News

Sandoval County Claims Broadband Bamboozle

This New Mexico project promised to bring extreme broadband to places that don't even have phone services, but several years in, the project has resulted in lawsuits, allegations of corruption and a loss of more than one million dollars. Is Sandoval Broadband a case of good intentions gone wrong or is it the poster child for a flawed model and an industry in trouble?

by Jim Thompson [March 13, 2008]

Like all good stories, this one began innocently enough with a good idea, good people and lots of optimism. But, as so often happens in the world of corporate and government deals, it soon went sour. The result was accusations of fraud, a loss to the taxpayers of Sandoval County, New Mexico of an estimated $1.2 million, potentially serious damage to the reputations of some major players in the wireless broadband arena, and at least one lawsuit.

Following what some called a game of smoke and mirrors that stretched over several years, the taxpayers of Sandoval County were left without broadband and a huge bill. In June, 2007 the Albuquerque Journal said that about $3 million in county and state funds were actually spent on the project that—to that point—had resulted in only one stable connection in the network—between downtown Albuquerque and the county courthouse.

In an article titled, "What Did Sandoval Get For $1.2M?: Broadband Project? 'Cans Attached to a String'" published on July 1, 2007, the Albuquerque Journal quoted Eric DaVersa (identified as "vice president of a national consulting company brought in last month [June, 2007] to review the project") as saying, "All the stuff (the county) was promised is vaporware. It doesn't exist."

The same article quoted County Commissioner David Bency as using "layman's terms to describe what the county has to show for its $1.2 million: 'a series of tomato cans attached to a string.'"

Back in 2005, New Mexico's Sandoval County decided it wanted—and needed—to deploy a wireless broadband network to serve the residents and businesses in the area.

Rural county
It would not be easy. The county sprawls over more than 3,700 square miles of mostly rural country northwest of Albuquerque. Nearly 70 percent of its more than 100,000 residents live in Rio Rancho. The rest are spread out between chaparral, sage brush, and the occasional twisting joshua tree. Techies know Rio Rancho as the site of an Intel manufacturing facility. The county is also home to several Native American tribes living in pueblos, most without reasonable telecommunications services. In fact, large parts of the county, reportedly, do not even have phone service.

When the project was first proposed, county officials were enthusiastic, saying that a working network would bring success to many other projects, such as an Internet education program and a post-traumatic stress initiative. Bandwidth costs were projected to fall from a rate of $150 per megabit per month to $50 or less.

The network was supposed to be available to ISPs in order to create competition—and presumably, lower prices—for broadband services. It was estimated that the network would cost approximately $9 million to build.

The ultimate goal—once the network was fully operational—was to sell it to a private business on the condition that health facilities, emergency services and schools in the area be given free access.

According to information contained in a feasibility study conducted prior to the work beginning, ISPs serving the area included Azulstar Inc., Lobo.net, Cibola Internet Services, Road Runner Internet, and Higher-Speed.net. Fiber is provided by Qwest and Time Warner Telecom. Cable companies working in the Sandoval County area are Cable One and Comcast. Companies providing phone service in the area are Qwest, Sacred Wind, Cable One, Comcast, Time Warner Telecom, and McCloud Communications. Internet services, via wireline, are provided by Ballard Communications, Qwest, and Time Warner Telecom.

Mann and Hendricks arrive
In December, 2004, Sandoval County hired Jonathan Mann and his company, AQV Inc., to develop a plan for broadband deployment. Mann was hired on the strength of a recommendation by Terry McDermott, who was then the government relations manager for Intel Corporation.

The study, prepared by Mann and his associates, was approved by the County Commission in July, 2005 and Mann took over at Olla Grande (later called Sandoval Broadband Inc.) which was set up by the county to do the work of building the network. Olla Grande then hired Dwayne Hendricks, CEO of the Dandin Group in Fremont, California, who also consulted on the feasibility plan, to help Mann and see the project to completion.

Hendricks came to the picture with strong credentials, a list of successes and a reputation of being able to deploy wireless broadband when most said it 'couldn't be done.'

In 2002, Wired Magazine dubbed him the "Broadband Cowboy" because of his association with a number of high-profile broadband network projects. In 1996, Hendricks was recruited by Dave Hughes, who started what may have been the first BBS and is known as a pioneer in community networking, to help bring internet access to Mongolia. After mounting transceivers on rooftops in the capital city of Ulan Bator to connect five universities, the library and the U.S. Embassy, "kids were able to ride their ponies to the library and surf the Net," Hughes told Wired magazine.

Two years later, Hendricks was working with the Crown Prince of Tonga on an even larger project. The Prince proposed a $13 million, four-year plan to bring wireless internet, video and telephone to the South Pacific Kingdom, but the project fell apart in 2000. The reasons are not clear since neither side has wanted to discuss it.

Considering his background, once Hendricks was aboard, the Sandoval County project seemed as good as done.

After the county earmarked the appropriate funding of several million dollars, the work got under way on the project to provide wireless broadband access. It was a project that many called visionary. But delay followed delay and by mid-2006 the dominos started to fall and the vision began to fade.

The first to leave was Jonathan Mann. He resigned in August, 2006. Not long after that, Hendricks took over the helm of Sandoval Broadband Inc. But, by May, 2007, he also resigned.

As both Mann and Hendricks tried to distance themselves from the project and the problems, attention turned to Betty Ann McDermott, the wife of Intel Executive Terry McDermott who had originally recommended Jonathan Mann for the project.

According to records, she was paid nearly $220,000 for work that involved communications, public relations, and education. McDermott, reportedly, also worked for Mann in the md-1980s.

Critics charged that none of Betty Anne McDermott's work for Sandoval Broadband was put to competitive bid. McDermott maintains that nothing inappropriate was done by her or any of her associates and there was no conflict of interest. No charges have been filed against her or her company.

Go to page two: Audit raises questions; lawsuit filed