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A Park City-based company that provides satellite-based Internet service to the Navajo Nation is planning to pull the plug Monday on the 27,000-square-mile reservation due to what it calls a financial misunderstanding.
And thousands of reservation residents who rely on the Internet to work, study and communicate across the vast expanse of the Navajo Nation likely will be adversely impacted as a result.
''It's going to be a sad day,'' said Ernest Franklin, director of the tribe's Telecommunications Regulatory Commission.
A tribal audit last year revealed that Utah-based provider OnSat Network Communications Inc. may have double-billed the tribe, and it raised questions about how the tribe requested bids for the Internet contract.
But Jim Fitting, a New Mexico attorney who represents OnSat, said the auditors mistook as double billing two separate bills for different services the company provided.
"We were able to go to court in July and get a preliminary restraining order to prevent the audit from being distributed until we could get everything cleared up," Fitting said.
Still, the audit led the Universal Service Administration Co., which administers the service under the Federal Communications Commission's E-rate program, to tell the tribe March 28 that it would withhold $2.1 million from OnSat.
Fitting said the delay in payment means it can't pay subcontractor SES Americom for satellite time.
''With USAC taking this particular position, it doesn't look like we're going to get paid in the foreseeable future,'' Fitting said. ''We're already $4 million in the hole, so why should we continue doing it?''
Evenings, when residents get off work, the reservation's chapter houses are closed, but their wireless signals remain live. So it's common to see residents with laptops sitting in cars outside working away, a local official said.
Through the Washington, D.C.-based USAC, the FCC reimburses 85 percent to 90 percent of the costs for Internet service to 70 of the tribe's 110 chapter houses, which operate like city governments. The Navajo Nation covers the other 10 percent to 15 percent of the cost and offers service inside the chapter house and nearby through Wi-Fi.
The USAC told Navajo President Joe Shirley Jr. in a March 28 letter that it is withholding money for OnSat for 2006-07 because of the possible overbilling and because the tribe didn't comply with federal rules that require it to select the most cost-effective service or equipment through a fair, open and competitive bidding process.
The USAC asked the tribe to prove OnSat provided the service it is billing for and has not overbilled.
The Navajo Nation has until May to respond to USAC's letter, and the USAC can release full or partial funding or continue to withhold funding, said spokeswoman Laura Betancourt.
Tribal regulator Franklin said he has given the USAC documents detailing how OnSat was selected and has shown USAC personnel the service operating last year at sites they randomly selected.
''We proved that we are delivering the bandwidth and that we went through the proper procurement system,'' he said. ''We had to dig up all these documents.''