3 years ago

Alabama taxpayers beware: Broadband consultants collect hefty fees as they push taxpayer-supported networks

Alabama Internet

By Johnny Kampis | Watchdog.org

If you build it, they will come.

It’s not just fictional Iowa corn farmer Ray Kinsella hearing those words. More and more, local governments across the country are getting such positive feedback from consultants, who recommend the construction of expensive taxpayer- or ratepayer-supported broadband networks with promises the moves will attract businesses and improve the area’s quality of life.

In Alabama, CTC Technology & Energy recently consulted with Huntsville Utilities on its $57 million network, while Strategic Networks Group is helping an entrepreneurial center in the Shoals establish broadband.

Critics argue that consultants are just telling local bureaucrats what they want to hear.

“They already want to create a government-owned network,” said David Williams, president of the Taxpayers Protection Alliance, “they’re just looking for confirmation.”

He jokingly calls government broadband consulting work “Jeopardy research.”

“They already have the answer, they’re just looking for the question,” Williams told Watchdog.org.

If you pore over the various reports scattered across the web, posted by cities and counties in which consultants have researched broadband, it’s hard to find an example in which a consultant told a government not to offer high-speed internet in some capacity, whether it’s building a full-fledged utility-operated network or a fiber-optic backbone onto which providers could connect.

Peachtree City, Ga., is the rare municipality to go against the advice of its consultant.

Community Broadband LLC of Midway, Ga., anticipated profits of $451,901 by year five if the city built its own $3.2 million network, but city leaders weren’t so confident. An initial survey yielded mostly favorable responses from local businesses indicating they might subscribe to a high-speed service from the city, but questions were raised about the reliability of that survey.

Peachtree City leaders saw enough failures of government broadband projects that they ultimately decided to scrap the project, and contract with a local provider to serve city facilities’ broadband needs. But even though the City Council voted down the plan, it didn’t create animosity between the consultant and the city: Peachtree City spokeswoman Betsy Tyler told Watchdog the city continues to use Community Broadband as a consultant on communications issues.

Kelly McCutchen, president of Georgia Public Policy Foundation, said unlike government leaders, consultants can’t be held accountable for the results by voters.

“They’ll tell them they can do it cheaper, and it’s not based in reality,” McCutchen told Watchdog. “And taxpayers are left holding the bag.”

“Typically these consultants are the only ones that come out good on these deals,” he said.

He points to Marietta, which sold its FiberNet broadband system at a loss of $24 million in 2004. Its fiber-optic system, stretching from Kennesaw to Alpharetta and partially into Atlanta, had all of 180 customers along its 210-mile route when the city got rid of it.

Bill Dunaway, then the mayor, who ran on a platform that included dumping FiberNet, told USA Today the city couldn’t keep up with the necessary equipment upgrades.

“That’s why we should not be in this business — you have to keep reinvesting,” he said.

Baltimore mayor-elect Catherine Pugh listed a litany of other municipal broadband failures in a 2013 op-ed in the Baltimore Sun when she served in the state Senate.

The Democrat pointed to Provo, Utah, which spent $40 million to build a network it would ultimately sell to Google Fiber for a $1, as well as Marietta and Groton, Connecticut, where taxpayers lost $38 million.

“For many local governments, the promise is seductive. A cottage industry of consultants and network builders — who stand to profit handsomely — sell the idea to misty-eyed government officials that building a municipal broadband network will spawn a local Silicon Valley microcosm that will be a monument to their incumbency,” she wrote. “But what they don’t see is that the economics of the grand venture doom it to likely failure.
“For the most part, municipally-built broadband networks have the economic chips stacked against them and, where tried, have saddled local taxpayers with a mountain of debt and half-built networks that are then sold at fire-sale prices to vulture investors,” Pugh continued.

Leaders in the field

The leaders in the consulting field are Magellan Advisors of Denver, Col., and CTC of Kensington, Md., each consulting on hundreds of broadband projects. Magellan says in press releases that its staff “has planned and developed fiber optic networks in over 200 communities across the U.S.”

