TMCnews Featured Article

October 19, 2009

Amend 'Shovel-Ready' Requirement: Broadband Stimulus Applicant

By Michael Dinan, TMCnet Editor

The federal government, which expected to announce the first round of broadband stimulus grant and loan recipients in just a few weeks, should consider receiving applications one U.S. region at a time toavoid overwhelming receiving servers and creating last-minute havoc for applicants, an official with a Hermosa Beach, Calif. company that’s been building mobile networks in underserved areas since 1999 told TMCnet in an interview today.


According to Matthew H. Merritt, N.C. and S.C. director of NTCH-Cleartalk, it’s difficult at this stage – after struggling to learn and navigate the government’s application process – to recommned a drastic changes. Yet it would be helpful to omit or modify a requirement that has applicants describe their service areas by census blocks.


“Wireless networks propagate in concentric circles – from which the term cellular network was derived – and thus are not truly definable in census block data,” Merritt told TMCnet in an interview, printed in full below.


In one of the company’s applications under the broadband stimulus program, NTCH-Cleartalk is seeking about $24 million in grants and the same in loans to serve parts of eastern North Carolina. Specifically, the company is seeking to fund a software-defined radio network that would accommodate upgrades in 4G wireless technologies such as WiMAX and LTE (News - Alert) that would see speeds of up to 50 Mbps and a proposed 700 Mhz public safety network on the same base stations.


Merritt told TMCnet that it’s also probably unrealistic to require carriers at one time to be “shovel-ready” for when monies are awarded, yet at the same to avoid building out for an area without government funding.


Our full exchange follows.


TMCnet: We’ve read the Executive Summary of your application, and clearly the organization feels there’s a strong need for funding. Take us a little bit beyond the numbers. How will U.S. citizens, consumers and businesses benefit if you’re awarded this grant money?


Matthew H. Merritt (pictured left with large fish): U.S. citizens will benefit by getting some return on the money they are investing in NTCH-Cleartalk. The money will be managed by an experienced private sector enterprise that has been in operation for over 10 years and is very experienced in deploying cost-effective wireless networks. Because the ARRA program only funds capital spending and not operating expenses the money much of the other spending on this program will be on entities that have not shown the ability successfully compete in the marketplace


Consumers in the areas we have applied for will get the best available mobile internet technology at a cost of $25 (public institutions) to $35 per month and this compares favorably to current pricing for similar services. But that is just what is on the surface. To explain what is below the surface, we need to examine the national carriers’ business model and an industry concept called “breakage” that NTCH-Cleartalk has never taken part in. To illustrate: One of our managers purchased a netbook computer and 3G data plan from the largest national carrier and signed up for a data plan at $60 per month. His first bill was for about $145 dollars because he was billed for an activation fee, a partial month and then a month in advance.


Cleartalk charges $35 because we give the first partial month free and we do not charge an activation fee. Now here is the real problem; the second bill was over $1,500 because he went over his 5 gigabyte limit by 3 gigabytes. So he was charged $60 for the first 5 gigabytes and $1,500 for the next 3 gigabytes, something no one would expect. Call it what you want, it’s not the way we do business. We would shut off the device at 5 gigabytes and the person would have the option to pay another $35 for another 5 gigabytes. So the second bill would be $35 for Cleartalk service (for 20 percent greater capacity) verses over $1,500. We offer honest and fair service and thus avoid many of the problems consumers find misleading or otherwise dishonest.


Businesses in the rural areas we are targeting can get high bandwidth internet access and transport of up to 1 gigabyte by connecting via microwave to the middle mile network we will deploy to backhaul our cell sites. These businesses will also benefit by having a mobile internet network in place that will allow them to use cloud computing in place of private LANs and WANs.


TMCnet: How did you find the application process? What would you recommend the U.S. government tweak in the process, if anything?


MM: There are definitely some application areas that could be improved, like omitting or modifying the requirement that applicants describe their service areas by census blocks. Wireless networks propagate in concentric circles (from which the term cellular network was derived) and thus are not truly definable in census block data. As far as recommending change, it’s the devil we know at this point and this has come at a hard cost of lost sleep, so we wouldn’t be recommending many changes. To avoid the last-minute congestion problems and avoid the flood of applications, which disables the receiving servers, we suggest they phase in the deadlines by region. The government also required carriers to ensure that they would not build out the applied for area without government funding but then be “shovel ready” when an award is given and then make a showing to prove this. We do not think this is realistic in a real-world setting.


Another critical part of this process that should be addressed is how the applications are judged. The NTIA has asked the states for input by reviewing and providing feedback on applications within their states. Looking at several of the responses from the states to the NTIA-BTOP it is clear the states view this as an opportunity to fund non-profit state based organizations. Clearly, states are facing budget short-falls and potentially this could allow the states to get indirect economical relief if this money can be used for non-profit state based organizations. Sadly, if that is how the money is deployed most of the intended beneficiaries in the rural or remote areas will not be getting high-speed broadband any time soon.


TMCnet: What would you tell reviewers at NTIA about your organization if you could have one minute to talk to them moments before they looked at your application?


MM: That we have done this before, we have operated for 10 years, never defaulted on our obligations, found a way to be profitable in rural markets while providing affordable service. We have found ways to include other Carriers (competitors) in our business and we only know one way to do business and that is by efficiently providing value. We understand the technology and we are providing the best in class and most cost effective network; it is 3G standard today with a very inexpensive upgrade to 4G/LTE and WiMAX (News - Alert).




TMCnet: Tell us in plain terms how important it is for your organization to receive this grant money. If you do not receive government funding, what will you do to improve services in the way you’re seeking?


MM: We will continue to survive and prosper without this funding. However, since we typically provide service in smaller markets (mostly avoided by other flat rate Carriers) this will allow us to rapidly expand into many more marginal unserved & rural areas with a sustainable and proven business. Population density is the driving economic force in new market expansion and dictates that the true rural and remote areas will continue to be avoided. This funding is a unique chance to ignore the economic reality of capital deployment and reach these rural and remote markets on a large scale.


It is important to realize there is a potential for unintended consequences. Simply, by funding entities that are either not sustainable or whose scale is too small to create long term viability there is chance the stimulus program could actually created an environment where these “short-life” businesses only last long enough to drive out existing providers. Then, if the new business/service fails many of the marginal markets will simply be without options or service. It is critical that the priority of “Sustainability” be properly applied for this program to produce long term benefits and viable options for the end-users!

Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan