When Lake County received Minnesota's biggest federal award for a broadband project last year, its troubles appeared to be over. They weren't.
Lake County Internet work to start in May
The county hired new managers for the project, and telecom firm Mediacom says its battle against the broadband plan is running out of time.
March 3, 2011 at 3:12AM
On paper, the $70 million project looked good. Lake County was to receive $66.4 million in federal broadband stimulus money to serve up to 26,000 people in rural Lake and St. Louis counties. Lake County had to put up only about $3.5 million of its own money.
But the county was dogged by bad publicity about the firm it hired to plan the high-speed Internet network, and it faced a wealthy and determined cable TV company that wanted to scuttle the project.
Now, in what may be a new beginning for the embattled broadband network, Lake County has hired new project managers to replace the controversial one whose CEO had overseen another broadband network that was now $50 million in debt. And Mediacom, a New York-based cable TV company with Lake County operations, admits its opposition to the Lake County Internet project is running out of time because network construction is slated to begin in May.
The Lake County network, like Mediacom's cable business in the county, would provide Internet, television and telephone service. As a result, Mediacom wants to stop the project as unfair government interference with its local business -- even though much of the area to be served by the county network has been designated as "under-served" by high-speed Internet service.
Paul Bergman, a Lake County commissioner, accused Mediacom, which has annual revenue of $1.5 billion, of unfairly using Lake County, population 11,000, as a national test case for its opposition to government-funded Internet projects.
"We're easy pickings because we're a county with a small population," Bergman said. "And they don't care if they hurt us."
But last week, the Lake County Board of Commissioners replaced National Public Broadband as the project manager, citing disagreements over terms of a new contract that covered network construction and management. The St. Paul company's CEO, Tim Nulty, was one of several officials who at different times managed Burlington Telecom, a Vermont broadband network being investigated by state and federal authorities because of its large debt. Nulty maintained that the problems in Vermont arose after he left in 2007.
Lake County, instead, hired two Minnesota telecom executives, project manager Jeff Roiland of Willmar, Minn., and consultant Gene South of Annandale, Minn., who are reevaluating the planned network's technology and business projections.
"These guys are looking at the whole project from the ground up," Bergman said. "The area the network is to cover will be the same, but they're looking at new ways of doing things. Since this project was started two years ago, the technology has changed."
Mediacom's opposition has shifted to Washington, D.C., as the company tries to convince the U.S. Department of Agriculture, one of two federal agencies that distributed broadband stimulus money, to stop the flow of funds and review whether the Lake County broadband award was made improperly.
Mediacom claims the Lake County project is likely to fail financially because it has a flawed business plan.
"I'm in the cable business, and I know the costs, and the Lake County project cannot work," said Mediacom attorney Thomas Larsen. "They estimated that they needed 60 to 65 percent of the homes in the areas they serve to take their service -- but only 70 percent of those homes are occupied today. The rest are vacant."
Mediacom also claims Lake County failed to meet some legal requirements, such as holding a referendum on the proposed broadband project. The company fears the county effort will go bankrupt, and the completed network will be auctioned off cheaply to a telecom company that will then be able to compete without making a big infrastructure investment.
"If built, the network will put us out of business in Lake County, if not by the first network operator, then by the second one," Larsen said.
Bergman says Mediacom has its facts wrong, and is only interested in stopping the broadband project, even though the new network would be an economic boon for Lake County.
"We're pushing this broadband project forward for the economic development of the county, and here is this big telecom company saying what we have is good enough and we shouldn't do it," Bergman said. "The U.S. will continue to get further behind the rest of the world in broadband if we let the telecom lobbyists have their way."
Steve Alexander • 612-673-4553
