The sequel to this story could be written from a jail cell.

The guilty pleas just keep on coming in a two-year old prosecution of a wireless broadband scheme that never delivered much service, but ripped off taxpayers to the tune of more than two million dollars.  This week, the president of Mountain State College, who has been employed there for more than 35 years, owned up to hiding facts from prosecutors in his role as chairman of the board of the now-defunct Sequelle Communications Alliance, Inc.

Alan Michael McPeek of Parkersburg, 63, plead guilty Wednesday to obstruction of justice charges in federal court, admitting he misled a criminal investigation reviewing fraud allegations against the company.

Sequelle, a publicly funded project to establish wireless Internet service in the mid-Ohio Valley region, received a $3.295 million loan in 2002 from the U.S. Department of Agriculture, a $600,000 grant from West Virginia’s Development Office and another $400,000 in loans from the Mid-Ohio Valley Regional Council and a bank.

For that funding windfall, the mid-Ohio Valley got several towers ready for wireless antennas, a website that didn’t get updated much beyond the fall of 2000, some software to administer the project, and nothing else.

Instead, federal prosecutors charged some of Sequelle’s officers and several Ohio-based subcontractors of laundering loan and grant funds as seed money and salaries for a new for-profit venture designed to market an “Internet in a box” concept to other rural areas seeking wireless Internet service.

Prosecutors particularly focused on the USDA loan, which required the money “to be used solely for the project specifically described in the application to furnish or improve broadband services in rural areas … in the states of Ohio and West Virginia.”

Like many federal grants and loans, this one prohibited using the money to pay salaries, utilities, and basic office expenses.  Prosecutors would later learn Sequelle’s principal founder and former CEO Heidi Ditchendorf Caroline Laughery laundered loan money through a sub-contractor who kicked back at least $250,000 she used as a salary. McPeek’s guilty plea came in part because he knew about it.

Another grant from Ohio was paid on the promise Sequelle would provide at least 45 high paying jobs within three years.  That never happened.

Laughery

Worst of all, many of the grant and loan applications asked whether any officer in the company had been convicted of a felony or was a defendant in any criminal case.  Laughery answered no to both.  Had government officials verified that information they would have discovered Laughery was previously convicted in 1987 on two counts of felony wire fraud — based on her embezzlement of more than $130,000 of customer funds and securities during her employment at Merrill Lynch.

Laughery didn’t want to bring up those bad memories, so she left her Merrill Lynch years off Sequelle’s website documenting her prior experience.

Prosecutors have been successful in bringing those responsible for this caper to justice:

• Laughery was sentenced in April to 18 months in prison and ordered to pay $850,000 in restitution.
• Sub-contractor R. Scott Truslow plead guilty to conspiring to commit money laundering and is now spending six months under home confinement and ordered to pay nearly $550,000 in restitution.
• Charges are still pending against a second sub-contractor.

McPeek faces up to five years in prison when sentenced in October.  He was released on a $10,000 unsecured bond pending sentencing.

Laughery’s attorney, Michael Callaghan, claimed in 2008 that the project failed because technology marched ahead of the project.

“All the money that the government is alleging was stolen actually went into the development of Internet (infrastructure),” he told a West Virginia reporter. “My client worked for a year-and-a-half without pay because she believed in this project. The concept was great, but the technology developed faster than the project did. Technology moves fast. Technology businesses fail every day.”

Tapdancing your way around money laundering charges can move fast as well.

[flv]http://www.phillipdampier.com/video/WTAP Parkersburg McPeek Enters Plea in Sequelle Investigation 6-30-10.flv[/flv]

WTAP-TV Parkersburg has this report on McPeek’s plea.  (1 minute)

Hulu has announced a new premium service that will deliver entire seasons of network TV shows at 720p high definition resolution for $9.99 per month (plus applicable taxes).

The concept of Hulu Plus has been around for months now, as Hulu’s owners (Disney, NBC Universal, News Corp and Providence Equity Partners) contemplate the increasing cost of delivering video to millions of Americans during an advertising industry crisis.  Advertising revenue no longer covers the costs, so Hulu hopes paying subscribers will.

