EAGLE-Net circles state

Rural telcoms take aim
The Colorado Statesman

Republican state and federal lawmakers are concerned that a federally backed intergovernmental program, EAGLE-Net Alliance, which is aimed at delivering broadband to rural parts of the state, is overbuilding infrastructure and taking customers away from existing smaller providers.

Broomfield-based EAGLE-Net was awarded a $100.6 million Broadband Technology Opportunities Program infrastructure grant in September 2010 from the National Telecommunications and Information Administration. Its task is to expand broadband to more than 170 rural parts of the state by August 2013. The priority is to connect education, libraries, government and health care facilities statewide.

Conceptually, it had widespread support, including from the Colorado Telecommunications Association, which represents smaller broadband providers across the state, especially in rural communities. The hope for CTA and its members was that EAGLE-Net would become part of the solution to improve broadband access for the plains and mountain communities, and increase opportunities for providing Internet services.

“My guys thought, ‘This is great. They’re going to build their system, they’re going to fill in the gaps… and they’re going to lease from us,’” explained Pete Kirchhof, executive vice president of the Colorado Telecommunications Association.

But the trade association now believes that EAGLE-Net is purposely overbuilding existing telecommunications networks and cherry picking customers — such as schools, municipal buildings and other public-sector entities — by utilizing grant money to offer services at rates that smaller private-sector companies can’t compete with.

“Our point is that there is not enough revenue out there for multiple networks,” contends Kirchhof. “Not only are they overbuilding, but their mission has gone from under-served schools and libraries to now community anchor institutions, to every government entity, to now saying they’re a competitor.”

CTA reached out to state and federal lawmakers and found politicians from rural parts of the state sympathetic to its concerns. Leading the charge in Washington, D.C. is U.S. Rep. Cory Gardner, R-Yuma, who represents most of the Eastern Plains. Gardner — along with the other three members of the Republican Colorado congressional delegation — has sent a letter to the U.S. Commerce Department asking for a temporary stay of activities in order to discuss the growing fears.

“We have asked the Department of Commerce to cease funding until we can clarify the goals and objectives of EAGLE-Net,” said Gardner. “We will look into the possibility of holding a congressional hearing, that is something we have not ruled out at this point, and certainly when it comes to spending bills coming up, it is something we will look at through the legislative process.

“If they continue to do what they’re doing and they meet their objectives, they’re going to possibly be putting small businesses out of business in Colorado, so I do think they need to stop; they need to reassess their fundamental goals and objectives,” Gardner continued.

Much of the grant money has already been distributed — about $60 million. But EAGLE-Net’s critics say it is not too late to redistribute the other $40 million.

The issue must be tackled at the federal level, but several state lawmakers have also joined the charge, asking for a re-evaluation of the program going forward. Sens. Mark Scheffel, R-Parker, Greg Brophy, R-Wray, and Rep. Jerry Sonnenberg, R-Sterling, are leading the opposition on the state level.

“It is very disappointing that EAGLE-Net has chosen to compete with local businesses instead of working with them,” said Scheffel. “The federal government needs to reassess the role of EAGLE-Net to make sure that they are not going into communities that have infrastructure already in place.”

Brophy acknowledged that as state lawmakers they have a limited role because federal funding fuels the program, but he says he is still looking into legislative options to divert funds.

“I feel like I needed to get on this earlier than I did, but again, the EAGLE-Net guys misled me to believe that they would work with local folks, and it turns out that is not the case,” said Brophy.

CenturyLink, the largest provider of rural telecom services in Colorado, agrees with concerns that the program is not living up to intentions. Jim Campbell, regional vice president for legislative affairs, said EAGLE-Net is not just competing in areas of the state where there are limited providers, but also in areas where there are multiple options.

“We’ve firsthand seen EAGLE-Net give sales pitches to consortium of cities that are Denver metro cities, which some of these cities… probably have four to five different options on who they can get broadband from, and so that is certainly not filling in the gaps,” Campbell said.

EAGLE-Net defends program

But spokespeople for EAGLE-Net are a bit baffled by the concerns. For one, they point out that the program is prohibited from providing services to residential or business customers. They also point out that the program had widespread support from the industry because of the potential for partnerships that could increase business.

Gretchen Dirks, vice president of public relations and communications for EAGLE-Net, said the program must still work with so-called “last mile” providers in order to complete projects. A “last mile” provider refers to the last leg of a telecom build-out, usually companies that deliver connectivity to retail customers.

“We look for those partnerships and work every day to build those partnerships,” said Dirks.

As for the concerns regarding overbuilding, EAGLE-Net describes it as building a redundant system that comes close to guaranteeing service in rural parts of the state.

“We’re building a completely new network across the state of Colorado, and what that does is it creates the option of redundancy for government entities and schools…“ said Dirks. “They can say, ‘I have service from two different providers,’ which guarantees them — it’s not a 100 percent guarantee — but most of the time it’s a guarantee that you’re not going to go down.”

For this reason, the Colorado Department of Education, the Colorado Board of Cooperative Educational Services and the Colorado Association of School Executives have endorsed EAGLE-Net, to name a few. Those who support the program point out that the plan to deliver broadband services statewide will help keep Colorado competitive. In the education category, for example, Colorado’s schools currently have less than half the Internet bandwidth of most neighboring states. This reduces access and availability to online services and information, decry school officials.

Colorado ranks 42nd out of 50 states in broadband connectivity, with broadband service costing 10 times that of neighboring states, according to EAGLE-Net officials.

In a letter to the National Telecommunications and Information Administration, the Colorado Department of Education said it believes the grant program will “have a positive impact on quality of life, increased access to educational support and student achievement across Colorado.”

“EAGLE-Net is a lifeline being developed in Colorado that will be the first of its kind network,” added Bruce Caughey, executive director of the Colorado Association of School Executives. “It will allow remote and rural areas to compete, and from the perspective of education leaders, is going to allow 21st Century learning to take place.”

Peter@coloradostatesman.com