CPUC connects Salinas Valley to Silicon Valley with fast, cheap fiber

A 91-mile fiber optic middle network for the Salinas Valley, stretching from Santa Cruz in the north, to Watsonville, Moss Landing, Castroville, Salinas, Gonzales and Soledad in the south, is on the way. On a unanimous vote this morning, the California Public Utilities Commission approved a $10.6 million grant to Sunesys, LLC from the California Advanced Services Fund (CASF).

“The key point for me was that typically that these projects only make a price commitment for two years”, said Commissioner Michel Florio. “In this case the provider has made a commitment for at least five years, maybe as long as fourteen years”.

Pointing out that there are “still more jobs in agriculture” in the Salinas Valley than in an other sector, Commissioner Catherine Sandoval highlighted the acute need for better broadband access in the area, as expressed at public meetings the CPUC held in Salinas last year. “This could be a game changer”, she said. “This is a middle mile project, a back bone that is critical”.

The project will bring low cost wholesale fiber access to Salinas Valley Internet service providers and major commercial and institutional customers all along its route, at a maximum cost of $1,550 per month for any contracts, of any length signed in the first five years. By comparison, unsubsidised dark fiber can cost up to ten times as much. The network will interconnect with major north-south fiber lines in Salinas and Soledad, and terminate in Santa Cruz where Sunesys earlier built a dark fiber connection to Santa Clara, which provides access to several Tier 1 exchanges in Silicon Valley.

Since the Santa Clara connection was built 4 years ago, the price of wholesale Internet bandwidth in Santa Cruz has dropped by a factor of one hundred, to less than a dollar a megabit per month. Cruzio, a local ISP, leveraged this access to light up last mile fiber optic connections for downtown Santa Cruz businesses and improve speed and reliability for thousands of consumers. This new line is expected to do the same for Salinas Valley communities.

On the retail side, the commission also approved CASF funding for two last mile projects in the Paradise Road and Monterey Dunes areas of northern Monterey County, proposed by Surfnet Communications, a local ISP (and a Ponderosa Telephone project in Fresno County), albeit without the haircut proposed by Florio.. These two systems are the first of what are expected to be many consumer and small business-oriented projects that connect directly to the Sunesys middle mile network.

Gonzales councilman Robert Bonincontri and city manager Rene Mendez told commissioners of the tremendous need for connectivity in the Salinas Valley, where unemployment rates are high and household income levels are low, even when work is available. The social and economic impact of the project, coupled with its financial viability – demonstrated by the Surfnet proposals, as noted in the approved resolution – was the reason commissioners opted to fund 80% of its construction cost. Normally, CASF grants are limited to between 60% and 70% of the tab.

The next step is to finalise construction plans and route details, with completion expected within two years.

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.

About Steve Blum

Steve Blum is president of Tellus Venture Associates, a management, planning and business development consultancy for municipal and community broadband initiatives. He is a 30-year industry veteran and an expert in developing new broadband infrastructure and services, including wireless, fiber optic and satellite systems.His career includes playing key roles in the launch and growth of DirecTv in the U.S., as well as other satellite broadcasting platforms around the world. For the past ten years, he has helped build municipal wireless and fiber optic broadband systems. His client list includes many California cities, such as San Leandro, Palo Alto, Oakland, Los Angeles, Lompoc and Folsom. He’s a member of the executive team for the Central Coast Broadband Consortium and has worked with other regional consortia in California.Steve is the author of seven books on the Internet and satellite broadcasting and is a frequent contributor to professional journals and industry events. He holds an A.B. in History from the University of California, Berkeley, an M.A. in East Asia Studies from the University of Washington, and an M.B.A. from the University of St. Thomas. He is a triathlete and multiple Ironman finisher, and is currently ranked in the top 100 of the Challenge Triathlon world rankings, out of more than 30,000 athletes.