News & Observer | newsobserver.com | Free Web for Bertie?

Published: Jun 05, 2007 12:00 AM
Modified: Jun 05, 2007 02:42 AM

Free Web for Bertie?

The ailing Eastern N.C. county would benefit if the FCC goes along with investors' idea

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A former Federal Communications Commission official turned entrepreneur wants to provide free, high-speed Internet access across the United States, starting with Bertie County in Eastern North Carolina. But he needs FCC approval to do it.

John Muleta, founder of M2Z Networks, says high-speed Internet access should be free to all consumers as an advertiser-supported network, similar to radio and non-cable television. Muleta says the potential ad revenue is enough to pay for broadband access nationwide and make for a profitable business.

Several venture backers agree, including Kleiner Perkins Caufield & Byers, Charles River Ventures and Redpoint Ventures. Muleta said he has more than a half-billion dollars in commitments.

Muleta said that his vision for free high-speed access starts with Bertie County, where the company is working with a non-profit group, as well as several North Carolina civic leaders, including former Raleigh Mayor Tom Fetzer.

Fetzer will join Muleta and several local and state officials in Raleigh on Wednesday to introduce the project.

Expanded nationwide, the service would benefit all consumers, providing competitive friction that could prompt telecom and cable providers to expand their own provisions of affordable high-speed Internet access.

"The recurring theme is that a lot of people can't afford broadband," said Muleta, former head of the wireless bureau at the FCC.

About half of U.S. households have broadband connections, on which more data can travel at a faster rate. That's far behind the rate of broadband usage in Europe and parts of Asia. In places such as Bertie County, a depressed region where the median household income is just over $25,000, very few people have access to broadband or can afford it.

Broadband access generally costs $60 to $90 a month. Slower dial-up access costs $15 to $20. M2Z also would provide a much faster premium service for a fee-based subscription.

Bertie County officials for the past few years have been trying to attract broadband options, assuming that the availability of high-speed Internet access is integral to economic development and education.

They began working with One Economy Corp., a multinational nonprofit group created to close the digital divide by bringing broadband to low-income communities. One Economy has been working closely with M2Z, which is how Bertie County was selected.

M2Z is offering $10 million to help pay for wireless broadband routers to set up service in the coastal county northeast of Raleigh and then expand that network nationwide. The company is in talks with several other possible pilot communities, including Jackson, Miss., and Lansing, Mich.

But nothing can happen until the FCC grants M2Z permission to use a specific block of radio spectrum to transmit the wireless data.

The FCC usually auctions off airwaves, but Muleta is lobbying FCC commissioners to grant the company use of the spectrum outright, in return for a government cut of 5 percent of annual sales. M2Z also promises to expand its broadband network to a third of the U.S. population within three years and 95 percent of the population within 10 years.

No date is set for a decision. The FCC declined to comment on "pending cases."

Alec Ross, One Economy's executive director for external affairs, said broadband access in Bertie County is almost nonexistent.

County government and civic leaders began mobilizing several years ago to raise money to buy computers and Internet access, he said. "It's nice to see a lot of people who don't necessarily have a lot of money understand the value of this," he said.

Muleta and the company, meanwhile, have gotten the support of national groups such as the PTA, as well as prominent Silicon Valley investors who think that ad-supported broadband is a lucrative enterprise.

"This is bringing broadband to the masses -- fast, free and family-friendly," said Bruce Sachs, a partner with Charles River Ventures in Waltham, Mass. "A lot of people don't have it, and we've come up with a business model that can really change that. Free is a very powerful marketing message."

Staff writer Frank Norton can be reached at 829-8926 or frank.norton@newsobserver.com.
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