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Archive for Tuesday, January 29, 2008

Internet firm’s plan raises questions

Lawrence Freenet wants city to co-sign $4.9M expansion loan

January 29, 2008

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Internet company seeks city backing

A non-profit Internet service provider is seeking city backing for a loan of nearly $5 million. Enlarge video

Alex Kaufman, of Community Wireless Communications, loads gear into a Lawrence Freenet truck outside the Lawrence Freenet offices, 4105 W. Sixth St, in this 2008 file photo.

Alex Kaufman, of Community Wireless Communications, loads gear into a Lawrence Freenet truck outside the Lawrence Freenet offices, 4105 W. Sixth St, in this 2008 file photo.

Editor's note: The Lawrence Journal-World is owned by The World Company, which also owns Sunflower Broadband. Sunflower Broadband and Lawrence Freenet are competitors in the Lawrence Internet service provider market.

The Lawrence City Commission is being asked to co-sign a $4.9 million loan for Lawrence Freenet to finance that company's plans to expand its wireless Internet service in the city.

Freenet leaders say in exchange for the unusual financial arrangement, they'll guarantee that every child in the city under age 18 will have free access to wireless Internet service. They're also agreeing to provide the city with enough installed underground cable to synchronize the traffic signals on major city streets, along with providing city government with free Internet access.

The majority of city commissioners, though, said the proposed deal creates a host of legal and ethical questions about what role city government should play in private enterprise. Some commissioners also are asking questions about whether the not-for-profit Freenet has adequately explained its relationship to a for-profit company created by Freenet's founder.

"They have great, positive, ambitious goals, but unless staff can give me some very good reason, I am not at all comfortable co-signing a loan," Mayor Sue Hack said.

Commissioners are being asked at their Tuesday evening meeting to hear the proposal and determine whether they want to reject the plan or ask staff to investigate it further.

The deal

Joshua Montgomery, a founding member of Freenet and company spokesman, said Freenet has plans to install 25 miles of underground cable, expanding the company's ability to provide Internet service from about 60 percent of the city to about 95 percent.

Montgomery said Freenet and its partners can get private financing to complete the expansion without the city co-signing the loan. But if the city agreed to co-sign, the interest rate would drop from 12.5 percent for 60 months to 5.5 percent for 120 months. That would reduce the loan's monthly payment by about $57,000.

In exchange for that help, Freenet would start "Freenet Kids," which would provide free, filtered, wireless Internet access to children via a user name and password wherever Freenet has a signal.

Freenet also is proposing that: the city would have use of about $1.9 million worth of fiber-optic cable that could be used to synchronize traffic signals; Freenet would provide improved access to the city's public library Web site; and the company would give the city Internet accounts for city employees.

Freenet would pay for the loan through sales of its Internet service. Montgomery said he is counting on individuals to buy the service and not use the filtered Internet access that may be available to the children. He said there isn't a method planned to stop adults from using their children's free accounts, and that the company needs to grow its paid subscriber base from about 1,100 today to 6,000 in two years to meet its financial plans.

Montgomery said the proposition is a low-risk deal for city leaders because the city would be the fourth guarantors on the note. Freenet, its for-profit service provider and Montgomery all would be guarantors ahead of the city.

"It is very similar to what would happen if you asked your dad to co-sign a loan," Montgomery said.

Split commission

A majority of city commissioners, though, aren't so sure. Commissioners Mike Amyx, Rob Chestnut and Hack all have expressed reticence.

All have posed questions of whether the city has the legal authority to back a private loan, but they've also expressed concern about whether it is the proper role for the city.

"I'm somewhat skeptical about even pursuing this at all because it opens the door for us to get involved in some private enterprise matters that we perhaps shouldn't be involved in," Chestnut said. "It brings up the question of whether we are providing something that, in fairness, we should be providing to other people, too."

In 2005, the previous City Commission allowed Freenet to place its wireless equipment on city water towers. The company pays $10 a year to locate on city water towers, a significant discount from the $1,000 to $2,000 a month that the city charges wireless telephone providers to locate on the tower.

But commissioners previously said they were fine with that subsidy because Freenet was different than for-profit Internet providers such as Sunflower Broadband or AT&T.

When Freenet first approached the City Commission, it was using a public television business model, where no one was charged for the service, but Freenet would rely on donations and pledge drives to sustain itself.

That model did not last long. Adam Mansfield, president of Freenet, said it became apparent that the business would need to generate money to pay expenses.

"That initial effort basically was a bunch of people getting together working with off-the-shelf radio equipment," Mansfield said. "It basically was some nerdy folks trying to figure out if we can make this work ourselves."

Now, the company sells service for $19.98 a month, which is at or above the rates charged by for-profit service providers in the city. The company commits to use 10 percent of its revenue to provide free service to qualifying low-income residents. According to the last quarterly report filed with the city in October, the company had 1,144 paying subscribers and 90 individuals who were receiving free service.

Freenet's proposal has drawn opposition from Sunflower Broadband. Patrick Knorr, The World Company's chief operating officer, said Sunflower has been providing community service to Lawrence long before Freenet was established. And he said the company has been doing so without a public subsidy.

"Asking the community to pay for us to serve the community, I think that would be outrageous," Knorr said. "I find it outrageous that any competitor is asking for that."

Knorr said Sunflower provides discounted Internet service to 341 nonprofit organizations as part of a program started in 1995. The company also provides more than 50 "hotspot" locations where people can access wireless Internet for free and without a Sunflower account. That program began in 2001.

In December, Sunflower started its own program to provide free Internet service to qualifying low-income individuals. The company has signed up 32 people in less than two months, Knorr said.

Knorr said he would urge the city to reject Freenet's proposal, in part, because Freenet's past business assumptions have been wrong and there's no reason to think the most recent projections are any more accurate.

