Wednesday, January 17, 2007

Lessig ties Net Neutrality and Muni networks

Net neutrality warrior, constitutional scholar, and copyfighter Lawrence Lessig endorses municipal networks as part of the larger battle to preserve freedom on the internet. (Lessig is something of a hero of mine.) Lessig salutes the work of the developers of the free and open source Linux Operating System (OS) and compares their work providing competition to the Microsoft monopoly to resistance to AT&T by those hoping to provide last mile access.

The core of this resistance comes from municipalities. Local governments are building neutral infrastructures that allow anyone, from ISPs to community networks, to use and extend blisteringly fast broadband networks. At the end of its first year, a project in Sandoval County, New Mexico, for example, already provides many in the area with more than 10 times the capacity than anywhere else in the US.

Lessig is right in seeing that the struggle to sustain freedom in our day is not limited to the net neutrality fight--and right in his insight that ownership of monopoly last mile resources broadband resources by the public is absolutely crucial to that freedom.

These activists recognize the basic truth of what I call the McAdams theorem: Monopolists, as Cornell economist Alan McAdams puts it, don't monopolize themselves. If the monopoly-like asset is owned by the user, he has little incentive to exploit himself. Put differently, private ownership by users creates its own business model.

I've made this same point, at some length, on this site.

It's good to see a leader in the net neutrality debate affirm the muni cause. But its sad that he doesn't quite seem willing to grasp the full implications of the logical position he takes. I'm somewhat embarrassed to say that think Lessig is showing a sort of ideologically-based naivete that I often see on the pro-corporate side of this issue. Those folks exhibit what is charitably called a naive faith that "free enterprise" cures all ills. --It doesn't and anyone who has had to deal with companies like Cox and BellSouth knows that faith is misplaced.

Lessig here exhibits a similar naive faith in the open source movement. Granted, the Linux project has proved that the model of free, community-built software can be used for even the most complex and critical software, the OS. But he is, in my judgment, seriously and dangerous mistaken if he believes a useful last-mile broadband infrastructure can be built solely with free labor, however dedicated and noble. Software is unique in that it can be built solely with donated labor. There is no material cost. Last Mile Networks are different. The network cost real money to build and maintain, the connection to the larger network that usefully connects the last mile network to the outside world is also expensive (and increasingly owned by the same few monopolists that currently own the last mile). Further, all credible networks, wireless as well as wired require access to property in the form of public rights of ways, poles and towers.

The full local community must be involved and it must be involved as a political community to at least the degree that it grants access to its publicly owned rights of way. There really isn't any practical way a noble band of soldiers can do this without government help--and really there is no reason why they ought to try. Providing necessary infrastructure, particularly in natural monopoly situations, is a perfectly legitimate and time-tested role of government. The implication that the model that has worked for Linux and open source software will work in the last mile is dangerously naive and suspiciously ideological.

Afterthought: Lessig's agrument is implicitly premised on the idea that Linux has succeeded in breaking the Microsoft monopoly. I don't see where that is even close to true. Certainly the sorts of control that the regulators were concerned about when they succeeded in their antitrust suit against Microsoft remain problems. The Justice Department was in part concerned that the market power that MS had was sufficient to allow it to determine which technologies succeeded and failed and to secure its future monopoly by making its proprietary technologies standard. It's pretty clear that, Linux or no, Microsoft still retains this power. Witness, for only one example, TiVo's recent announcement that addition of free, streaming movies and TV shows to already established accounts will only be available to users who happen to use late versions of Windows and Internet Explorer. Why? Because MS has leveraged its near monopoly of the OS market to make its proprietary Digital Rights Management (DRM) "solution" for video the one that TiVo must use to succeed in the marketplace.

Linux has not, and shows no signs of, solving the problems that motivated the Feds' successful antitrust action. It is a great thing--but it is no substitute for enlightened public self-interest even in its areas of greatest success.


Anonymous said...

the muni he points to in his article is a municipal wireless that that is not involved in retail sales. It is designed only to provide connectivity to other service providers. Great idea.

John said...

Ok, nameless one....

