Government launches probe into $267M Open Range loan

The House Energy and Commerce committee launched an investigation into the Department of Agriculture's $267 million loan to Open Range Communications, the WiMAX provider that filed for bankruptcy protection in October.

Six bipartisan members of the committee sent a letter to Rural Utilities Service Administrator Jonathan Adelstein, a former FCC commissioner. The outstanding balance of the loan, which was the largest in a series of loans made to rural broadband providers between 2002 and 2008, remains $73.5 million.

The letter also discusses concerns from the Agriculture Department's inspector general about the oversight of broadband loan programs, including the fact that $340 million had been dispersed despite "incomplete applications, loans that defaulted and grant funds used for inappropriate purposes." RUS was also in charge of distributing broadband stimulus grants and loans.

"Open Range's bankruptcy potentially puts $73.5 million of taxpayer money at risk," wrote committee Chairman Fred Upton (R-Mich.), ranking member Henry Waxman (D-Calif.), among others. "In light of Open Range's bankruptcy, the Energy and Commerce Committee requests a bipartisan briefing to explain the RUS application review process for the Open Range loan and the oversight RUS conducted to ensure taxpayer funds were used as intended."

"We are reviewing the Nov. 9, 2011 request for information and will work with the committee to be responsive," Agriculture Department spokeswoman Stephanie Chan told FierceWireless.

When Open Range filed for bankruptcy Oct. 5, the company listed total assets of $114 million and total liabilities of $110 million as of Sept. 30. The company's top five creditors are Adesta ($7.574 million), Velocitel ($5.590 million), One Equity Partners (Chase) ($2.789 million), Alvarion ($1.960 million), and Black Dot Wireless ($742,316).

Privately held Open Range operates a WiMAX network in more than 140 markets spanning more than a dozen states. Earlier this year, the company said it counted more than 20,000 subscribers, according to the Denver Business Journal. The company essentially jettisoned all positions in its markets outside of its headquarters in Greenwood Village, Colo. The company also said it would stop accepting new customers, though it would continue providing service to existing customers.

For more:
- see this Denver Post article
- see this The Hill article

Related Articles:
WiMAX operator Open Range up for sale, but who's buying?
WiMAX operator Open Range winding down business, announces massive layoffs
Open Range laying off portion of direct sales force
IT policy think tank sides with LightSquared in GPS interference issue
Open Range finds favor with the FCC, LightSquared

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