The free version of Hulu isn’t going anywhere — in fact the service has just signed agreements with CBS and Viacom to bring shows that formerly were seen on Joost over to Hulu.  Time Warner (the entertainment company, not the cable operator) is also bringing some of its shows to Hulu.

But free viewers will continue to find access to the latest shows limited, typically to the last four to five episodes.  If you want to catch up on an entire season, you’ll need to pony up ten bucks.

The prospect of watching nearly every network show from ABC, CBS, Fox, and NBC over your home computer, television or other devices including the iPhone, iPod Touch, iPad, PlayStation 3, Xbox 360, and Blu-Ray players from Samsung, Sony, and Vizio would give you more than 3,000 viewing options to choose from.  But before getting too excited, there are some downsides to Hulu Plus:

1. You’re still going to watch commercials. Just like basic cable, you are going to pay to watch commercials on Hulu Plus.  That will be a deal-breaker for many who believe if you pay a monthly fee for it, you shouldn’t have to watch advertising.  Netflix offers online viewing as part of its $9.99 monthly service and there is no advertising.
2. You still have to wait to watch shows. There is no live streaming of network shows.  You’ll have to wait until the next day like everyone else on Hulu to catch the latest episode.
3. Don’t you dare watch on your smartphone. With Internet Overcharging schemes in place at AT&T and presumably on the way at Verizon, nothing eats your allowance faster than online video.  Paying $10 a month for Hulu Plus will be dirt cheap compared to the overlimit fees you’ll pay if you exceed your usage allowance.

The cable industry still thinks it could have a better product in the end.  TV Everywhere’s variations from Comcast and other cable operators are provided free of charge to existing cable subscribers (although the advertising load may end up being greater).  Many cable network shows are better received than some of the swill served up by the networks, and cable could be free to provide season passes right from the outset.

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An introduction to Hulu Plus. (2 minutes)

Don't touch this -- Bridging the gap (circled) can drive your iPhone's signal bars into a ditch

The long lines are over.  The hype that drove some Apple fanboys to wait hours in line, even with an advance reservation for the phone, has died down.  The people in the office you irritated bragging about your conquest have moved on with their lives.  For a growing number of early iPhone 4 buyers, that exhilaration is now being replaced with a realization: you are a beta tester for a new product that has some nagging design problems and defects.  And you are still stuck with AT&T, the nation’s least favorite wireless carrier.  Only now, it’s not just AT&T dropping your calls — it’s the iPhone itself.

A growing number of buyers have discovered a flaw so obvious even the most rudimentary testing, even from the drunk guy who left his phone in that California bar, should have picked up — if you hold the phone in your hand a certain way to make a call, the iPhone has a tendency to drop it.  That problem has grown so significant, Apple had to lock the message thread discussing the matter because it was crashing the browsers of support forum visitors.

You didn’t buy the iPhone to actually make calls, did you?

Sorting out whether the dropped calls are Apple’s fault or just business as usual at AT&T is now underway.

Apple’s answer to this particular problem is to turn the potential marketing crisis into an opportunity — by selling you a $30 “bumper”-case to keep your hands from actually touching the phone’s side, which is part of the antenna system.  The case’s odd design, which only covers the sides of the phone, has some speculating Apple knew about this problem all along and designed a case to mitigate the problem, and pocket the proceeds.

A leaked memo from Apple includes talking points to calm customers who have concerns Apple thinks are non-issues.  Apple even insists its representatives take a moment to summon up the proper “tone” when dealing with customers:

1. Keep all of the positioning statements in the BN handy – your tone when delivering this information is important.

• The iPhone 4’s wireless performance is the best we have ever shipped. Our testing shows that iPhone 4’s overall antenna performance is better than iPhone 3GS.
• Gripping almost any mobile phone in certain places will reduce its reception. This is true of the iPhone 4, the iPhone 3GS, and many other phones we have tested. It is a fact of life in the wireless world.
• If you are experiencing this on your iPhone 3GS, avoid covering the bottom-right side with your hand.
• If you are experiencing this on your iPhone 4, avoid covering the black strip in the lower-left corner of the metal band.
• The use of a case or Bumper that is made out of rubber or plastic may improve wireless performance by keeping your hand from directly covering these areas.

