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Economy & Economic Development  April 23, 2010

Ready to bring broadband access to small towns

The national obsession for connectivity – as evidenced by the recently released federal broadband plan – has already been playing out in Northern Colorado and could heat up even more if Qwest has anything to do with it.

The Federal Communications Commission released the nearly 400-page national broadband plan in March, a year after it was directed by Congress to do so. The goal of the plan is to get high-speed, affordable Internet access to at least 100 million homes across the nation. To do that, the FCC proposed 60 action items in early April, including freeing up spectrum, creating incentive funds and studying competition in the industry.

While some industry watchers have questioned whether the plan goes far enough to be more than symbolic, the FCC has committed to start down the road to implementation. It is expected to start discussing a transition of $15.5 billion from the Universal Service Fund, which was set up to subsidize traditional phone service to rural areas, into a fund that would support broadband deployment.

The FCC activities have the industry on alert but many aren’t waiting to see how things develop. Greenwood Village-based Open Range Communications began operations with a pilot program in Platteville, Fort Lupton and Frederick last fall, and has been in rapid-expansion mode since. It is now in 17 states, and all of its Colorado markets so far are in Northern Colorado.

Open Range received approval for more than a dozen broadband sites in Northern Colorado through the U.S. Department of Agriculture’s Rural Development Utilities Program in March 2008. The company initially landed $268 million from RDUP’s Rural Broadband Access Loan in 2007. The 12-year loan also carried with it a stipulation for private equity investment.

In January 2009, Open Range secured an additional $100 million from One Equity Partners, the private equity arm of JPMorgan Chase & Co. In the next five years, the firm plans to serve around 6 million broadband customers living in 546 unserved or underserved communities.

Today, the company has deployed its high-speed technology to areas of Berthoud, Mead, Erie, Evans, Greeley, Johnstown, Windsor and Longmont. Loveland is the next community slated to launch, with plans in the works for Fort Collins, Laporte, Pierce and Kersey. To facilitate the growth, the company set up a Fort Collins office headed by Joe Fernandez de Castro.

Eye to the future

Fernandez joined Open Range at the start of the year following a long career in the wireless industry. He made the move with an eye to the future.

“It’s an exciting new technology,” he said. “This is where we are all going.”

Open Range offers connectivity through transmitter/receiver technology. Rather than a receiver connected to the exterior of a home or building, Open Range customers connect directly to the computer through a modem-sized receiver. The company calls the device Freedom 4G; Fernandez calls it the Magic Box. He explained that it replaces Internet modem, phone service, WiFi, router and answering machine.

Fernandez has about 15 people working out of the Fort Collins office now, but he is looking to hire as many as 20 more to work in sales. He hopes to be in all of the identified Northern Colorado markets by the end of August.

“It’s not set in stone,” he said, explaining that the dates and markets have been dynamic. “If I had my way, we’d be in every little town in Northern Colorado.”

Access to the unserved and underserved has been a major focus nationally and locally. Qwest Communications announced in March that it filed a grant application that would allow the publicly traded company to build and upgrade its broadband infrastructure into previously untouchable areas.

The company is hoping to land $350 million from the USDA’s Broadband Initiatives Program. Last year, the USDA and the U.S. Department of Commerce shared $7.3 billion in Recovery Act funds to be used for broadband programs. About half of those funds were committed last year.

“Qwest did not apply in the first round for a number of different reasons,´ said Qwest Colorado President Chuck Ward.

Tax support for areas not served

He explained that the company decided to seek taxpayer-funded capital expansions only for areas that it would otherwise not serve and that it would only do so if the business case was right. The rules for the first round of grants included limits on funding that still made it economically unfeasible for the company to construct infrastructure to those areas.

“For the second round, they changed the rules,” Ward said.

The company can, and did, request 75 percent financing for the capital costs of installing infrastructure to high-cost rural areas. An in-depth study of the underserved areas revealed that the capital cost for its proposed access area would be $467 million, with $100 million of that spent in Colorado if the grant is awarded.

“We’ve got a lot of rural territory in Colorado that is underserved,” Ward said, adding that about 87 percent of the company’s service area in the state is covered by some speed of broadband.

Ward couldn’t share the proprietary network map showing where in the state the grant would help them reach; however, he did say that the areas are dispersed all over the state, with a good number of projects in Northern Colorado.

“There is quite a bit in Northern Colorado – Fort Collins, Greeley and that area,” he said, adding that the Interstate 76 corridor is also slated for some improvements.

The investment in Colorado is expected to encompass 107,000 homes, 17,000 businesses and 100 K-12 schools, but there is no set priority for the new infrastructure and network upgrades. Ward said the company would try to piggyback any of the grant capital projects with other planned construction. The capital construction is expected to create 5,000 direct and indirect jobs in the state, according to a model from an independent study.

Qwest expects to hear whether it will receive the grant in the coming months and will have three years to make the improvements.

“Our intention is to start turning dirt as soon as possible,” Ward said.

The national obsession for connectivity – as evidenced by the recently released federal broadband plan – has already been playing out in Northern Colorado and could heat up even more if Qwest has anything to do with it.

The Federal Communications Commission released the nearly 400-page national broadband plan in March, a year after it was directed by Congress to do so. The goal of the plan is to get high-speed, affordable Internet access to at least 100 million homes across the nation. To do that, the FCC proposed 60 action items in early April, including freeing up…

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