SCTC explains how Peak Speed won $456,000 grant
Editor’s note: The Summit County Telecommunications Consortium (SC TC) released the following statement about how it awarded a $456,000 grant to Peak Speed Communications. We are printing itverbatim because of the controversycreated by Summit Daily News coverage and editorials about the issue.The SCTC is an intergovernmental consortium, with membership including Summit County government, the towns of Breckenridge, Frisco, Silverthorne and Dillon, as well as Colorado Mountain College and the Summit School District (resource members only).The SCTC’s general focus is on improving the telecommunications capability and services throughout the county in various media. The SCTC wishes to update the community regarding progress on its Beanpole Project.Beanpole grants originated with state legislation in 1999 intended to encourage development of local telecommunications infrastructure as an extension of its statewide telecommunications network, effectively hooking all county seats to state government.The legislation was based on the theory that having local government entities in rural areas become anchor tenants for advanced telecommunications services would stimulate private development of infrastructure that might eventually benefit all businesses and residents in a community.The SCTC submitted a planning-phase proposal in response to the state’s request for proposals in 1999. It was subsequently one of seven communities awarded a general planning grant. That grant brought $28,600 to the project late in 1999 for such planning purposes.After a series of community awareness meetings in early 2000 and a written survey distributed to about 700 public and private entities throughout Summit County, an SCTC technical subcommittee prepared an application for a technical assistance planning grant to develop a Summit County Infrastructure Network Implementation Plan.Awarded $28,720 for this phase of the project in May 2000, the SCTC subcommittee used these dollars to develop an actual implementation proposal.In response to the success of that implementation proposal, the SCTC was awarded $472,000 for Beanpole implementation in October 2000.This grant is the source of dollars behind the SCTC request for proposals from telecommunications providers that was released in August 2001, for what is now commonly known as the Beanpole Project.Unfortunately, in the midst of a significant economic downturn in the telecommunications industry, only three companies formally responded to the SCTC request with proposals – Qwest, Netbeam and Brunetti, a company from Denver.The SCTC technical subcommittee reviewed each of these proposals thoroughly, and though each presented potential benefits, there were areas of concern as well.Such concerns were generally as follows:n Qwest – the proposal only offered services already provided in the community and thus did not present the promise of improving the high-speed telecommunications infrastructure as intended by the Beanpole Project. Moreover, Qwest’s proposal was very expensive. There were also concerns regarding the fiscal status of Qwest in terms of financial reporting, allegations of executive corruption and the like.n Brunetti – the proposal by Brunetti failed to meet the technical specifications of the request for proposals and thus was not a responsive bid eligible for consideration.n Netbeam – as many in the community are aware, Netbeam, a local company, is subject to a Chapter 11 bankruptcy reorganization. While still fully entitled to conduct business, such financial considerations were a concern for the SCTC.In addition, two other telecommunications providers were visibly absent from the actual bidding process, though they did participate in initial meetings regarding this project:n AT&T Broadband – The SCTC had every expectation that AT&T would bid on this project. Nonetheless, AT&T did not submit a formal bid. The company indicated that given certain corporate restructuring and prioritization of projects, it declined to bid on the project in Summit County as well as most other Beanpole projects in the state.n VailNet/ColoradoNet – VailNet, another local provider, participated in several early meetings on this project. However, VailNet representatives expressed a lack of interest in pursuing an award of this project, and never submitted a formal bid.After otherwise passing initial technical review, the Qwest and Netbeam proposals were forwarded to the SCTC for further consideration.In the midst of continuing to consider the two remaining proposals, the SCTC was notified that if the SCTC did not proceed soon to implement the grant, it was likely that the state would withdraw the grant.Subsequently, at its meeting in July 2002, the SCTC was presented with three options:(1) do nothing and lose the grant, (2) reject all proposals and release a new request for proposals, or (3) ask still-viable bidders to update their proposals and present them to the SCTC board in August 2002.Even though the SCTC was not entirely satisfied with either of the proposals under consideration, it decided on the third option in a pragmatic effort to avoid losing the Beanpole grant all together.At its Aug. 9, 2002, meeting, the SCTC listened to presentations by the two remaining bidders.At that time, Greg Friedman from Netbeam updated the SCTC regarding the status of the company’s bankruptcy and explained to the SCTC the relationship and distinction between the new, reorganized company known as Peak Speed and Netbeam.In conjunction with his presentation he informed the SCTC of his plan, if selected, to enter into a contract with SCTC under the Peak Speed organization rather than Netbeam.Although concerned about the financial condition of Peak Speed/Netbeam, the SCTC was attracted to the company’s proposal for a variety of reasons:(1) it offered more bandwidth for the same overall cost, (2) it offered far greater promise of connectivity for parts of the county traditionally left out of fiber-based (“wired”) infrastructure, including Blue River, Montezuma, Heeney, the north end of the county, and even Copper Mountain, (3) it was the lowest bid with the highest level components, exceeding technical requirements in the request for proposals and (4) it was a local company.In contrast, the Qwest proposal did not appear to offer much in the way of upgraded capacity to the community for its grant subsidy.Furthermore, other than its shear size, it did not offer more in terms of financial stability or assurance of reasonable service rates in the long run than did Peak Speed/Netbeam.Equipped with the information described, the SCTC reached consensus at its Aug. 9, 2002 meeting and directed its negotiating team to draft a contract with Peak Speed/Netbeam, subject to satisfactory results of a due diligence effort to review the financial status of Peak Speed/Netbeam and reach appropriate agreement regarding other technical details.That due diligence effort included engaging an independent auditor to review the company’s books. It also involved building detailed provisions into the contract that would protect the financial interests of the SCTC (as steward of the Beanpole grant) should the company default. Both measures went significantly beyond normal practice and procedure for developing such contracts.In spite of reported delays, mostly associated with weather and securing conditional land use permits for the construction of some towers, the project is generally on track so that by this summer high-speed wireless connectivity (up to 60 Mbps) will be available not only to the government entities, whose service is subsidized by the grant for two years, but to private entities and residents throughout most of the county, at highly competitive rates.In addition, customers will have other market options to choose from: Cable modem service from Comcast (up to 30 Mbps); DSL, wireless, and fiber services from ColoradoNet (up to 45 Mbps); traditional wire and fiber services from Qwest; satellite services from Hughes Affiliates (3 or more Mbps).This means telecommunications capabilities and market choices will be comparable to those in downtown Denver and the Denver Tech Center.”Competition and the market choices that it provides are part of the SCTC vision,” according to Sue Boyd, Summit County’s voting member of the SCTC board.
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