Bismarck firm claims 'game-changing" tech for rural wireless
FARGO -- Flow Mobile is a small company with a bold plan to bring the next wave of mobile wireless communications to a big swath of rural America.
The Bismarck-based firm claims to have "game-changing" technology that makes it economically feasible to cover sparsely populated areas of 12 states in the Midwest and West.
The launching pad for Flow Mobile's proposed wireless network is North Dakota, with a pilot project expected to start soon in Cass County to demonstrate its technology, which has drawn skeptics.
To help build its wireless empire, Flow Mobile has applied for $52 million in federal stimulus grants, including $29.1 million for projects in North Dakota.
And although few people outside of the wireless communications industry have heard of the startup company, Flow Mobile's cast of characters includes a handful of prominent North Dakota names, as well as Silicon Valley technology entrepreneurs originally from India and Hong Kong.
The central figure is Bill Owens, a retired Navy admiral and No. 2 Pentagon official, who grew up in Bismarck and became a technology executive after retiring from the military. Owens is an investor in Flow Mobile and is also chairman of its board, which also includes Rich Karlgaard, another Bismarck native who is publisher of Forbes magazine.
Flow Mobile's key players not only have their roots in North Dakota. They also have political connections.
Gov. John Hoeven wrote a warm letter of support earlier this year offering to have several state public safety agencies use Flow Mobile's demonstration network -- and possibly use state-owned towers and poles for base stations.
Sen. Kent Conrad, D-N.D., wrote two federal agency heads to support Flow Mobile's request for stimulus grants, which are still pending.
Some strong protests
But North Dakota's early backing of Flow Mobile, which also involved collaborative filings with federal communications officials, drew strong protests.
That's because Flow Mobile also has its homegrown rivals: a consortium of 19 rural telecommunications cooperatives with a combined investment of $1 billion in North Dakota.
The companies have their own interest in a partnership with the state in a new public safety communications network.
The static generated by Flow Mobile's ambitious proposals takes place amid a high-stakes competition by companies jockeying for access to a valuable asset: airwaves made available by the conversion of television signals from analog to digital.
Those airwaves will be in great demand for the next generation of mobile wireless devices -- 4G, shorthand for the emerging fourth-generation technology that will make today's 3G smart phones smarter, faster and more versatile.
Finally, Flow Mobile has a past. The company, first formed more than a year ago, is an offshoot of Extend America, a now-defunct company based in Bismarck that provided Internet service and cellular telephone service to rural areas. Extend America received $11.2 million in federal loans in 2004.
In fact, Flow Mobile is the trade name for a company called New EA Inc., as in New Extend America, originally incorporated in North Dakota but dissolved and reincorporated in Delaware in September 2008.
Extend America's chief executive once was Ed Schafer, in between his time as North Dakota governor and U.S. agriculture secretary. He has no involvement in Flow Mobile, company officials said.
Flow Mobile got the red carpet instead of red tape when it approached North Dakota about its plans for a mobile broadband wireless network to serve public service agencies.
The wireless public safety network -- as well as mobile broadband services the company plans to sell to commercial and residential customers -- is based on "smart antenna" wi-fi technology Flow Mobile claims is dramatically cheaper than other wireless technology.
Hoeven eagerly signed off on a Flow Mobile demonstration project in a Feb. 9 letter of support sent to Owens.
"We are pleased to have New EA Inc. serving communities in North Dakota with wireless mobile broadband access using wireless technologies," the letter began.
"As their respective operating budgets allow, several State of North Dakota public safety agencies will participate in the project," the governor's letter said in part.
After suggesting that several state agencies, including the Highway Patrol, State Radio and Homeland Security, could use Flow Mobile's network, Hoeven's letter went on to offer that the state "will, where possible and practical, help identify potential locations" for Flow Mobile's base stations on state-owned towers and poles.
The letter was written by a Hoeven aide in consultation with officials of the state's Information Technology Department and Department of Emergency Services, with input from a Flow Mobile employee, Hoeven spokesman Don Canton said.
That Flow Mobile employee is Bill Sorensen, a former Bismarck mayor who was an investor in Extend America and now handles government relations for Flow Mobile.
But Hoeven's letter concluded by cautioning that the state had no binding agreement with Flow Mobile, and his intent was to express interest and make an "offer of cooperation" to enhance public safety communications.
But six months later, on Aug. 11, Hoeven sent a second letter to Owens, this time with a more aloof tone.
Hoeven noted that the state must go through a competitive bidding process when selecting services and said the state had not yet sought bids during its evaluation of technologies for a broadband wireless public safety network. "Any company applying for a stimulus grant should not represent that the State has selected its product or company to develop its statewide mobile broadband emergency network, only that the State wants to develop a statewide mobile broadband emergency communications network," Hoeven's second letter said.
