[RTC List] Major broadband development with Open Range

Thu Sep 16 16:30:35 PDT 2010

I went to Denver and met with them last Jan.  
Seemed like a wall st company the. all about big $$ - no technical whatsoever 

  ----- Original Message ----- 
  From: Larry Goldberg 
  To: RTC List ; Northcoast Broadband Forum 
  Cc: wirelessfreedom at willitsonline.com 
  Sent: Thursday, September 16, 2010 9:34 AM
  Subject: Major broadband development with Open Range

  I assume that most of you, like myself, are stunned and dizzy from all the broadband proposals and scramble to grab the brass ring of the Economic Stimulus money these past two years.  One player that many of you don't know about is a potential 800 pound gorilla that is a "stealth" player in the  strategic rural market domination game.  In doing the research for proposals submitted from this area for Access Humboldt, I discovered that a huge player already had plans for this area.  Open Range Communications already had an approved  $267 MILLION LOAN from the RUS from 2008 and had $100 MILLION IN EQUITY!!!  They had plans for reaching 500 rural communities around the U.S. with WiMax broadband and Fortuna and Willow Creek were two on the list (you can look it up on their website).  Open Range played a significant role in possibly bumping several wireless proposals from this area (insofar as these were areas that would be served under an existing RUS grant) and therefore were largely excluded from recent submissions for this reason.

  Well, read this that came out today...

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                September 16, 2010
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                Open Range left holding the bag after Globalstar fails to meet satellite criteria

                     By Lynnette Luna  Comment |  Forward | Twitter | Facebook | LinkedIn 

                The FCC dealt a blow to rural broadband operator Open Range Communications by denying a request from MSS operator Globalstar for a 16-month extension to come into compliance with the commission's rules regarding the Ancillary Terrestrial Component (ATC) of Globalstar's satellite system. That means Globalstar's ATC authority has been suspended, leaving its lease partner, Open Range Communications, without spectrum and likely without funding to roll out WiMAX services to rural communities.

                Open Range Communications and Globalstar made headlines in 2008 when the two were granted authority from the FCC to enter into a lease agreement whereby Open Range would use the ATC component to roll out WiMAX services to 540 communities in 17 states. The U.S. Department of Agriculture's Rural Utilities Service (RUS) had granted Open Range a $267-million loan in 2008 and Open Range secured a $100 million equity investment from One Equity Partners, the private equity investment unit of JPMorgan Chase.

                In its ruling this week, the FCC stated it had already given Globalstar a temporary waiver in 2008 to come into compliance with the ATC rules. This time, the FCC said, Globalstar was not justified in asking for another extension. The rule Globalstar hasn't complied with is what is known as the "gating criteria" that requires an MSS operator to provide continuously available satellite service in specified geographic areas, maintain spare satellites and make MSS commercially available throughout the required coverage area. The FCC also requires ATC licensees to integrate the terrestrial and MSS offerings.

                The commission declared that Open Range won't be allowed to continue to use Globalstar's ATC authority to provide service, but it is granting Open Range special authority in a limited set of markets, for a period of 60 days, to find other spectrum.

                In July, RUS informed Open Range that its $267-million loan had been suspended, according to an article in Stimulatingbroadband.com. By July 1, Globalstar was supposed to have complied to the ATC rules. In a letter issued to Open Range, RUS stated that "all future advances are hereby suspended on the grounds that Globalstar's non-compliance constitutes a Material Adverse effect on Open Range's ability to perform its obligations." 

                With a significant chunk of its operating spectrum in limbo, Open Range is at risk of defaulting on the RUS loan and possibly its loans from its equity partners such as JP Morgan. In a letter dated Sept. 10 from RUS Administrator Jonathan Adelstein to FCC Chairman Julius Genachowski, Adelstein said the action was taken to protect the RUS loan program.

                Of course CTIA shouted with glee as the carrier industry has always been vehemently opposed to allowing MSS operators to offer terrestrial services, or even have spectrum at all since they got it for free.

                "CTIA is pleased with the FCC's decision to deny Globalstar's request for waiver of the Commission's ancillary terrestrial component rules and to reject Open Range's request to operate its terrestrial network without a satellite partner," CTIA President Steve Largent said in a statement. "Globalstar's failure to live up to the gating criteria, and to subsequently live up to the conditions upon which the commission granted it a waiver, validated CTIA's concerns. Globalstar could not meet the satellite needs of American consumers and instead sought to parlay a satellite license into a terrestrial network. Had the FCC granted Globalstar and Open Range's requests, it would have amounted to an end-run of the commission's spectrum auctions and would have eviscerated the commission's licensing rules."

                Indeed, the FCC has always been careful about requiring the MSS industry to roll out satellite services in addition to terrestrial services. It wanted to see a successful MSS industry and agreed with MSS players early on that adding a terrestrial component would result in better device form factors and greater penetration in buildings, a drawback to today's satellite services.

                It appears Globalstar was banking on the fact that rural broadband is an initiative near and dear to the heart of Genachowski and the commissioners and hoped that would prompt the FCC to rule in its favor. Open Range had the spectrum and the funding to make rural broadband a reality across some 500 rural communities. "Globalstar maintains that these public interest factors are more compelling now, as denial of the requested extensions would force Open Range to discontinue wireless broadband service to rural customers who are currently receiving it," the FCC said in its ruling.

                The FCC's ruling was the right one, but the consequences will be hitting a company that had one of the best chances to fulfill the FCC's goal of bringing broadband to underserved areas. There a number of parties hurt by Globalstar's lack of follow through. For instance, Alvarion and WiChorus, now part of Tellabs, have contracts with Open Range.

                I don't know where Open Range will find new spectrum in 60 days. Even if it does, customers will face disruption because of incompatible devices. Moreover, I think it's highly unlikely Globalstar will ever come into compliance now. Open Range can't wait around.--Lynnette

                P.S.: While I just wrote about a big disappointment for rural broadband, take a look at one company that is making a success in the wireless rural broadband market. Check it out here.

                      ERF Wireless betting on rural wireless broadband: With the $7.2 billion broadband stimulus funding process still in its infancy, there isn't a whole lot of news about rural companies making a go of a wireless broadband strategy in sparsely populated areas. But ERF Wireless has found a way to make the business case work by using its massive fixed wireless broadband network that covers territories specific to the oil and gas industry as the cornerstone of its strategy. Special report

                Read more about: ATC, Rural Utilities Service, Rural Communities, Open Range
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  Larry Goldberg
  larry at northcoast.com

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