June 2009 Archives

Recently I posted an article on this blog '4G WiMAX to Become the New e-Printing Press - Saving the Newspaper Publishing Industry' in which I briefly mentioned the National Educational Broadband Service Association (NEBSA) and I wanted to define more clearly the opportunities available using the 2.5GHz EBS band they currently oversee and advise upon to non-profit 2.5GHz EBS license holders all over the United States. The 2.5GHz band -- along with the 3.65Ghz band -- is very effective in the offering of 4G WiMAX solutions in the fixed, nomadic and mobile environments.

These non-profit EBS license holders include state government agencies, state universities and university systems, public community and technical colleges, private universities and colleges, public elementary and secondary school districts, private schools (including Catholic school systems in a number of large metropolitan areas), public television and radio stations, hospitals and hospital associations, and private, non-profit educational entities. All of these agencies are located in the communities where we live and work.

There is no doubt that the 2.5GHz Educational Broadband Service band will provide an extremely cost effective and viable solution for enhanced broadband services and applications in un-served, under served or rural communities. This spectrum, along with other licensed and un-licensed spectrum (e.g. 3.65GHz) could also be used in metro, urban and suburban markets to facilitate ubiquitous and interoperable broadband infrastructures throughout the nation -- leading to a national broadband plan.

And now that Sprint and Clearwire (now 'CLEAR')[1] have secured long term leases from our community non-profit EBS license holders what is it that they plan to do with this valuable spectrum real estate?

Are they going to simply become another service provider and compete to pull every dollar they can from our communities? Are they going to sub-lease to Comcast and Time Warner (as resellers) as these cable incumbents need some kind of wireless strategy going forward? Or will they look at the big picture and take proactive steps to solidify their new 'CLEAR' brand with our businesses, households and communities throughout the United States?

In April (2009) I submitted a response to the joint request for information (RFI) issued by the Department of Commerce National Telecommunications and Information Association (NTIA) and the Department of Agriculture Rural Utilities Service (RUS) surrounding the new Broadband Technology Opportunities Program (BTOP) introduced through President Obama's new American Recovery and Reinvestment Act (ARRA).

This summary is indexed at the top of major search engines (Google/YaHoo 'BTOP responses'). The summary has invited some very intelligent and unique responses from credible companies and agencies such as internet service providers, company executives, NTIA, RUS, NRTC, NRECA, legal/council, non-profits, print/TV media, authors, publishers, municipal/county/state governments and a plethora of other qualified individuals and/or organizations seeking advice or comments on the changing face of broadband within the United States.

The most intriguing of all the responses and comments I have received are from the newspaper publishing industry and colleges/institutes of journalism. Based on this input I can envision devices, firmware and software (e.g. Plastic Logic) that will in essence maintain the visual cues of traditional publishing (printing) and allow the industry to make a smooth transition to digital delivery of their medium and advertising. This can be accomplished by using state-of-the-art software, firmware and wireless delivery methods incorporating spectrum that has yet to be fully utilized. This also could represent fundamental improvements to traditional business and operating models synergistic to both the newspaper publishing industry and incumbent wireless service providers.

3.65GHz (WiMAX) Band

The 3.65GHz band is garnering much attention of late. Some national and local (W)ISP's have established footprints in their respective markets and are basically marketing services to businesses that would provide fixed point-to-point wireless resulting in replacement of hard line T1 and other antiquated services and equipment while providing significant cost savings. This only scratches the surface when introducing the capabilities of this spectrum.

In both the fixed and nomadic environments this spectrum could be used to provide robust broadband wireless applications and services to residential, municipal and local businesses. The problem is that everyone is waiting to see what is going to happen with CLEAR and the 2.5GHz EBS. It seems that everywhere there is substantive service using the 3.65GHz band CLEAR comes in and soft launches in the same market, notifies the local and national media and bombards the market with the promises of their new high speed fixed, nomadic and mobile 4G (WiMAX) network.

Both the 2.5GHz EBS and 3.65GHz bands represent an excellent delivery vehicle for newspaper publishers to deliver their digital content and advertising in the form of an "e-newspaper" that would be delivered to e-readers now being developed and tested in the marketplace.

With that being said let's move directly to a very simple plan that provides fundamental improvements in operating and revenue models for the publishing industry, 3.65GHz operators and service providers while bolstering CLEAR's subscriber base and bottom line profits using the 2.5GHz EBS. This plan can also help to define strategies and solutions surrounding the sovereign support for a national broadband plan.

A 'CLEAR' Strategy

The best way to introduce this new model is to define a geographical service area (GSA) in which CLEAR has leased 2.5GHz EBS spectrum, there is an established 3.65GHz operator(s) and there is distribution of major newspaper(s). For this model we will use Palm Beach and Broward County, Florida (PBC/BC).

The Players

• CLEAR has leased the 2.5GHz EBS from Florida Atlantic University (FAU) for the next 30 years. FAU's license covers all of PBC/BC. CLEAR will pay a total of $173 million over that period with an up front payment of $14 million.
• The Palm Beach Post (175,495 Daily; 204,847 Sunday)
• The Sun-Sentinel (226,591 Daily; 319,103 Sunday)
• Several 3.65GHz WiMAX operators and service providers

Note: In markets where there is no established 3.65GHz service provider or operator newspaper publishing companies could establish their footprint and own/operate their own network. This would provide substantive new revenue streams for the newspaper publishers by leasing out bandwidth on their network for local public use, systems and agencies.

