Saturday, October 29, 2011

Louisiana's Lost Broadband Grant: Legislators Complain; Questions Raised

Hat's off to Michelle Millhollon, on the Advocate's legislative beat, who has an exemplary article up today on the loss of the delta region's $80 million broadband grant. She's got the story almost exactly right, something rare in so arcane a topic. It still pays to have real beat reporters.

Francis Thompson, Delhi
She lays out the national political backdrop succinctly and accurately, moving on to State Senator Francis Thompson's anguished pleas for an appeal. Thompson's from Delhi, deep in the heart of Louisiana's most impoverished rural area and his distress, and the distress of his constituents is understandable.

Here's the heart of the story:
Initially, the Board of Regents oversaw the project. The state Division of Administration, which handles the daily operations of state government, later took control and modified the project.

U.S. Sen. Mary Landrieu, D-La., said earlier this week that the state requested alterations without demonstrating that the project could be finished on time and achieve the goals of the original application.
She accused state government of fumbling the ball.
Rainwater told members of the Louisiana Joint Legislative Committee on the Budget on Friday that the Board of Regents' initial approach to the project would have pitted the public sector against the private sector by focusing too much on government involvement.

That's what you need to know: Jindal's Division of Administration under Rainwater took control of the grant process, submitted new plans which violated the terms of the grant, and when challenged, responded by point blank telling first the feds and then the state's legislators that nothing that didn't protect certain business interests was acceptable to the Jindal administration.

¿¿¿¿The Question????
The unanswered question here is: Just whose business interests were at stake and why did their influence warrant sabotaging a plan that had previously passed state muster and had then won a highly competitive grant process at the national level?

Ed Antie's
Board of Regent's Portrait
Mullhollon was surely part of the team that followed the controversy around Jindal's Board of Regent's appointee and telecommunications businessman Ed Antie. (Yes, the same Board of Regent's whose grant project was later reshaped by Rainwater.)  Antie's performance in his confirmation hearing was so shot through with denials of and contradictions about a $531,000 dollar contract one of  his businesses had leasing fiber optics to the Board of Regent's LONI research network that he withdrew his name. But the unusually sharp questioning in that hearing followed and was inspired by his lobbying his new colleagues on the board and the state's education commissioner in the interval between his appointment and his confirmation hearings:
Records submitted to the committee reveal that Antie took an active interest in telecommunications issues during his short time on the board, frequently emailing fellow board members and Higher Education Commissioner Jim Purcell about LONI and urging more involvement by the private sector.
Now this degree of open self-dealing is unacceptable by even Louisiana's famously lax standards. But there's more: even if some members of the Board of Regents were uncomfortable with Antie's antics the board as a whole had come under critical scrutiny. WAFB reported that eight of the nine members Jindal appointed to the Board of Regents donated to his campaign, many within weeks of being appointed. As it turns out Antie had donated $3,000 dollars to Jindal's reelection coffers. But, even sweeter, executives in various businesses associated with his fiber leases to the Board's LONI network had contributed another $16,000 dollars.

It all stinks.

And that's before we even bring up partisan politics and Mary Landrieu's role in securing the grant, the Jindal administration's ragged record on privatization ranging from the prisons to the Office of Group Benefits, or the naked ideology visible in the recent failure to complete application for a $60 million dollars in "race to the top" money for Louisiana's award-winning early childhood programs.

It all stinks.

—Stay tuned; more details and a fuller exploration to come.

Monday, October 17, 2011

"LUS Fiber, Sprint announce partnership" (Updated)

The Advertiser carries a short wrap-up of this morning's Sprint-LUS Fiber event. Turns out it's mostly a marketing—and more subtly, a defensive—move. (My speculations—and a day of intensely pondering and researching the history and technology strategies—turned out to produce a lot of hooey. At least this time. C'est la vie.)

It's not a bad marketing scheme for Lafayette—all Sprint customers, not only new users, get a 10% cut in their Sprint bill if they are LUS customers. Business customers also get waived activation fees for their employees, discounts on upgrades, and a 20% discount on accessories if bought at the time of activation. Over the course of a year a 10% discount can add up...the average US cellular bill seems to be about 600 dollars a year. While the regular joe residential figure, is nice (and I know one guy who just cracked his phones casing who says he's planning to take advantage of it when he gets his new iPhone 4s) it probably isn't where LUS sees its greatest upside. The dollar figure for businesses can add up rapidly—and LUS has been having already been having unplanned-for success in the business sector. Back in August G4S started "to provide network deployment and customer fulfillment services" For LUS Fiber. The company is focused on the business market and this sort of deal can get a foot in the door at businesses. It's easy enough to imagine the sales pitch that would feature going with a superior local network and getting a nice break on your nation-wide cell service.

