April 19, 2009
The White House
Dept. of Commerce NTIA
Dept. of Agriculture RUS
The FCC
Broadband Technology Opportunities Program (BTOP) & National Broadband Plan Officials
President Obama,
Thank you so much for your fresh brand of leadership that this Country so desperately needs. Your openness, candor and public outreach are indeed a welcome change compared to past administrations.
During the first few months of your Presidency you have taken some bold strides in reorganizing corporate infrastructure in this Nation by encouraging, and in some cases, directly modifying operating and revenue models of large behemoth incumbents for the overall good of the Country. One market segment that seems to be flying under the radar is large Telecommunications and Cable incumbents and the need for fundamental revamping of their traditional business, operating and revenue models.
Specifically, there are some serious spectrum issues that need to be addressed as we begin to develop a nationwide broadband plan and infrastructure for all urban, suburban and rural (un-served, under served) markets in the United States.
Most of these concerns relate to recent FCC policy and rule changes taking place prior to the upcoming Senate confirmation of the new FCC administration. These changes have had and will have a direct bearing on these plans and initiatives.
It is important that we determine viable and sustainable solutions that benefit all American people, Businesses and our Communities while allowing large incumbents (ATT, Verizon, Sprint, Clearwire, Comcast, Time Warner etc.) the ability to maintain their bottom line profits.
I would like to draw particular attention to the FCC policy and rule changes adversely affecting the development and deployment of the 2.5GHz Educational Broadband Service band. These policy and rule changes[1] allowed Sprint and Clearwire to acquire use (lease) and control of this spectrum in over eighty-five (85%) of the United States in medium and large sized MSA/GSA markets for the next 15 – 30 years.
They acquired this Community spectrum from hundreds of non-profit institutions from across the Country. These are non-profits located in OUR Communities including state universities and university systems, public community and technical colleges, private universities and colleges, public elementary and secondary school districts, private schools (including Catholic school systems in a number of large metropolitan areas), public television and radio stations, hospitals and hospital associations, and private, non-profit educational entities.
This spectrum covers large geographical areas to include multiple Counties, Cities and Municipalities. For example, Florida Atlantic University’s (FAU) 2.5GHz EBS license covers all of Palm Beach and Broward Counties; 3 million people, 1.4 million households, 260K plus businesses and 69 Municipalities.
Most of these Municipalities had issued RFI’s or RFP’s that would have attempted to bring large scale broadband wireless infrastructures to their Destination Markets, Local Governments and Communities. However, due to FCC policy and rule changes the most suitable available spectrum (Community 2.5GHz EBS) to fulfill upon these critical infrastructure needs is now in the hands of Sprint and Clearwire obtained through extremely undervalued lease agreements that only benefit Sprint, Clearwire and the Constituency of the Non-Profit license holder.
These non-profits have, or will receive extremely undervalued upfront and yearly residual lease payments from Sprint/Clearwire. This is quite disturbing as unsuspecting and non-technical Boards of Trustees negotiated these agreements without performing basic due diligence processes like assessing the present and future value of their spectrum and forecasting CaPex, OpEX and revenue models. They also did not specifically address or consult as to the needs of all the constituentcy within the GSA coverage area (other school systems, municipalities, public safety, etc.).
This diligence process would have presented options favoring the Non-Profit Licensees forming Public/Private Partnerships with Local Constituencies to determine the needs and desires of all Local Governments, Public Safety, First Responders, Colleges, School Systems, Libraries, Health Care, Local Businesses and the Citizenry within the geographical service area (GSA) coverage area. Local stakeholders, local private sector investment and local service providers then would have built out the core infrastructure needed.
The revenues derived from these core broadband infrastructures would greatly exceed lease values presented by Sprint and Clearwire. These revenues would also be used to support and sustain new, shovel ready or existing community outreach, BTOP or ARRA programs.
It is also ironic that all of these non-profit agencies (2.5GHz Licensees) are the very agencies that are represented as potential applicants to BTOP loans/grants[2] as established during the BTOP public round table meetings and panelist discussions . This does not make sense.
This issue needs to be scrutinized and fixed. This spectrum needs to be given back to these non-profits (restructure long term leases with Sprint/Clearwire), Public/Private Partnerships formed, private sector money will invest, credit markets unleashed, and build out their own broadband core infrastructures ((by County (EBS License holder) in all urban, suburban and rural markets, creating exponential Job creation)). Then lease to Sprint, Clearwire, Comcast, Time Warner, etc.
We will want and demand enhanced and extended services[3] from these large incumbents however local constituencies should be in control of their core network infrastructures. This proposed model[4] will enable revenues from broadband services to flow back through the Public/Private Partnerships and greatly facilitate and sustain ongoing community outreach, BTOP and ARRA programs within all urban, suburban and rural markets.
Politically, you are sitting on a goldmine. The American people need to grasp something, anything, associated with the ARRA that appeals to their sense of Community… “social capital”, as it were. Using the technology and spectrum that is available today the planning, designing, financing, and deployment of broadband infrastructures is well within the knowledge base and means of every GSA market in this Country.