The company said that through its services more than $1 billion of broadband investments have resulted, “connecting more than 1,000 schools, hospital, libraries and governments and passing nearly 1 million homes with fiber.”

In Jupiter, Florida, Magellan both consulted on a municipal broadband project and helped build it.

Magellan urged Baltimore, where it earned $157,000 for its report, to pursue federal funding to connect schools to fiber, and to lease 122 miles of existing fiber that was part of a emergency responders communications network to interested providers.

Google Fiber will tap into the network CTC helped plan in Huntsville to provide gigabit-capable speeds to homes and businesses. CTC has consulted with the public sector for more than 30 years. Its current projects include fiber-optic and wireless regional communications interoperability initiatives in the Washington, D.C., area for the U.S. Department of Homeland Security.

A lengthy list of its partnerships can be viewed here.

CTC didn’t return a call from Watchdog for comment on its consulting work. Magellan president and CEO John Honker also didn’t return a call.

Strategic Networks Group, based in Ottawa, Canada, and Superior, Col., recently announced a partnership with the Shoals Entrepreneurial Center in north Alabama. SEC got a nearly $1 million grant from the Appalachian Regional Commission for a three-year partnership with SNG to develop digital strategies for the region. This will include the Small Business Growth Program, “a program that shows businesses the economic impacts that inspire greater Internet application utilization, grow businesses, and create job opportunities.”

SNG says it helps communities “uncover the transformative power of technology investment.”

Magellan continues to do brisk business in the government broadband consulting sector today, even nabbing two projects in Chatham County, Georgia. First, the city of Savannah paid Magellan $65,200 early in 2016 for a broadband network feasibility study, then Chatham County, of which Savannah is the seat, agreed to a similar consult for $65,500 in September.

Savannah is served by some two dozen broadband providers, but Comcast captures most of the business. That company is planning on upgrading its network to provide 1 gb speeds to residents and 10 gb speeds to businesses in the coming years.

Williams argues it doesn’t take a $65,000 study to determine the scope of the broadband market.

“When I go to talk to lawmakers about broadband, I do a Google search to see who serves an area,” he said. “And I don’t charge $65,000 for that search.”

Williams said local governments can ill afford to spend that kind of money on broadband consulting, calling it “a big waste of resources.”

“People think consultants are a mystical group of people who have all the answers,” he said. “They’re selling snake oil. They’ve found a niche for getting taxpayer money.”

Magellan was initially rebuffed this spring in Lakeland, Fla., where the city’s chief financial officer, Mike Brossart, warned city leaders against a $220 million to $270 million plan to build a new government-owned internet utility across Lakeland Electric’s service area.

Magellan’s report anticipated a quick return on investment, but its projections required that 40 percent of Lakeland Electric’s customers sign up for internet and face an annual 1.5 percent price increase. Brossart deemed that financial model too sensitive.

“It’s highly speculative and we’re not in the business of being highly speculative with the citizens’ money,” Brossart told The Lakeland Ledger.

Lakeland leaders considered building a network, but on a much smaller scale, before scrapping the idea altogether in October.

In Stark County, Ohio, Magellan recommended county leaders create a broadband authority and consider building a 130-mile middle-mile fiber-optic backbone with an estimated cost of $22.5 million. Providers could then build the last mile from the backbone to facilities desiring broadband.

Nearly all of the homes and businesses in the county that were randomly sampled are already able to subscribe to broadband-speed services at reasonable prices.

Magellan noted in its study that if the county built the backbone, many of its cities could use it to plan their own networks.

“An additional benefit of the middle-mile fiber backbone, is that it would provide political sub-divisions the ability to develop their own fiber initiatives,” Magellan wrote in its report.

And if those municipalities need any consulting work in planning those networks, Magellan is just a phone call away.

