’s small business show, “Your Business.”

John Badal, described by the Shine A Light Foundation as an entrepreneur, founded Sacred Wind to provide service across the largely ignored Navajo Reservation in New Mexico.  Fewer than 40% of the homes had access to even basic telephone service, provided by Qwest on what the foundation describes as a “dilapidated telephone system.”

Badal, along with a few others, thought Qwest’s turtle-like-speed to provide basic telephone service was not acceptable.

Badal should know — he was the former president of Qwest New Mexico from 2000-2004, overseeing that phone network.

During his involvement with Qwest, the frustration to wire the economically challenged Native American community in his area was daunting.  He told Fierce Broadband Wireless that laying copper cable throughout a rugged, rural desert area to reach a small number of customers who couldn’t afford to pay much for service wasn’t economically feasible for Qwest.

In four years, Qwest only managed to bring phone service to 42 new customers–out of thousands. “It took us two years to get through the rights of way process. Six of those homes had moved by the time the process was completed. It would have taken 45 years to reach 70 percent of the homes in our territory,” Badal said. “We needed a different technology altogether. We needed to go wireless.”

Sacred Wind's service areas (click to enlarge)

Badal decided to build a for-profit telecommunications company with a business plan that would depend on funding from the government.

“The only way any company could hope to provide service to the Navajo Nation is with the help of the Federal Communications Commission’s Universal Services Fund,” Badal told New Mexico Business Weekly in 2005.

“We can make this affordable, where Qwest cannot,” says Badal, who expects half of the cost to be picked up by government funding. “That is a necessary part of this equation. Without that, the Navajo cannot be served.”

Virtually every American pays into the Universal Services Fund through a charge levied on telephone bills.  The funding underwrites the expense of providing rural America with access to basic telecommunications services.

In 2004, the same year Badal left Qwest, the company agreed to sell its telephone business on the Navajo Reservation to Badal’s new company.  Sacred Wind, which the company says “evokes a sense of connection between what we do – to send communications over the air – with a larger-than-life purpose for starting this business,” launched service two years later in 2006.

Sacred Wind uses recently developed wireless technology to provide phone service to 2,700+ customers, using both point-to-point wireless and fixed WiMAX to reach as many customers as possible in the sparsely populated desert region.  It’s a challenging proposition for any company, considering most of their service area has less than one home per square mile.  Even when finished constructing their network, Badal estimates there will only be two or three homes served per square mile.

One third of Sacred Wind’s customers live in Navajo or federal government sponsored public housing, another third live in small clusters of a half dozen homes separated by several miles, and the last third live at least a half mile from the nearest neighbor.  Most are economically disadvantaged and have household incomes below $15,000 a year — 57.9% living below the poverty level.  More than two-thirds of reservation homes have no telephone, with some driving up to 30 miles to reach the nearest pay phone.  Several lack access to electricity, which makes wireless phone service and broadband even more challenging.  Sacred Wind is exploring solar options to serve these unpowered homes.

The benefits achieved from Sacred Wind’s focus on their service area are obvious – they know the landscape, the culture, the economics, and the people.  The company will work on problems that a large multi-state carrier like Qwest would not.  Technicians trying to reach one customer five miles away from the nearest wireless base station could not get service until a technician experimented with bouncing the three gigahertz wireless signal off a granite cliff face to extend coverage, which worked.

A company specializing in providing service to rural Native Americans, that also has a non-profit arm dedicated to computer training, provides scholarships, and e-commerce opportunities for Native Americans, is a natural for recognition, and the public responded, calling Sacred Wind’s mission inspiring.

“It’s a real honor to be voted most inspiring small business in the Shine A Light program,” Badal said. “It’s so exciting and rewarding to start your own business and be able to make an impact on the community. Through the support we will receive from American Express as winner of this program, we will be able to further extend our commitment to serving the Navajo people with advanced technology and educational resources.”

Since August, people across the country have nominated thousands of small businesses for the “Shine A Light” program. Three finalists were ultimately selected with the help of host and entrepreneur Ellen DeGeneres, fashion designer and entrepreneur Diane von Furstenberg and MSNBC’s small business expert and host JJ Ramberg.

[flv width=”480″ height=”320”]http://www.phillipdampier.com/video/sacred wind intro.flv[/flv]

A one minute introduction to Sacred Wind Communications

Sacred Wind Broadband Speed/Pricing

In addition to telephone service, Sacred Wind also provides Internet access to its customers, and here is where the story becomes considerably less inspiring.