In the longer run the payoff is likely two-fold. First partnering up with Sprint opens up a dialog with a company that, among other things, both provides long-haul fiber but needs local backhaul. Lafayette is ideally situated to provide local backhaul but needs long-haul connections. There's a nice symmetry there that growing a little trust could help develop. And then there are those other possibilities...

The second long-term consideration, the defensive move, however, is really nice. Cox, we all know, is eventually coming with its relabled Sprint service—it's already launched that addition to its triple play in markets across the country. At one point Cox was geared up to launch its own independent network using (expensive) spectrum it bought at  Federal auction that would be synched tightly to its cable offerings and form a basis for a Cox "third screen" strategy. That's fallen through and a much less ambitious plan to resell Sprint service is what now being offered in limited areas. When Cox gets to Lafayette with that service they'll not have a clear field where they are offering something that the local competition can't match. LUS can, correctly, say that they are getting you a deal on the full range of Sprint services and all the nifty new devices Sprint has in its portfolio while Cox is offering some white-label subset of the the full Sprint network.

Not a bad move.

Update, 10:30, 10/18/11
The Advertiser, the Advocate and KATC have stories this morning on yesterday's Sprint-LUS Fiber announcement. KATC reports that Sprint credits the unique deal to the community's FTTH project:
According to Lori-Anne Hill, Director-Federal & Public Sector Sales for Sprint, this relationship is the first of its kind for Sprint -- partnering with a utility to offer wireless services at a discount. Sprint's decision to partner with LUS Fiber stems largely from the city of Lafayette's impressive Fiber-To-The-Home-and-Business infrastructure and the city's foresight to bring that technology to the city.
If you only have time for one I'd recommend the Advertiser version. The reporter  apparently spent some time talking to LUS' Terry Huval and some bits of the history leading up to the agreement—including the information that Sprint approached LUS Fiber with the deal and is taken with the gumption implied by building our building our own fiber network. Companies like Sprint, who are laboring to extend their own fiber-optic  backbone, understand the start-up expense involved and the long-range vision that implies. That story concludes with a tantalizing hint of future benefits:
This pact with LUS Fiber also extends Sprint's reach directly to LUS Fiber's valued customers and it opens the door to other mutually beneficial business opportunities for Sprint and LUS."

Huval agreed, saying that LUS Fiber and Sprint already are talking about other possible ways to benefit customers of both services.

"We have some ideas, but nothing we can state publicly right now," he said. "But this does give us a platform to move forward in the future."

Sunday, October 16, 2011

LUS & Sprint Teaser...

LUS Fiber and Sprint —"There's something happening here. What it is ain't exactly clear." (With apologies to Buffalo Springfield)
"LUS Fiber and Sprint representatives will make a major announcement concerning the development of a unique partnership."
"LUS Fiber makes ground-breaking strides toward delivering upon its mission of creating tomorrow’s essential broadband infrastructure while advancing today’s telecommunications services."
That's from an LUS Fiber PR teaser; I'd read it as being an embargoed invite to reporters but the Advertiser apparently judges otherwise...and, I admit, the story makes a damn good mystery and something to idly speculate about over the Festivals Acadiens et Creoles weekend.

So what's up with that? What could the nation's third largest cellular network being doing with LUS Fiber that would be "unique" and "ground-breaking?" Now right up front let me say I don't know. And I'll be eager to attend the Monday event to find out. But in the interim we can wonder and even hope a little.

Some (skippable) background on Sprint...National & Local
Sprint has interesting issues: Sprint may be a huge company but it definitely is not in the same league with sector leaders Verizon and AT&T. Those corporations—with 106 and 99 million subscribers respectively—far outpace Sprint's 52 million. T-Mobile is the only other national carrier these days and AT&T is engaged in a concerted effort to buy its perhaps 31 million subscribers. Should that buyout succeed it would leave Sprint in a distant third place at the back of the pack—and falling further behind each quarter. The company's troubles can be traced in part to an attempt to incorporate Nextel, an attempt which ended badly with Sprint unable to absorb either the very different technical network or the Nextel's very different community of users. Sprint tried to break back into the top tier with an abortive stab at building an advanced network based on WiMax but has recently abandoned that effort and restructured its 4G effort around the LTE standard already endorsed by AT&T and Verizon. Most recently Sprint made a splash when the Apple iPhone 4S launched added it as the third US carrier to resell the popular phone. But the cost of the iphone deal, combined with a solid commitment to actually investing in an accelerated LTE buildout has lead to a precipitous drop in the stock and threats to the continued reign of the CEO.

