Unwiring Texas

Marty Hale is a man with a broadband plan for the great state of Texas. He
certainly has his work cut out for him.

Hale, co-founder and former CEO of Minnetonka, MN-based ISP Net
, wants to use government money — what remains of the $1.5 billion
Texas Telecommunication Infrastructure Fund (TIF) established in 1995 — to
build a statewide broadband fixed wireless network.

His new company, Bluemoon Solutions of Eastland, TX (125 miles
west of Dallas), would build, manage and maintain the network on behalf of fund
recipients such as hospitals, school districts and colleges. It would also make
it available to any ISP that wanted to use it to offer services.

"Our plan is to build a seamless network," Hale says. "You could
travel anywhere in the state of Texas and get broadband access. There might
be some dead zones [in under populated areas] but for the most part we’d have
total coverage."

The first concrete step in the plan will go ahead in July, when Bluemoon begins
a $2.5-million TIF-backed build-out in Eastland County with access points to
cover the whole district. The project was funded after Bluemoon and the county
brought together 19 local entities to apply for TIF money.

"Once we’ve deemed it a successful model — and it will only take us about
four months to build out Eastland County — we’ll begin to roll it out across
the state," Hale says. "And eventually the whole country."

Bluemoon, which consists of Hale, a handful of executives who followed him
from Net Lifestyles, and a small engineering staff, developed a detailed technology
plan that shows where access points have to go — based on topology and the
presence of existing broadband infrastructure — to cover the entire state.
It involves fixed wireless access and a partly wireless backbone.

The company also developed a business plan that it hopes will get around past
problems with the way the fund was used, which were largely the result of tight
restrictions imposed by the TIF board.

Under the fund’s rules, private companies — such as ISPs — cannot be fund
recipients, though they can be suppliers to eligible constituents such as hospitals,
school districts, colleges and local governments. TIF recipients cannot resell
services on the infrastructure they build with TIF money.

The result is that much of the $934 million spent since 1995 was squandered.
As soon as the government dollars dried up, unless constituents could successfully
apply for additional TIF grants, the services were discontinued for lack of
money to support them.

Most of what the TIF program has to show for its expenditures today is outdated
hardware — computers, scanners, printers, etc. Hale says Texans refer scornfully
to this TIF detritus as good only for "trotline weights" — sunk in
the water to hold fishing lines in place.

Commercial "sustainability," which has clearly been lacking to this
point, is a key goal of Bluemoon’s business model. In the model, Bluemoon manages
the network on behalf of TIF recipients, maintaining it and controlling access,
and acts as a broker, wholesaling network capacity to resellers such as WISPs
and dial-up ISPs.

The problem is, the whole plan hinges on all future TIF recipients agreeing
to work with Bluemoon under its master plan. Bluemoon, which has been lobbying
any state or county agency that might possibly have influence, is simultaneously
pursuing two strategies for resolving this problem. One is top down, the other
bottom up.

Hale has enlisted the strong support of one influential State Representative,
Jim Keffer, who is vice chairman of the House Economic Development Committee
and a member of the Interim Select Committee on Rural Development.

"Jim is not a technical individual," Hale says. "Yet he understands
how broadband access will effect health care, for example, and the economy as
a whole."

Hale also claims to have the support of state Senator Troy Fraser, United States
Senator Kay Bailey Hutchison and Jon Rex Jones, chairman of the Texas Oil and
Gas Association. He has made presentations to the Office of Rural & Community
Affairs (ORCA) and the County Information Resource Agency (CIRA).

Most importantly, he has met with governor Rick Perry. Since the TIF Board
itself does not have the power to mandate that recipients work to any state-wide
plan, Hale’s best hope is that the governor will do that. He expects some decision
will be made on this by November.

If it isn’t, or it’s the wrong decision, Hale will revert to Plan B, the bottom-up
approach — getting each county or region onside separately. He admits this
is "a little like herding cats. It’s a pretty tough job. There are rivalries.
Some will want to try and go one better than their neighbors."

That said, Bluemoon has already managed to get a dozen or so of the 200 counties
and regions it has approached to work with it on TIF applications. They’re similar
to the Eastland applications in that they bring together a variety of local
agencies and organizations.

Five have already been successful in securing TIF money. Some of them are slated
to start build-outs later this year. And Hale says reception from local mayors,
county economic development officers and other key influencers in other regions
has been encouraging.

At the same time, the company has been talking to ISPs to get them onside.
Some wireless ISPs, he admits, figure they can do it on their own. But they
will inevitably only be able to cover the state piecemeal. More, he claims,
can see the definite benefit of being able to offer subscribers a state-wide
— and perhaps eventually nationwide — roaming service.

As if selling the state on the plan, herding the county cats and lining up
ISP resellers isn’t enough, Hale faces another major challenge. The estimated
cost of the network Bluemoon proposes building is in excess of $1 billion. The
TIF Board only has a little over $500 million left in its kitty. So Hale and
his backers are also lobbying the state to allocate additional funds.

Meanwhile, much hinges on the Eastland County project. Hale says TIF officials
have been quoted in the press saying that Eastland will be a test of the Bluemoon
model — implying that if it works, the TIF Board may be inclined to look favorably
on other applicants working to the Bluemoon plan.

Another huge task required to get the Bluemoon plan rolling is selecting a
wireless network equipment vendor. The plan calls for a single vendor for all
local and regional projects to ensure 100-percent compatibility from one jurisdiction
to the next.

Bluemoon looked at every option available from seven major manufacturers and
has whittled it down to about three. Despite the impending construction start
in Eastland County, it still has not made a final decision. Hale even says the
company will consider late proposals from additional vendors.

Competition among vendors for the Eastland project should be fierce — and
is, Hale says. "If you’re a vendor and you realize that this is a test
model, you definitely want to be the manufacturer [we select]," he points
out. "But we want to be very cautious about this."

A few other states, meanwhile, are working on possible state-wide broadband
networks, but none that Hale knows of are using the sustainable, public-private
business model Bluemoon is proposing. That’s not surprising given the horrendous
complications, but too bad when you the potential benefits of the Bluemoon approach
are considered.

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