"If this was sustainable, sound business, they wouldn't need to be this creative with their financing," Knorr said.

The fact that Freenet is now competing with traditional for-profit companies also is giving some city commissioners pause.

"It certainly has expanded from what I was comfortable with in the beginning," Mayor Hack said.

City Commissioners Mike Dever and Boog Highberger said they are comfortable with the city's arrangement, and want to look at the $4.9 million credit proposal.

Dever said the amount of fiber optic cable that city government would gain use of could have a significant value to the city. He said the city likely would need to spend millions of dollars to put in cable for a program to coordinate traffic signals.

"You have to look at what we're being asked to do versus what we could gain," Dever said. "I'm interested in pursuing extraordinary pursuits to have an extraordinary community."

Comments

none2 6 years, 2 months ago

While in theory what FreeNet wants to do sounds wonderful, in execution they have left a lot to be desired. If you go to their website, take a look at their map. They have completely ignored North Lawrence. While I may be biased for North Lawrence, the fact of the matter remains that they stated they wanted to make available internet coverage for those who can least afford it. That would tend to be the older parts of town -- especially east Lawrence & North Lawrence. How many more years are they going to completely skip North Lawrence and claim to still have this goal?

Furthermore, originally they stated they were also going to include the rural areas around Lawrence. They used to have a rural waiting list, but now their website indicates that it has been dropped.

If you want to know where internet is most needed it is out in the surrounding countryside. Cable companies normally halt cable services at the city limits. Traditional phone companies seldom provide DSL unless it is near a subdivision. So in rural areas you mainly have the old fashion dial up, satellite, some wireless via the mobile phone companies, and we are lucky that Sunflower also has some canopy for part of rural Douglas County.

If I were someone with money to loan out, I would hesitate to do so for FreeNet. Again, I applaud their goal, but as it stands it comes across to me that they have lost site of their goal. You cannot ignore a whole section of town and say you are for internet connectivity for everywhere. While rural areas outside of Lawrence aren't the responsibility of the city, the fact of the matter remains that it is a very POOR area for even having options for internet activity. We are very lucky to have affordable internet access in the city via Sunflower, it would be best if FreeNet concentrated in areas that are grossly neglected by internet options.

Finally, I am not an employee of Sunflower, but I am SO grateful that they have given Lawrence an option besides the phone company. I am also grateful that they have attempted to reach out to some rural residents via their canopy system. On the other hand, I am very disappointed that the traditional phone companies continue to ignore rural areas. It is too bad that FreeNet has also dropped that goal.

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doesnotplaywellwithothers 6 years, 2 months ago

Why do they not go to Venture Capitalists for their money?

With such funding readily available for anthing with "Wireless or Internet" in their name five million is a drop in the bucket for these guys.

The city should not guarentee any money for a business that competes with existing businesses that pay their budget.

The rewards and risks are for Venture Capitalists and investors, which their are pllenty of.

At least they are getting free publicity and should attract more customers who are anti Sunflower customers.

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compmd 6 years, 2 months ago

Godot, I'm curious why you feel the way you do about this.

"Unvalued concessions?" If you are referring to the benefits to the city that were outlined (such as police department bandwidth, Internet access for city employees, fiber to traffic lights) then maybe you should rethink that statement. Simons and Knorr seemed to place great value in those things and said this evening that they would want to bid on those projects. Commissioner Dever seemed to think very highly of those projects and even suggested that Sunflower and Lawrence Freenet partner on a project.

"How does one value a barter between a city, a not-for-profit, a for-profit and the taxpayers who will eventually be forced to ante up the tab?"

Community Wireless and Lawrence Freenet, both of which started together as a bunch of geeks in a garage with a Winnebago, has grown to a large office building with several vehicles, numerous employees, and one of the most successful city-scale wireless mesh Internet providers in the United States that continues to grow. You assume that:

1) The businesses will fail, which based upon my prior paragraph doesn't fit with the trend. 2) Everyone else guaranteeing the loan will default. 3) Everyone involved in this process must not know what they are getting themselves into.

Does that really seem reasonable?

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its_getting_warmer 6 years, 2 months ago

I've just read the entire proposal.

Pretty well thought out in my view. Lots of indirect benefits to the City for very little risk too.

Heck, even if the City PAID cash for this whole thing instead of just providing security for the loan, it would STILL be cheaper than what the city will pay for the Oread Hotel parking hole. With a lot more benefit to a lot more people.

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unite2revolt 6 years, 2 months ago

Did anyone else notice that World company now owns TV Channel 49 in Topeka too?

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Godot 6 years, 2 months ago

Monkeyhawk is straight on right about this issue. This business has already taken advantage of "not for profit" status, and its originators used their relationships with the commission of 2005 to gain an unbelievable gift of a $10 annual lease from the city to mount their equipment; even then, it failed; now, after reinventing itself and getting private, for-profit funding, it is still on the edge, and it comes to the city with this surreal notion of having the city "co-sign" a note in exchange for unverifiable, unvalued concessions to the city.

How does one value a barter between a city, a not-for-profit, a for-profit and the taxpayers who will eventually be forced to ante up the tab?

There is trouble in river city and it begins with "free"

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compmd 6 years, 2 months ago

Well, its easy for people to attack things they don't understand when they are being inundated with negative information from a monopolistic news agency. Its also easy considering how most people can barely grasp how a credit card works; I don't expect most people to have a clue about business finances.

I was at the meeting this evening, and Simons and Knorr were in full form. Simons went off about the 700 "Gigahertz" auction (its "megahertz" actually) and withheld the actual costs of implementing 700MHz infrastructure. Knorr stood up and talked about how "we wanted to do these things first, so let's bid on them!"

There have been disappointingly few people here who have taken the time to actually read the proposal to the city and simply drink that LJW's Koolaid and then spew vitriol on these boards. Monkeyhawk, keep drinking the Koolaid. You have made a conscious decision to not educate yourself on this matter, when other posters have provided everything necessary. Your baseless invective has added nothing of any substance this discussion. Baille, Ralph, Marion, good posts. Glad to see some people get it.

