Old real estate business models slowing fiber upgrades

If you live in an apartment or condominium complex or similar – multiple dwelling units or MDUs as they’re called – then there is an additional hurdle between you and faster Internet service: your landlord or home owners’ association. Generally speaking, ISPs have to get permission to upgrade or install broadband facilities on private property. Those who control access can, in many cases, demand some form of compensation for saying yes.

Google has run into this problem in Kansas City. Verizon is having similar problems in New York. According to a story in Fierce Telecom

Hamdi Nezaj, a Bronx building owner, said that he has blocked crews from installing wiring in more of his buildings due to sloppy installation work.

“They never came back to fix the holes that were drilled, fix the boxes they installed and put molding on their respective wires,” he said.

Verizon faced a similar issue earlier last January when it decided to update all of the copper wiring that was damaged by Hurricane Sandy to FiOS. While FiOS provides higher reliability and better features and speeds, none of those elements were enough to convince landlords in six New York City apartment buildings to let them install fiber. At the time, the landlords claimed that some tenants who that reside in these buildings want to keep their copper-based DSL and PSTN services.

Whether it’s reluctance to pay for upgrades, as in Kansas City, or a bargaining position aimed at getting a better deal, landlords will offer disingenuous reasons for saying no, and home owners associations can be equally stroppy, with condo board politics often complicating matters.

In New York, Verizon continues to slog it out, with the city government also in the mix. Google, on the other hand, seems to be looking for new ways around the problem. There are no announced plans to expand Google Fiber to New York, but even so the company is opening a sales office, specifically targeting MDUs and mid-sized businesses.

The old business model is that service providers pay for access to MDUs, frequently on an exclusive basis. That’s a recipe for delays, often for many years. It’ll be interesting to see if Google will find a new business model, as it’s trying to do in Provo, or learn to live with the old one.

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Google offers a better benchmark for Santa Cruz broadband policy

The color scheme is optional.

Santa Cruz County is moving closer to slashing red tape for broadband projects to the level urged by Google Fiber, in its talks with other cities in California and elsewhere in the U.S. That’s not to say that Google has any interest in putting a fiber system anywhere on California’s central coast. Nor that new broadband infrastructure rules are a done deal here. Not by a long shot. But it’s to the point where it’s more useful to compare Santa Cruz County to Google’s fast track than to the normal course of broadband construction in California.

Recently, the San Antonio city council rocketed through a master lease agreement with Google, the first step towards perhaps qualifying for its next round of fiber builds. At 6,400 words it’s five times longer than the template offered in Google Fiber’s City Checklist, but that’s largely because the average city attorney – hell, any attorney – loves to cover all the bases with as much verbiage as possible. Google’s representative at the meeting seemed to think it was a reasonable adaptation.

So how does the master lease template for telecoms equipment championed by Aptos supervisor Zach Friend and tentatively approved in January compare? Not too badly. The San Antonio lease was a targeted agreement to build fiber huts on city land, but the Santa Cruz draft is intended to cover a much broadband range of possibilities including attaching antennas to county owned towers and occupying space on county property. So the 9,200 words in the Santa Cruz document doesn’t seem far out of line.

There’s a major difference between the San Antonio and Santa Cruz master leases, though. The San Antonio lease allows Google to batch together paperwork and get pre-approval for all 40 of the fiber huts it plans to build, with exceptions specifically noted. There’s no such process contemplated in the Santa Cruz draft, which leaves it up to companies building broadband infrastructure to navigate through local permit, license and zoning rules, one at a time. That’s the sort of thing Google and AT&T have both said is a deal killer.

Solutions to that problem are on the table, though. Friend proposes to simplify that process by treating broadband facilities like any other utility project, subject only to relatively simple technical reviews rather than painfully drawn out zoning and design fights. And the City of Santa Cruz has pioneered an online system – OpenCounter – for streamlining all the other paperwork. Not as fast off the mark as Texas maybe, but so far more than enough to lead the California pack.

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Verizon’s move to fiber a blessing for some Californians, but maybe a curse for others

Verizon says it’s invested more than $500 million in upgrading its broadband infrastructure in southern California and, in contrast to AT&T, it seems to be putting its money into wireline systems, particularly its FiOS fiber-to-the-home offerings. But the company is also making it clear that regulated copper plant belongs to past, and plans for replacing it with unregulated, fiber based Internet protocol service are moving ahead in California and elsewhere.

