BusinessTN

For a man who chaired the inaugural committee of former Tennessee Governor Don Sundquist, businessman and self-professed technology geek Al Ganier III is rarely seen at political functions any more. The man behind the company that provides Internet access to the state’s one million schoolchildren and teachers, Ganier isn’t much embraced by the business community these days, either. A federal criminal case concerning Ganier’s Education Networks of America (ENA) $106 million contract with the state and his alleged obstruction of an investigation into it has all but erased Ganier’s once firm status as a Tennessee power broker. The case has also undermined his company’s ability to do business with the state, despite a track record most would envy.

Back in 1996, when the Internet was just finding its way into most American households, Ganier chose a novel method of connecting Tennessee schools to the Internet. Instead of using dial-up modems, some of which to this day are still used by state government to connect its outposts in rural, and even some metropolitan, areas, Ganier assigned a router to each school. His company, ENA, connected all of the school routers, education county routers and county access points through one of six regional hubs to a central server in Nashville, which provided a gateway to the Internet. The network was initially built on 1,500 Cabletron CyberSwitches connected from counties to individual schools via T-1 and ISDN lines. ENA installed Cabletron's Spectrum Enterprise Manager at its operations hub in Nashville, to manage the entire network from one place—also a novel approach at the time. From ENA’s operation in Nashville’s Gulch, a trendy downtown area, technicians are able to perform remote testing, monitoring and troubleshooting of school routers. Since 1998, the network has been upgraded at least four times and is Cisco-equipment-heavy at present. (Aside from Tennessee, ENA currently also provides Internet access to all public schools in Indiana.) Ganier declined to be interviewed for this story. But in past interviews he has said that Tennessee public school students could receive up to three hours of Internet time per week via ENA’s system, as compared to the few minutes per week they would get if the schools were still connected via dial-up modems. Currently, Tennessee schoolchildren have unlimited access to the Internet at schools.

In 1997, Education Week put Tennessee ahead of the national average in the way its schools--urban and rural alike--were connected to the Internet. Among the factors considered were the number of schools with Internet access, the number of students per computer, and the percentage of schools with local- and wide-area networks. Jackie Shrago, then-vice chancellor of technology with the Tennessee Board of Regents (TBR) and director of the state’s network, ConnecTen, said in a November 1997 interview with The Tennessean, “We should look good because we’ve done a lot of good things.”

More recently, a federal investigation into the way the administration of former Tennessee Governor Don Sundquist awarded state contracts to friends and supporters revealed a romantic connection between Shrago and Ganier. This revelation was followed by allegations of the “shredding” of virtual evidence. As a result, Ganier stands accused by the government of four counts of obstruction of justice for allegedly destroying or attempting to conceal computer files in 2002 related to the prosecution’s probe into how his company received its $106 million contract from the Sundquist administration. The prosecution’s lead lawyer, Eli Richardson, presented that evidence during trial in August 2005, saying it showed computer searches that included the names of Sundquist, Monteagle businessman John Stamps and Alex Fischer, Sundquist’s top aide at the time. (To date, no charges have been brought against Ganier regarding illegal or improper awarding of contracts to ENA.)

Stamps, also a longtime friend of Sundquist, was indicted in a separate case over his dealings with the administration. He pleaded guilty to charges of tax evasion and lying to get a $1.9 million state contract. The probe into Stamps’ business dealings revealed that ENA paid $667,000 between July 1998 and December 2002 to Stamps and his lobbying company, Privatization Strategists Inc. According to last year’s order of Judge Karl Forester of Lexington, Ky., who was specially appointed to handle Ganier's case after several Nashville judges recused themselves from the matter, Ganier's prosecutors argued “there is, in fact, some evidence that Sundquist interceded in some way on behalf of ENA with respect to at least one contract.”

While awaiting trial, Ganier has tried to minimize the damage to ENA, a company that has built a strong reputation in the state’s technology industry for doing things right and on time. Tim Webb, associate commissioner for resources and support services at the Tennessee Department of Education, is one of many supporters of the existing arrangement between the state and ENA. He says that ENA provides a robust infrastructure and backbone that has “put Tennessee way ahead of the game.”

In fact, most technology executives across the state, though on the condition of anonymity, praise Ganier’s efforts in connecting Tennessee schools to the Internet. Their praise comes as ENA faces stiff competition from BellSouth and others to take over the contract—set to expire in July 2007—with the Tennessee Department of Education. These top tech gurus argue that for the sake of the continuity of education at Tennessee schools, the state should carefully weigh ENA’s technology expertise and past performance against the legal cloud currently hanging over Ganier’s head in determining what’s best for Tennessee schools and their access to the Internet.

Some in the industry say Gainer has merely become the ammunition in the ratings war between the state’s top network affiliates. Perhaps to divert legal fires from the company he founded, Ganier stepped down as chairman and chief executive of ENA in November 2004. While he no longer has financial interest in the company, Ganier still maintains an office there and is considered by some as a de facto strategist, even though David Pierce has carried out the top management duties since last January.

Asked how his former boss’ legal challenges have affected ENA’s performance, Pierce said that the probe “made it difficult to collect federal E-Rate funds for a couple of years,” but that the state contract is fully funded at present. The Federal Communications Commission received proof from the administration of Tennessee Gov. Phil Bredesen that there was no wrongdoing in contract procurement by ENA, and currently picks up approximately $14 million, or 70% of the annual $20 million tab. Pierce says that with such generous federal help, Tennessee pays only one-third of the cost per each K-12 student for Internet access, which makes ENA an extremely competitive provider.

In the end, when in June of 2007 the State of Tennessee has an option to extend its contract with ENA or bid it out again, ENA will have to prove its worth not via friends in high places, but with a track record of customer-satisfaction and technological savvy built over the past 11 years.