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been_there 6 years, 2 months ago

Wait, if they are promising that every child under 18 would have free internet access, what if they lived in that 5% area? Would they have to go somewhere else to use their free access? They never said they would have it in their home. How tricky.

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been_there 6 years, 2 months ago

So if the city taxpayers would end up paying for it, would the 5% of Lawrence that will not have access to their system be exempt from having to pay for it

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Godot 6 years, 2 months ago

When, not if, Freenet defaults on this loan, the co-signors will be responsible for paying it back. The city in Lawrence will be fourth in line to pay it off - the three entities who would be responsible for the loan before the city are just different names for one person: Joshua Montgomery.

As I posted on another thread, this reminds me of:

"Dad, I am not asking you to buy me a car. Really. All you have to do is co-sign the loan. I'll make the payments, on time, I promise. There is nothing to worry about."

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Ralph Reed 6 years, 2 months ago

Baille (Anonymous) writes: "There is an 83 page proposal on the City Commission's website ... go to page 19 to see what they really propose. Whether or not you agree with the financing, the proposal itself is interesting."


I agree, the proposal is interesting and deserves further consideration. I think that's why they CC sent it back to City Hall.


What I don't understand is how people got the idea, and others jumped on the band wagon, that Freenet is asking the City for a loan. That's not what the proposal is. Go read it.


I'm me. Who are you behind your hood of anonymity?

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monkeyhawk 6 years, 2 months ago

Has it occurred to anyone that this may merely be a ploy by "free"net to be gobbled up by a "Goliath" company? They must be somewhat clever to get this thing off the ground to begin with, so why not come up with some outlandish, unprecedented partnership proposal with the city. If they are denied, at least G company is taking notice

Perhaps the city should consider signing the note, if they are guaranteed say, 25% of the sale price when "free"net is taken over.

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spywell 6 years, 2 months ago

I wonder if the CC can see the difference in this companies plan and the Fritz plan for the hotel at 12th and Indiana. Their both asking for the city to invest in their private business. The difference is that the Hotel Plan is not helping the public in anyway whereas the Freenet plan somewhat does. The CC has twisted logic on this hotel plan when they object to the freenet plan.

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pace 6 years, 2 months ago

Hack feels free to speak dis about cosigning for a business that could really help Lawrence. She just won't discuss her own deals that involve giving money to compnany that she had invested in. Hack should resign. We are tired of asking her the questions about her "special" deal and getting a wounded look. she should of stood up and communicated with the people who elected her, she should of answered right away.

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been_there 6 years, 2 months ago

Looks to me like they are targeting students, why don't they ask KU for money?

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been_there 6 years, 2 months ago

I tried to get Freenet a few months ago but they have no service in North Lawrence, couldn't believe it Once again North Lawrence gets ignored. I quess people in North Lawrence have too much money to need such a service. Look at their coverage map and you will see that the older low income areas are not covered, totally contradicting what they say they are about.

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JackRipper 6 years, 2 months ago

Oh so it comes down to personal attacks on someone who may have a different political stance. I could care less about his politics if I'm getting a heck of a good deal.

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zbarf 6 years, 2 months ago

Freenet is trying to take advantage of bleeding heart liberals is Lawrence to promote a front company. The real company is behind the scene and yes there is a profit motive.

Nothing is free...somebody has to pay and this is just another social program to distribute wealth. Better bet would be to tell poor kids in school to ask their moms to put the cigarette money towards the same internet access we all pay for.

I have heard this guy (Joshua Montgomery) speak and he is a jerk. Don't support this plan!

PS. You ask my how I know he is a liberal....he invented the FOX Blocker!

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Baille 6 years, 2 months ago

There is an 83 page proposal on the City Commission's website. Skip the fluff and the story of Freenet's success and go to page 19 to see what they really propose. Whether or not you agree with the financing, the proposal itself is interesting.

http://www.lawrenceks.org/web_based_agendas/2008/01-29-08/01-29-08h/lawrence_freenet_kids_proposal.pdf

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Baille 6 years, 2 months ago

The proposal has little to do with the wireless technologies that Freenet has developed. It is primarily concerned with infrastructure - high tech cable.

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rodentgirl16 6 years, 2 months ago

I'm sorry, but I had terrible service with Freenet. I had a charge on my credit in June from February because they forgot to bill me for it. They didn't bother to let me know and I had to dispute the charge with my credit card company because I could never get ahold of anyone for help. Their service is slow and cuts out, and it takes them a long time to remedy the problems (2+ days). I wanted to like Freenet, I really did, but when you have to use the internet for school or work, it is absolutely imperative that you have reliable internet and I've never had a connection problem with Sunflower. At this point, I think Freenet is too unstable and this is too big of a monetary gamble.

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OnlyTheOne 6 years, 2 months ago

"I am not at all comfortable co-signing a loan," Mayor Sue Hack said." But it was okay to give Deciphera a million. Oh yes, I'm leerie of this "loan" also.

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macon47 6 years, 2 months ago

WHINE everything is lawrence should be free whine no one should have to put up with the man whine pot should be legal whine we cant get easy jobs that pay big bucks and show up when we want to whine its not fair for others to have more money give me some whine

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Norma Jeane Baker 6 years, 2 months ago

Hey, lucky_guess, I'm not 100% sure, but I am reasonably certain that Sunflower already has a fiber ring. You could probably check with them to find out. I seem to remember them doing a lot of work a few years back.

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lucky_guess 6 years, 2 months ago

Bottom line.

To provide an alternative to Sunflower you need to provide competitive services.

To provide competitive services you need a competitive network.

