USDA makes huge loan for wireless broadband to a firm that won't talk and plans a novel approach

The Department of Agriculture is making a $267 million loan to bring wireless broadband service to 518 rural communities in 17 states, many of which have no broadband service. The states are Alabama, Arkansas, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Nebraska, Nevada, New Jersey, New York, Ohio, Pennsylvania, South Carolina and Wisconsin. The money will go to Open Range Communications, which has $100 million in private investment.

A department news release said the project is designed to cover more than 6 million people in 447,000 households within five years. "The commitment by USDA and Open Range represents one of the largest public-private investments for broadband service by the federal government," the release said, quoting Tom Dorr, undersecretary for rural development: "Broadband is as important today as providing rural telephone service was 75 years ago."

The department has been criticized for not putting more money into rural broadband, but questions are already being raised about this loan. Not much is known about Open Range, which is based in Centennial, Colo. Company officials wouldn't comment to Kimberly Johnson of The Denver Post, who reported some possible problems with the company's approach, based on comments from Frank Ohrtman, president of a Denver-based WiMax consulting company.

"They intend to do a land-based broadband service using spectrum that was allocated as a satellite spectrum," Ohrtman told the Post. "They have to sublease the spectrum from others. That can be a real showstopper." Johnson added, "Open Range is not using industry standards that would make the cost of equipment lower for customers, Ohrtman said. If a vendor has to custom-build receivers or other equipment specifically for Open Range, costs could be higher." (Read more)