Sacred Wind’s “broadband” service for most affordable tiers fails to qualify as “broadband” at all, using the FCC standard of 768kbps.  Pricing is exorbitant and speeds are slow.

It self-describes its dial-up option as “stable, fast, and affordable.”  The “affordable” claim may be true when comparing pricing with the first broadband tier that actually meets the minimum definition of broadband – $49.95 a month for 768kbps service.  Paying $79.95 a month will bring you their maximum speed offering — just 3Mbps.

The company also sells customers annual contracts to avoid the $99 installation and $65 equipment fees.

Still, for those who have never had telephone service, much less Internet access, it’s considered by many residents to be a good beginning.  The company is amenable to the idea of raising those speeds when technically and financially feasible.

[flv width=”480″ height=”320″]http://www.phillipdampier.com/video/Fujitsu Sacred Wind.mp4[/flv]

Fujitsu showcases Sacred Wind Communications and how it approached the technological challenges involved in providing service to the Navajo Reservation [8 minutes]

Unfortunately, like its bigger telephone brethren, Sacred Wind is not entirely free from the telephone industry politics that often lobbies for anti-consumer policies.  A concerning document on Sacred Wind’s website promotes a questionable legislative agenda, including support of legislation that would permit providers to “create fair compensation in network use by identifying traffic on our networks,” which is a Net Neutrality no-no if it applies to their broadband network.  Another mysterious bullet point, not well explained, objects to “video programming and broadcasting practices that make it difficult to provide an affordable product to our customers.” That could apply to wireless frequency allocations or traffic on their broadband network — it’s not well defined.

While the FCC works on its goal of providing broadband access to underserved Americans, actual case studies illustrating “successes” like Sacred Wind that only manage to bring 3Mbps service to rural areas underline the need for Universal Services Fund reform.  Dedicating additional economic assistance to construct considerably more advanced networks to meet the needs of an increasingly high bandwidth Internet is essential to correct the urban-rural digital divide.  The original purpose of the USF to guarantee basic phone service in rural areas was a noble idea a decade ago, but that was then and this is now.

As the pile of money in the USF continues to grow from Voice Over IP and mobile phone surcharges, it was only a matter of time before waste, fraud, and abuse also turned up.  The administrators of the USF have often wasted considerable amounts of that money on questionable projects in decidedly un-rural areas.  Redirecting, reforming, and broadening USF resources to cover broadband deployment in areas like the Navajo Reservation may be one of the only ways to build sustainable and equitable broadband access networks that are scalable and affordable, even for the most financially-challenged communities.  Providing 256kbps service for $30 a month doesn’t come close to cutting it in poverty-stricken communities.

Additional video coverage of Sacred Wind can be found below the jump.

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Facebook and Twitter have officially signed up for the Net Neutrality battle on the side of consumers demanding a free and open Internet.

Facebook co-founder Mark Zuckerberg and Twitter’s Evan Williams added their signatures to a letter expected to reach Federal Communications Commission Chairman Julius Genachowski this morning. The letter, signed by 24 high profile Internet executives, calls on the FCC to continue efforts to “begin a process to adopt rules that preserve an open Internet.”

Both companies have not been major players in the political debate surrounding Net Neutrality until now.

The correspondence comes after two weeks of sustained attacks on Net Neutrality from several dozen Republicans on Capitol Hill and intense lobbying from telecommunications companies to drop the issue.

One signer, Echostar CEO Charlie Ergen, is no stranger to pro-consumer telecommunications legislation.  Prior to the launch of DISH Network, Ergen sold satellite dish equipment to consumers and was an active participant in the battle to pass the 1992 Cable Act, which mandated fair and open access to cable programming networks making DirecTV and DISH Network possible.  Ergen’s company owns Sling Media, manufacturer of the Slingbox, a device that streams television programming over the Internet for private use.  The Slingbox has been banned from certain wireless mobile networks, a prohibition that would end should Net Neutrality rules take hold.

… Continue Reading

John Boehner (R-Ohio)

Eighteen Republican senators joined twenty House Republicans in a letter writing campaign to get FCC Chairman Julius Genachowski to drop Net Neutrality from the agenda at the Federal Communications Commission, calling the policy “counterproductive,” and would create a “chilling effect” on broadband investment in the future.

Many GOP members signing the latest round of letters also took issue with Net Neutrality a few years ago when it was a hot topic in Washington.

After Sen. Kay Bailey Hutchison’s aborted attempt to de-fund FCC enforcement of Net Neutrality regulations, the past month has seen a full frontal assault on Net Neutrality by many Republicans.  Minority Leader John Boehner (Ohio) and Republican Whip Eric Cantor (Virginia) co-authored a letter to President Barack Obama suggesting he intervene to drop Net Neutrality policies and instead focus on the national broadband plan.

Any regulations that would prohibit Internet service providers from managing their networks, they said, would discourage those companies from investing the billions of dollars needed to expand broadband access.

“We believe that network neutrality regulations would actually thwart further broadband investment and availability, and that a well-reasoned broadband plan would confirm our view. So to hastily begin the process of adopting network neutrality rules months before issuing such a plan implies that politics are driving the FCC’s decision-making process.”

Ranking Member of the House Communications, Technology & the Internet Subcommittee, Rep. Chris Stearns of Florida fired off a letter to Genachowski echoing the same sentiment:

Sam Brownback (R-Kansas)

“At first glance, net neutrality regulations may appear reasonable and harmless, but, a deeper examination reveals that net neutrality is neither reasonable nor harmless. These mandates would harm consumers, reduce competition, and discourage new investment and innovation at a time of tremendous technological growth.”

“The FCC bears the responsibility to prove a market failure, especially since its 2002, 2005, 2006, and 2007 decisions on cable modem service, digital subscriber line service, broadband over power line service, and wireless broadband service were predicated on the notion that the broadband market nationwide is competitive and that regulation is unwarranted,” Stearns wrote.

Of course, during the years he cites, the Republicans enjoyed a majority on the Commission that made that finding.

Stearns and his colleagues suggest that the FCC could only intervene if substantial evidence existed the broadband marketplace was collapsing.

The Senate Republicans, led by Senator Sam Brownback of Kansas and Chuck Grassley of Iowa, questioned the need to adopt new regulation, suggesting only two abusive incidents have occurred in the last five years that would have been prohibited by the regulations.

“It appears your decision to create new commission rules is outcome-driven. Your promulgating network neutrality rules seems to emanate from a fear that there may be some problems related to openness in ‘the future.’  Our view is that it is harmful for the commission to impose industry-wide rules based upon speculation about what may occur in the future.”

“Such a major policy shift should be contemplated with only all of the FCC Commissioners involved,” they wrote. “To do it with just one party reduces the confidence the public and Congress has in the proposal.”

Pro Net Neutrality groups had none of it:

Gigi Sohn, Public Knowledge:

It is truly unfortunate that the House Republican leadership has put itself in the position of trying to slow down the greatest economic engine for job creativity and innovation ever created. Under the neutral, non-discriminatory Internet, thousands and thousands of new businesses were created and millions of dollars were invested.

The latest House Republican letter asking for the FCC to slow action on preserving an open, non-discriminatory Internet is simply another attempt at a delaying tactic by those who favor big telecom and cable companies over competition and innovation.

The letter also has fatal flaws, such as when it asserts that Net Neutrality would make investment more difficult, or that Net Neutrality would result in lower speeds and higher prices for consumers. Both of those claims are false. Billions of dollars were invested in the Internet ecosystem, not only by carriers, but by companies doing business on the Internet, and by consumers subscribing to Internet services. That is the investment we seek to expand. There is nothing in banning discrimination on the basis of source, ownership or destination of bits would create lower speeds or raise prices. Those are simply distractions.

Net Neutrality is about big telecom, cable and wireless companies (which are often the same) picking winners and losers on the Internet. It has nothing to do with online services, consumer electronics or applications. The FCC should proceed to guarantee the freedom of the Internet that all consumers and businesses deserve.

Markham Erickson, Open Internet Coalition:

This issue has been under debate since 2005 when the Supreme Court issued its Brand X ruling. The previous Republican-led FCC engaged in ad-hoc enforcement in the Comcast case. To suggest this is a radical policy u-turn is simply incorrect.

The Internet existed for more than 25 years under a neutral regime. During that time, a national data network was built out by telcos and cable providers, despite a neutrality requirement. To suggest that a return to that status quo threatens broadband investment is not borne out by experience. In fact, it is critical to investment that this issue be addressed sooner rather than later — further delay in addressing this core policy issue will harm investment flows into new and innovative technologies.

