End of the Trail for WiMAX Hopeful Open Range?

Looks like the rural WiMAX project Open Range Communications is at the end of its entrepreneurial trail, according to a news report from Fierce Wireless’s Mike Dano, who says CEO Bill Beans has resigned and massive layoffs are underway as the company will stop accepting new customers.

Sidecut Reports has been openly skeptical about Open Range ever since the company secured a big $267 million loan from the government back in 2008 to build a WiMAX network that would primarily serve rural markets. The loan was made from a rural broadband program developed during the Bush administration, and was not part of the larger telecom subsidies package authorized by the Obama administration.

While the company was always a bit of a mystery — it avoided press contact and even took down its original press releases from its website — we became even more skeptical of Open Range during an interview and research project this summer when Sidecut Reports submitted a Freedom of Information Act (FOIA) request to the U.S. Department of Agriculture to get more details about Open Range’s loan. We also conducted a brief phone interview with then-CEO Beans, though neither the FOIA request nor the interview shed much light on Open Range’s operations.

Though most of the financial and business material from the USDA was redacted (based on claims that the information was sensitive to Open Range’s business) we did learn from the USDA that as of July, only $70 million of the $267 million had been advanced to Open Range. In a phone interview this summer Beans would not talk about specifics of the loan.

Close followers of the saga may remember that last year the USDA itself suspended loan advances to Open Range based on an FCC decree that said Open Range couldn’t use the spectrum it had initially sought, first reported by the blog StimulatingBroadband.com. Though Open Range was attempting to strike a deal with hopeful wholesale provider Lightsquared to share spectrum for future deployments, neither firm made good on a promise to deliver any more details about the sketchy agreement they made back in March.

Open Range also likely suffered competitively from the rapid advancement of cellular deployments from major carriers into rural markets, like Verizon’s effort to sign up licensees of its 700 MHz spectrum to extend its LTE network into rural locales. Also, Open Range only ever offered an in-home modem, a competitive disadvantage during a time when many consumers are ditching land lines in favor of mobile broadband devices.

According to Fierce Wireless and the Denver Business Journal the closest Open Range has ever come to reporting user numbers is 20,000 subscribers. In a brief phone interview with Beans earlier this summer Sidecut Reports asked him directly how many subscribers Open Range had, and Beans said Open Range has “never reported” a user number but that the company was “very pleased with acceptance in markets where we are.” At that time, Beans said Open Range was offering services in “143-ish” small markets around the country, scattered across several states including California, Colorado and Illinois. The company’s website no longer offers pricing information for its in-home WiMAX modem, which also allowed the company to offer an associated VoIP service. Originally the service was available for between $30 and $50 a month.

What happens next is a big question, since Open Range also reportedly took in $100 million in private investment from One Equity Partners (OEP), the private equity arm of JPMorgan Chase & Co. Repeated attempts by Sidecut Reports to speak with a representative of One Equity Partners have been ignored or declined, and Beans did not provide any information when asked about Open Range’s finances. According to the USDA Open Range’s original loan agreement had a repayment period of 13 years; with the company now apparently shutting down operations it’s a good guess that the government may never see any of the $70 million (or more) it sent to Open Range. Stay tuned to see if our calls and emails in to the company and to the USDA bear any additional fruit.

UPDATE: Channel 9 KUSA in Denver interviewed us via Skype about Open Range. Note to self: time to upgrade the home studio.

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