2 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.

12 hours ago

GE Aviation to expand 3-D printing facility in Auburn

Governor Kay Ivey announced Wednesday that GE Aviation has plans to invest $50 million into expanding the additive manufacturing operation at its facility in Auburn, which is the first site to mass produce a jet component using 3-D printing technology for the aerospace industry.

“GE Aviation is at the leading edge of advanced aerospace additive manufacturing, and the company’s expansion plans at the Auburn facility will strengthen its technology leadership position,” Ivey stated, via Made in Alabama. “We look forward to seeing where the great partnership between Alabama and GE Aviation will take us both in an exciting future.”

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As a part of the project, GE Aviation will reportedly create 60 jobs and place new additive production machines in Auburn, which will allow the factory to begin greater production of a second engine part by implementing the additive process.

The expansion will allow the Auburn facility to mass produce a 3-D printed bracket for the GEnx-2B engine program.

“We’re very excited for this new investment in our additive manufacturing operation here in Auburn,” said GE Aviation’s Auburn plant leader, Ricardo Acevedo.

He added, “Our success thus far is a testament to all the hard-working folks at this facility who are leading the way in advanced manufacturing. The future here is bright, and we’re glad to have such great support from the Auburn community and the state of Alabama.”

Instead of taking the more traditional route to produce a part, additive manufacturing uses a CAD file to grow parts by using layers of metal powder and an electron beam. It is a much quicker process and allows for more product with less waste.

“Additive manufacturing technologies are revolutionizing how products are being made in many industries, and GE Aviation is helping to drive that revolution in aerospace,” said Alabama Department of Commerce Secretary Greg Canfield.

He added, “We welcome GE’s decision to expand AM activities in Auburn because this will solidify the Alabama facility’s position as a hub for next-generation manufacturing techniques.”

Before today’s expansion announcement, the Auburn facility was set to employ an estimated 300 people in 2019.

“We’re grateful for GE’s continued investment in our community, and we are proud to be the home of GE Aviation’s leading additive manufacturing facility,” said Auburn Mayor Ron Anders. “For years, Auburn has sought after technology-based industries, and this expansion is evidence of the value in that.

Kyle Morris also contributes daily to Breitbart News. You can follow him on Twitter @RealKyleMorris.

13 hours ago

Marsh’s bill to help build Trump’s wall filibustered by Dem Senate minority leader

MONTGOMERY — A bill authored by Senate President Pro Tem Del Marsh (R-Anniston) that would voluntarily allow a taxpayer to divert a portion or all of their own state income tax refund to We Build the Wall, Inc. was filibustered by Senate Minority Leader Bobby Singleton (D-Greensboro) Wednesday afternoon.

The bill, SB 22, has been carried over to a later legislative date yet to be decided.

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Singleton conducted several “small” filibusters, as he called them, leading up to debate on SB 22 when the chamber was confirming some of the governor’s various nominations.

Singleton said he wanted to slow down the bill’s passage and has managed to do so by at least one day.

When SB 22 came up as the first item on Wednesday’s special order calendar, Singleton launched into a mini-filibuster of just a few minutes before the Senate adopted a budget isolation resolution (BIR) on the bill, but in doing so, he threatened to filibuster for four hours on consideration of passage of the bill itself. He then began to appear to do just that after the BIR was adopted.

During his speech, Singleton claimed more “drugs and crime” come into the United States from Canada than Mexico. He also proposed that the federal government simply print more money to build the wall if it is needed and that walls should be built on both the southern and northern borders, rather than just the southern one.

After about 20 minutes of Singleton speaking passionately against SB 22, Marsh offered to carry the bill over to a later date so the rest of Wednesday’s legislation would not be adversely affected.

He emphasized that his bill does not divert tax money to help build the wall, but instead deals with money that taxpayers would be getting back anyway from the state. Individuals would voluntarily be able to send money already owed back to them by the state to a nonprofit named We Build The Wall, Inc.

Marsh also said SB 22 allows Alabamians to easily and directly send a message (through their monetary contribution) to the federal government and people around the nation – and world – that they support border security and President Donald Trump’s efforts. Marsh himself has made such a contribution previously, but his bill would make it easier for citizens to do the same.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

14 hours ago

Ivey on Common Core: ‘We should be deliberate in determining a course of study for our state’

Governor Kay Ivey has released a statement on Senator Del Marsh’s (R-Anniston) bill to eliminate Common Core in the state of Alabama, saying, “I support Senator Marsh’s efforts to ensure that headlines about Alabama ranking last or close to last in education become things of the past.”

Marsh’s bill, SB 119, was advanced unanimously from committee Wednesday and will come before the full Senate on Thursday, with passage in that chamber expected. All 28 Republican state senators support the bill.

The legislature’s spring break is next week, and substantial discussion from the education community is expected to occur with Marsh over the break and heading into the House committee process.

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“Alabama has some of the greatest teachers anywhere, they do a fantastic job each and every day laying a strong educational foundation for the children of Alabama,” Ivey said. “I have supported our teachers by proposing pay raises each of the last two years and expanding programs that have proven successful. As a former educator and president of the Alabama State Board of Education, I know how important it is to have good course materials to teach.”

The governor concluded, “Efforts like this should not be taken lightly, and I believe we should be deliberate in determining a course of study for our state. I support Senator Marsh’s efforts to ensure that headlines about Alabama ranking last or close to last in education become things of the past.”

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

14 hours ago

Dale Jackson: The ‘clean lottery bill’ is not clean, nor a lottery bill

There was hope that the Alabama legislature would be dealing with a simple and non-complex lottery bill this legislative session. This was false hope.

Alabama Senator Jim McClendon (R-Springville) touted his lottery bill as a bill that would simply give Alabama voters an opportunity to vote on a lottery. He wasn’t trying to solve the state’s economic ailments. He wasn’t hoping to appease every group in the state with some piece of the pie. He wasn’t creating a new spending obligation. All he allegedly wanted to do was give the average Alabamian an opportunity to buy lottery tickets in their home state and send the benefits to the state’s coffers.

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Simple. Easy. “Clean.”

But it was not to actually be. Instead, this clean bill provides a quasi-monopoly for certain individuals who already have gambling interests in place. McClendon says this is to protect the jobs at these facilities by giving them the ability to have new “Virtual Lottery Terminals.” The terminals are really just slot machines with extra steps, and some of these folks already have experience running this type of business because they have been running these quasi-legal machines for years.

These entities want this legalized and they want to stop any competition from springing up. This is a completely reasonable position for them.

Guess who has a problem with this? The Poarch Band of Creek Indians.

The Poarch Band of Creek Indians released the following statement:

We appreciate Sen. McClendon’s efforts to bring the question of whether the state should have a lottery to the forefront of this legislative session. However, the bill introduced today does not fit the definition of a “clean bill.” It does not give citizens an opportunity to cast one vote on one issue — whether we should have a traditional lottery in our State. Instead, the bill is cluttered with provisions that will expand private gaming operations in a few parts of the state owned by a handful of individuals. It also demands that any vote on a lottery include a vote on video lottery terminals, which are also commonly known as “slot machines.”

They are not wrong, but no one should be sympathetic to this argument. They want their own monopoly on slot machines. This is a completely reasonable position for them.

Neither position is reasonable for the state of Alabama to take. The state of Alabama should either offer a legit clean bill with no expansion/codification of existing gambling or open the door for others to enter the free market.

If the legislature thinks these types of gambling are good for the state, then it needs to regulate it, limit it and give other parts of the state and other operators an opportunity to take part in the benefits. Let Huntsville, Birmingham, and Mobile enter a developer bidding for gambling facilities.

Alabama legislators clearly want to address this in this legislative session. McClendon’s bill is not the way to do it.

Dale Jackson is a contributing writer to Yellowhammer News and hosts a talk show from 7-11 am weekdays on WVNN

 

15 hours ago

Ainsworth looks forward to Common Core repeal – ‘Damaging legacy of the disastrous Obama administration’

Count Lt. Governor Will Ainsworth as an adamant supporter of eliminating Common Core in the state of Alabama.

After Senate President Pro Tem Del Marsh (R-Anniston) filed a bill to do just that, Ainsworth told Yellowhammer News that he “look[s] forward to dropping the gavel when the repeal of Common Core passes the State Senate.”

This is expected to occur Thursday after the bill unanimously was advanced from committee on Wednesday.

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Ainsworth said in a statement, “I believe Alabamians should determine the curriculum and standards for our schoolchildren based upon our available resources, our needs, and our first-hand knowledge of what makes Alabama great. We should not rely upon some out-of-state entity or liberal, Washington, D.C. bureaucrats to determine our standards, and we certainly should not continue embracing this most damaging legacy of the disastrous Obama administration.”

“Sen. Marsh and the co-sponsors of his bill should be commended for working to end this unnecessary Obama-era relic, and I look forward to dropping the gavel when the repeal of Common Core passes the State Senate,” he concluded.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn