Neubeam: Wireless Investment Threatened by Broadband Authority Expansion

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By Stefanie Jackson- Late last month, the Eastern Shore of Virginia Broadband Authority (ESVBA) asked Northampton supervisors to support the continued expansion of its wired, high-speed broadband internet service delivered to homes by fiber optic cable.

ESVBA supplies three internet service providers (ISPs) on the Shore and provides broadband internet service direct to consumers.

Northampton Board of Supervisors Chairman Spencer Murray invited the most well-known of the three ISPs, Declaration Networks Group – branded as wireless provider Neubeam – to tell its side of the story on Sept. 11.

“When ESVBA talks about the desire to build out their fiber-to-the-home network, they often point to, ‘The residents want faster speeds,’” Declaration Networks CEO Bob Nichols said. “That’s absolutely false. It’s a baldfaced lie.”

ESVBA Executive Director Robert Bridgham said the two reasons he hears most often why people want fiber-to-the-home are bandwidth (download and upload speeds) and quality.

Upgrading bandwidth for wireless internet service providers can mean installing new hardware, such as a tower or receiver, but for fiber-to-the-home, it means a software update, he said.

Consumers also request fiber-to-the-home because it is higher quality and more reliable, Bridgham continued. Unlike wireless internet signals, fiber optic cable is not subject to electromagnetic interference such as radar.

Nichols said Neubeam could offer download speeds up to 100 Mbps (megabits per second) like ESVBA, but for most customers, affordability is a higher priority than speed.

About 15 percent of Neubeam customers buy the lowest internet service package, 80 percent opt for the two middle packages, and less than 5 percent choose the highest package, providing download speeds up to 5 Mbps, 10 Mbps or 20 Mbps, and 30 Mbps, respectively.

Due to recent technological advances, soon Neubeam will be able to double its internet speeds, Nichols added.

Nichols takes issue with ESVBA, a public authority, providing access to its fiber optic broadband network directly to residential consumers, generating competition for private companies like Neubeam.

Bridgham told Northampton supervisors on Aug. 27 that the decision to move forward with its fiber-to-the-home service was based on public feedback.

“We heard people both in Accomack and Northampton say time and time again … it wasn’t just, ‘We want any internet,’ it was, ‘We want fiber-based broadband,” he said.

ESVBA also offers four levels of residential service, ranging from download speeds of 10 Mbps to 100 Mbps.

Not only must Neubeam compete with its own supplier, ESVBA does not offer the ISP wholesale pricing and its costs are “prohibitive,” Nichols said.

“We spend four times as much on internet with ESVBA than in our other markets,” he said.

Neubeam obtained an $8.7 million USDA loan to fund its expansion. It also applied for a $3 million USDA grant that would have covered the cost of extending broadband internet service to 3,300 homes, but that effort fell through when ESVBA began experimenting with fiber-to-the-home service in Harborton, Nichols said.

He blamed the loss of the grant on ESVBA’s “lack of cooperation … lack of planning” and “lack of leadership … it’s a shame,” Nichols said.

Bridgham said ESVBA’s fiber network was built out to Harborton in 2015 and service began in September 2016, six months before the application for the USDA grant was due. A requirement of the grant was that the applicant could only seek to provide broadband internet to previously unserved communities.

ESVBA’s fiber-to-the-home project is “by definition, almost, it’s overlapping 100 percent of what’s already in place” to provide Shore homes with broadband internet access, Nichols continued.

Neubeam can serve 57 percent of Northampton’s 5,300 homes. If ESVBA increases its coverage area to about 70 percent – between 67 percent and 73 percent – as proposed, only 10 percent more homes would be covered, Nichols said.

ESVBA is welcome to “fill in the gaps,” but, “don’t gut our investment,” Nichols said. “A cooperative approach … will allow us to hit the 100 percent milestone” for broadband internet access on the Eastern Shore “a whole lot faster than trying to take us out of business.”

One of those coverage gaps is Cape Charles, where Neubeam does not plan to provide service and District 1 Supervisor John Coker says residents have told him the “internet stinks.”

District 2 Supervisor David Fauber explained that by providing fiber-to-the-home service in some areas of the Shore, the broadband authority “just did what the people have been screaming at them to do for years now.”

Chairman Spencer Murray emphasized three times during Nichols’ presentation that supervisors would not “take sides” and their main concern is Northampton’s economic development.

Nichols also raised the issue of a rate study conducted by consulting firm CTC (Columbia Telecommunications Corporation). Its report stated, “At the direction of ESVBA staff … CTC has used ESVBA’s lower cost assumptions in developing the financial analysis herein.” Nichols called it “outrageous” for the broadband authority to influence CTC’s report and “sway it to their benefit.”

Bridgham said ESVBA asked CTC to include the lower cost estimates in the report because they were more accurate. CTC’s cost estimates were based on average costs of other companies in other areas, while ESVBA presented actual costs proven by past contracts, purchase orders, and invoices. ESVBA’s actual costs were as little as one-fifth of CTC’s estimates.

Though ESVBA has not made the financial mistakes made by many broadband authorities across the country, Nichols believes it could still happen.

“There’s a reason why Verizon hasn’t upgraded their network” to offer broadband internet on the Shore, Nichols said. Billing customers $50 to $100 a month doesn’t “add up to a fiber-to-the-home capital expense and … unknown operational expense.”

Nichols requested that if supervisors draft a resolution backing ESVBA’s financing of its expansion, the document should include a restriction stating funds may only be used to expand fiber-to-the-home in areas Neubeam will not serve. Nichols also wants ESVBA to give Neubeam wholesale pricing.

County Administrator Charlie Kolakowski said a resolution supporting ESVBA is “no longer an issue,” suggesting the broadband authority does not need the county’s approval to finance the expansion project as originally anticipated.