2. Do not perform warranty service. Use the positioning above for any customer questions or concerns.

3. Don’t forget YOU STILL NEED to probe and troubleshoot. If a customer calls about their reception while the phone is sitting on a table (not being held) it is not the metal band.

4. ONLY escalate if the issue exists when the phone is not held AND you cannot resolve it.

5. We ARE NOT appeasing customers with free bumpers – DON’T promise a free bumper to customers.

The yellow blotch problem

This week, even more problems are showing up:

• The Glitchy Proximity Sensor: PC World covers the iPhone’s sudden activation of the menu screen while talking on the phone.  With one’s face next to the screen, customers are reporting calls suddenly switched to speakerphone mode, muted, or throwing blasts of touchtones at callers.
• AT&T “Still Sucks”: Customers in San Francisco and Los Angeles, among other large cities, report “Bermuda Triangle” reception zones where calls regularly drop and cannot be made.  Randomly dropped calls are also still a major problem, and some customers believe the latest iPhone is more prone to showing “no service” than earlier models.
• Yellow Screen Blotches: Yellow-tinted blotches are visible on several owners’ iPhone screens.  Apple claims this is residue from the manufacturing process to bind the glass to the screen and will disappear with use as the adhesive fully dries.  Gizmodo reports these phones were likely rushed through manufacturing and shipped in time for the iPhone release day.  While some customers confirm the blotches do seem to be fading, others have been instructed by Apple to return yellow-tinged phones for replacement.
• Easily-Scratchable: Despite the hype about breakthrough glass technology making the phone more scratch resistant than ever, folks on Engadget found it was quite easy to tear up the phone when placed in a pocket with keys or other scratchy things.

Engadget received photos of scratched iPods hours after being unboxed (click to enlarge)

A Sacramento law firm, Kershaw, Cutter & Ratinoff has already started looking for customers experiencing poor reception quality and dropped calls, presumably to consider a class action lawsuit against Apple, AT&T, or both.  As of now, the law firm has received more than 400 complaints.

The signal loss problem has the prospect of becoming the most notorious — for both Apple and AT&T — especially when it is easily reproduced by reporters on the local evening news (see below).  But Steve Jobs thinks the complaints are overblown, writing back to one complainer, “Non issue. Just avoid holding it in that way.”

Despite that,  Gizmodo launched a petition urging Apple to give free cases to all iPhone 4 owners.

Every product launch has its bugs. We’ve seen a lot this time. Many issues, like the yellow screens, will go away as manufacturing fine tunes and adjusts to solve the problems. But the antenna issue is a fundamental one, a design flaw, that won’t go away as easily without adjusting the product in a deeper way.

So with all these great things, it’s terrible that buyers should have this excellent phone ruined for them because of a single, but serious, design problem. And even worse that Apple should suggest users use their phones in unnatural ways or shell out $30—for what is essentially a double wide livestrong armband—to fix it.

According to some Apple-watchers, the company plans a software fix, suggesting the signal meter displayed on the phone is the real issue, not the actual quality of reception from AT&T.  If the software fix only re-calibrates the signal meter and consumers still see dropped calls and reception problems, additional complaints are likely.

After a week of made-for-TV-lines outside of Apple stores across the country, reality has set in and several stations are now turning their attention to the iPhone 4’s pesky problems.

We have a number of videos for you to watch below the jump!

… Continue Reading

Seoul, the capital city of the Republic of Korea

Seoul, the capital of the Republic of Korea, is the world’s most wired city with some 95 percent of residents enthusiastic users of the world’s fastest broadband networks.