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"I think these are radical consumer groups," says Larry Kudlow

CNBC host Larry Kudlow engaged in on-air lovemaking with the wireless phone industry in a shameless segment decrying Net Neutrality.  His guest, Chris Guttman-McCabe, vice president of regulatory affairs at CTIA – The Wireless Association, was strictly in friendly territory as Kudlow tossed him softballs.  It was an industry talking point Blitzkrieg on consumers from start to finish:

Kudlow: Potential government control of the Internet: is Net Neutrality going to limit investment and innovation and even customer service?

Reality: Saying Net Neutrality is “government control” of the Internet is like saying safety inspections are “government control” of the food industry.  Without Net Neutrality, big cable and phone company providers will be the ones controlling the Internet.  Will Net Neutrality really limit investment, or continue the Internet success story that investment and innovation has already produced before providers demanded you pay more.  As for impacting customer service, that’s about as valid as claiming Net Neutrality will cause snakes to hide in your bed.

Guttman-McCabe: It’s a perfect storm of usage.  If we’re forced to deliver every bit all the time you’re going to lead to some form of commoditization of the product.

Reality: Gasp!  We can’t have that!  For those who may miss the meaning, commoditization refers to a perfect storm of competition, with providers generally competing on price because their products are of similar scope and quality.  Providers cannot extract higher pricing in such environments, because consumers won’t pay.  In the wireless industry’s eyes, Net Neutrality forces them to actually deliver the service they promise in their marketing materials.  You, as a consumer, get to choose the applications and services you wish to use and pay accordingly.  The market they want is to closely control and manage the content you use on their networks, blocking or impeding “unauthorized” services that don’t have a relationship with, or approval from, your wireless phone company.  Consumers actually want every bit delivered all the time, and providers are throwing a hissyfit because of it.

Kudlow: If you’re forced to deliver every bit all the time and meet the demands of these radical consumer groups, what happens to the profits of the deliverers?  The profits that are supposed to go into the investments to expand the broadband delivery?

Reality: Radical consumer groups?  Attacking real consumer groups that represent what consumers actually want, while providers stomp their feet when forced to deliver, doesn’t solve “the problem.”  And what of the profits?  That’s a good question Guttman-McCabe isn’t prepared to fully answer.  The enormously profitable broadband industry, in general, earns billions and invests a small percentage of that back into expanding their networks.  As our readers have learned on the wired broadband side, the logical assumption that providers will at least maintain a level percentage of revenue going back into network infrastructure isn’t always the case.  Instead, some providers raise prices and limit service, blaming “increased demand.”  Kudlow could ask providers what percentage of their revenues go into network expansion, and whether that has changed in the last ten years.  Of course he doesn’t.

Kudlow (to Guttman-McCabe): …obviously you’re not from the telephone company or the cable company, what’s your meat in the game here, who are you representing?

Reality: The CTIA has among its members AT&T, Cox, and Verizon.  Guttman-McCabe’s meat is paid for by all three, and many other industry members who belong to the group.  Who does CTIA not represent?  Consumers.

Guttman-McCabe: (Here come the shiny keys of distraction and misinformation, folks) I posit a question.  Are they (Google) allowed to cache their content closer to the customer to provide a better service under these Net Neutrality rules?

What about this pen -- will it be allowed under the new Net Neutrality rules?

Reality: Yes!  Having redundant and strategically placed content delivery servers is a widespread, industry-accepted practice not harmed by Net Neutrality.  Akamai delivers vast quantities of video content from regionally placed servers.  Cable operators will be able to place servers to deliver TV Everywhere to their customers wherever they like, if they so choose.  Net Neutrality does not compel web providers to run everything from a central server farm.  It would, however, tell broadband providers they cannot identify and artificially slow that content delivery down just because they don’t like it on their networks.  Big difference.

Guttman-McCabe: Is the Amazon Kindle, which is basically a wireless (single purpose) device — is that allowed to exist under the new Net Neutrality rules?  I think these are some of the questions that will come out as the Commission considers these new rules.