The steps towards implementing this program are strait forward, expedient and very conducive to overall long-term BTOP and ARRA program goals.
- Announcement of the new “ARRA Community Broadband Cooperative Initiative” through BTOP
- Memo to the National Association of Counties outlining specific criteria and documentation regarding formation of local GSA Public/Private Partnerships (2-4 months)
- Identify local non-profit 2.5GHz License holders and provide full transparency on existing lease structures(1-2 months)
- Identify other usable synergistic spectrum (3.65GHz, 5.nGHz, 4.9GHz public safety, 2.4GHz Wi-Fi) (1 month)
- Identify other assets (city/dark fiber, backhaul circuits, etc.) (1 month)
- Public participation/comment period (1 month)
- Download from BTOP - Templated Business Plan’s and RFP’s for submission to NTIA, RUS, BTOP and/or the State. Develop business plan and RFP. (1-3 months)
- Submit to BTOP
- BTOP coordinates private sector investment/bond issues in conjunction with BTOP loans/grants (Wachovia and PIMCO possibly committed) (1-2 months)
- Deployment of core infrastructure, testing, and launch (6-12 months for each GSA, e.g County)
To take this a step further, the White House, the FCC, NTIA, RUS, NEBSA, Sprint and Clearwire could announce full support of this initiative. This would bring both Companies’ brands to a new all-time high, facilitate build out of broadband facilities and create thousands of jobs virtually overnight.
Immediate specific advantages:
- Concurrent build out of core infrastructures in all Counties throughout the Country
- Exponential job creation
- Competitive market, brings CaPex down (AirSpan, Alvarion, Aperto, RedLine, Solectek, other equipment manufacturers)
- Re-birth of community “Social Capital”, sense of involvement by Citizenry, emphasizes core premise of the ARRA
The State of South Carolina is the only State that has not awarded lease agreements in their 2.5GHz EBS band. This represents the last line of defense to ensure that, at the very least, proper operating and revenue models are in place and that this spectrum will fully support and sustain a sensible national broadband plan.
The following link provides a quick reference outlining a proposed model surrounding concurrent build out of the 2.5GHz EBS and 3.65GHz bands. This does not affect existing lease structures and could be used in GSA's throughout the USA.
http://www.accessdelray.org/BTOP+NTIA+RUS+SPRINT+CLEARWIRE+FCC+EBS+2.5GHZ.html
Please find a complete summary of this particular issue at
http://www.accessdelray.org/docs/Response%20to%20NEBSA%20Comments%20-%202.5%20GHz%20Band.pdf
The complete summary/response to the joint NTIA, RUS BTOP RFI is at
http://www.accessdelray.org/docs/RESPONSE%20TO%20REQUEST%20FOR%20INFORMATION%20--%20NTIA-RUS%20BTOP%20INITIATIVES%20--%20FINAL.pdf
I am,
Sincerely,
Brad Bowman
Program Director, AccessDelray.org
561.252.4764
bbowman@accessdelray.org
http://www.accessdelray.org/
_______________________________________________
[1] Sprint will transfer control of its wholly-owned subsidiaries that hold all of Sprint’s respective 2.5 GHz [EBS] related assets to Clearwire Venture LLC, the direct wholly owned subsidiary of New Clearwire.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-08-1477A1.pdf
[2] COMMENTS OF THE NATIONAL EBS ASSOCIATION to NTIA, BTOP pg. 8, Section 6. “Given the eligibility requirements of the FCC, EBS licensees are clearly already eligible under the Recovery Act to apply for NTIA BTOP grant funds. In addition, in recognition of the fact that, in many or perhaps most cases, EBS licensees will be partnering in broadband projects with other entities (including commercial excess capacity lessees of their spectrum), the NTIA should determine that such entities seeking funds jointly with EBS licensees to deploy broadband with and through the capacity made available over EBS stations should be eligible for BTOP grant funds.” http://www.ntia.doc.gov/broadbandgrants/comments/6F1B.doc
[3] ENHANCED/EXTENDED SERVICES: Enabling delivery platforms for three-screens digital media, Hosted video platforms, video servers, CDN, publishing platforms, Technology platforms for rich media, Encoding/Transcoding, DRM and content security, client software, streaming, players, asset management, streaming and delivery platforms, VOD, Subscription, rental, download to own, ad-supported, carrier services and delivery, hybrid, service bundles, Three-screens convergence devices and services, Hybrid set-top boxes, carrier and over-the-top enabled devices, broadcast and streaming, CE device streaming platforms, software platforms for three-screens services. http://www.abiresearch.com/products/service/Digital_Media_Research_Service
[4] Proposed concurrent 2.5GHz, 3.65GHz build out: http://www.accessdelray.org/BTOP+NTIA+RUS+SPRINT+CLEARWIRE+FCC+EBS+2.5GHZ.html
