Eastern Sierra fiber optic project needs $10 million more from California broadband subsidy fund

by Steve Blum • , , , ,

Inyo County segment. Red is the original route, dark blue is the new route required by government regulators.

The Digital 395 broadband project needs another $10 million from the California Advanced Services Fund (CASF) to cover unanticipated costs. A draft resolution released this week by California Public Utilities Commission (CPUC) staff endorses the request and the commission is scheduled to vote on it at its 5 September 2013 meeting.

Originally funded by a $81 million grant from the 2009 federal broadband stimulus program, $19 million from CASF and $1 million from the applicants, Digital 395 is a 530 mile fiber optic middle mile system that will run from Reno to Carson City, Nevada, then head down the eastern side of California along U.S. Highway 395 to Barstow. The objective is to turbocharge economic growth in a remote and economically underdeveloped area of California. Originally scheduled for completion last month, Digital 395 is effectively stalled until the shortfall is covered.

Serious work on the project didn’t get underway until 2012 because of delays in getting environmental, archeological and government right-of-way clearances from dozens of federal, state, local and tribal agencies. The budget overrun is mostly related to the cost of getting those approvals and then complying with the requirements imposed.

In some cases the California Broadband Cooperative (CBC), Digital 395’s owner, and Praxis Associates, the broadband construction and engineering company behind the project, underestimated the complexity of the often byzantine process required by state and federal regulators. Other times, new rules and requirements were imposed that changed the original design. For example, the CPUC adopted more stringent regulations for stringing cable on utility poles in January 2012, forcing some route segments into more costly underground conduit.

Although [CPUC staff] analysis finds that some of the cost overruns may be attributed to poor planning, assumptions and other factors under the CBC’s control, that does not diminish the extraordinary environmental, cultural, historic preservation and other agency requirements the Project faced. According to the NTIA, these requirements were “[f]ar beyond those that the typical [broadband stimulus] construction project must satisfy.”

In total, the extra costs add up to $25 million. Some of it is being absorbed by the backers and $14 million is being covered by cost savings on other aspects of the project. CPUC staff concluded that the only possible source for the remaining $10 million is CASF, and if it isn’t approved…

The route would be divided in two sections, without a complete path, potentially reducing revenues below CBC sustainable levels. County of Mono will still have to “operate in two parts” – one served in from the south (760 Area Code) and from the north (530 Area Code). Cell towers and major last mile providers would not get route redundancy and service quality guarantees. In some cases their points of presence will not be installed and migration of mobile coverage to 4G would be deferred or limited to certain areas. Several local service providers would be unable to execute their plans to provide last mile broadband Internet service, including current CASF Infrastructure Grant applicants.

The extra money would boost CASF’s share of the funding from 19% to 26%, in either case more than the 10% offered to other broadband stimulus projects but still less than the 40% maximum available at the time. It would reduce the money available to current CASF applicants from $158 to $148 million.