Tuesday, June 14, 2016

Network formed to bring broadband to rural Florida goes bankrupt without signing a single customer

A network that accepted $24 million in federal grants to bring broadband to rural Florida has gone bankrupt without having signed a single customer, Gary Pinnell reports for Highlands Today. The Florida Rural Broadband Alliance, which went into Chapter 7 bankruptcy in April, was created by non-profits, Florida’s Heartland Regional Economic Development Initiative and Opportunity Florida, which used a 2009 grant from the economic stimulus package "to build a network that beamed the internet from rented mobile towers."

Greg Harris, former FHREDI director, told Highlands County commissioners, “The reason why FRBA is in bankruptcy is that the contractor that was running the network walked away from the network." He said the equipment is being returned to the federal government, which holds title to it.

The goal of the alliance "was to install central offices in Orlando and Tallahassee, to buy microwave dishes and computer servers, and deploy a middle-mile broadband network in the under-served rural areas of Florida," Pinell writes. "Counties qualified because they have populations less than 100,000 and low per-capita incomes, low per-capita taxable values, and high unemployment. That equipment is still sitting in warehouses in Lake Placid and Tallahassee. However, that last mile—the figurative mile between the middle-mile broadband network and the 200,000 residential and commercial users—never appeared."

Paul McGehee, business development manager for Glades Electric and a Florida Heartland Economic Region of Opportunity director, said the flaw in FRBA’s plan was a lack of federal funds for operations. “No one wanted to step up and operate the network, and there was no way to pay the tower leases,” he said. “The end product wasn’t a viable sustainable thing.” (Read more)

In an October 2014 story in the Jackson County Times, Bo McMullian reported, "Apparently, private industry stepped up and aggressively competed with what it saw as a government-discounted rival." Project manager Jim Brook told him, “Once the grant was awarded, we noted that the incumbent internet service providers appeared to not only go into expansion but to drop their rates.”

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