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Archive for Monday, May 23, 2011

Lawrence Freenet’s operators proposing to pay city for use of new fiber optic cable

May 23, 2011

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City commissioners Tuesday night will consider a $30,000 offer from the operators of Lawrence Freenet that could shake up the competitive landscape among area Internet service providers.

Commissioners will consider a deal with Lawrence-based Community Wireless Corp. to allow the company access to a new fiber optic cable that the city will install along 23rd Street.

Community Wireless is proposing to pay the city $30,000 to use about 10 percent of the capacity of a new fiber optic cable that will be installed as part of a project to synchronize 23rd Street traffic signals. The city is set to receive a $150,000 state grant for the project, but it must come up with $30,000 in local funding to match the grant.

“We feel like we can save the city some money,” said Joshua Montgomery, founder of Community Wireless. “And this project would allow us to expand dramatically and increase competition in the Internet service market, which we think will benefit consumers.”

Lawrence Freenet primarily provides service to apartment complexes, fraternity and sorority houses and other group living areas. Montgomery said access to the new fiber optic cable would be the “backbone” for a multi-year expansion that would allow the company to be more competitive in providing service to single-family homes.

Community Wireless also is proposing to pay the city 5 percent of its annual Lawrence revenues in order to have access to various pieces of city infrastructure — such as water towers, traffic signals and city buildings — to install wireless Internet equipment.

But city staff members are raising questions about the proposal. Assistant City Manager Diane Stoddard said the city wants to be sure it is treating private companies that use city infrastructure equally.

The Community Wireless payment — based on current revenues — would be about $15,000 per year for more than 70 connections in the city. Other communications companies — like AT&T, Sprint and others — pay anywhere from about $1,500 to $2,500 per month to locate on a single water tower.

City commissioners previously agreed to allow Lawrence Freenet to connect to city infrastructure at low prices, citing the fact Freenet is a not-for-profit group that has a goal of providing free Internet to people who can’t afford the service.

But Community Wireless — which has provided much of the equipment and operational support for Freenet — is a for-profit company. Montgomery said he wants all the Freenet agreements to be transferred to Community Wireless in anticipation that the Lawrence Freenet non-profit organization may cease to exist in the future. Montgomery said the Freenet name likely would remain, but that the non-profit corporation may go into “hibernation,” in part because it has made raising capital for Community Wireless more difficult.

Montgomery said he believes the Freenet offer is fair, and said the 5 percent annual payment will grow as the company’s revenues and customer base grows.

“We think we could do $15 million to $20 million in sales, but granted, we’re probably still 10 years away from that,” Montgomery said. “But we could end up paying the city a substantial amount of money in the future.”

Montgomery estimated Freenet now serves about 1,500 to 2,000 customers. He said the company provides free service to about 150 to 200 people, mainly by providing service for multiple Lawrence-Douglas County Housing Authority units along Haskell Avenue, to residents at the O’Connell Youth Ranch and to other not-for-profit entities that serve low-to-moderate income individuals.

City commissioners meet at 6:35 p.m. on Tuesday at City Hall.

Comments

cowboy 3 years, 7 months ago

Freenet is the single flakiest business in lawrence. City commissioners should not even consider an agreement with these folks.

NotASquishHead 3 years, 7 months ago

I agree. Just say no. There is something seriously sketchy about Mr. Montgomery and all of his "businesses".

just_another_bozo_on_this_bus 3 years, 7 months ago

What's the harm? If they provide the $30,000 needed to leverage the fiber optics for the traffic signals, that's a good thing. If they provide competition to AT&T and Knology, that's a good thing. If they don't succeed and fold in a couple of years, we're no worse off than we are now (actually, we'd be better off, given the improved traffic flow on 23rd.)

Sara Garlick 3 years, 7 months ago

If Freenet is willing to pay the city part of their profits I dont see a problem. Knowlogy has a monopoly on internet service here.

Ignignokt 3 years, 7 months ago

This comment was removed by the site staff for violation of the usage agreement.

just_another_bozo_on_this_bus 3 years, 7 months ago

Did you inform anyone at the city of this plot? The police probably would have found it of interest.

Glenn Reed 3 years, 7 months ago

I'm assuming that you've informed the police about this? No?

Ignignokt 3 years, 7 months ago

This comment was removed by the site staff for violation of the usage agreement.

Eride 3 years, 7 months ago

They shouldn't contract away 10% of the capacity for $30,000 unless that capacity is actually worth that much on the open market. The subsidies for this company need to stop.

Hudson Luce 3 years, 7 months ago

If Lawrence "Freenet" proposes it, the city should dispose of it. I can see why Joshua wants to dump "Freenet", it appears to be just a pass-through shell for his for-profit business, Community Wireless, and the IRS might be breathing down his neck since he only gives away about 10% of his service. Out of 1500 to 2000 paying subscribers, there are 150 - 200 free accounts - of which the most superficial accounting has been given - and that works out to be 10% at the most. He's still got the exemption, but I can surely see why he wants to dump it.