To build a competitive network, you need money. Lots of money. Fiber is not cheap. Wireless mesh radios are not cheap. Network administrators are not cheap. Technician crews, utility trucks, call centers, all cost a lot of money.

But it is what you Must Have if you want an alternative to Sunflower thats worth a darn.

What Freenet is asking from the city is not a big deal. It seems pretty logical considering the city stands to benefit quite a bit.

Maybe Sunflower is worried about losing the city's business. Maybe they are worried about losing more residential business if their service suddenly becomes inferior to Freenet's due to the planned network improvements (a fiber ring would really be awesome).

In any event, it appears to me that Sunflower whined to the World Co. who ordered the Journal World to put out some negative pub.

The chokehold that the World Co. has on media in this town is really, really beginning to irritate me. And I really, really hope that Freenet can get a foothold in the market. I agree with their direction and apparent goals far more than that of World Co.

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ivan 6 years, 2 months ago

I like the idea of FreeNet and competition. But when I got to their actually website it took two minutes just to load their rates page, same amount of time for the signup page. Not a good sign.

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DonQuipunch 6 years, 2 months ago

Wow, not only are they running with that as their main story, but they're keeping it there all day!

Classy, LJWorld. And that's coming from a guy named DonQuipunch.

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a_flock_of_jayhawks 6 years, 2 months ago

"And what exactly does the franchise fees go to. I'm sent many emails and never received an answer."

Ask the city. They are the ones who require the franchise fee.

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lucky_guess 6 years, 2 months ago

I have had a Freenet account for over a year and I use it at public hotspots without issue. When I talk to the employees there they are friendly supportive and they don't give you the run around. Quite different from my typical Sunflower experiences in the past where one time I had to call, sit on hold for 20 minutes in order for them to explain to me that the mysterious $7 charge on my $40 Internet bill was simply because I didn't have cable TV.

"Now, the company sells service for $19.98 a month, which is at or above the rates charged by for-profit service providers in the city." (from above). I really don't think this is true.

I have followed the Freenet project since nearly the beginning because I really feel that what is going on in this town (and nearby towns) with the World Company is getting out of control. Also, I've read the Freenet literature, I've been to a city council meeting or two, and I really think these people are fighting a good fight. And I don't think it is out of the question at all to ask the city to C0-SIGN a loan with MULTIPLE OTHERS if it truly benefits the city provides MORE CHOICES for Lawrence residents.

And the World Co. should really be ashamed here. It is very very clear to me that the Journal World is acting as a media outlet for the interests of Sunflower. Do they think that this is not obvious? Do they think we won't catch on, or do they think we just won't care?

Consider this: Until today, the Journal World has printed next to nothing about Freenet and the services they are trying to provide the city. If you search the Journal World for 'Freenet' you just get a bunch of city commission meeting agendas. To get a real story you have to go all the way back to November of 2005.

This makes sense of course, because Sunflower and Freenet are competitors. But the travesty is that the Journal World pretends to be a fair media outlet. It simply is not.

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JackRipper 6 years, 2 months ago

autie, you mean there are no other hotels in Lawrence that may be effected by the palace on the hill? Again, did you miss that they are providing backbone to the city infrastructure and not a bunch of promises which all disappear when some of these "tax abatement" companies are bought out and moved elsewhere?

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Tristan Moody 6 years, 2 months ago

Autie:

So let's set up a fair bidding process. Let Sunflower bid on the same services that FreeNet is offering to the city. I think we have to take all the articles about FreeNet here with a grain of salt, since this paper writing about FreeNet constitutes a conflict of interest. The LJWorld has absolutely nothing to gain by writing something favorable to FreeNet and everything to lose, and writing articles in this manner without stating the benefits they provide to the community, as presented in the rebuttal offered by FreeNet, is journalistically irresponsible and unethical, but such is life when the local media monopoly is a for-profit company. Of course they will protect their interests.

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eliteminds 6 years, 2 months ago

Well since there's all this hoopla over local Internet firms... how about giving some business to another local Internet firm?

If you need web hosting please give our company a try. It's called Elite Minds and the URL is www.eliteminds.com

>

We're locally owned, don't ask for a dime from the city, and have 24/7 tech support and rates as low as $7.95 a month. Thank you for your support!

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autie 6 years, 2 months ago

Cutting out what the deal entails, city government should not be involved in any arrangement that gives Freenet an unfair competitive advantage..which this deal clearly does. It is ethically wrong and morally bogus. Note this is not the same as giving a company tax abatements; that have no local "competition" and creates a significant postitive to the local economy.

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Marion Lynn 6 years, 2 months ago

cont'd:

Is the 10% "investment" in the for-profit maybe a bit on the "unethical" side?

Maybe a bit but without that investment and the financial obligations which go along with it, the non-profit would be unable to function.

Example: Do you really think that the networks "donate" all that air time to those "non-profits" which plea endlessly on your screens for money for this "good purpose" ot that?

Do you think that the production of those commercials is free?

None of those things are completely free and people have to get paid.

Occasionally non-profts have to serve up to Mammon.

Further, it is perfectly legal and ethical for a non-profit to limit those to whom "free" services are provided, just as even the Salvation Army, the American Red Cross, the United Way and all other non-profits!

Until very clearly shown otherwise, I'm going to stand behind Lawrence Freenet.

Lastly, I beleive this action on the part of Sunflower to be merely another shot fired in the battle to promote the "Two-Tiered Internet"; an interent based on which companies and individuals can pay the most to get their websites to be marketed, found in search results and have faster loading speeds than those which are not.

If you want to keep the interent open and free, you must support operations like Freenet or you will see a "Ma Bell" of the internet which will make the old telephone company look like a piker!

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Marion Lynn 6 years, 2 months ago

OK, I'm going to weigh in on this as I have more than a bit of experience with working with non-profits and if the LJW blows a gasket, so be it.

First, this is not about a non-profit "scamming"; this is about control of the internet and internet services by an already large ISP; Sunflower, et, al.

Free internet service operations have been halted nation-wide by already existing for-profit ISPs; just Google it a look around(I can't do all your homework!) but here is one link to a good article on the subject:

http://www.usatoday.com/tech/wireless/20:

Second, most folks do not understand how non-profits really work in terms of fund raising, donations, what they can and cannot do for themselves; more as matters of practicality and cost than anything else.

No one "invests" in non-profits because such entities are just that; non-profit. Going to be tough to get investors to put money into a zero-return operation, so most non-profits contract with for-profit corps to provide the non-profits with services which would otherwise be unobtainable.

Investors will invest in a company which is contracted to a non-profit to perform various services for that no n-profit on a paid basis and there is nothing "scamming", unethical or illegal about it.

The investors simply required Josh to have some personal repsosibility; i.e.; personal committment to the company so constructed to perform those services for the non-profit.

I'd bet that his personal financial obligations to both corporations are a lot more than most of you would be willing to believe!

Josh has been very straightforward and open in discussing his financial relationships with both corps.

cont'd:

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JackRipper 6 years, 2 months ago

No it isn't free, about $20 a month. Buy or rent their modem, plug it in your network card, sign in, you're on. That's it!

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jayhawklawrence 6 years, 2 months ago

JackRipper:

Ok, I will study it further.

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RidgeRunner 6 years, 2 months ago

No talk of the current FCC 700mhz auction/s or, more specifically, the C-Block and or the effects that an Open Access Network might have on the aforementioned providers?

Curious...

4G is coming IMO.

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JackRipper 6 years, 2 months ago

Ragingbear you might want to note that newer smart phones are coming with wifi. Suppose those companies know something?

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JackRipper 6 years, 2 months ago

jayhawklawrence I hear you but companies like AT&T have already upset the free market basket. Helping a local small company is what I thought the chamber and city strived for. This won't cost us and it provides infrastructure that the city will be able to use at the same time. They may be an upstart but they cover the city pretty much with the investments already made. Lean and clean plus you get to talk the guys who own the company when you call or stop in. Also there is talk AT&T might start filtering the internet. If these big companies get the upper hand in the internet market how can we expect to have an open forum in the future and they decide what we get access to. All you have to do is look at commercial radio and see what happens if we don't try to help keep our access local.

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Adrienne Sanders 6 years, 2 months ago

Quote: Now, the company sells service for $19.98 a month, which is at or above the rates charged by for-profit service providers in the city.

It's above rates charged by other providers? Um, what? Would someone like to tell me where I can get decent internet service (not dial up) for under 20 bucks a month?

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Ragingbear 6 years, 2 months ago

This reminds me of what NetZero originally aimed for. They wanted to give free Internet to everyone.

I think it's still too early to set something like this up. What we ultimately are aiming for is a realistic way to run laptops on our cellphones. They are fully capable of doing so, but the cost is astronomical.

Ditch the project. You get free wireless downtown anyways. Wait a few years and it will be a moot point. In 5 years, we are going to look at this as an asinine idea that drained millions and STILL failed to deliver. Meanwhile we will be walking around with cell phone transmitters on our PDA's.

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jayhawklawrence 6 years, 2 months ago

RalphReed:

I appreciate yours and everyone's comments. Gee, if only congress could discuss issues sometimes...

I am only applying simple MacroEconomic principles that I believe have allowed us to have the greatest economy in the world. When AT&T tries to change these principles for there own benefit, it hurts all of us in the long run so these principles of the "invisible hand of the market" work for all of us. I am only assuming that there exists certain free market forces and when tax payer funds help create a new competitor in the market where there is an existing business environment with existing businesses servicing market needs, you upset that balance and you end up with less services and greater cost.

Hey, I have liberal tendencies also. I cannot stand Conservative Republican BS and I like our Lawrence openmindedness. But we complain all the time about the taxes, etc and then we mess up our own economy because we just don't pay attention to the consequences. This is not my opinion, it is Econ 101.

Look up this issue on the internet. Many cities want to provide free internet access for everyone. Great concept. I have loved it. Why isn't everyone doing it? Because there are problems with this. I just think we need to be very cautious about this being another boondoggle.

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blakus 6 years, 2 months ago

Ah, World Comp., how I love your veiled attempt to seem impartial. It is not what you report that is important, but rather, what you fail to report. What Freenet brings threatens Sunflower for two reasons (in my opinion), no bandwith cap and better, more comprehensive services. Being a previous Sunflower customer, I was horrified by the constant traffic jam that I experienced while using their services. Freenet is a completely different system when compared to Sunflower and I believe this is seen as a problem to World Comp. It would infringe on their wireless hotspots that are inplace in businesses and Freenet's infrastructure would allow faster access. The technology that a company employs and maintains is just as important as its business practices (money.) What Freenet brings to the table is interesting; improved infrastructure (fiber optic cable is the future for info. tech.) free services for low income families, children, and city employees (not to mention refurbished computers for those who can't afford them), and city-wide wireless access!!! Being the fourth guarantor on a loan that would allow Freenet to keep costs down and therefor keep price down does not seem that awful. Call me crazy for believing that bringing open access for some and improving information availability= democracy is a good thing.

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Ralph Reed 6 years, 2 months ago

StephenColt (Anonymous) writes: "I find it ironic that none of the questions raised by the plan are really about the plan itself, rather in the execution of the plan. Does this mean that the consensus is that the plan is good?"


Maybe not ironic, but it is interesting. But, putting the shoe on the other foot, do we have access to the World Company business plan? Unless the intended service is a public utility, then we shouldn't have unfettered access to their business plan.


jayhawklawrence (Anonymous) writes: "FYI: I can get free internet at a lot of places around town. Einstein Bagle for instance. Go have a bagle and use the internet. That is good business for everyone."