In its press release the company seems to be claiming to have switched more than 500,000 Californian telephone customers from copper to fiber. I say “seems” because the wording is vague enough to leave plenty of wiggle room. But there’s no doubting Verizon’s intent…

Nationwide, Verizon now serves more landline customers on its all-fiber infrastructure than on its legacy copper network.

For the people and communities that have FiOS upgrades already – 1.4 million households in California, according to Verizon – or are on the road map to get it – it’s a great thing. But there’s two ways to raise the percentage of FTTH subscribers: either build more fiber infrastructure or chop off less profitable DSL service and leave customers dependent on costly mobile data. Verizon is doing both.

For now, the company says its not going to add new markets to its fiber map, just build out what it’s already started. Its systems in California are a patchwork, mostly made up of former GTE territories, where the copper infrastructure was not outstanding to begin with. That leaves future broadband options in doubt for some rural areas of the San Joaquin Valley, the fringes of Silicon Valley and parts of the northern and central coast, along with big swathes of southern California.

It would be the same story in eastern California, except for the fact that the Digital 395 middle mile project is already boosting bandwidth for incumbent cable systems and competitive service providers alike. It’s no surprise that Verizon is one of the loudest – if not the most coherent – opponents of state subsidised broadband projects.

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Expect the unexpected from giants’ battle for air supremacy

A year ago, if anyone had said that Google and Facebook would be fighting each other to acquire drone manufacturers and technology, you might have rightly called that person crazy. Loony, even. But that’s what’s going on now.

Google announced this week that it bought Titan Aerospace, a New Mexico-based maker of drones. That follows stories more than a month ago that Facebook was in the process of buying it.

Titan’s drone technology will be used by Google both for imaging purposes and to bolster Project Loon, which is aimed at bringing Internet connectivity to parts of the world that can’t be economically reached by conventional means. Facebook founder Mark Zuckerberg, via Internet.org and the new Facebook Connectivity Lab, wants to use drones for the same purpose.

Project Loon is also making progress. The idea is to deliver Internet service by using a globe-spanning web of balloons steered along stratospheric wind streams solely by changing their altitude. One test balloon recently logged one lap of the Earth in 22 days.

These initiatives are research and development projects right now, and are a long way from actually providing service to consumers on the ground. But the out-of-the-box knowledge Google and Facebook gain from these experiments could have – will have – unpredictable consequences for telecoms technology. It doesn’t matter how weird or unusual the original problem was, novel solutions can be put to very conventional uses. Which can be very disruptive for incumbent telecoms companies. Which might be the whole point.

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Tahoe broadband development initiative recommended for CPUC funding

A new regional broadband consortia project is on the table for the Lake Tahoe basin, which straddles the California-Nevada border. The California Public Utilities Commission will be considering whether to spend $167,000 from the California Advanced Services Fund (CASF) on a proposal to carve out separate funding for broadband infrastructure planning and development around Tahoe.

The area is included within the Gold Country broadband consortium, funded by CASF two years ago along with 13 others. Nominally, the money will be funnelled through that consortium, but according to the draft resolution the project would be run separately by a regional non-profit organisation, the Tahoe Prosperity Center…

Although the California portion of the Tahoe Basin is included as an area under the existing Gold Country Broadband Consortium, Gold Country’s Commission approved work plan has focused on more rural communities, particularly unserved areas in western Placer and El Dorado Counties. Thus, Tahoe Prosperity Center proponents assert that the area is underrepresented by the current, Commission-approved Consortium structure.

The Tahoe project would focus on “infrastructure data collection, site survey and mapping; a broadband needs assessment; analysis of the assessment; and broadband development plan implementation, including the development of broadband internet infrastructure projects”.

With about $1 million still available, the CPUC opened up a new round of consortia CASF grant applications last year. Five were submitted by the deadline in January, and the Tahoe proposal will be the first to go in front of the commission.