Bi-County Demographics (approximate)

• 1.4 million households
• 3 million people
• 300,000 businesses
• 3,200 square miles

Concurrent build out of both the CLEAR 2.5GHz EBS and 3.65GHz bands providing full bi-county GSA coverage and revenue model is agreed upon. (using AirSpan equipment in PBC/BC)

The newspapers will become the initial marketing arm for CLEAR and the 3.65GHz service providers. This represents an immediate potential customer base (circulation) of -- let's say --  400,000 in PBC/BC. WiMAX enabled E-readers are delivered free of charge in exchange for subscription to the e-newspaper. The cost in doing this is now absorbed through the operating budget allocated for their printing press and other operations in delivery of their traditional print version of the newspaper. (Average cost per year for 100,000 circulation is about $30 million)

In conjunction with marketing their e-newspaper product and service the newspapers can also offer multiple extended or enhanced fixed, nomadic and mobile WiMAX services and applications (SLA's). This could include:

• CLEAR - Increased upload/download speeds, VoIP, enabling delivery platforms for three-screens digital media, hosted video platforms, video servers, CDN, publishing platforms, technology platforms for rich media, Encoding/Transcoding, DRM and content security, client software, streaming, players, asset management, streaming and delivery platforms, VOD, subscription, rental, download to own, ad-supported, carrier services and delivery, hybrid, service bundles, three-screens convergence devices and services, hybrid set-top boxes, carrier and over-the-top enabled devices, broadcast and streaming, CE device streaming platforms, software platforms for three-screens services, and future deliverables within the GSA.
• 3.65GHz WiMAX Service Providers and/or Newspaper Publishers - Ubiquitous core (base cost) fixed, nomadic and mobile broadband wireless services, communications, applications, media and entertainment for all residents, businesses, local/county governments, school systems, colleges/universities, public access TV, public safety, first responders, private security/remote DVR access, energy/utility programs and services, health care, libraries, low-income households, distance learning, employer outreach, tele-medicine, destination market portals and future deliverables within the GSA.

The benefits in using this new model are endless but here are a few major advantages:

• Concurrent build out of both 2.5GHz and 3.65GHz bands in major MSA's (metro, urban, suburban markets) throughout the United States will provide for exponential job creation
• Bolsters bottom line for CLEAR, the 3.65GHz service provider and/or newspaper publisher
• Spectrum management is greatly improved
• Provides Municipalities and Cities within the GSA much needed wireless infrastructure leading to direct cost savings and increases in productivity through enhanced departmental applications
• Will adhere to FCC substantive use and licensing requirements surrounding both bands
• Unleashes private sector credit markets and investment by introducing significant ROI opportunities
• All company/non-profit/local government brands are greatly improved due to increased community outreach and creation of "social capital" and;
• Provides distinctive competitive advantage over future AT&T/Verizon services

This model could represent an excellent starting point towards formulating a national broadband plan that new FCC Chair Julius Genachowski is charged with. His confirmation hearing is set for June 16, 2009. 

 

[1] Sprint Nextel Corporation ("Sprint") and Clearwire Corporation ("Clearwire") have filed a series of applications pursuant to Section 310(d) of the Communications Act of 1934, for authority to transfer control of certain licenses, authorizations, and de facto transfer spectrum leases held by Sprint, Clearwire and their subsidiaries to a new wireless broadband company also called Clearwire Corporation ("CLEAR"). Approved 11/4/08. Also lists Orders & Public Notices, Recorded Documents http://www.fcc.gov/transaction/sprint-clearwire.html

Reference Article

Senate Sets Genachowski Confirmation Hearing

"Almost six months after his nomination to serve as chairman of the Federal Communications Commission, Julius Genachowski will finally go through the confirmation process [June 16]. If confirmed, as expected, Genachowski is likely to lead President Obama's change agenda for U.S. technology, including policy changes on network neutrality."


A national broadband plan. This is what new FCC Chair Julius Genachowski will be charged with formulating. This is going to be quite a task based upon past FCC and White House policy and rule changes surrounding broadband and spectrum in this country. But with Harvard buddy Obama at the helm some significant changes are surely going to present.

So what does FCC Chairman Genachowski have to work with?

Spectrum - 2.5GHz EBS (Excess), 3.65GHz (Incentives for Operators), 4.9GHz, 5.8GHz, 2.4GHz

The most immediate creative and viable solution in developing and deploying a nation wide broadband plan lies with a proactive approach by Clearwire so we will leave AT&T and Verizon out of the mix for now.

As Clearwire now controls about 85+ percent of the 2.5GHz EBS band covering major MSA's in the United States the following model is proposed. This new model does not effect existing lease agreements with non-profit 2.5GHz EBS license holders.