This is true. In fact you can even access the Aimee's Coffeehouse wireless internet from across the street at Einstein's. However, both of those businesses pay for the access they provide. It's free to you, but it's not free to the business providing the free access.


"I want to have an open mind, but you cannot screw up the market for existing businesses using Taxpayer funds."


Jayhawk, you're making the assumption up front that Freenet will fail, so your assertion is really unfounded. Besides taxpayer funds are not being used. The loan is not from the City, the City is simply being asked to cosign so Freenet will save some interest. They've got the loan, they just want to cut their interest rate. What's wrong with that.?


(Why are there only two posters to this blog who are NOT anonymous? Must be that pesky accountability issue again.)


I'm me. Who are you behind you hood of anonymity?

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Baille 6 years, 2 months ago

Criminy people. At least take the time to go to the commission website and read the proposal. Or better start attending the commission meetings. The proposal is to develop infrastructure for the benefit if the city as a whole. It is not an investment in the business itself. It also doesn't put forth a model that will compete with Sunflower.

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BigPrune 6 years, 2 months ago

How many children live in Lawrence? If it wasn't for the virtual school, the school district's enrollment numbers would show a decrease in students.

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JackRipper 6 years, 2 months ago

If you don't believe AT&T has benefited from government involvement in the business world you are missing something important. I think Sunflower is wonderful but I'd like to see their competition coming from a local business instead of a corporation who has bought their privileges from the federal government in a way that a small businessman or even Sunflower could never do . What we need a options that don't keep tying us to the mothership. They are asking for a co-signer, not a dime coming out of our pockets in taxes if they do well. If you haven't noticed their infrastructure is all around us, look up at the light pools, those antennas and dishes are Freenet, and they have been expanding.

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lccaf 6 years, 2 months ago

First off, they are still 24 people short of even giving free service to 10% of their users. Second for a company that has been in business since April of 2005, how can they still not be rated well enough to get good loan rates? Fourth in line guarantor? LFN is a nonprofit that obviously needs money, so write them off as a realistic guarantor. If CWC has enough money and revenue to be a viable guarantor why don't they just make a low interest loan to LFN themselves. I would like to see Joshua Montgomery's tax returns and portfolio before I believe he has the ability to bail the city out of a loan of this size. Ultimately they are an almost 3 year old company that still only has 1144 uses. How is this a sound business investment for anyone let alone the City?

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jayhawklawrence 6 years, 2 months ago

FYI:

I can get free internet at a lot of places around town. Einstein Bagle for instance. Go have a bagle and use the internet. That is good business for everyone.

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jayhawklawrence 6 years, 2 months ago

I want to have an open mind, but you cannot screw up the market for existing businesses using Taxpayer funds.

These local businesses pay for our city services. Without them the only alternative is to raise taxes. Ouch again.

Cutting edge is a relative term. I have read of problems across the country with the free internet concept. I think this needs a lot more study and from what I see, it is not good for Lawrence.

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StephenColt 6 years, 2 months ago


Also you may want to investigate how they are putting Lawrence on the map as ahead of the game when it comes to wireless access in a city.


It's funny you mention this. The Lawrence Freenet project is one of the most successful City WiFi projects to date, it's a shame that the LJW hasn't told anyone about this. Not only is the technology on the cutting edge, but from what I've read they've got better coverage and for less money than anyone else.

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JackRipper 6 years, 2 months ago

"The result can only be less revenue and fewer services for all of us. We need to attract productive companies not companies looking for hand outs."

Oh you mean like the alternative AT&T that can buy lobbiest that provide them with all kinds of perks and have overwhelming resources to come in cheap and then who knows what they'll do after controlling most of the market. Helping a local businessman to build a company that provides service to the city and individuals without jerking the customer around like the mega corps sounds dang good to me. Also you may want to investigate how they are putting Lawrence on the map as ahead of the game when it comes to wireless access in a city.

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Godot 6 years, 2 months ago

TIF for Fritzels: BAD

TIF for anything in Lawrence: BAD

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jayhawklawrence 6 years, 2 months ago

I think Joshua Montgomery is a great entrepreneur. He has figured out how to use other people's money. The problem I have is that he is using this Kid's freenet as a way to get his foot in the door while selling his for profit services. I think it smacks of false advertising and confuses the people in Lawrence,

It is a BAD idea to fund a competitor to an existing business with tax payer funds. This was the main problem with the Eagle Bend debacle which is still losing money today. Why do we keep having to relearn the same hard lessons.

The Journal World internet business is a great business that pays taxes that help us fund our precious city services. They have competitors, all of whom, play by the same rules of the market. It is not fair for Freenet (Scamnet) to try to paint them as unethical.

I am only a customer of LJW. I don't work for them. But I know how market forces work and this Freenet is trying to violate the natural forces at work in our market. The result can only be less revenue and fewer services for all of us. We need to attract productive companies not companies looking for hand outs.

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its_getting_warmer 6 years, 2 months ago

Let's review my gage of City Commission sentiments:

  • Provinding fourth level loan guarantee at probably no cost for this internet company, private or not. verdict: BAD

  • Writing a $ 6 million check to Fritzel family wealth by TIF financing of the Oread hotel garage in which citizens won't even be able to drive: verdict: GOOD

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StephenColt 6 years, 2 months ago

I find it ironic that none of the questions raised by the plan are really about the plan itself, rather in the execution of the plan. Does this mean that the consensus is that the plan is good?

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hawkperchedatriverfront 6 years, 2 months ago

Mr. Dever , you already have an extraordinary community because you and the other commissioners are extraordinary at running off businesses. constantly increasing fees tacked onto the water bills, constantly trying to waste money on studies , not to mention the city faling to be more responsible in it's day to day spending. Yes, this is an extraordinary community without doing anything. Please, do not think and pass it on to the other commissioners. Do nothing for one year and we will all be better off. Keep the day to day business in hand and cut the city hall budget. Time to lay off at city hall. Lawrence needs some extra laborers anyway for any new business to come to town.

