The co-founder and former president of Gigabit Squared is ending his involvement in the operations of the Cincinnati, Ohio company amid questions over unpaid bills and a lost contract with the city of Seattle.
In an email he wrote:
I am no longer with GB2. I am resigning over strategic differences and am pursing other projects. You can reach out to Matt Weiland for comment. Their intent is to pay. Other than that I cannot comment.
Gigabit Squared, a Cincinnati, Ohio company that was formed in 2011 to deliver better broadband to U.S. cities, has found itself imploding in the last few weeks with the apparent loss of a contract with the city of Seattle and organizations in Chicago proceeding to wire the city without Gigabit Squared’s involvement. Meanwhile Gigabit University, an organization associated with Gigabit Squared’s ambitious $200 million broadband deployment effort, is distancing itself from the beleaguered business. It feels like watching an implosion.
Last Friday, Geekwire reported that the city of Seattle was owed $52,250 by Gigabit Squared for work that the city had performed digging up the streets to ready the area for superfast broadband. Those bills were unpaid, and the city was in effect sending Gigabit Squared to collections. On Tuesday, current Mayor Ed Murray confirmed that the deal had fallen through to a reporter for the Puget Sound Business Journal:
… the city’s deal with the company may have been doomed before Murray was even elected. “We understand the Gigabit problems had developed before the election,” Murray told PSBJ reporter Marc Stiles in an interview last week. Murray confirmed that the deal with Gigabit Squared had fallen through.
With Seattle in doubt, it’s an open question as to how the Gigabit Squared contract in Chicago is faring. Ansboury declined to comment, and I’ve not heard back from Gigabit Squared’s spokesman. The local Chicago community is not optimistic, but it’s also making plans to take up where Gigabit Squared has fallen down.
Gigabit Squared, which was founded in 2011 to help bring gigabit broadband to communities, built its name via a relationship with the Gigabit University program that was formed in 2012 to bring gigabit broadband to university towns. When the Chicago news was announced we wrote the following:
Gigabit Squared has set aside $5 million for the Chicago project as part of its Gigabit Neighborhood Gateway Program in collaboration with partner Gig.U. The State of Illinois is kicking in $2 million, while the University of Chicago is committing $1 million now and plans to raise another $1 million in the surrounding communities.
The Seattle and the Chicago contracts were part of a tie with Gig.U, which seems to be distancing itself from the Gigabit Squared implosion. Blair Levin, the executive director of Gig. U told me that Gigabit Squared has no formal ties with Gig. U. It was one of many companies that responded to a request for information issued by Gig. U on how to expand superfast broadband in the U.S. The organization provided the following statement:
“Gig.U is a group of communities and universities collaborating to accelerate next generation network deployments. It is not a party to any transactions related to such deployments and therefore, we do not have knowledge of the day-to-day developments related to any of the deployments. We do know enough, however, to have great respect for the leadership and dedication shown by the University of Chicago and the University of Washington and their government and community partners in driving next generation network deployments to serve economic and educational development and we have confidence that over time, their communities will greatly benefit from their efforts.”
When the Gigabit Neighborhood Gateway Program with Gig.U launched, Ansboury said that Gigabit Squared planned to spend up to $200 million building out the networks in the six communities. He said the money came from a combination of vendor financing provided by companies such as Alcatel-Lucent, Ericsson, Corning and others who are working with Gigabit Squared as well as Chicago investment bank Stern Brothers. Communities that apply were expected to contribute too, but instead of cash they would have to make commitments that will lower the cost and headache of deployment.
It’s unclear how things have unraveled, but even when the plan was announced we were wondering if the model it planned to implement — of open fiber-to-the-premise networks was sustainable. However, to not even make it past the construction phase means that either financing didn’t come through as anticipated (or came with unforeseen strong attached), parters balked or municipal roadblocks arose that stymied the deals.
We’ll have to hope the truth comes out, because otherwise we could see a retrenchment by local governments when it comes to a willingness to invest in public-private partnerships for gigabit networks. And that would be a problem indeed for getting better broadband to the rest of the country. Gigabit Squared’s failure doesn’t mean all municipal or public-private broadband efforts will fail, but it will provide ammunition for naysayers.