Of the remainder, two were for a new consortium serving San Luis Obispo, Santa Barbara and Ventura counties and another for San Francisco, San Mateo and Santa Clara counties – six counties that were left out of the initial round. One was for extended funding for the existing consortium serving Riverside and San Bernardino counties and the fourth is for a hybrid, which would include Marin and Napa counties, which are not yet part of a consortium, and pull in Sonoma and Mendocino counties from existing consortia. The draft resolution notes that two of those proposals scored well enough to be considered and two did not, although without specifying which is which.

The commission is scheduled to vote on the Tahoe project at its 15 May 2014 meeting.

Tellus Venture Associates has assisted with several CASF proposals, both for infrastructure grants and consortia applications – including the Tahoe project – so I’m not a disinterested commentator. Take it for what it’s worth.

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Shasta County wireless broadband proposal goes to CPUC

A $2.2 million proposal for a wireless broadband and telephone system in the mountains of Shasta County will be going in front of the California Public Utilities Commission next month. Commissioners will be considering a draft resolution released earlier this week that would approve a grant from the California Advanced Services Fund (CASF) to San Diego-based Shasta County Telecom. The plan is to build three new towers that would be positioned to reach about 1,400 homes. According to the draft

Shasta proposes to bring broadband services to north of Bella Vista, Round Mountain, Montgomery Creek and Lake Margaret areas of Shasta County. Currently, the project area is primarily unserved by wireline technology and underserved by fixed wireless and mobile broadband. According to Shasta, there are an estimated 500 households within the project area that do not have telephone service available. The Shasta Project proposes to provide fixed wireless broadband and telephone services by installing fixed wireless transmitters and infrastructure on three mountain tops in Shasta County: Bear Mountain, Hatchet Mountain, and Round Mountain, in order to provide high speed Internet service over a 331 square mile area. Shasta plans to obtain backhaul capabilities from Level 3 Communications and the telephone central office, connection to the Public Switched Telephone Network (PSTN), and Emergency 911 network will be located in an offsite co-location facility located in San Diego, California.

On paper at least, Shasta’s pricing plan is a genuine bargain. They’re proposing to offer Internet service at 20 Mbps download and 10 Mbps upload speeds for $20 a month and telephone service for $10 a month. As is standard with CASF-subsidised projects, the price commitments – including zero installation cost – are good for two years.

There’s no guarantee, though, that all the homes in the mountainous area will be able to link to the towers, with or without a sufficiently good connection to support those speeds, nor there is there any mention of the total capacity of the network.

Commissioners are scheduled to vote on the project at their 15 May 2014 meeting.

Tellus Venture Associates assisted with several CASF proposals in the current round, so I’m not a disinterested commentator. Take it for what it’s worth.

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Current CASF round pushes $42 million with 7 projects pending

The California Advanced Services Fund (CASF) has been tapped for $41.7 million in grants and $127,000 in loans for 15 projects at this point in the current round of applications. That’s the total following last week’s approval of four projects by the California Public Utilities Commission.

Twelve last mile projects account for $23.4 million in grants. Two others – Klamath River and Cressman – combine last and middle mile facilities. One, Sunesys, is pure middle mile. Together, those three amount to $18.3 million.

Ten projects have been withdrawn, rejected or are otherwise off the table, and 7 are still pending. Based primarily on what was stated in the initial applications, the amount under consideration is $38.4 million, although it’s likely that some of those numbers have since shifted. If you assume only some will be approved, there’s likely to be something like $140 million left in the CASF grant fund when the program is rebooted this summer (perhaps in the July or August time frame), more than the $130 million I previously estimated. But it’s still a moving target.

On the other hand, the loan fund has hardly been touched. Of the projects still under consideration, 3 are asking for loans totalling $1.4 million. Originally set at $15 million and later reduced by the state legislature to $10 million, most of it will remain available to applicants, even if all three are approved.

The current round began more than 14 months ago when 32 projects were submitted on 1 February 2013. At least three – a Surfnet proposal for the Santa Cruz mountains and Race Communications projects in Mojave and California City – were withdrawn because the incumbent cable companies upgraded service.

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Commuter survey finds tech talent bonanza in Santa Cruz

Not worth the money.

Ditching a two hour commute and working in Santa Cruz is worth a 9% cut in pay, according to a survey by Civinomics, commissioned by South Swell Ventures. Most of those surveyed – 61% – said they had technical jobs, with software engineers predominating. The most commonly reported commute time was 2 hours (28%), with 80% saying they traveled at least an hour and a half a day. The sample was specifically targeted rather than random…

The survey was conducted in two parts, with half of respondents being randomly selected while boarding company buses at multiple stops, and the other half being referred through a verified link via email. The latter group of respondents are primarily single car commuters who had heard about the survey through local events and co-workers.