Take-away: Sprint is a huge company with enormous resources that has demonstrated both a need for and a willingness to take unconventional risks. Some of those unconventional positions reflect its ability and willingness to break with its larger wireless brethren. It took itself out of the landline business, so unlike Verizon or AT&T it does not have a "bastion" in one area of the country where it is the clearly the dominant phone company—and it does not have any area in which it has a deep penetration copper/wired network to feed its wireless towers cheaply. Also, Sprint has also been much more willing to resell its network to what are known as MVNOs — companies which use its network and resell a rebranded service possibly because there is no region of the country in which it it would be giving away the ability to "rob" its own landlines without creating a corresponding benefit to its wireless division.

Sprint & Cox: All that might suggest that if any of the cell phone companies might be willing to partnership with the definitely small and "unconventional" LUS it would be Sprint. But, and it's a big but: Sprint's biggest MVNO appears to be Cox Communications. This is a long-standing association which reaches back five years to a time when a partnership of the largest cable companies had reached a deal to converge technologies in the wireless space with an eye toward developing handsets as targets for video. The vision that animated that partnership faltered and Cox was the first big defection. It declared that it was building its own national cellular wireless network, was going to use LTE, and proceeded to invest in expensive spectrum (including significant spectrum in an arc between Lafayette, through Baton Rouge and into New Orleans). Lafayette's partisans have always thought Sprint our best hope for a wireless partner to give a local fiber fueled wireless network national reach.

Sprint's North American Backbone
(click to enlarge)
Sprint & LUS: While it's true that Sprint's alliance with cable companies has always seemed to stand in the way of an partnership with Lafayette it is also true that Sprint has shown LUS Fiber some sympathy—Sprint's fancy Fiber-Optic promotional van appeared 3 times in Lafayette during the referendum fight and served to introduce local citizens to the idea and to serve notice that a major national corporation took fiber-optics seriously. Sprint is also a Tier 1 internet backbone provider (meaning it is a major player) and has fiber backbone assets that run through Lafayette.)

Where does all that get us? A lot of possibilities.
  • The most obvious, and most interesting is some sort of wireless play. But even that has ranges of possibility. 
    • In one scenario LUS becomes an MVNO, offers Sprint service under its own label complete with national roaming. Lafayette gets out in front of the coming "quadruple play" and offers its customers Video, Wired Internet, Phone, and now Cellular telecomm services. (LUS building its own WiFi data network has been in the plans since the beginning—Quintuple play anyone?) Sprint gets a poster boy for a marketing move that leverages local providers' good will to take its MVNO offerings to new markets. (About LUS getting access to Sprint's new iPhone 4S: I refuse to get my hopes up.)
    • Down another dimension Sprint agrees to supply or use a WiFi network or a series of WiFi hotspots. AT&T and Verizon both have programs in place to use localized WiFi networks to reduce congestion on its networks (especially in "small" high traffic areas like hospitals, malls, and stadiums). Sprint has announced its intention to join them, and reveal the plan in 4th quarter (this quarter) of this year. The questions here would be how extensive it would be and what would be LUS' role. 
      • On the most ambitious end Sprint and LUS launch a city-wide wifi network with Sprint getting some sort of exclusive deal to use it to offload voice and data traffic. That would give Sprint an enormously powerful local network, far outpacing any others and would give Lafayette a ubiquitous wireless network any citizen-customer could use.
      • At the least ambitious end Sprint announces a series of hotspots, centering on the downtown area and large event venues using LUS Fiber for backhaul.
    • Or some combination of the above...
  • But various permutations of a wireless play don't exhaust the realm of possibility...Sprint has a powerful wired network too — and, even more than the other carriers, a noticeable lack of easy backhaul to supply its ubiquitous cell towers.
    •  LUS Fiber could be providing that backhaul in Lafayette Parish in a comprehensive move that leverages the wholesale fiber network to provide Sprint with munificent backhaul that would make 4G's new bandwidth demands easy to supply. A smaller move in this direction would entail only using the dense city network. In such scenarios Lafayette gets Sprint 4G wireless early. 
    • Or LUS Fiber could be using Sprint's Tier 1 network for backhaul at a substantial savings.
      •  One permutation would have LUS Fiber switching from satellite download of its video feeds to using Sprint's backhaul to tap into extremely high-quality feeds that travel over fiber. 
    • Or some combination of the above....
  • Or some other wild idea or combination...ideas?
Looking forward to Monday.

Friday, October 14, 2011