Also, "A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization." (http://www.irs.gov/charities/charitable/article/0,,id=123297,00.html)

Finally, "A section 501(c)(3) organization will jeopardize its exemption if it ceases to be operated exclusively for exempt purposes. An organization is operated exclusively for exempt purposes only if it engages primarily in activities that accomplish the exempt purposes specified in section 501(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities does not further an exempt purpose." (http://www.irs.gov/charities/charitable/article/0,,id=123304,00.html )

Hudson Luce 3 years, 7 months ago

On top of which: "About Knology's lifeline programs:

Knology's Lifeline Internet service is a voluntary program. Knology receives no subsidy to offset the costs of this service. The reason we offer this service to the citizens living in our service area is because local help agencies reached out to Knology in 2007 saying there was a need and it was not being fulfilled by the current low-income provider who only offered conditional approval for their service offering to low-income families. Knology offers this service without a waiting list or other conditions, beyond the criteria set by the state for Lifeline Telephone Service, to all those who qualify. Knology has presented their program to national industry-wide associations encouraging other internet service providers to offer a Lifeline Internet service similar to our program."

So Knology offers the same kind of charitable deal to low-income people as does "Freenet" without the 501c3 shell... Montgomery should be paying full freight for his wireless access points, 70 points at $2,000/year apiece = $140,000. Montgomery's offer of $15,000/year is ridiculous and should be rejected out of hand, it's a taxpayer dollar subsidy to a private business which should end.

just_another_bozo_on_this_bus 3 years, 7 months ago

I guess we have Knology's official position on this proposal now.

BigPrune 3 years, 7 months ago

If it's not free how can they call it free? How many people get free internet from Freenet anyway? What is the percentage?

BigPrune 3 years, 7 months ago

Oh. I'm sorry, I didn't read the last paragraph....never mind.

Glenn Reed 3 years, 7 months ago

For the first issue:

Essentially what Community Wireless is proposing is that they pay one hundred percent of the city's cost, in return for 10% of the benefit.

It's like having someone give you money to buy ten lego sets, as long as you agree to give them one. It really doesn't matter what they do with the lego set.

They could play with the lego set, rent it to someone else, even sell it.

Y'know what, they could find themselves wanting more lego sets. They could rent more.

Unless there's a better reason than, "We hate Community Wireless," then we should seriously consider the offer.

Unless one of their competitors are willing to offer a better offer, we should take the offer.

just_another_bozo_on_this_bus 3 years, 7 months ago

Obviously, AT&T, Knology and any other company is free to offer the city a competing proposal. If they do, the city should compare all the proposals on the table, and take the best one.

If no one else comes up with an offer, the city needs to come up with another reason besides "We don't like Freenet" to refuse it.

Perhaps the city should use this new fiber optic line to offer their own service?

Bob Forer 3 years, 7 months ago

I believe Montgomery was the one who took over Larryville.com. Whoever did pretty much destroyed it.

Glenn Reed 3 years, 7 months ago

For the second issue:

The "5% of annual Lawrence revenue" deal might be a good deal to offer companies like AT&T, Sprint, and others. There's not enough information in the article to determine that.

How many points of contact does AT&T have in Lawrence? What's their Lawrence revenues?

Sigmund 3 years, 7 months ago

"The Community Wireless payment — based on current revenues — would be about $15,000 per year for more than 70 connections in the city. Other communications companies — like AT&T, Sprint and others — pay anywhere from about $1,500 to $2,500 per month to locate on a single water tower."

More corporate welfare for the politically connected shady operator Freeloader.not? How many high paying good jobs with health insurance do they provide to the community? Sprint, AT&T, and Knology pay their own freight and provides benefits to this community that are orders of magnitude in excess than FreeNot. Why should taxpayers be forced to support the competition to those providers who actually provide high paying jobs and benefits to Lawrencian's?

trainpost 3 years, 7 months ago

“We think we could do $15 million to $20 million in sales, but granted, we’re probably still 10 years away from that,” Montgomery said. “But we could end up paying the city a substantial amount of money in the future.”

Sounds great... but you, Joshua Montgomery, are a proven liar. Just. Go. Away.

Sigmund 3 years, 7 months ago

just_another_bozo_on_this_bus (anonymous) replies… "Obviously, AT&T, Knology and any other company is free to offer the city a competing proposal. If they do, the city should compare all the proposals on the table, and take the best one."

The city has express no need for any proposal, but if the city should desire to sell off excess bandwidth it should be offered to the highest bidder, most especially in these economic times. The good old days of freebies to friends is long over. The city needs to come up with another reason besides "We like FreeNet" to subsidize its operation.

just_another_bozo_on_this_bus 3 years, 7 months ago

I don't know Montgomery-- never met him, but I don't get the impression that he's "politically well-connected" in the least. So I seriously doubt that this will be approved simply because he's such a popular guy.

But I don't think should it be disapproved simply because some people have ideological objections to anything that's not part of a large corporation.

Sigmund 3 years, 7 months ago

just_another_bozo_on_this_bus (anonymous) replies… "But I don't think should it be disapproved simply because some people have ideological objections to anything that's not part of a large corporation."

I don't think it is a good idea for Lawrence to start leasing space to anyone, large or small. If they do decide to lease they should make that bandwidth available to everyone, large or small, based on bidding. The only preference based on size that should be given is to the size of the bid. If FreeNet wants to make this about supporting local providers and jobs, Montgomery should provide some audited numbers. When it comes to providing jobs and benefits to local using taxpayer funded facilities, big is beautiful and bigger is better. The time is long past for freebies to local good-ol-boys.

just_another_bozo_on_this_bus 3 years, 7 months ago

Like I said, I haven't seen any indication that Montgomery is considered a "good-ol-boy" by anyone, regardless of their perspective.

Other than that, I agree with you.

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