I presume you are talking about the Sandoval County project that Lessig mentions? I've met Hendricks at a conference and heard him speak. He's inspirational and intense, charismatic even. And pretty much the entire story behind the Sandoval project. As nearly as I can tell Lessig is overstating what has been accomplished. Nowhere near the amount of coverage that Hendricks seems to claim has actually been provided according to reports in local media.

I recently covered the most hopeful--and real, IMHO--sign in what has been to date mostly a press release effort in a post titled: "LamdaRail Deal in New Mexico...& Lafayette?" There Hendricks has actually built a fiber connection to the National LamdaRail which, apparently, yields a MUCH cheaper price for his connection to the internet. That opens real potential for his project to offer higher speed connectivity. Those costs are among the issues limiting speeds for most private, public-private, or public wireless data nets. The limited speed has been a deal-killer for using wireless to supplant or compete with the duomonopoly wired provider like Cox and BellSouth.

But, so far, Sandoval isn't real. (Lessig has recently heard Dwayne Hendricks at the Reform Media Conference in Memphis. I suspect that Hendricks didn't distinguish well between his plans and the current reality.) Don't get me wrong--I wish Dwayne the best and hope he succeeds. A rural county like Sandoval offers the best hope of making a wireless cloud a viable broadband delivery method.

The Sandoval project has yet to get off the ground; it should not be counted as a success for the business model it hopes will attract providers to its network or for the wireless technology that underlies it.

Anonymous said...

Sorry guys it was all vaporware read below

Sunday, July 15, 2007
Sandoval's Network a High-Tech Debacle

By Colleen Heild and Sean Olson
Copyright © 2007 Albuquerque Journal; Journal Investigative Reporter; Journal Staff Writer
Where did the county go wrong?
That's the million-dollar question now that the county is poised to resuscitate its lifeless wireless system with another influx of taxpayer dollars.
The answer, based on interviews and records obtained by the Journal: right from the start and at almost every step along the way.
A recent consultant's report says the $1.2 million it cost to design and build an affordable broadband network essentially bought "vaporware." An estimated $950,000 will be needed to get a network up and running.
The county has spent more than $2.6 million on the project since 2004, but officials say not all the money has gone down the drain. They say subcontractors have come up with related educational and health programs that have value— even without a countywide wireless system.
"It was never just about building a backbone," said County Manager Debbie Hays.
But, for the most part, the initiative has been an embarrassing bust that is attracting the wrong kind of attention for county officials who once hyped the project and said it would bring national accolades.
For the past several months, private investigators hired by the State Auditor's Office have been conducting interviews and poring over project records.
There is plenty to pique their interest. For example:
# The man hired to write the county's bid specifications for the project master plan was allowed to bid on and ended up winning the master plan contract— a practice banned by the state and many local government entities.

# The county only put $300,000 of the project to competitive bid— a process designed to ensure the best work for the best price. And that piece of the project is arguably tainted by the fact that the winner wrote the specs.

# The county paid thousands of dollars up front rather than waiting for detailed bills— in effect, loaning contractors money to do work, some of which wasn't performed.

# The county didn't require the primary contractor to post a performance bond to ensure the job would be completed as promised. Liability insurance for the project wasn't purchased until last September, a year into the implementation.

# The county shelled out more than $50,000 to set up a private company, Sandoval Broadband, to oversee the project— a move that allowed the hiring of subcontractors and disbursement of public dollars to be shielded from public scrutiny.
Sandoval County had $3 million for the project, of which $2 million came from the proceeds of a revenue bond deal it approved for Intel. The state kicked in another $1 million.
Now the county is seeking to recoup some of its costs after design engineer Dewayne Hendricks of the California-based Dandin Group walked off the job in May.
The Dandin Group was paid $1.2 million to design and build the network, but county officials have estimated that the equipment installed is worth about $80,000 and the project will have to start over practically from scratch.
The county spent another $300,000 for a master plan. Other money went to consultants, travel, public relations and other expenses.
"New Mexico had a chance to leap frog and to really be in the game," said Marshall Monroe, a Corrales consultant who created Gov. Bill Richardson's strategic plan for film in New Mexico. He believes the ambitious project— in the right hands— can still be salvaged.
Monroe chairs a communications task force for the National Intelligence Science Board, which advises the director of the CIA.
He said he worked on the Sandoval County project in 2005. But he bailed within months.
"They had a little team and that's where it just started to smell," he said.
Former County Commissioner William Sapien said, "There have been some challenges that should have been addressed as we went along and they weren't. I think if the oversight had been closer, a lot of these things would have been caught beforehand.
"Pretty much the commission was left out of it, certainly in speaking for myself," he added.
Hays, who refers to the Sandoval Broadband project as her "baby," called the shots and signed off on payments.
Looming over the project is an inquiry by State Auditor Hector Balderas, who told the Journal last week that he has decided a special forensic audit is now needed.
Balderas said the special audit will make recommendations on how to improve accountability and ensure lawful conduct.