15 mins ago

Ivey to undergo outpatient procedure with ‘very high rate of success’ after cancer discovered early

Governor Kay Ivey on Thursday announced that she will undergo an outpatient procedure at UAB on Friday after a recent routine exam revealed she had spot on her lung.

After more testing, “a tiny, isolated malignancy” was confirmed, meaning the spot was indicative of cancer.

The procedure and subsequent radiation treatments are not expected to interfere with her duties as governor, Ivey said in a statement.

Ivey said “this was discovered early, and it is very treatable.”

314

She added that the procedure “has a very high rate of success” and expressed great confidence in Alabama being “home to some of the world’s leading physicians.”

The governor welcomes prayers and support from around the state.

Ivey’s full statement as follows: 

Throughout my life, I am constantly reminded that I have so much for which to be thankful; God has been incredibly gracious to me.

One of the highest honors you have given me is serving as your governor.

Because I always shoot straight with you, I want to share a recent challenge that has been placed in front of me.

Within the past few weeks, during a routine exam, my longtime family physician discovered a spot on my lung that was unusual. Additional tests confirmed that this was, indeed, a tiny, isolated malignancy.

The good news is I am one of the fortunate ones where this was discovered early, and it is very treatable.

The better news is Alabama is home to some of the world’s leading physicians. My team of doctors have assured me this treatment has a very high rate of success and will have a minimal impact on my schedule.

Tomorrow morning, I will travel to UAB for an outpatient procedure, which will allow me to soon begin a series of specialized radiation treatments. None of this will prevent me from continuing to serve as your governor and doing the work you elected me to do.

Naturally, I welcome your prayers and your support. Just as so many others who have been affected by cancer, I am confident of God’s plan and purpose for my life and feel extremely fortunate this was caught so early.

May God continue to bless each of you and the great state of Alabama.

Update 2:30 p.m.:

The governor also released a video message to the public.

Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn

44 mins ago

On this day in Alabama history: Alabama legislature ratified the 19th Amendment

Sept. 19, 1953

The fight for the right for women to vote officially ended in 1920 when Tennessee became the 36th state to ratify the 19th Amendment to the U.S. Constitution. In Alabama, there was an active suffragist movement, led by the Alabama Equal Suffrage Association, but opposition by some Alabama groups resulted in the legislature not taking up the amendment, and after Tennessee signed on the issue was moot. Thirty-three years later, the legislature decided to “record its approval of extending the right of suffrage to women” and officially ratified the 19th Amendment. Although the Alabama Equal Suffrage Association dissolved in 1920, many of its leaders and members joined the newly founded League of Women Voters, which remains active today in Alabama elections.

14
1 hour ago

Canfield elected chair of Alabama Commission on Artificial Intelligence, Waggoner vice-chair

The Alabama Commission on Artificial Intelligence (AI) and Associated Technologies recently held its inaugural meeting, at which commission members elected Alabama Department of Commerce Secretary Greg Canfield as chairman and State Senator Jabo Waggoner (R-Vestavia Hills) as vice-chairman.

The commission plans to schedule additional meetings over the next seven months, with all meetings being open to the public.

The members will deliver a report in May to Governor Kay Ivey and the Alabama Legislature, recommending strategies and policies on how AI and other emerging technologies will be of benefit to the Yellowhammer State’s economy.

In a statement on Thursday, Canfield explained the importance of the commission’s work.

717

“Artificial intelligence is a powerful, disruptive technology that has the potential to forever change the way we live our lives and how businesses across Alabama operate,” he emphasized.

“It’s critical that we understand how AI will bring about these sweeping changes, and this Commission will help us develop insights into what the future has in store for Alabama’s citizens and businesses,” Canfield concluded.

Waggoner spearheaded the legislative resolution that formed the commission. His leadership has been, and continues to be instrumental, in this process. The powerful chair of the Senate Rules Committee identified the goal of Alabama being on the cutting edge of AI research and job creation in the technology sector.

“We want Alabama to be a leader in AI research, innovation, technology start-ups, and technology jobs,” Waggoner stated. We believe that we are competitive with other states.”

