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Houston "rural" homes wired by [provider name redacted] who was awarded a $22.9M RUS Broadband Loan. Source: USDA, OIG Audit 09601-4-TE, Sept 2005, Exhibit C |
Last week MarketTrustee introduced the idea that public investment which binds broadband infrastructure to the electorate is not a transparent process. In fact, FedVC projects provide ample cover for high-risk pork in agency pipes and short-term gains. The RUS Broadband Loan and Grants Program is an acute example of our underfunded equity stake in universal access. While netroot Media and Democracy talking points pick at "net neutrality" and hacked privacy issues, capital like fiber miles, spectrum, secure servers, and income is being gift wrapped for the private sector. Shrub LLP partners will have you believe sacrificing "community" to prop up the FedVC portfolio is jess one of the costs of doing business. But wouldn't you like to know who are the reps behind the curtain? Your community may be on the approved RUS list ... or not.
My initial digest of the $20B discretionary spending massacre in OMB's FY2007 "savings"
report turned up the USDA
Community Connect "pilot program" and a profile of netizen
Stephen Gowdy, founder of
StoneBridge Wireless, ersatz Chippewa Tribal member and a
$4.25M loan winner in the 2003-round of Broadband Loans and Grant financing
So where's the money? If StoneBridge is any indication, I dunno.
- StoneBridge current posted prices: $899/mo business, $99/mo residential
- StoneBridge costs: WiFi spectrum, currently free.
- StoneBridge footprint: Twin Cities' looks like blueprint of Houston-based [provider name redacted]
- Stonebridge acquisitions: regional competitor Nomad Broadband, shops in WI and OK, and $2.5M in Alvarion (NASDAQ: ALVR) wireless business equipment and consulting
We're very energized and excited about bringing our service to businesses underserved on the basis of their location, says Gowdy.
This was the burp in the system shared by few
A Pew/Internet memo surfaced mid-February via AP. Typically, .org analysts skip the infrastructural reality that supports America's hope for universal access. (Forrester wonks do that) This memo examines gaps in "community-type" broadband uses, 2002-2005.
- Fixed wireless adoption in rural America increased from 1% to 5%
- 38% of rural adults are not on the net
- 28% who are, dial-up. The rest are nearly evenly divided between DSL and cable
- Netroot handicap: 21% read blogs
In September, 2005, someone did call the Inspector General on RUS' ass despite the agency's small print claims to legislative indemnity re: Executive Order 12372 Intergovermental Review of Federal Pragrams, 5 USC 551, 553, Administrative Procedure Act, prior notice and opportunity for public comment, 5 USC 601, Regulatory Flexibility Act, analytical requirements, Title II, §202, §205, Unfunded Madates Reform Act of 1995 for state, local,tribal gubment., and private sector, 42 USC 4321, National Environmental Policy Act of 1969, environment impact statement or assessments.
Deep Pockets whispers to 65M rural folk
In its Sept. 2005 RUS audit, OIG alludes to reps on the Congressional Rural Caucus Committee who had attended past Fed VC "analyst meetings" chaired by Leg.
Meet the Caucus of the fightin 109th: co-chars, Peterson (R, PA, chair), Boyd (D, FL, chair), and 132 members led by 13 Task Force co-chairs (8D:5R). Distinguished caucus members include Peterson (D, MN), Gutnecht (R, MN)--chairing ed and telecom, respectively -- Oberstar (R, MN), Green (D, WI), Cuellar (D, TX), Paul (R, TX), Pombo (R, CA), Ney (R, OH), Blunt (R, MO), and ba-da-bing Wilson (R, NM)
Oddly, Pew reports broadband reached a (not so) astonishing 24% of rural households after RUS's purported four-year pilots. "The use of high-speed Internet services is growing fast in rural America" but not fast enough -- at an average annual rate of 69%, as compared to (46%/47%) growth in urban/suburban areas.
OIG to RUS: ... the agency has issued over $103.4M in loans to 64 communities near large cities, including $45.6M to 19 planned subdivisions near Houston, TX ... Furthermore, we question whether the gubment should be providing loans to competing rural providers when many small communities might be hard press to support even a single company ... In some cases, loans were issued to companies in highly competitive business environments where multiple providers competed for relatively few customers. For example, one borrower received a $15.6M loan to expand broadband service to a North Dakota town. ...FY 2003-2005 we found problems with the approval of 2 loans totaling $137.4M. One loan was approved even though the application lacked a market survey, business plan, or complete certified system design ... etc etc
MarketTrusee finds it hard to credit Pew data-types against OIG findings, when Pew clearly doesn't understand there is no difference between "rural" and "suburban" communities!
RUS to OIG audit: * * * and die.
OIG audit to RUS: get a lawyer... you have lawyers, right?
OIG and RUS made up on paper. But deeper into its own report, Pew ponders: Is rural America just too old, too poor, and uneducated to adopt high-speed? Because the FCC assures Pew and the general public, there's broadband infrastructure covering 99% of rural/urban/suburban zips that FedVC track. That's right ...
- FedVC's published broadband spec is a transfer rate of 200kbps or faster - which includes, in fact, the whole set of digital networks: powerlines (BPL), DSL telco fiber, AsDSL cable fiber, or spectrum already have capacity to deliver at least 2x this rate.
- Telco's have been busily upgrading Pew-typed urban/suburban Internet users since 2003 in order to compete with cable. And even if you haven't bought your phone company's $40/mo DSL package, your dial-up ISP who buys wholesale has anyway.
Does that mean throwing more money into the VC market will yield affordable prices or even rollout a wider broadband area? MarketTrustee thinks not. Maybe Pew shoulda verified the quality of their information with the Fort Worth Star-Telegram?
RUS to Fort Worth: Why have we excluded farmers located near Houston but extend federal aid to existing broadband providers in the same metropolitan area? We want to deploy broadband where there is no broadband. [but] There must be economies of scale to make the loan financially feasible.
Oy. The day stats reflect infrastructural reality is the day utility will be meaningful and policy will be actionable. But if we dial "community-type" like hair color to justify "high-speed" access, we have not identified the inequities we purportedly seek to illuminate ... like stank regulatory failures that protect the franchise and bounce the IT bubble to America's neediest customers.
Put broadband capital on the mid-term agenda.
Franken-ATT is set to roll. It's time for progressives to take a cue from the EU which legislated mandatory digital conversion by 2000. And did it by 2000.