By Dan Njegomir | Colorado Watchdog
DENVER — A $100 million, federal stimulus-funded project intended to expand high-speed Internet access in rural Colorado is raising an outcry from longtime local telecommunications providers, who say the effort is backfiring on the private sector and squandering public dollars.
About 25 small-town providers — mostly generations-old telephone co-ops and private mom-n-pops — say the federally subsidized effort needlessly duplicates their own budding, high-speed fiber-optic networks and will wind up stealing their biggest customers. They also say the project is poised to poach market share just when the rural phone companies have gone into debt to upgrade their infrastructure.
The ironic upshot, they contend, is something only Washington, D.C., bureaucrats could have cooked up: Federally bankrolled EAGLE-Net might wind up running federally leveraged telecoms out of business.
“It’s one branch of government competing against another,” said Alan Wehe, owner and general manager of the Blanca Telephone Co., serving parts of southern Colorado’s San Luis Valley. Wehe said his and other firms have started cutting back payroll, as they brace themselves for the blow.
EAGLE-Net, formed in 2007, is described on its website as “a cost-sharing cooperative that will deliver a carrier quality broadband network to more than 170 communities across the state.” In 2010, EAGLE-Net was awarded a $100.6 million grant through the Broadband Technology Opportunities Program under the National Telecommunications and Information Administration.
By Wehe’s estimate, his company has invested more than $5 million so far — borrowed from the U.S. Agriculture Department’s Rural Utilities Service loan program — laying a fiber-optic line from Walsenburg on the Front Range to Monte Vista in the western San Luis Valley. Now, an EAGLE-Net contractor is laying another fiber-optic line alongside it. Wehe says such “overbuilding” has become standard operating procedure for EAGLE-Net statewide.
For their part, EAGLE-Net execs say they’re simply trying to hew to their mandate and follow federal specifications, for which they broadened their focus to qualify for the stimulus funding.
“Our intent is to bring a new network into town,” said EAGLE-Net communications chief Gretchen Dirks. The organization’s head of business development, Chip White, said EAGLE-Net is “not trying to cut the local providers out,” but he added, “This is change and a new way of doing things.”
The windfall was part of the federal American Recovery and Reinvestment Act, championed by the Obama administration. The goal is to connect 234 “community anchor institutions” — schools, local governments and other public entities — through a high-speed broadband network. The network is supposed to be completed by August 2013.
The problem with that mission, say the local providers, is it’s largely unnecessary. They say they are providing high-speed Internet access to schools and other government services and institutions as their networks ramp up. They accuse EAGLE-Net of empire building, and they say the state-federal venture now seeks to take the most lucrative customers in rural climes — not just schools but also municipal and county governments — while neglecting some truly underserved locales in the high country that are expensive to build to.
Up in arms, they’re pushing back through an organized public awareness campaign and recently launched a barrage of letters to the U.S. Commerce Department, which oversees NTIA. The letters call on the Cabinet agency to rein in EAGLE-Net.
“(EAGLE-Net) is moving aggressively to overbuild … This is wasteful use of taxpayer dollars,” wrote Jon Loe, general manager of Wiggins-based Colorado Communications Transport. “It is important to remember that CCT members … are USDA Rural Utility Service borrowers. It is unconscionable that BTOP funds are being used to overbuild fiber facilities that are already supported through other federal programs.”
Wrote Patricia White, general manager of the Eastern Slope Rural Telephone Association in Hugo: “A sad example of waste within the EAGLE-Net model occurs on (a) stretch of new fiber … approximately seventy miles from the Otis School to the Woodlin School in northeast Colorado … Woodlin School has existing fiber facilities placed by Eastern Slope. It seems only logical that these construction dollars could have been appropriated to areas of Colorado that have no services.”
While the providers say EAGLE-Net is overstepping its original parameters and even violating state statute by overbuilding and going head to head with the private sector, the agency’s leadership says it is squarely within its mandate and consistent with state and federal law for it to build a statewide rural network it believes is superior to what the private sector can offer. They stress they aren’t competing to provide phone service, only a data network, and that they are barred from serving anything other than public entities. EAGLE-Net also insists it wants to work with, not against, the local providers.
“We have an open door with them,” said EAGLE-Net’s Dirks.” We’re always willing to talk to (the rural providers) on the issues.”
Dirks and White say they are open to using existing fiber-optic lines of private providers who wish to participate. Yet, when they publicized their request for proposals to help bridge the gap over La Veta Pass, for example, they said Wehe’s Blanca Telephone Co. never responded. Only contractors seeking to lay new fiber expressed interest.
Wehe counters that EAGLE-Net’s management, in fact, has made little effort to communicate with his company.
“Either somebody shows and it’s not a decision maker, or I don’t get a call back,” he said.
He also dismisses EAGLE-Net’s claim of being able to provide faster, more reliable service. Wehe says his company offers 100 mbps speeds to schools in places like Fort Garland.
Dirks and White say no one is forcing school districts or other entities to use EAGLE-Net’s network, but that it offers rural communities an important option.
“Why should they not have a choice?” Dirks said.
Yet, Wehe said EAGLE-Net isn’t a free-market option but rather a boondoggle all taxpayers are forced to underwrite. He said such a project might have been applauded years ago — before the private sector stepped in and bridged rural Colorado’s digital divide. Now, he said, it’s just another government program that has missed its mark and is attempting to justify its colossal cost.
“They’re 20 years too late,” he said, adding, “I don’t think they care. I think they have to spend the money to fulfill the grant.”
Contact Dan Njegomir at firstname.lastname@example.org.