Reality: Yes!  Mr. Boots, your cat, will also be allowed to exist under Net Neutrality rules if he happens to jump on your keyboard while you access web pages.  Your wireless picture frame, which receives digital images to display on your bookcase will also be allowed to exist even if it cannot be used to play World of Warcraft.  I’m certain Guttman-McCabe and his friends will concern troll their way through the debate by throwing up lots of non-germane “concerns and questions” that they know have no relationship to the matter at hand.  They are well paid to do so.

Kudlow, of course, doesn’t challenge his guest on any of these issues, because he seems in perfect agreement with the industry position.  The shameless segment wraps up with the ominous notice that Net Neutrality has a long way to go and the CTIA has a “lot of educating to do.”  I’ll bet.

Larry Kudlow is the host of CNBC’s The Kudlow Report (M-F, 7pm/ET).

[flv width=”400″ height=”300″]http://www.phillipdampier.com/video/CNBC Kudlow Net Neutrality 2009-09-21.flv[/flv]

Larry Kudlow interviews Chris Guttman-McCabe, vice president of regulatory affairs at CTIA – The Wireless Association on Net Neutrality (9/21/09) (4 minutes)

Verizon Wireless and Google this morning surprised the wireless mobile industry when it went far beyond a much-anticipated agreement between Verizon and Google to market smartphones using Google’s Android operating system, and instead seemed to embrace Net Neutrality for unrestricted use of online services on Verizon Wireless’ network.  Is this a consumer-friendly about face or a strategic effort to take the wind out of the sails pushing for formal adoption of Network Neutrality regulations?

Today’s announcement represents a complete reversal for Verizon Wireless, which announced opposition for wireless Net Neutrality in September.  Tom Tauke, Verizon’s executive vice president of regulatory affairs said then: “We believe that when the FCC reviews the record and looks at the facts, it will be clear that there is no current problem which justifies the risk of imposing a new set of regulations that will limit consumer choices and affect content providers, application developers, device manufacturers and network builders.”

Google and Verizon have been on opposite sides of the Net Neutrality debate for several years now.  The phone company spends millions of dollars lobbying Washington to keep Net Neutrality off its back, in direct opposition to Google’s strong advocacy for the consumer-friendly open network rules.  One might anticipate a joint webcast between the two companies would be reserved in tone at best.

It wasn’t.

In fact, Verizon Wireless CEO Lowell McAdam and Google Chairman and CEO Eric Schmidt fell all over themselves praising one another, and attacked Verizon’s nemesis AT&T.

McAdam took a shot at AT&T for the recent controversy over their decision to block Google Voice and other Voice Over IP services from working with AT&T’s wireless network.

“Either you have an open device or not. This will be open,” McAdam said.

Schmidt praised Verizon Wireless’ nationwide mobile broadband network, calling it “by far the best in the United States.”

AT&T understood the implication of the partnership between its biggest rival and the super-sized Google and announced it was reversing its decision to block Voice Over IP applications on its network.

Ralph de la Vega, chief executive of AT&T’s consumer wireless unit, said “the iPhone is an innovative device that dramatically changed the game in wireless when it was introduced just two years ago.  Today’s decision was made after evaluating our customers’ expectations and use of the device compared to dozens of others we offer.”

That’s a remarkable statement coming from a company that has routinely ignored the wishes and expectations of its iPhone customers for less expensive, higher quality, less restrictive service.

AT&T’s reversal was praised by FCC Chairman Julius Genachowski, who is pushing for adoption of Net Neutrality as part of FCC broadband policy.

“When AT&T indicated, in response to the FCC’s inquiry, that it would take another look at permitting VoIP on its 3G network I was encouraged,” Genachowski said. “I commend AT&T’s decision to open its network to VoIP. Opening wireless services to greater consumer choice will drive investment and innovation in the mobile marketplace.”

Have AT&T and Verizon suddenly realized taking a customer-friendly position of Net Neutrality is better for their corporate image?

Perhaps, but one might also consider the reversals to be part of a strategic effort to demonstrate a lack of need for Net Neutrality rules in a ‘remarkably open and free competitive wireless marketplace.’  Expect to see that line or something akin to it coming from the anti-Net Neutrality lobbying campaign within hours of today’s events.

AT&T has also spent millions on lobbying efforts in Washington to keep Net Neutrality and other telecommunications legislation at bay.  The prospect of a sudden role reversal for two of the biggest spenders on influencing public policy would be remarkable, if it actually happened for consumers’ sake.

Verizon Wireless & Google Joint Webcast — October 6, 2009 (18 minutes)
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