He continued, “The Commission will look at how Alabama is positioned and ready for the opportunities of tomorrow. Those are some of the issues and questions this Commission is going to answer. We will meet with key business groups and different industry sectors to understand the impact of AI and automation on their industries.”

According to Waggoner, the commission will also examine how schools and universities can develop AI-educational programs, and investigate what privacy safeguards might be needed to protect consumers.

“We want Alabama’s education system in a place where we can equip students with AI-relevant skills through engineering and technology classes and apprenticeship programs,” he added. “As we promote innovation and educational readiness, we must also protect the privacy rights of citizens, and examine whether existing state laws are effective in regulating these emerging technologies. There’s a lot of work ahead.”

The commission will be divided up into five sub-committees, focused on the following:

  • state regulations, government oversight, and potential legislative action;
  • education and workforce development;
  • healthcare and medical services;
  • future and evolving industries, economic development, and research;
  • ethics, privacy and security.

The subcommittees will begin their work in mid-October.

State Senator Dan Roberts (R-Mountain Brook) was appointed to the commission by Senate President Pro Tem Del Marsh (R-Anniston). Roberts came away from the body’s initial meeting impressed at the experience and expertise of its membership.

“Artificial intelligence, machine learning, and deep learning are very complex subjects. Thankfully, I think we have some of the finest minds in our state working on this project. The sub committees that have been established will allow every person on the commission to hone in on their particular areas of expertise,” Roberts outlined.

The 25 members of the commission are as follows:

Greg Canfield – Secretary of Commerce (chairman)

Marty Redden – Acting secretary of the Alabama Office of Information Technology

Ivey’s appointees:

1. Dr. Hari Narayanan— Auburn

2. Dr. Gerry Dozier— Auburn

3. Dr. Jeff Carver – UA (Tuscaloosa)

4. Dr. Curt Carver – UAB

5. Dr. Alec Yasinac – USA

6. Dr. John Beck – UAH

7. Dr. James Cimino – UAB

8. Melvin Evans – Hand Arendall

9. Jim McLane – NaphCare

10. Jacob Kosoff – Regions Bank

Lt. Governor Will Ainsworth’s appointees:

Joshua Jones – StrategyWise

Dr. Vicki Karolewics – Wallace State Community College

Speaker of the House Mac McCutcheon’s appointees:

Rep. Kirk Hatcher

Rep. Craig Lipscomb

Marsh’ appointees:

Sen. Jabo Waggoner (Vice-chair)

Sen. Dan Roberts

Non-Voting members appointed by the governor:

J. Michael Hardin – Provost & vice president at Samford University

John Brandt – Southern Company

Leonard Tillman – Balch & Bingham

Mike Rowell – Senior VP & CIO at ALFA Insurance

James Mizell – Senior account executive at Microsoft

Jason Asbury – NXTsoft

Dr. Syed Raza – Jefferson State Community College

An Alabama CEO, also a commission member, said artificial intelligence is on the cusp of transforming every industry.

“Artificial intelligence is rapidly changing every industry, and it is incredibly important for us as a state to think strategically about what that means to our economy,” advised Joshua Jones, CEO of Birmingham-based StrategyWise, an AI and data science consulting firm.

He concluded, “I applaud Senator Waggoner and Secretary Canfield for leading Alabama to be one of the first states to really address these opportunities and changing dynamics systematically. It sends a message to the rest of the U.S. that Alabama is serious about investing in our future, and we’re growing our tech-based ecosystem. For companies that want to leverage all that AI has to offer, we’re going to be prepared with a trained workforce, accommodating public policy, and a strong tech infrastructure.”

Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn

2 hours ago

Decatur Mayor Tab Bowling open to Tennessee River toll bridge — If that moves freight, freight companies, truckers ‘would just be thrilled to do it’

For decades, traffic headed west from Huntsville and other points toward the Shoals has relied upon the Captain William J. Hudson “Steamboat Bill” Memorial Bridges to cross the Tennessee River into Decatur. Once traffic crosses that bridge, it either heads south on U.S. Highway 31 toward Hartselle and Cullman, or it makes a hard-right 90-degree turn on to U.S. Highway Alternate 72 and heads toward Muscle Shoals, Tuscumbia and Sheffield.