Car commuters, though, were more likely – 78% to 46% – to say they’d take less money for working over the hill than company bus riders, which suggests that it’s not based purely on lifestyle considerations. With gas prices hovering around $4 a gallon, there’s also an economic benefit to staying at home, which would partially offset lower pay.

The results validate the assumption that there is a significant reservoir of high tech talent on California’s central coast that’s ready to be tapped, which is an opportunity for local start-ups and growing Silicon Valley companies alike. With a new fiber optic line in the works, the central coast’s broadband capacity will also be up to the challenge, expanding location options south through Santa Cruz County and into the Salinas Valley. Unmatched quality of life combined with superior infrastructure is hard to beat.

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Comcast cash and lobbyists grab southern California beachhead

Money to burn.

Comcast’s acquisition of Time-Warner continues forward, with little apparent notice of the focused but relatively small opposition it’s attracted. That’s thanks in large part to the army of lobbyists Comcast keeps on staff and on retainer to make its case at the local and state level. It’s now redeploying troops from its northern California stronghold to the south, where it would gain a controlling share of the market by adding the Time-Warner systems in the greater Los Angeles area.

Nationally, Comcast is mobilising its lobbyists – staff and hired guns alike – who come bearing cash contributions to politicians without apology, according to a Politico story by Tony Romm…

Asked about the company’s lobbying and donations, Comcast spokeswoman Sena Fitzmaurice said the cable giant, which owns NBC, already operates in 39 states. “It is important and will continue to be important for our customers, our employees, and our shareholders that we participate in the political process and support senators and members who represent our employees and customers,” she said.

In California alone, that participation has pumped more than a million dollars into political pockets, greasing the skids for Comcast to extend its control of the northern half state south through Los Angeles.

Moving staff lobbyists south to work local officials complements the baleful influence it has nurtured in Sacramento with lawmakers from all over the state. Their bag of tricks includes a cynical reboot of Comcast’s low-income Internet service plan, which it first offered to help blunt opposition its earlier acquisition of NBC and was about to shut down before the Time-Warner deal popped up. This time, Comcast won’t say how long it’ll keep the offer on the table, which amounts to a threat to pull it if the merger doesn’t go through.

There are legitimate arguments that can be made in favor of the merger. But political muscle is far more compelling and, legitimate or not, that’s the path Comcast is taking in California and Washington, DC.

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CPUC awards first broadband infrastructure subsidy to an independent ISP

Two small Monterey County last mile projects are now proof of concept for both a key assumption and a major change for the California Advanced Services Fund (CASF).

Proposed by Surfnet Communications, Inc. and approved unanimously last week by the California Public Utilities Commission, the Monterey Dunes and Paradise Road projects validated the assumption that underpinned spending $10.6 million on a fiber link from Santa Cruz south through Monterey County to Soledad: that building middle mile links will lead to faster, cheaper and more reliable last mile service in underserved areas.

Although the Surfnet projects will only reach about 400 homes, it demonstrated that there is a market for dark fiber in the Salinas Valley, where 100,000 people lack access to the CPUC’s minimum standard of 6 Mbps download/1.5 Mbps upload speeds. That was a major difference between the successful Salinas Valley grant application and the failed Golden Bear middle mile proposal in northern California, which had no last mile element.

Surfnet is also the first CASF applicant to be approved without first qualifying for a certificate of public convenience and necessity (CPCN) as a regulated telephone company. New rules adopted by the CPUC in February, as authorised by a new law – senate bill 740 – last year, set strict standards for Internet service providers that don’t fit the traditional telco mold.

However, a lower entry bar appears to mean tougher scrutiny going forward, as commissioner Carla Peterman noted. “These funds are one of the first going to non-CPCN holders”, she said. “So I’d like to emphasise that the monitoring of non-CPCN holders should receive by us under these is important”.

Tellus Venture Associates assisted with several CASF proposals in the current round, including the Sunesys and Surfnet projects, so I’m not a disinterested commentator. Take it for what it’s worth.

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