Link to Proposed Model (graphic opens in new window)
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The overall benefits of "CLEAR" (Clearwire/Sprint) partnering with local GSA 3.65GHz service provider(s) and equipment manufacturers in concurrent build out of the 2.5GHz EBS band (fixed/nomadic/mobile), 3.65GHz band (fixed, nomadic), and other synergistic spectrum (e.g. 5.nGHz, 4.9GHz, 2.4GHz, etc) provides for the following:

• Ubiquitous (one account) fixed, nomadic and mobile broadband wireless services, communications, applications, media and entertainment for all residents, businesses, local/county governments, school systems, colleges/universities, public safety, first responders, health care, libraries, low-income households, etc. within the coverage area (GSA)
• Revenue models will enable CLEAR to maintain projected bottom line profits using the 2.5GHz EBS while revenue models using the 3.65GHz will flow back to the communities through the public/private partnerships (PPP's) that will be formed. For example:
• CLEAR (2.5GHz EBS) can charge whatever they see fit for enhanced fixed/mobile/nomadic wireless services (which subscribers will demand) including increased upload/download speeds, VoIP, enabling delivery platforms for three-screens digital media, hosted video platforms, video servers, CDN, publishing platforms, technology platforms for rich media, Encoding/Transcoding, DRM and content security, client software, streaming, players, asset management, streaming and delivery platforms, VOD, subscription, rental, download to own, ad-supported, carrier services and delivery, hybrid, service bundles, three-screens convergence devices and services, hybrid set-top boxes, carrier and over-the-top enabled devices, broadcast and streaming, CE device streaming platforms, software platforms for three-screens services, etc.
• Community (Public/Private Partnerships (PPP's) and/or Service Providers) 3.65GHz can charge low-cost base core subscription rates for basic fixed/nomadic wireless internet/network access and communications, fixed/nomadic VoIP, VPN's, fixed point-to-point. These local networks will also provide broadband applications and services autonomous to local communities and cities for residents, businesses, local governments, public safety/first responder, health care, school systems, colleges, local newspapers, libraries, low-income households or other public or departmental agencies distance learning, employer outreach, telemedicine, destination market portals, etc.
• Marketing can be set up in a way that potential subscribers will have multiple PPP/CLEAR SLA's to choose from.
• Adhere to the FCC deadline that's pushing lease holders nationwide to find operators that will put 2.5GHz spectrum to substantive use by May, 2011 (model can lead to concurrent build out in all CLEAR GSA's and may possibly extend this deadline of May, 2011).
• Greatly increase subscriber base to CLEAR services
• This model makes the non-profit EBS license holder look very good in the eyes of all communities, cities and municipalities within the GSA coverage area (instead of sole beneficiaries of CLEAR lease monies being the constituency of that particular EBS license holder)      
  
• Spectrum use and management of all available bands is greatly improved
• This model can help to set the standard for BTOP, NTIA, RUS, FCC, NEBSA in:
  • Rural Markets (un-served, under served) - In markets where CLEAR has obtained licenses where GSA coverage spills over to these markets CLEAR can partner with local service providers AND the electric/telecommunication cooperatives to incorporate the latest in state-of-the-art broadband facilities. (Supports comments made by the NEBSA regarding funding for lease partners -http://www.ntia.doc.gov/broadbandgrants/comments/6F1B.doc - Pg. 8, Sec 6)
  • Urban and Suburban Markets - CLEAR (2.5GHz) partnership with local 3.65GHz GSA public/private partnerships will expedite concurrent build out of new state-of-the-art broadband wireless facilities and deliverables and;
  • The development and deployment of a new national broadband plan, delivered to Obama and Congress by February, 2010            
• Exponential job creation in markets throughout the United States and;
  
• CLEAR 2.5GHz EBS, partnering with Community (PPP) 3.65GHz, solidifies CLEAR's position in the market and provides distinct competitive advantage over future ATT/Verizon 700MHz LTE offerings.

The Newspaper Publishing Industry

If you incorporate the Newspaper Publishing Industry into the above model then you have a "clear" marketing strategy as:

• The Newspaper Publishing Industry needs broadband wireless facilities for delivery of future "e-newspapers" to e-readers like Kindle and Plastic Logic and;
• Wireless incumbent Clearwire (2.5GHz EBS) and local 3.65GHz WiMAX service providers have an instant subscriber base (newspaper circulation) of which to market extended or enhanced broadband wireless services (co-marketing of multiple service level agreements)

 

[Published by Brad Bowman and the 3.65GHz WiMAX Publishing Consortium (3.65WiMAX.com)]

Reference Articles

"The president is talking about broadband and newspapers "all the time," says Obama administration member Susan Crawford [Obama's National Economic Council]. But the answers to how to boost both remains to be determined." http://www.broadcastingcable.com/article/232506-President_Obama_Focused_On_Broadband.php

"But well into what Crawford described as a "watershed year for the journalism industry," the economics of the proposition remain an unanswered question. With the explosion of content online, information is no longer a scare resource that can command a high price tag. Advertisers have an exponentially larger menu of less expensive options than display ads in printed media, and online ad revenue is proving incapable of sustaining a large newsroom.

"It's not immediately apparent what that plan B is," Crawford said. "It's not ... apparent that a business model on purveying information will be sustainable." http://www.internetnews.com/government/article.php/3820421/Obama+Aide+Broadband+May+Save+the+News.htm

Summary

Stop the presses...literally.

As the United States gears up for what could turn out to be major changes in deployment of new broadband infrastructures and wireless technology the publishing industry needs to latch on and seize the opportunities available to re-tool their traditional operating and revenue models.

It seems that everyday we hear of another newspaper that is laying off employees and closing their doors on their print divisions while trying to figure out how to make money with their static on-line websites. So far, none of this is working. Advertising revenue has fallen dramatically and without a major re-vamp of how publishers can maintain their brand and their presence within their communities the American people and businesses will not realize how important these newspapers are until it is too late.

For decades, and in some markets centuries, newspapers have played a pivotal role in how we disseminate and receive information. We take for granted the invaluable services this industry provides for our communities. And it is these same communities that will benefit even more if their local newspapers can take the blinders off and develop a business model that will keep them in business while using the same assets to provide the core broadband services needed for their communities.

The newly created 3.65GHz WiMAX band can become the new delivery facility for publishing of e-newspapers. This newer touted 4G, or WiMAX technology, is being examined by publishing industry experts as the new delivery method for their medium.

So get ready for new state-of-the-art wireless viewing components that will replace traditional delivery of your newspaper to your home or office. These devices will incorporate all the visual cues associated with current print editions of your local newspaper or nationally published magazines but instead of wetting your fingers to turn pages, you will simply slide your finger left or right on a screen to turn the page and tap to read an article, view a video, etc.. It will also cost nothing for subscribers to receive their own personalized mobile access and viewing station in exchange for the subscription.

Traditional operating models required that publishers own and operate their own printing presses that were only in operation after final copy had been delivered. With the introduction of WiMAX, newspapers can eliminate costs involved in operation and maintenance of their printing presses and use wireless to deliver their content, 365/24/7.

The newspaper industry can also take this model a step further. The new operating model also presents an abundance of new revenue streams for newspaper publishers by leasing bandwidth on their WiMAX networks. This will provide the communities they serve with low-cost, high-speed ubiquitous internet access and communications (e.g. VoIP) benefiting their residents, businesses, local governments, public safety/first responder, health care, school systems, colleges, libraries, low-income households or other public or departmental agencies. So, if modeled correctly, newspapers could maintain a level of traditional printed medium while transitioning to digital delivery.

In essence, our local newspapers will become an internet service provider (ISP). They have the option of owning and operating their own networks or partnering with local service providers already offering the WiMAX services.

And the budget is there too. Average production costs for circulation of 100,000 newspapers runs about $30 million per year. This money could be reallocated to invest in the wireless infrastructure needed to deliver their digital medium and advertising to state-of-the-art viewing stations, kiosks, tablets or handheld devices. This money would also allow local and national publishing companies to anchor themselves as a substantial stakeholder in broadband network services providing them with significant ROI.

As part of this new model newspapers can also offer bundled wireless internet access and communications packages to residents and businesses within their markets. CaPEX for these types of networks are low (compared to traditional large scale Telecom or Cable wired networks). This would greatly increase bottom line profits. And the best part of all of this is that this revenue stays within the community to improve upon the existing aforementioned services or develop new community outreach or re-development programs.

Jobs are created, not eliminated. Borne from this model are greatly enhanced distance learning and employer outreach programs, educational tools and even the ability to partner with power companies to provide money saving "green" energy management programs, load control and rebate programs through the two-way high speed wireless communication available through the network. The benefits are endless.

Existing internet service providers and wireless operators should also welcome this new business model. By partnering with local and national publishers their potential subscriber base would increase exponentially by being able to market their extended services to the publishers existing circulation (subscribers to their print, e-paper, e-magazine).

Based upon input and comments from the National Educational Broadband Service Association (NEBSA) and newspaper publishing companies, the availability of NTIA BTOP and RUS broadband stimulus programs and sovereign support of a national broadband plan it is evident that the United States is positioned to develop it's existing wireless assets (2.5GHz EBS, 3.65GHz band) most effectively through partnerships of qualified national and local GSA (W)ISP's and newspaper publishers with alliances to municipalities, cities and counties and their associated public systems and facilities currently desiring their own broadband wireless infrastructures.

Rural Telecommunication/Energy Cooperative Broadband vs. Urban and Suburban (Metro) Broadband

Brief History

The National Rural Electric Cooperative Association (NRECA)
Electric cooperatives are private, independent electric utilities, owned by the members they serve. Democratically governed businesses, electric cooperatives are organized under the Cooperative or Rochdale Principles, anchoring them firmly in the communities they serve and ensuring that they are closely regulated by their consumers.

The National Rural Telecommunications Cooperative (NRTC)
NRTC was founded in 1986 by the National Rural Electric Cooperative Association (NRECA) and the National Rural Utilities Cooperative Finance Corporation (CFC). NRTC provides products and services developed specifically to meet the needs of rural utilities and their customers, such as high-speed Internet access via satellite, full service Internet access and support, automated meter reading, SmartSCADA, wireless technologies, power quality products, long distance programs, mobile phone service, IP backbone services, direct broadcast satellite service (DBS) with DIRECTV and Internet protocol television (IPTV).

By the numbers:

• 40 million people in 47 states.
• 17.5 million businesses, homes, schools, churches, farms, irrigation systems, and other establishments in 2,500 of 3,141 counties in the U.S (80 percent of the nation's counties).
• 12 percent of the nation's population.

2.5GHz EBS/3.65GHz Broadband Wireless and Telecommunication/Energy Cooperatives Provide Distinct Advantage - Perfect Model for NTIA BTOP and RUS

During their haste to secure long term leases from non-profit EBS License holders in major metropolitan service areas (MSAs, Metro, Urban and Suburban markets) Sprint and Clearwire passed over many rural markets simply because they determined that the revenue was not there and did not suit their ROI models.

Enter the NTIA BTOP and RUS broadband stimulus programs. As beneficiaries of first tranche funding from the Department of Agriculture Rural Utilities Service (RUS, $2.5 billion) rural markets in the United States are now poised to set the standard not only for enhanced fixed, nomadic and mobile broadband wireless infrastructures, services and applications but to bolster consumer awareness, adoption and advocacy of their existing Telecommunications and Energy Cooperatives that now exist.

The NRECA and the NRTC should begin immediately to determine who is in control of the 2.5GHz EBS band in their respective markets . The advantages of being able to use this spectrum in conjunction with 3.65, 5.n, 4.9 and 2.4GHz spectrum are tremendous for their existing consumer base. And by offering new state-of-the-art broadband wireless facilities to their markets they will inevitably attract new customers to their cooperatives.

The broadband service applications surrounding these cooperatives are also very conducive to sustainable NTIA BTOP and RUS programs. This includes ubiquitous high speed wireless network access from anywhere within the coverage area, much improved IP based communications (VoIP) and facilitating much needed two-way residential and commercial energy control and conservation programs leading to smart grids and local energy storage at the home.  

There are far too many broadband service applications to mention but all one has to realize is that by encompassing energy control and conservation, telecommunications and enhanced broadband infrastructures and applications, all of which all are managed, operated and overseen by the consumers they serve represents a pivotal fundamental improvement to traditional business models offered by large broadband service providers in medium and large sized metropolitan, urban and suburban markets.

Urban and Suburban markets are not so lucky. Most consumers in these markets are beholding to behemoth service providers for their broadband and energy needs and these consumers are offered no participation or public input regarding development, deployment or functionality of the networks. Costs remain high while technological advances remain dormant.
 
As newer state-of-the-art wireless facilities are introduced in rural markets it is the urban and suburban markets that will become "under served" thanks to the blatant support of large incumbent service providers by the FCC and their policy/rule changes in both the 2.5GHz and 700 MHz spectrum.

Maybe large incumbents will be able to match rural speeds and QOS in urban and suburban markets but they will not be able to match the low costs and overall community benefits derived from operating under cooperative business models as in rural markets.

Digital Bridge Communications Corp. (DBC) has seen the light. They recently inked a deal with the NRTC. By combining capabilities, NRTC members and DigitalBridge will be able to rapidly deploy affordable, next-generation WiMAX services to large parts of rural America. DBC's deployment capabilities, state-of-the-art Network Operations Center, scalable billing and customer care systems, and solid operating record will be further leveraged and enhanced by NRTC members' track record of rolling out new technologies in their rural communities.



DBC will be taking full advantage of the available spectrum in rural markets, namely the 2.5GHz Educational Broadband Service (EBS) band in combination with the 3.65GHz band and other synergistic spectrum.

Urban and suburban broadband markets, mostly controlled by large incumbent operators and service providers are now going to become the "under served" while consumers in those markets will be paying top dollar for antiquated broadband services.

[links open in new window]
(From Mercury News Article June 2, 2009)

Challenging the Legislature to "spend only what we have," Gov. Arnold Schwarzenegger declared Tuesday that devastating cuts in the state budget are unavoidable, but said they could lead to lasting reforms and a revived economy.

Addressing a rare joint session of the state Senate and Assembly, he urged lawmakers toresolve a $24 billion deficit within two weeks, before the state starts to run out of cash. Schwarzenegger stuck to his revised cuts-only budget-balancing plan, unveiled last week, that includes eliminating the state's welfare-to-work program and its health insurance program for poor children, along with deep cuts to schools, parks and higher education.


Introduction

As California and most States face similar challenges it boggles the mind that these agencies and officials continue to follow the same flawed bureaucratic processes that got them in this situation in the first place. And even if Wall Street and the federal government continue to bail these states out how long can this last?

As we are experiencing the worst economic downturn since the Great Depression the Telecom and Cable Industries seem to be flying under the radar. The government continues to bail out large financial, insurance institutions and auto makers, promising that these bail outs will get these companies back on their feet. Does anyone truly believe this?

Auto makers can re-tool to start making cars that will benefit our economy and the planet. But what are the financial markets going to do? The whole financial and banking system needs to be reformed but this is not the subject of this post.

A serious re-vamping of State operational and revenue models is needed and the first place to start is with variances in operating and revenue models surrounding broadband infrastructure and communications services in our communities, cities and counties.

During this economic downturn the American people and businesses are finding a way to pay for the most expensive internet access and communications services in the World. They will put off a credit card payment (or use that same credit card) to pay and maintain multiple accounts for their cell phones, pay TV, internet access, VoIP, land lines, fax lines, GPS, etc. because these are services that we, as Americans, cannot live without.

American businesses and households pay $100, $200, $400 or more per month to large incumbent Telecom and Cable companies. These companies compete daily to pull every dollar they can from our communities and cities to line their pockets with the mask of responsibilities to stock holders. These companies remain in the black while almost every other major industry in the United States is struggling to survive.

The creative solutions and initiatives to combat this economic downturn will be borne from the communities in which we work and live... from the ground up. Not from the top down. Communities and Cities now have the means to launch revenue generating broadband infrastructures that can provide the core communications and internet access needed to sustain as a community while bolstering economic stimulus and community outreach programs within their markets.

These core services will greatly benefit the communities they serve by providing low-cost, high-speed ubiquitous internet access and communications for their residents, businesses, local governments, public safety/first responder, health care, school systems, colleges, libraries, low-income households or other public or departmental agencies. Revenue from these core services will remain within the communities.

Then we will demand (and pay for) extended or enhanced communications, entertainment, internet, and other peripheral products and services from large incumbent operators and service providers.

Communities, cities and counties throughout the United States have issued numerous RFI's and RFP's over the years that have only found their way to the circular file because of the lack of assets and viable cost-effective solutions to build out these wireless infrastructures.

This can only be attributed to past FCC and White House administrations and their blatant support of large incumbent Telecoms and Cable companies. They have allowed these companies to monopolize all the assets needed, namely spectrum.

Brief History

In January 2008 the FCC allowed AT&T and Verizon to gobble up most of the 700MHz spectrum at auction... thus the reason for the transition to DTV.

The FCC also allowed Sprint and Clearwire to approach hundreds of non-profit 2.5GHz Educational Broadband Service (EBS) license holders to lease this spectrum. These non-profits include state government agencies, state universities and university systems, publiccommunity and technical colleges, private universities and colleges, public elementary and secondary school districts, private schools (including Catholic school systems in a number of large metropolitan areas), public television and radio stations, hospitals and hospital associations, and private, non-profit educational entities. These are non-profits located in OUR COMMUNITIES!

How and why did the FCC allow this to happen? This is something we need to scrutinize a bit further.

The FCC recently approved (Election Day, 2008) Sprint and Clearwire merging their spectrum holdings to form "CLEAR" [1]. It is their intention to offer WiMAX based Fourth Generation or "4G" wireless services using this spectrum. Intel has announced their laptop silicon chip sets (Rosedale 2) will support WiMAX mobile technology in only four bands of spectrum, one of which is the EBS band.

Long term leases of this spectrum (15-30 years) were negotiated with these non-profit Licensees at extremely undervalued terms[2]. This can be attributed to the tactics used by potential Lessees during negotiations to secure these long term leases and to the lack of proper due diligence on the part of non-profit Boards of Trustees and their assignees to perform basic diligence including analyzing and forecasting the present and future value of their spectrum, technology standards, cost basis, CaPex, OpEx and revenue models[3].

Non-Profit Boards of Trustees were impelled to sign these long term leases under the assumption that CaPex would be too high (at that time). This discouraged Boards of Trustees and their assignees from forecasting current and future CaPex, OpEx and revenue models that would have favored build out of their own core broadband infrastructure using the asset they have maintained for decades. This eventually lead to only one alternative... accept the lucrative offer as put forth by Sprint or Clearwire due to the responsibilities of Boards of Trustees to the constituency they serve.

It is ironic that the very non-profit agencies that hold and manage the rights to their 2.5GHz Educational Broadband Service (EBS) spectrum are the same non-profit agencies that now will potentially become their own customers and consumers and pay a premium to CLEAR. Even worse is the fact that all of these non-profit agencies are the very agencies that were represented as potential applicants to NTIA BTOP and RUS broadband stimulus funding during the BTOP public round table meetings and panelist discussions.

Had these non-profits in medium and large MSA's not succumbed to the lure of under valued upfront cash payments and residual lease payments these non-profit EBS License holders would be in a position to generate much higher gross revenues by establishing public/private partnerships with local (W)ISP's, governments, communities, cities, counties, school systems, public safety/first responders, health care and other stake holders through private sector investment that would facilitate exponential job creation and greatly enhance NTIA BTOP, RUS and ARRA initiatives and programs as a whole.

Instead, all of these agencies and tenants will conceivably have to go through the 2.5GHz EBS spectrum "middle man" to obtain the services critical to sustaining their own infrastructures surrounding NTIA BTOP, RUS broadband programs and associated ARRA programs as a whole.

The Solution

The most immediate creative and viable solution in developing and deploying a nation wide broadband plan lies with a proactive approach by Clearwire so we will leave AT&T and Verizon out of the mix for now.

As Clearwire now controls about 85+ percent of the 2.5GHz EBS band covering major MSA's in the United States the following model is proposed. This new model does not effect existing lease agreements with non-profit 2.5GHz EBS license holders.

Link to Proposed Model (graphic opens in new window)
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The overall benefits of "CLEAR" (Clearwire/Sprint) partnering with local GSA 3.65GHz service provider(s) and equipment manufacturers in concurrent build out of the 2.5GHz EBS band (fixed/nomadic/mobile), 3.65GHz band (fixed, nomadic), and other synergistic spectrum (e.g. 5.nGHz, 4.9GHz, 2.4GHz, etc) provides for the following:

• Ubiquitous (one account) fixed, nomadic and mobile broadband wireless services, communications, applications, media and entertainment for all residents, businesses, local/county governments, school systems, colleges/universities, public safety, first responders, health care, libraries, low-income households, etc. within the coverage area (GSA)
• Revenue models will enable CLEAR to maintain projected bottom line profits using the 2.5GHz EBS while revenue models using the 3.65GHz will flow back to the communities through the public/private partnerships (PPP's) that will be formed. For example:
• CLEAR (2.5GHz services) can charge whatever they see fit for enhanced fixed/mobile/nomadic wireless services (which subscribers will demand) including increased upload/download speeds, VoIP, enabling delivery platforms for three-screens digital media, hosted video platforms, video servers, CDN, publishing platforms, technology platforms for rich media, Encoding/Transcoding, DRM and content security, client software, streaming, players, asset management, streaming and delivery platforms, VOD, subscription, rental, download to own, ad-supported, carrier services and delivery, hybrid, service bundles, three-screens convergence devices and services, hybrid set-top boxes, carrier and over-the-top enabled devices, broadcast and streaming, CE device streaming platforms, software platforms for three-screens services, etc.
• Community (PPP's) 3.65GHz can charge low-cost base core subscription rates for basic fixed/nomadic wireless internet/network access and communications, fixed/nomadic VoIP, VPN's, fixed point-to-point. These local networks will also provide applications and services autonomous to local communities and cities for residents, businesses, local governments, public safety/first responder, health care, school systems, colleges, local newspapers, libraries, low-income households or other public or departmental agencies distance learning, employer outreach, telemedicine, destination market portals, etc.
• Marketing can be set up in a way that potential subscribers will have multiple PPP/CLEAR SLA's to choose from.
• Adhere to the FCC deadline that's pushing lease holders nationwide to find operators that will put 2.5GHz spectrum to substantive use by May, 2011 (model can lead to concurrent build out in all CLEAR GSA's and may possibly extend this deadline of May, 2011).
• Combat any concerns as to how the 2.5GHz Educational Broadband Service was acquired by CLEAR, use the overall premise of the ARRA to create a sense of community (social capital) while improving Company brand to new all time highs.
• Greatly increase subscriber base to CLEAR services
• This model makes the non-profit EBS license holder look very good in the eyes of all communities, cities and municipalities within the GSA coverage area (instead of sole beneficiaries of CLEAR lease monies being the constituency of that particular EBS license holder)      
  
• Spectrum use and management of all available bands is greatly improved
• This model can help to set the standard for BTOP, NTIA, RUS, FCC, NEBSA in:
  • Rural Markets (un-served, under served) - In markets where CLEAR has obtained licenses where GSA coverage spills over to these markets CLEAR can partner with local service providers AND the electric/telecommunication cooperatives to incorporate the latest in state-of-the-art broadband facilities. (Supports comments made by the NEBSA regarding funding for lease partners -http://www.ntia.doc.gov/broadbandgrants/comments/6F1B.doc - Pg. 8, Sec 6)
  • Urban and Suburban Markets - CLEAR (2.5GHz) partnership with local 3.65GHz GSA public/private partnerships will expedite concurrent build out of new state-of-the-art broadband wireless facilities and deliverables and;
  • The development and deployment of a new national broadband plan, delivered to Obama and Congress by February, 2010            
• Exponential job creation in markets throughout the United States
• CLEAR 2.5GHz EBS, partnering with Community (PPP) 3.65GHz, solidifies CLEAR's position in the market and provides distinct competitive advantage over future ATT/Verizon 700MHz LTE offerings.

[1] Sprint Nextel Corporation ("Sprint") and Clearwire Corporation ("Clearwire") have filed a series of applications pursuant to Section 310(d) of the Communications Act of 1934, for authority to transfer control of certain licenses, authorizations, and de facto transfer spectrum leases held by Sprint, Clearwire and their subsidiaries to a new wireless broadband company also called Clearwire Corporation ("New Clearwire"). Approved 11/4/08. Also lists Orders & Public Notices, Recorded Documents http://www.fcc.gov/transaction/sprint-clearwire.html

[2] VERMONT STATE COLLEGES -- LEASING OF EDUCATIONAL BROADBAND SERVICE (EBS) SPECTRUM & COMPETITIVE BIDDING REVIEW; "Our information suggests that VSC likely did not receive full fair market value for its licensed spectrum asset and likely would have received higher compensation through a competitive bidding process."(pg. 16, Thomas M. Salmon, CPA, Vermont State Auditor ) http://www.accessdelray.org/pdf/vermont_case_study.pdf

[3] VERMONT STATE COLLEGES -- LEASING OF EDUCATIONAL BROADBAND SERVICE (EBS) SPECTRUM & COMPETITIVE BIDDING REVIEW; "While VSC was not required to seek a professional appraisal or valuation of its EBS licenses, or technical advice from expert outside counsel, prior to entering into a long term lease, it should have done so as a matter of proper due diligence. Broadcast spectrum is a scarce resource and a professional valuation would, in our opinion, have served VSC well."(cvr. Ltr, Thomas M. Salmon, CPA, Vermont State Auditor) http://www.accessdelray.org/pdf/vermont_case_study.pdf

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The United States ranks a dismal 17th in the World in broadband deployments and services while offering the most expensive services available compared to other nations around the World. Most of this can be attributed to past FCC and White House administrations and their blatant support of large incumbent Telecom's and Cable Companies.

It is quite clear that Communities, Municipalities, Cities and Counties within the United States have desired to build out their own broadband (wireless) infrastructures for their Citizenry, Businesses, Tourists, Local Governments, School Systems, Health Care Providers, Public Safety, First Responders and Low-Income Households, serving their Urban, Suburban and Rural Geographical Service Areas (GSA's), since broadband Wi-Fi (802.11n) became tried and true in the marketplace.

Newer broadband technologies will allow Communities, Municipalities, Cities and Counties to build towards developing and deploying extremely cost-effective high speed broadband communications, networks, applications and services that will help these public agencies and systems define their own broadband futures in all urban, suburban and rural markets within the United States.

This blog will present ideas that will introduce creative solutions to benefit all Americans and businesses and hopefully prevent federal government officials, Congress, the FCC and the NTIA BTOP/RUS from following the flawed bureaucratic processes of the past and to capture as much "broadband bang-for-the-taxpayer buck" from the new Department of Commerce National Telecommunications and Information Association (NTIA) Broadband Technology Opportunities Program (BTOP) and the Department of Agriculture Rural Utilities Service (RUS) program as possible.

It will also introduce variances from traditional business models that will allow large incumbent service providers to maintain bottom line profits while bettering their brands in the eyes of the American people. This is important because there is no getting around the large incumbents in the United States especially due to the blatant support of these incumbents by the past FCC/Federal Legislators and because of the spectrum auctions/lease agreements that have been executed to this point.

We can try to compare our new broadband stimulus to that of, let's say, Australia but the comparisons quickly become irrelevant when you look at the differences in funding, deployment, spectrum allocation/availability and operational models being proposed. In the United States we have what we have to work with (the Government, large incumbent service providers, the FCC, etc.) and it will take creative solutions and fundamental changes in traditional models, policy and rules to achieve the lofty goals initiated by the new Obama administration. This must all be accomplished while allowing incumbents to maintain bottom line profits. In fact, the Telecom and Cable sector are poised to take proactive steps to accomplish these overall goals.

It is also important to point out that as of the date of this blog post Obama FCC Chair nominee Julius Genachowski has yet to be confirmed by the Senate. When confirmed, Mr. Genachowski will certainly introduce the changes needed to accomplish the tasks he is charged with... namely changes in FCC policy and rules to facilitate development and deployment of a national broadband plan and infrastructure.

The need for creative, forward thinking approaches towards implementing successful and sustainable broadband technology and operating models in the new US broadband wireless arena is only compounded by the fact that we need to relieve much of the onus that will be exacted upon Federal and State departmental officials and the NTIA BTOP/RUS to coordinate and implement sustainable and transparent broadband programs.

There is a total of $7.2 billion of funding available from the NTIA BTOP and RUS through the American Recovery and Reinvestment Act (ARRA) of 2009. Institutional and private sector monies must also be solicited to fortify flailing credit markets. The technology sector can help to accommodate this need as this is one market segment that will continue to thrive and help the United States and the World to recover from the current economic downturn.

Large private sector financial institutions and financial advisers have already expressed interest in migrating from traditional investment vehicles to specifically bolster investment in newer broadband facilities and infrastructures.

It is also important to realize that NTIA BTOP and RUS program monies are going to improve upon and help sustain the many programs that will be introduced by the ARRA as a whole (outside of the broadband stimulus). Broadband wireless infrastructures will directly affect the success and sustainability of these ARRA programs. A sensible broadband plan will also benefit other industries such as the newspaper publishing industry (more on this later).

We have reached an initiatory pinnacle as far as technology, vehicles and instruments to deliver broadband communications and services and it comes down to proper wireless spectrum allocation, availability and usage, fiber, improved satellite and ground based services, creative operating/business models and ongoing improvement in technology and models using the available assets.

The fact that we no longer need hard line or hard wired Telecom or Cable Company incumbents to deliver these services is a blessing in disguise to Communities, Municipalities, Cities and Counties in all Urban, Suburban, and Rural markets within the United States.

Large incumbents, such as Verizon, AT&T, Sprint, Clearwire, Comcast, Time Warner, etc., have been lobbying and strategizing to monopolize and lease/sub-lease these new wireless markets and spectrum. There is absolutely no room for these large incumbents, acting as middle men, to offer the core broadband communications and wireless infrastructures to our Communities, Municipalities, Cities and Counties and compete to pull every dollar possible from our cash-starved communities, local governments, municipalities and associated public agencies.

Large incumbents should be exploring strategic partnerships and alliances with these public agencies to allow for concurrent build out and operation of usable spectrum and developing creative revenue models that allow these public agencies to sustain the very NTIA BTOP, RUS and ARRA programs they will be applying for.

We will look to large incumbents to provide enhanced services through their new wireless networks and we will demand and pay for those extended services. It is important however that Communities, Municipalities, Cities and Counties implement the technology, dark fiber and spectrum available to build out their own broadband wireless infrastructures for their Urban, Suburban and Rural markets (their asset), generate revenue from those infrastructures, and build towards their own broadband futures.

It is time Americans had a choice. A choice between large incumbents and local wireless broadband service providers (or combination of both); a choice between supporting our local economy by using local providers and opting to receive enhanced services form large incumbents; a choice between building a self sustaining community or one monopolized by large incumbents. With the "change" that President Obama is promising there must also be the choices that all Americans can make to implement that change and improve their quality of life.

This blog will provide information on all of these aforementioned issues along with explaining and defining the potential roles of large Telecoms and Cable incumbents, private sector investment, the FCC, NTIA BTOP, RUS and will help to introduce new standards and overall fundamental improvements to traditional broadband operating models to jump start a quick and sensible path to broadband excellence within the United States.

If you would like for this blog to address specific issues or initiatives please comment below.

Thank you,

Brad Bowman