Ponderosa broadband subsidy proposal ducks middle mile responsibilities

by Steve Blum • , , , , ,

Quacks like a middle mile project.

A draft resolution approving a $1 million California Advanced Services Fund grant for a DSL upgrade in the small mountain community of Cressman in Fresno County was posted on the California Public Utilities Commission website yesterday. Proposed by Ponderosa Telephone Company, the project has middle mile fiber and a middle mile price tag, but doesn’t offer middle mile access.

The cost per household is $8,900, making it the second most costly project so far in the current round of CASF subsidy applications. At the top of the list is a stalled fiber-to-the-home project in Madera County, also proposed by Ponderosa, that will cost somewhere between $11,000 and $55,000 per home, depending on how homes are counted.

A better point of comparison, though, is a combined middle and last mile project in Humboldt County which costs $8,100 per home and was approved by commissioners last month. Most of the money for that project is going toward building an 82-mile fiber optic link to Internet facilities down the coast. It’s pretty much the same as the Cressman proposal…

Ponderosa contends that the extension of its fiber backhaul also has potential value beyond serving the Cressman Project area. Although not part of the Cressman Project, Ponderosa stated their long term plan is to eventually serve the Blue Canyon rural subdivision…Ponderosa aims to extend the fiber to connect to existing fiber at their Exchequer site so as to complete a fiber network ring, which would provide route diversity and protection in case of a fiber cut or disaster.

There’s one huge difference. The Humboldt project, submitted by the Karuk Tribe, explicitly includes a middle mile component, and the CPUC attached conditions that make it available to other last mile service providers. Ponderosa, on the other hand, isn’t characterising its fiber backhaul as middle mile infrastructure and there’s no requirement in the draft that would force it to share the link with competitors or lease dark fiber to end users.

The area is remote and sparsely populated, so sharing is theoretical at best. But precedent is important. In this case, the language as drafted could provide a basis for future subsidies without access conditions to projects that are middle mile in all but name. Allowing one company to lock up publicly-funded dark fiber means less competition, higher prices and worse service. That’s not what the money in CASF is supposed to be buying.

Anyone can submit comments to commissioners regarding the project, the deadline for doing so is 4 December 2013.

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.