As the manufacturing base in northern Alabama expands, freight traffic is expected to increase at that intersection and make the turn west even more precarious for commuters and commercial traffic.

During an appearance on Huntsville radio’s WVNN on Wednesday, Decatur Mayor Tab Bowling discussed that spot and possible solutions for the future, which could include a tolling component.

512

“If you were to go now and sit in the Doubletree Hotel, which is where you’re talking about there where you make that turn to go to the Shoals, and just look at the amount of freight that comes in out of Memphis — Memphis is the distribution hub for America,” Bowling said on Wednesday’s broadcast of “The Jeff Poor Show.” “And that freight that comes out of Memphis, straight down [U.S. Highway Alternate] 72, and then it makes its way across our bridge and goes various routes from there — into Huntsville, Madison, Athens, gets on [Interstate] 65, has different directions it can go from there. But whenever we start producing a thousand cars a day, we have 4,000 employees plus the tiered suppliers who will be there. The amount of freight that will come in to take care of that I believe is going to double.”

Bowling noted the situation at the Hyundai facility near Montgomery as a sign of what is to come and commended Gov. Kay Ivey for the commitment to widen the existing Interstate 565 that connects Decatur and Huntsville.

“We visited the Hyundai facility manufacturing a thousand cars a day just south of Montgomery — just-in-time deliveries: batteries, tires, things of that nature — they receive a truck a minute,” he continued. “You think widening [Interstate] 565 is important? Heck yeah, it’s important. We’re thankful Gov. Ivey is going to get that done for us in the Spring of 2020.”

The Decatur mayor said the completion of a nearby overpass for Alabama Highway 20 remains his current top priority.  Once that is completed, Bowling said exploring the possibility of an alternate route over the Tennessee River would be appropriate.

“We’re working on an overpass on [Alabama] Highway 20 where Apple Lane Farms is,” he said. “That’s Decatur, and that’s a build grant that we received for $14 million from the Federal Highway Department. We’re very thankful for that. A lot of people made that happen. Once that project gets going, then we’ll start working on the other. But we want to be sure we do everything to make sure that project gets going first.”

As for the possibility of using tolls to finance a new bridge, Bowling said he expected that those moving freight would be “thrilled” if it expedited transit and that if it would improve commuter traffic on existing structures, it could be a possibility.

“If that moves freight, I would believe that the freight companies, the truckers would just be thrilled to do it,” Bowling explained. “If we were to take the trucks off of the [U.S.] Highway 31 bridges, I believe that our commuter traffic — it would be a lot easier to make that commute. And so, we’ll see what we can do. We’ll come up with a traffic plan. We’ll do traffic counts. Things to prove it out.”

@Jeff_Poor is a graduate of Auburn University, the editor of Breitbart TV and host of “The Jeff Poor Show” from 2-5 p.m. on WVNN in Huntsville.

3 hours ago

Patriot Flag to be displayed in Mobile on Thursday to honor fallen American heroes

The Patriot Flag will be displayed at the USS Alabama in Mobile on Thursday, September 19.

According to WALA Fox 10, the flag is currently on a national tour intended to honor and thank fallen American men and women who made the ultimate sacrifice for our nation’s freedom and safety.

Measuring 28 by 60.5 feet and weighing 50 pounds, the Patriot Flag’s nationwide journey began on the 15th Anniversary of 9/11 when the flag was displayed at all three locations that were attacked by radical Islamic terrorists. The tour will end in 2021, on the 20th anniversary of the attacks.

119

On Thursday, the flag will be unfurled at 3:00 p.m. at Battleship Memorial Park. Mobile Fire-Rescue firefighters will assist.

You can read more about the tour and see photos from previous stops here.

Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn