Sticking with Peak Speed – for now
SILVERTHORNE – A new president of the bankrupt Peak Speed Communications promises to pay all subcontractors and keep the Summit County high-speed Internet network working.
Based on those assertions, the Summit County Telecommunications Consortium (SCTC), composed of local government officials, will not try to take possession of the wireless network and operate it.
The SCTC has paid Peak Speed $426,902 in public grant money to build a high-speed network to connect local government and nonprofit offices, a stepping stone to Peak Speed making the service available to the public.
Although the contract stipulates money would be paid upon certification that Peak Speed was paying its bills, some subcontractors who worked on the system were still waiting for the now former Peak Speed president Greg Friedman of Breckenridge to ante up.
A third-party trustee, created because of Friedman’s past financial troubles, was supposed to certify all bills were paid.
Two subcontractors, John Lester of JPL Services in Kremmling, who is owed $33,000, and Gary Probst of Triangle Electric at Farmer’s Korner, who is owed $12,000, stated their case before an emergency SCTC meeting Friday.
Bankruptcy papers show Peak Speed owes its top 20 creditors more than $1.2 million.
“We did the work. We did not get paid,” Probst said. “I wonder if anybody is going to look into fraudulence there.”
“We are fully committed to do every bit of due diligence on this situation that we can,” said Sue Boyd, assistant county manager.
Summit County government was the fiscal agent handling the grant money and execution of the Peak Speed contract.
Assistant county attorney Dan Teodoru said “there are such things as bankruptcy fraud and crime,” but he was not alleging that.
This is not Friedman’s first bankruptcy.
In the late 1990s, he established Netbeam in Summit County to sell and operate high-speed wireless Internet connections.
He pushed Netbeam into bankruptcy in July 2001, and while federal courts were sorting that out, he formed Peak Speed.
Netbeam had been sued by unpaid employees and owed creditors several millions of dollars.
Peak Speed was technically a new company, but it operated through Netbeam equipment and employees and Friedman managed it.
Despite Netbeam’s history and its linkage to Peak Speed, the SCTC still contracted to pay it up to $456,000 in public money to build and operate a system.
Teodoru said due diligence included reading the public documents filed in the Netbeam bankruptcy and studying Netbeam financials.
SCTC members said Friday the choice when the grant was issued in September 2001 was between Netbeam/Peak Speed and Qwest.
Peak Speed was the only firm proposing a wireless solution within the SCTC’s cost range, Boyd said.
“Hindsight is 20-20,” Boyd said. “When faced with a choice between two viable bidders, both in bankruptcy … basically we made a decision based on the best information we had available.”
She said the contract protected the public interest. A third party technically owns the equipment Friedman bought and installed.
Still, when a company files for Chapter 11 bankruptcy protection, a federal judge decides what happens with that company’s assets and operations.
Teodoru said that should the county exercise its rights to take possession, a bankruptcy judge could possibly hold sway in the manner.
Bernie Zurbriggen, the mayor of Frisco and president of the SCTC, said that while Peak Speed presents a challenge, the result of creating a wireless network is good.
“We accomplished our goal of setting out to create a robust, competitive environment (for high-speed access),” he said.
“We have all known forms of technology available for delivery and multiple companies competing for business. That was the goal all along.”
In the last year, Comcast has finally delivered on offering cable modem high-speed access, joining Qwest and others offering DSL and other solutions.
“Maybe we should ask the question, was it worth it?” Zurbriggen said of the Peak Speed ordeal. “From my standpoint, it was. We accomplished our goal, we got to where we were trying to get to.”
Of Peak Speed, he added, “The technology is very good. Obviously, the business practices are not very good.”
Boyd said the concerns with Peak Speed are not about its services.
“Contract management and business practices are the main concerns,” she said.
In a statement released by the SCTC Friday, Boyd is quoted as saying Peak Speed’s bankruptcy “is definitely grounds for the SCTC to terminate its relationship …”
Boyd also reported “heated words” with Friedman about the contract performance on multiple occasions.
“I am now well beyond the end of my rope,” she said.
Boyd said Tom Balun is now president of Peak Speed. Nobody has met him but they spoke with him Thursday by phone when he issued his assurances of service and subcontractor payments.
He is expected to meet with the SCTC next week.
“We have bent over backward making this project work through Peak Speed,” Boyd said. “It has been one problem after another all the way along. It will take a lot for Mr. Balun to convince us that any assurances he offers us now are reliable.”
During the meeting, Zurbriggen disclosed he was a past investor, board member and paid consultant for Netbeam. He said he lost his investment and left the board May 2001. He has not consulted since January 2001, he said.
Zurbriggen said he has conducted SCTC meetings regarding Netbeam/Peak Speed matters, but “has not participated or influenced in any way the outcome of the meetings.”
– Last we knew: Peak Speed Communications filed for bankruptcy after spending $426,902 of a public grant to foster high-speed Internet access. The wireless network went into operation Feb. 1, after much delay. Subcontractors have not been paid.
– The latest: The Summit County Telecommunications
Consortium (SCTC) will see if Peak Speed makes good on a pledge to keep the network running and pay its bills, but will hire its own bankruptcy attorney to look after the public interest.
– What’s next: If Peak Speed falters, the SCTC would take the legal steps to get possession of the network and find someone to operate it.
Where the Money Went
How the SCTC spent public money
on Peak Speed and how much is left:
– Total Beanpole* grant $472,366
– Amount held
for administration $16,366
– Amount dedicated
to Peak Speed contract $456,000
– Amount paid
to Peak Speed $426,902
– Amount set aside
to subsidize customers $29,099
– Amount of subsidy
paid to Peak Speed $4,850
Remaining project assets:
– Subsidy of service funds $24,249
– Letter of credit
to cover emergencies $45,000
– Administration $16,366
– Total $85,615
*Beanpole state grants were designed to bring high-speed Internet services to rural areas.
Jim Pokrandt can be reached at (970) 668-3998, ext. 227, or email@example.com.
Support Local Journalism
Support Local Journalism
As a Summit Daily News reader, you make our work possible.
Your donation will be used exclusively to support quality, local journalism.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User