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Dave Greenbaum 6 years, 2 months ago

Interesting some of the inaccuracies in today's story.

First, Sunflower provides NO free Wireless Access. Those Sunflower HotSpots are paid for by the business owners. Coffee shops and other business are given NO discounts for declaring themselves a Sunflower HotSpot. In fact, Sunflower requires them to put a Sunflower Ad on their Window and to change their network name to include sunflower information. Heck, Sunflower doesn't even provide the router.

Second, the city is already in a "private enterprise matter" with a for-profit company. Each month, the city gets a profit sharing "cut" of every dollar Sunflower bills via a franchise fee.

That's really what it comes down to. When Sunflower makes money, the city makes money. When Sunflower looses customers, the city looses money.

And what exactly does the franchise fees go to. I'm sent many emails and never received an answer. At least with Freenet, they tell us what they do with their money.

Finally, can't help but notice the city council members expressing concern are all Sunflower customers based on their contact infromation from the city website. I'm assuming they won't vote on the issue due to conflict of interest?

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Norma Jeane Baker 6 years, 2 months ago

Good point, Godot. The city should stay out of this unless they are willing to pay back the loan when Freenet defaults. And if they are willing to pay back the loan, DON'T use my tax dollars.

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JackRipper 6 years, 2 months ago

Hmmm monkeyhawk, guess you missed the part about the city getting technology out of the deal for their use to perhaps make the stop lights more effective?

Isn't an SBA loan also backed by the government? Why not keep it local so we can be sure they stay on task?

This is a lot better deal then what we'll get from the $88million sewer which will just bring more taxes as we have to add infrastructure. Is it a problem when we have people creating infrastructure for what is already here and only asking for a co-signer?

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Godot 6 years, 2 months ago

Follow the lender's lead in this. If they need 12.5% for the risk this loan represents, at a time when the Fed fund rates are near all-time lows, then they are telling us this is not a good risk; reducing the rate to 5.5% if the city co-signs means that they expect these guys to default, and know that they city will pay up.

Where is the policy regarding such a giveaway? This is the same as a that so-called rebate.

And, if Freenet is only borrowing $5 million (rounded up), how is it that they expect to provide the city with use of millions and millions of dollars of equipment in return? Sounds very questionable.

I agree with Monkeyhawk. This is a scam.

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hawkperchedatriverfront 6 years, 2 months ago

Monkeyhawk, no relation to this "hawk", you are correct about getting a SBA Loan. Deciphera could get a SBA Loan also, or maybe the angel investors who invested in Deciphera would invest in Freenet. How come kids get free internet, why only kids. Is if free or not free. Free doesn' t discriminate.

SBA Loans are available for most anything. Lawrence Memorial Cemetery is financed with a SBA Loan , all guaranteed by the number of spaces left for bodies. This is the cemetery that the city continues to maintain but does not own. That's smart leadership.

What is Dever smoking anyway? And Boog,, well we know. Is he sharing the bong at the table?

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zettapixel 6 years, 2 months ago

"Let them find their own financing the way any other business does. This is purely a speculative deal."

Moneyhawk... I totally agree with you on that one! A business should not have to rely on handouts in order to stay afloat. If it can't stand on its own two feet, then the business model probably isn't viable and should be terminated.

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monkeyhawk 6 years, 2 months ago

Does this company have the right to lay all that cable? Are they entitled to the same right of way as utilities?

There is already "free" internet access for anyone who desires it in the form of the public library and in all of the schools.

For those of you who believe that this is a good deal and won't cost the city anything probably rents or has a sub prime loan. If they default on the loan, it is the taxpayers holding the bag.

Amazing how some of you howl over TIFs, etc. to tax paying businesses, but when it has the "free" label, or "it's for the children" you get sucked in.

Fact is, it is a private business, still wet behind the ears, asking the government to help out. That is what the SBA is for. Let them find their own financing the way any other business does. This is purely a speculative deal.

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beobachter 6 years, 2 months ago

If the city backs it, why don't all taxpayers get free service, not just city employees..

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Baille 6 years, 2 months ago

Read the commission agenda. At the end of the day, the proposal won't cost the city anything and the city gets state of the art infrastructure in return. Plus all Lawrence kids get free access to the internet wherever they may be in Lawrence.

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funkdog1 6 years, 2 months ago

newsreader said:

The FreeNet response, at the bottem, says that computers are "free" while with Sunflower you have to "provide your own". Does this mean they are going to be running around passing out labtops?

Freenet collects individuals' and businesses' discarded computers, refurbishes them and gives them away for free to their low-income internet users who don't have a computer.

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compmd 6 years, 2 months ago

"The company commits to use 10 percent of its revenue to provide free service to qualifying low-income residents"

BigPrune, perhaps you missed that. You also clearly did not read Freenet's response to this article. Or maybe you work for Sunflower.

Sunflower is upset that their profits are being cut into. Mr. Knorr, how much does Sunflower charge local businesses for a hotspot? Is that different than what Sunflower charged before Freenet came around? And why do they now offer their "Lifeline" service?

Sunflower does not compete with Lawrence Freenet. They offer completely different services. Sunflower's service involves tying you to one location and ridiculous bandwidth caps. Freenet allows you to sign on anywhere in the city where Freenet has an access point and has no bandwidth caps. And do you really think that Sunflower is going to run cables to traffic lights?

What's wrong Mayor Hack, you won't back an advanced, promising and innovative local business that you don't have a financial stake in? You wouldn't have any ties to the World Company by chance, would you? And if you did, would you recuse yourself from discussion about Freenet? Oh, how about that, you are a Sunflower customer too! And so are you, Mr. Chestnut. Two out of the three opposing commissioners are Sunflower customers. Funny stuff.