Why the difference in tone?
A lot had transpired in the time between the two letters, both in Bismarck and in Washington.
For one, beginning in late March, the consortium of rural telecommunications cooperatives met several times with state officials to express interest in working with the state to provide broadband wireless for public safety, said Derrick Bulawa, chief executive of BEK Communications, a co-op based in Steele, N.D., and consortium representative.
In an interview Friday, Hoeven said the state was not aware that other firms were interested in providing wireless broadband public safety communications when he wrote his first letter to Owens.
"At that time, we weren't aware of anybody else that was willing, able and ready to provide the service," Hoeven said.
The governor stressed that his letter of support only concerned a test project -- not a permanent network to provide service, which would require a formal bidding process, which hasn't happened.
"We haven't contracted with anybody at this point," the governor said. "We're on the front end of it. Nothing's been decided yet. At this point, we don't even know if the FCC's going to allow us to use the spectrum."
No state money has gone to Flow Mobile, officials said.
Hoeven wasn't the only elected official to write on Flow Mobile's behalf.
In a letter dated Aug. 4, Sen. Kent Conrad, D-N.D., wrote to the heads of two federal agencies involved in awarding stimulus funds for broadband communications infrastructure.
"It is a pleasure to write to you to express my support for the broadband stimulus funding application of Flow Mobile of Bismarck, North Dakota," Conrad's letter said.
On Friday, a Conrad aide said the letter was a courtesy extended to many state companies.
"This was a routine letter asking the department to simply give consideration to the application," said Christopher Gaddie, a Conrad spokesman. "It was nothing beyond that."
In filings before the Federal Communications Commission, Flow Mobile's proposal has drawn criticism from groups representing public safety communications organizations.
Those groups have expressed concerns -- and the rural co-ops have asserted -- that the company's "wi-fi" broadband wireless technology will be incompatible with the emerging next generation of wireless communications.
Incompatibility could mean the radios for public safety responders from outside the area would not be able to communicate with North Dakota's network, making the state an "island."
Sree Tangella, Flow Mobile's chief executive and an engineer, argues that the company's "4G-like" wireless technology will be able to "migrate" to the new 4G standard that has emerged as the consensus choice.
It is unfair to argue that Flow Mobile's technology won't work with a standard that still is under development, Tangella added.
Also, public safety organizations have said Flow Mobile's network could cause interference with wireless public safety networks in neighboring states.
The interference problem, Tangella said, can be avoided by carefully placing transmitting stations and controlling the power of the signal.
Flow Mobile's Cass County demonstration will show the effectiveness of its "smart antenna" technology, Tangella said.
The company has leased wireless spectrum in eastern North Dakota, and will seek airwaves in the western part of the state, said Yick Chan, Flow Mobile's chief operating officer.
"Fargo is the showcase," he said.
North Dakota hired a consultant to review Flow Mobile's proposal to use Cass County as a test site for its technology.
The technology consultant, Elert & Associates, concluded that Flow Mobile's plan represents a "unique and very viable solution for North Dakota" but also cited a number of concerns to be resolved.
A smaller demonstration project in Dickinson, N.D., served as a "proof of concept" and was "generally successful although included some hiccups," the Elert report found.
Using radio frequencies open to the public, Flow Mobile's wireless system experienced a dropped connection in one of four or five signal "hand offs" between "wi-fi" access points, the report said.
If Flow Mobile's venture succeeds, North Dakota would be the first market in the world to have its new technology, Tangella said.
If fully realized, public and private investment in Flow Mobile's 12-state territory likely would exceed $450 million, Tangella said.
Owens said the company's business model doesn't hinge on government support and has significant private investment.
"We are fully funded to do whatever we need to do to get the business cash-positive," he said. "We will do that without government subsidy."
He added: "I believe this can make a revolutionary change in the way small communities receive their telecom broadband communications."
Hoeven said Friday he still supports Flow Mobile's test project.
Hoeven said he has urged Flow Mobile and the rural telephone cooperatives to consider collaborating to provide broadband wireless services.
He said a possible model is Dakota Carrier Network, a fiber-optic communications network that is a partnership between rural telecommunications companies and the state.
Representatives of Flow Mobile and the rural telecoms said they have met twice to talk about a possible collaboration but failed to reach any agreement.
"I think the governor has always been committed to an open process," said David Crothers, executive vice president of the North Dakota Association of Telecommunications Cooperatives.
"We've had difficulties with the process with others -- the National Guard, State Radio, Emergency Services," he said, referring to state public safety agencies. "I wouldn't place this on the doorstep of the governor."
Similarly, Crothers didn't fault Conrad for his support of Flow Mobile's stimulus grant application.
New rules are being written for future rounds of stimulus grants, he said.
"There's going to be Round 2 of stimulus grants," Crothers added. "We'll just see what happens."