While Americans cope with a broadband duopoly that holds us back, the 100Mbps world of broadband has already arrived in Korea, at prices a fraction of what Americans pay for service — with no limits.

A full 95 percent of households in South Korea have broadband internet access – the highest in the world. Singapore is second to South Korea, with broadband connection in 88 percent of homes. The U.S. ranks 20th, with broadband connection in 60 percent of homes.

Although densely populated cities in Korea, where residents live in multi-dwelling units, makes wiring fiber optic broadband easy, that’s not the only reason why South Korea is so far ahead of the United States.

Koreans consider broadband an essential part of life, a representation of their sense of freedom, as well as a tool to help Korea’s development in a global economy.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Seoul The World’s Most Wired City 6-25-10.mp4[/flv]

ABC’s ‘Good Morning America’ visited Seoul to learn how the world’s most wired city has been transformed by universal, inexpensive, super-fast broadband.  (5 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Why So Wired South Korea 6-25-10.mp4[/flv]

ABC’s Juju Chang sat down for an interview with Yongmann Park, chairman of Doosan Corporation, one of Korea’s successful business conglomerates.  (2 minutes)

A $24 million federal grant proposal to install 600 miles of fiber optic cable across the southern tier of New York has advanced to the “Due Diligence Phase” of federal review, making it a serious contender for approval.

The application for the “middle mile” project was submitted jointly by the Southern Tier East and Southern Tier Central Planning Development Boards to create a fiber-based backbone to facilitate so-called “last mile” projects which deliver connections directly to consumers and businesses.  If built, the project will make connectivity available to all-comers, from wireless providers trying to reach the most rural homes to cable and telephone-based broadband providers delivering enhanced speeds and service.

The Shequaga Falls, visible from W. Main Street in Montour Falls, exemplifies the terrain of many Southern Tier communities in New York.

Broome, Delaware, Otsego, Chemung, Steuben and Schuyler counties would be served by the fiber network if constructed.

The southern tier of New York, mostly defined as west to Lake Erie and east to Binghamton, is particularly lacking in broadband, in part because of very difficult terrain.  Steep sloping hills rising 1,000 feet or more, created from glacial movements, combine with level hilltops representative of the Appalachian Plateau.  In most of these areas, fields and pastures crown the high points while cropland and communities locate on the level valley floor.  Getting broadband to residents and farms involves winding cables around the hills through communities like Bath, Corning, Elmira, Hornell, Watkins Glen-Montour Falls, and Wayland.  Even larger communities like Binghamton and Ithaca have plenty of landscape to navigate.

Inside immediate town and city centers, broadband is usually provided by Time Warner Cable, Frontier Communications, Verizon, or one of several independent phone companies.  Where 30mph speed limits predominate, broadband is likely available.  Once the speed limit returns to 55mph, service becomes more spotty.

Prior efforts to expand broadband availability included:

• Public/Private Partnerships: Cooperative efforts to ease the way for private providers to extend service into previously unserved areas.  This had limited success, particularly when sufficient return on investment could not be achieved within a set time frame.  Most private providers will not wire sparsely populated areas because of the time it takes to recoup wiring and pole costs.
• Aggregation of Demand: This technical-sounding term simply means bringing neighbors together and getting them to jointly commit to sign up for broadband service if a provider will agree to extend service to their neighborhood.  This can achieve success in areas where a provider is assured of getting his initial investment back.  A few of these efforts have even shared or split the financing of some construction costs.  Mike McNamara of Haefele Cable Television, an independent cable provider serving 4,700 residents in rural sections of Tioga County, noted “last mile” access can be expensive, costing about $12,000 for them to extend cable service per mile.

The blue color represents areas in this section of the Southern Tier where no broadband service is available. (click to enlarge)

A decision on the grant is expected by September.

[flv]http://www.phillipdampier.com/video/WETM Elmira One Step Closer to High Speed Broadband Access 6-24-10.flv[/flv]

WETM-TV in Elmira explains the plan to expand broadband service throughout the Southern Tier of New York, if a grant can be awarded.  (1 minute)