If I'm not mistaken, the point of having the city back the loan is because Freenet will provide services to the city. City employees, city traffic lights, and the city library. And Freenet Kids serves the public good.

Don't kid yourselves, this is all about Sunflower angry about losing profit. I for one will be at the commission meeting tonight to support Lawrence Freenet.

Posted from a Lawrence Freenet access point.

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SoupBone 6 years, 2 months ago

It seems to be OK to provide corporate welfare to businesses that have City Commissioners as part owners....

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billmore 6 years, 2 months ago

To me, it doesn't really matter how you slice it. Municipalities give hand-outs to businesses -- It has and will continue to happen. At least in this case, if Freenet pulls the deal off, the taxpayers really aren't out anything (and there are other co-signers in the event of a failure). In the usual tax deals, we end up paying out regardless of the outcome.

I applaud Freenet for at least finding a way to (potentially) get help from the city that doesn't mean my taxes go up again.

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newsreader 6 years, 2 months ago

The FreeNet response, at the bottem, says that computers are "free" while with Sunflower you have to "provide your own". Does this mean they are going to be running around passing out labtops?

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JackRipper 6 years, 2 months ago

I'm very impressed with my Freenet service. There are no configuration issues, I didn't have to call someone in to set it up, just plugs right into your network card, sign in and your are running. We need to have diversity in the market and this is exciting because it is local. Service is great and you get to talk to real people when you want to, no computer directing you someone in a far away city who could give a frip about your problems. I like that. Sunflower and Freenet are both local and that is a great thing and the kind of businesses we should support. Sounds to me like all the risky business transactions this city has taken this has a least immediate benefits for the city.

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americorps 6 years, 2 months ago

I love the idea of freenet, but something does not sound quite right about this deal. If it is too good to be true, then it usually is. Further, if they fail, we pay the loan. Not a risk worth taking.

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SettingTheRecordStraight 6 years, 2 months ago

So it's not really "free" if the taxpayer is co-signing a potentially risky loan? Bad, bad, bad idea.

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macon47 6 years, 2 months ago

Joshua learned pretty well from usd-494 "its for the kids" He is just holding the children hostage Like usd 497 is. I can admire his "efforts" of helping The needy, but how much help Can we give people with out asking For something back I respect people that haul their selves out Of bed every day to go to a job, pay taxes, and support the community. I really get tired of everyone worrying so much about the degenerates that want to lay about all day playing on a free computer. What if some Joshua come lately appeared on The horizon offer a free service that you had dedicated your life's work to?

Ok, you mow yards for a living Joshua pops up on the scene, Calling on your customers, telling Them he will mow their yard for free If you convince the two next door Neighbors to pay Joshua to mow thiers?

Rob from the rich give to the poor How noble

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monkeyhawk 6 years, 2 months ago

"It is just a public battle for public resources."

No it isn't. It is a private company asking taxpayers to guarantee $4.9 million dollars. I would have extreme reservations putting faith in people who did not have enough foresight to understand that they could not ever operate as a not for profit. Or, maybe they just decided to become capitalists. And, as good little capitalists, they will understand that they need to pay the going rate to house their equipment on city property. No more "free" rides.

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Ralph Reed 6 years, 2 months ago

Good post toefungus (anonymous).

In fact, the other article says that Freenet has the capability to secure a loan at a higher interest rate, costing them about $57K more over time. All that co-signing will do is save them the extra interest.

It is a public battle for public resources. Maybe this will bring about "gas wars" like we had when I was a kid.


I'm me. Who are you behind your hood of anonymity?

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toefungus 6 years, 2 months ago

There may be other ways to raise the capital that they need. I like competition. Don't forget that Sunflower also has corporate welfare in favorible tax laws, limitations for years on what telephone companies could send over wires, and limitations on the ownership of TV and newspapers by a single parent company. All of these were put in to protect small media outlets. It is just a public battle for public resources. Let the games begin.

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Stain 6 years, 2 months ago

Anonymous user Keith (Anonymous) says: Wow, two articles in one day, the World Co. is really protecting its turf.

That explains why our mayor suddenly developed a concern for ethics in business.

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BigPrune 6 years, 2 months ago

Gee, this thing reeks as corporate welfare, and why is it called "free" when in fact it is NOT free at all? FREEnet is just like SMARTgrowth - to define them means exactly the opposite.

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monkeyhawk 6 years, 2 months ago

Joshua is asking every taxpayer in the city to guarantee $4.9 million dollars. His not-for-profit business has shifted to a for-profit business, (but is still misleadingly named FREEnet?) and he thinks that the city will be enticed by free stuff? I know of one commissioner that loves freebies, but the others we elected are business people, not social welfare reps. I guarantee if I am forced into co-signing for this private company, I will be first in line asking the city to co-sign on my next venture. But, I will come armed with many years of business acumen.

"That model did not last long. Adam Mansfield, president of Freenet, said it became apparent that the business would need to generate money to pay expenses." Oops, bad planning. The kids found out that it takes money to operate a business. Since they are now a for-profit company, I would expect them to pay the same rate for housing their equipment on water towers as other service providers.

If I wanted to gamble with millions of dollars (OPM), I would buy into something like an empty bus system. It looks like the city has already gotten scammed once by this "free"net.

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Keith 6 years, 2 months ago

Wow, two articles in one day, the World Co. is really protecting its turf.

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macon47 6 years, 2 months ago

LAWRENCE HAS PRETTY MUCH BEEN A "ROB FROM THE RICH GIVE TO THE POOR COMMUNITY". AND "LETS SLAM THE MAN" IS A GAME THE DEGENERATES PLAY EVERY DAY HERE

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Joshua Montgomery 6 years, 2 months ago

Please See the Lawrence Freenet Project's Official Response

http://tinyurl.com/29v2qd

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