Utah man takes charge
Jonathan Mann came to the Sandoval County broadband project as a business consultant from Salt Lake City in 2004.
He had no background in wireless technology but was put in charge of a cutting-edge broadband venture— and said he earned an estimated $350,000 by the time he walked away two years later.
Hays said she hired Mann and his one-man firm, AQV Communications, in October 2004 after getting his name from Intel government relations manager Terry McDermott.
Hays said she never considered anyone else for the task, in part because she hoped Mann could bring private funding to the project through his business contacts and acumen.
Mann's initial assignment was to write the request for proposals for the broadband master plan, for which he was paid $5,000.
His RFP didn't award points for a company's experience and didn't require references.
A model request for proposals published by the New Mexico Public Procurement Association says a minimum of 30 calendar days should be given between the date an RFP is issued and proposals are due.
The county RFP written by Mann gave companies just 11 business days to respond.
Mann himself bid on the project, stating in his proposal that he would coordinate a team that included Intel, the University of New Mexico "and 10 to 15 other interested parties" in developing the master plan. The 10 to 15 parties weren't identified.
A review by four county employees, including Hays, rated Mann's proposal better than those of four other firms— some with national experience in the field.
Mann's proposed cost of $300,000 was higher than all the other bidders.
The state Governmental Conduct Act bars state agencies from accepting bids on a project from anyone who had direct or indirect involvement in developing the specifications.
New Mexico counties aren't technically covered by the act, but contractors and government officials interviewed said the prohibition makes sense.
"If you write the specifications, the same company should not be allowed to bid on it. It's good practice is what it is. It would be a conflict of interest," said Ramona Gutierrez, president of the New Mexico Public Procurement Association.
Peter Baston of Ideas Inc. of Albuquerque came in second in the competition to create the master plan. Baston told the Journal he talked with county officials about a broadband project before Mann came on the scene.
He said that, at Hays' request, he met with Mann in October 2004.
Baston said that, during the meeting, Mann told him he would see to it Baston got the master plan contract if Baston would hire him and several people who were "close to county government."
"I felt like I was being shaken down," said Baston.
Mann met with Baston, according to an e-mail obtained by the Journal. But in an interview with the Journal, Mann disputed Baston's account of the conversation.
"That's a lie," Mann said. "There were no commitments made to Peter Baston of any nature."
Baston said he told investigators for the state Auditor's Office about the meeting with Mann and passed a polygraph they asked him to take.
Balderas said he couldn't address specifics of the inquiry but said his office is using a "vast amount of tools ... to make sure we're getting accurate information."

No-bid project
In 2005, the project went from a master plan to a $2 million implementation without ever going to another public bid.
Instead, the county created a private company to develop the system and named Mann's company to oversee it.
Monroe, former creative executive for The Walt Disney company, said the Sandoval Broadband project was "an enormously sophisticated technology challenge.
"One of the main problems is that the county gave a no-bid $2 million contract to somebody with no technical background," he said.
Hays contends the implementation phase didn't need to be put to bid "because we had competitively bid it in the beginning."
But the 2004 request for proposals for the master plan didn't require contractors to bid on implementation costs.
One unsuccessful bidder on the master plan proposed a national RFP to find candidates to build the system.
To retain Mann for the next phase of the project, the county in 2005 rolled 11 new duties into his old contract by issuing addendums.
Such a practice is often frowned on in government procurement circles, said Gutierrez.
"That's a really gray area. Normally, we don't allow it," she said.
A July 2005 addendum said AQV would be paid $250,000 a year plus a stock option to act as "executive director" for the private company. Initially called Olla Grande, the company was later renamed Sandoval Broadband.
Mann retained his former business associate, Betty Anne McDermott of Rio Rancho, and Hendricks to work for the new company. Both had helped on the earlier master plan.
A November 2005 addendum stated that AQV "is now providing oversight to all the development and deployment efforts to facilitate completion of the broadband project and is now incurring expenses."
It added: "It is necessary for the county commission to now authorize expenditure of $2 million infrastructure funds to reimburse the Contractor for the costs."
Sapien, commission chairman at the time, said he didn't recall anyone asking whether the county should go to bid for the $2 million portion of the work.
"I think we were relying on Debbie Hays' recommendation that what was taking place was the right thing to do," he said.
Monroe said he was assured by county officials that Mann wouldn't continue to lead the project after the master plan was submitted in July 2005.
Mann said he never intended to stay on but said Hays talked him into it.
Monroe said a number of people in New Mexico were qualified to build the system.
"And keep in mind," Monroe added, "there is a global stampede in this area to roll out municipal wireless infrastructure."

Paid in advance
State law generally bars government from issuing checks for any purchase of services, construction or tangible personal property unless it has actually received them and they have met specifications.
Yet the county frequently paid contractors in advance.
County records show that during the last six months of 2006, more than $500,000 was paid in "anticipated costs" for engineering, equipment and administration.
Mann said he was reimbursed for roughly $125,000 he personally spent before December 2005 but was later advanced funds to distribute to subcontractors.
Hendricks in a Journal interview said his company never had to shell out a dime for any work on the project.
Hays has said the county wasn't looking for immediate results with early invoices and payments. She said the county was prepared to spend $3 million for a finished product and wasn't as concerned with the process.
She signed off on many early invoices that contained little or no detail about where money was being spent, explaining that line-item detail would have been technical jargon she would never understand.

No performance bond
William Bridges, owner of RITE Brain consulting of Littleton, Colo., worked for Mann in 2005, investigating the costs of setting up a trial for the broadband network.
He said that, after he submitted the plans, Mann told him "to take a hike," leaving the Dandin Group as the primary engineer.
Bridges said government agencies usually require performance or surety bonds on public projects in case contractors don't finish the job. The contractor is supposed to pay for the bond.
"There is not a single RFP that I have seen in the last five years for any wireless network where the municipal government didn't require a bond and/or some equivalent," he said.
The city of Albuquerque, for instance, plans to deploy an affordable, wireless broadband network. One requirement of the city's RFP is that the winning contractor obtain a performance bond.
Mann's contract and the addendums contained no such requirement.
Hays said through a spokesman that there was no need for a performance bond because Sandoval Broadband had insurance.
But invoices show that a commercial liability insurance policy wasn't purchased until more than a year into the project. Sandoval Broadband bought two policies in September 2006 at a cost to the county of $23,300.
Hendricks said his firm wasn't required to provide proof of insurance because Sandoval Broadband was insured.

A private company
Sapien said he understood that the purpose of the county setting up a private company was so "that when the project got up and running, there'd be a private company that would come in and buy it and take it over."
Mann told the Journal that the private company wasn't obliged to adhere to government standards.
After Mann resigned in August 2006, Hendricks became president of Sandoval Broadband.
In response to Journal inquiries, Hendricks refused to produce receipts and records of how money was being spent. He refused to name anyone else working on the project.
Mann said that, after he left, Sandoval Broadband paid him $50,000 as part of the transition.
But Hays told the Journal she knew nothing about the payment because it involved the private company.
During the investigation by Caswell Investigations of Albuquerque earlier this year, the county lacked detailed records about how project money was spent. So the state auditor went to court to obtain subpoenas requiring the documents from Mann and Hendricks. By that time, both men had resigned.
Today, the private company— Sandoval Broadband— has no CEO, board of directors or employees. It also owes money to vendors.
Bridges said he's saddened to hear how the project deteriorated.
As part of his work for Mann, he proposed creating an oversight team representing county government, the private firms involved and an independent member who wasn't associated with any of the parties involved.
"You have to have oversight," Bridges said. "There has to be reporting."

Sunday, July 15, 2007
Intel Exec's Wife Played Key Role

By Colleen Heild
Copyright © 2007 Albuquerque Journal; Journal Investigative Reporter
The wife of Intel government relations manager Terry McDermott had a key role in the Sandoval Broadband project and was paid nearly $220,000, records show.
Betty Anne McDermott was chiefly involved in public relations, educational and communications work, invoices show.
She was also one of three shareholders in Sandoval Broadband, the private corporation the county formed in the fall of 2005 to develop the system that has been plagued by delays and is not yet operational.
None of Betty Anne McDermott's work was put to competitive bid— including $80,000 in educational services the county paid for via the prime contractor who resigned months earlier.
Betty Anne McDermott, of Rio Rancho, was originally hired by AQV Inc., a Utah-based consulting company owned by Jonathan Mann of Salt Lake City. Mann worked for Betty Ann McDermott in New Mexico in the mid-1980s.
Mann was hired for the project after County Manager Debbie Hays got his name from Terry McDermott.
The county launched the initiative with $2 million from the proceeds of a revenue bond agreement with Intel.
As part of the deal, Intel pledged a total of $85 million to the county and agreed to give technical advice on a wireless system in exchange for approval of a $16 billion industrial revenue bond.
Hays said there was no "collusion" involving the hiring of Mann and Betty Anne McDermott.
The McDermotts, she added, "are two incredible New Mexicans that are incredibly devoted to improving the state."

Word of mouth
Terry McDermott said his wife was out of state and couldn't be reached by telephone or e-mail.
He confirmed that Mann and Betty Anne McDermott knew each other from working for a New Mexico video production company called Sunrise Video West.
The two had kept in touch over the years as business associates, Terry McDermott said.
Hays said Mann's name came up during a "hallway discussion" she had with Terry McDermott at a county function in 2004.
"I told him what I wanted to do is provide free connectivity for the schools, for health initiatives, for emergency services. He said, 'I know someone who has been incredibly successful in getting grants.' ''
Hays said she didn't get the idea the McDermotts and Mann were social friends but said Terry McDermott told her he had incredible respect for Mann.
"He said, 'Jonathan is the kind of person, quite frankly, if something happened to me, I would want him to raise my children, he's that ethical of a person.' ''
Mann and Hays talked for the first time subsequent to that conversation.
In a recent telephone interview, Terry McDermott had a somewhat different account, saying Hays never mentioned the broadband project at the time.
He recalled that Hays talked about a movie studio project and "she wanted to know if there was somebody that I could help her with that could bring more companies to the table."
Though he never worked with Mann, McDermott said he knew of his work as a business consultant.
Both Mann and Terry McDermott say there was no "quid pro quo" for Mann to hire his wife.

$220K in invoices
Mann resigned from the Sandoval County broadband project in August 2006, and, weeks later, the county formally removed AQV Inc. from the contract.
About the same time, Betty Anne McDermott formed a company called Sandoval Broadband Educational Services.
"The county began working with Betty Anne directly because the county was pleased with what she had done," Mann said.
Financial documents on file with Sandoval County show that checks written for the benefit of Betty Anne McDermott, Sandoval Broadband Educational Services or McDermott Enterprises totaled $219,880.
Terry McDermott said he didn't have the invoices but knows his wife hired a number of contractors and subcontractors and didn't put the entire $219,880 "in her pocket."
Documents show at least $10,000 was reimbursement for supplies and at least $13,500 went to fees charged by technology companies.
Mann said Betty Anne McDermott "wasn't paid excessive at all for what she did."
Mann said he checked with Hays before hiring her and was told there was no conflict of interest.
Hays in an interview said she couldn't remember that discussion but said McDermott's employment posed no problem.
Hays said Betty Anne McDermott was initially hired as a spokeswoman for the project and was Mann's "point person in Sandoval County since he was actually out of Utah."
Betty Anne McDermott eventually moved on to a role assessing the computer needs of Sandoval County schools and "having meetings with principals in helping to pull the initiative together," Hays added.
Hays said the educational component of the broadband project is separate from building the network and doesn't necessarily rely on the county's planned high-speed Internet system to be up and running.
The $80,000 bill involving McDermott's company was for work that could someday allow students to take handheld computers home to further their education.
Hays said the handheld computer program is "still under construction."

Payment arrangement
Contracts of $30,000 or more are required to be put to competitive bid under the state procurement code.
But Sandoval County instead paid McDermott in April by making the $80,000 check out to Mann's consulting firm, AQV Inc.
A March 20, 2007, invoice related to the work shows the letters "AQV" at the top.
It also states "work directed by SBES (Sandoval Broadband Education Services), submitted within AQV contract with Sandoval County at the request of the County."
That was despite the fact that AQV Inc. had been formally removed as the primary contractor on the project six months earlier.
Mann said in the phone interview that he "didn't invoice the county for that money. I was simply not involved at that point."
He referred a reporter to Betty Anne McDermott and Hays.
Hays said the payment arrangement was a means to pay Betty Anne McDermott for work she had done. The invoice shows some tasks were still in progress.
The invoice listed $41,300 as administrative fees.
Asked why the county didn't issue a separate contract to Betty Anne McDermott, Hays replied: "Not for that amount, not without going out to bid."
Why was the check made out to AQV, Mann's company?
"Because, quite frankly, she (McDermott) didn't want to go under Dandin at that point," Hays said. "There were already problems with Dandin."
Dandin is owned by Dewayne Hendricks, a California wireless design engineer who headed the project after Mann left.
The county contends Dandin is now in breach of his contract on the project after he resigned in early May.
Hays said she didn't know Betty Anne McDermott very well before the broadband project.
But Hays said she is "an incredibly talented woman who has been mostly home raising kids, but she's had her own contractual services and work for the television stations previously.
"I can tell you Betty Anne didn't make any money on this project by the time it's all gone out with regards to taxes and a number of other things," Hays said.

Sunday, July 15, 2007

Broadband Project Players Weren't Vetted

By Colleen Heild
Copyright © 2007 Albuquerque Journal; Journal Investigative Reporter
The consultant who once headed the county's complex $3 million wireless broadband project doesn't have a Web site.
"I'm wonderfully low tech," said Jonathan Mann in a recent telephone interview.
Governments and many private sector businesses often perform "due diligence" inquiries before hiring contractors.
County Manager Debbie Hays told the Journal she researched Mann's credentials and found they were "impeccable."
Mann owns a Salt Lake City business consulting firm, AQV Inc.
When asked for Mann's resume, county spokesman Gayland Bryant said the county didn't have one and referred a reporter to a proposal Mann wrote in 2004 to create the county's broadband master plan.
Mann spent 18 years as an "advisor/consultant to CEOs and business owners" and listed six clients including Intel, the proposal said. The five others were out of the country. No dates of work, phone numbers or contacts were listed.
It gave a number of New Mexico companies, but no dates or details about the assignments.
Mann also listed work in television and video production, including winning an MTV Music Video of the Year. No dates or details were given.
Mann's proposal gave no information about his education.
Bryant said the county also had no resume on Dewayne Hendricks, a California design engineer who replaced Mann on the project in 2006.
Bryant said the county went to the Internet to check on Hendricks and found he had worked on a wireless project in Tonga and serves on a Federal Communications Commission advisory council.
Hendricks resigned as head of the Sandoval Broadband project in May amid a state auditor's inquiry into the project's finances. The county claims Hendricks is in default of his contract.
Hendricks, under the company name of Tetherless Access, is now helping design a $12 million wireless broadband system for a group of 16 communities along the Vermont-New Hampshire border.
Project manager Tom Joyce in a recent phone interview said Hendricks started earlier this year and has fulfilled his commitments.
"He has a big reputation, he's one of the best in the world for building wireless systems," Joyce said.
But heading up an entire wireless project?
"I'd put my dog in charge of an operation because he'd bite you if you'd stepped out of line. I wouldn't put Dewayne in there. He's nice," Joyce said recently. "I'm the jerk that tells you it's due yesterday ... and he's not that guy. He couldn't do that. I never thought of him that way."
Joyce said it doesn't make sense to put someone living outside the state in charge of a long-term project.
"We would never hire a consultant or a contractor that's got other jobs around to run a project. It's a 24/7 job."
Hendricks did get an unusual plug from a former colleague at Sandoval Broadband, Betty Anne McDermott of Rio Rancho.
On the project's Web site in an article dated a year ago, she stated: "Dewayne brings savoir-faire cutting edge. Without him there would not be a Sandoval project."