Dark fiber for California’s Salinas Valley needs CPUC help

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A 91-mile fiber optic backbone project on California’s central coast is under consideration by the California Public Utilities Commission, which will have to decide whether or not to increase the limit it previously set for broadband construction subsidies from the California Advanced Services Fund (CASF).

Proposed by Sunesys, LLC, the project would connect unserved and underserved communities in the Salinas Valley with affordable dark fiber links to lower cost, higher speed Internet bandwidth in Silicon Valley. The ultimate goal is to provide a boost to the area’s depressed economy. The project has been endorsed by local governments and organisations, and championed by the Central Coast Broadband Consortium.

It’s a middle mile project, which means that its customers would be Internet service providers and major institutional users. The area is far from affluent, though, and in order to make a business case for the network, Sunesys is asking commissioners to raise the current grant limit of 60% for underserved areas and 70% for unserved ones to 83% overall. According to the draft resolution prepared by CPUC staff…

Given the lack of other available sources of funding for the project, as attested by Sunesys, a higher CASF funding of the total project costs is necessary in order to keep prices for access to the middle mile network at reasonable rates…Sunesys has informed [CPUC] staff that it will not be willing to take on this project without CASF funding of at least 83% of the total project costs of $13,300,000, because a smaller funding percentage on this project will take too long to receive a viable return on the invested capital.

In dollar terms, Sunesys is asking for an $11 million grant. If commissioners don’t approve an exception, the existing rules would limit it to $7.4 million. The project is scheduled to be considered at the CPUC meeting on 13 March 2013. Comments, pro and con, are being accepted until 3 March 2013.

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