Tag Archives: golden bear

Golden Bear fiber plan not sturdy enough to survive incumbent challenges

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The two thousand mile, $120+ million Golden Bear middle mile fiber network is officially dead. Snaking through the canyons and river valleys of far northern California, the project was touted as a way of bringing fast, inexpensive backbone connectivity to areas far removed from bandwidth-rich regions to the south.

Effectively, backers were asking for 100% grant funding from the California Advanced Services Fund (CASF). Nominally, the limit is somewhere between 60% and 70%, depending on the level of broadband service, if any, that is available. There’s at least some support on the commission for popping that limit, at least for a middle mile project that lights up economically disadvantaged areas, such as the Sunesys proposal in the Salinas Valley. But the rules also limit funding to areas where residents can’t get service that hits 6 Mbps download and 1.5 Mbps upload speeds, and there’s little enthusiasm for subsidising fiber builds on routes where it’s already available.

Golden Bear failed on both counts. According to a story in the Santa Rosa Press-Democrat, a flood of challenges from incumbent service providers such as AT&T, Verizon, Comcast and others forced the original plan to be scaled back to the point where it didn’t make technical or economic sense, so the backers pulled the plug.

There were other problems with the proposal, not least the lack of skin the backers were putting in the game. Originally, the applicants asked for $119 million from CASF to pay what was positioned as 90% of the cost of building about a thousand miles of fiber and leasing another thousand. But it soon became apparent that the 10% match was conceptual: in kind contributions at best. Although details were closely held, the total cost to CASF was believed to have climbed into the $140 million range.

It’s not a total failure, though. Past experience with grand fiber plans that don’t fly on the first try shows that the technical and business planning done and community support gathered can be leveraged for incremental, rational projects. To paraphrase Winston Churchill, it’s not the end or even the beginning of the end, just the end of the beginning.

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

$130 million available for broadband infrastructure grants in California

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We found the money.

The California Advanced Services Fund (CASF) will be topped up to the $315 million limit set by law by mid–2016, thanks to a hike in a surcharge added to phone bills that was approved last week by the California Public Utilities Commission. But much of it is already spent or earmarked, so the amount available for broadband infrastructure construction grants is likely to be $130 million, plus or minus a few million, the next time the CPUC accepts applications.

Boiling it down, $10 million goes to a loan fund, $25 million to public housing facilities and marketing programs and $10 million to regional consortia, leaving $270 million for grants. Of that, about $52 million is for projects approved under older rules, including a $10 to $11 million spiff for the Digital 395 project approved last year.

So far, $30 million has been given to 11 projects in the current round of applications, which were submitted in February 2013, and the commission is scheduled to vote on 4 more totalling $12 million. Based on administrative costs approved to date and projecting forward a few years, the overhead hit will be north of $10 million. Call it $16 million.

Subtracting it all out leaves $150 million. If you assume the $120 million Golden Bear proposal is dead (as I do), 7 projects totalling $39 million are still on the table. But those attracted multiple challenges or have other problems, so there’s some uncertainty. I don’t know what the final figure will be, but if you call it half – purely for the sake of discussion – you end up with something like $130 million. Or somewhere in the $110 to $150 million range, if you prefer.

The CPUC’s goal is to approve spending all the grant money by the end of 2015, to hit a target set by lawmakers. But first the commission has to rewrite CASF rules yet again, also because of changes made last year by the legislature. That’s scheduled to be done in July, which will leave a year and a half for applicants to develop projects and submit applications, and for the commission to approve or reject them.

CPUC delays expanding broadband subsidy eligibility

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Picker takes a seat.

The California Public Utilities Commission put off consideration of new rules governing the California Advanced Services Fund (CASF) today. The vote on how to expand eligibility for CASF grants and loans was put off until 27 February 2014. No reason was given for the delay, but it’s likely due – at least in part – to comments filed last week by The Utility Reform Network (TURN) that proposed allowing more flexible requirements for local governments that might want to apply for broadband construction subsidies. Typically, CPUC staff would summarise and respond to comments received on proposed decisions and that work appears to still be in progress. In addition to TURN, a group of small telephone companies and the commission’s Office of Ratepayer Advocates filed comments that would also, presumably, require a response.

The commission did vote to give Golden Bear Broadband status as a regulated telephone company, similar to its action in December doing the same for Schat Communications. In Golden Bear’s case, the rationale was that it would be providing “dedicated private line special access services to business customers and carriers”, in addition to unregulated (and, under state law, unregulatable) broadband service.

The meeting also marked the debut of Michael Picker as a commissioner. He was appointed by Governor Brown last week to take the place of Mark Ferron, who resigned because of health issues. Prior to being appointed, Picker was a renewable energy advisor to Brown and a member of the Sacramento Municipal Utility District board of directors. He resigned both jobs before taking the oath of office as a commissioner this morning.

CPUC finds a legal way to treat ISPs as regulated phone companies

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CPUC sends a Schat across incumbents’ bow.

Buried in last week’s California Public Utilities Commission consent agenda was a resolution granting a certificate of public convenience and necessity (CPCN) to Schat Communications, an independent Internet servicer provider based in Bishop, on the eastern side of the Sierra Nevada. Schat applied for the CPCN in order to qualify for California Advanced Services Fund (CASF) grants for two proposed last mile projects in Mono and Inyo Counties.

CASF rules are different now, but back in February, an applicant either needed a CPCN or the mobile telephone equivalent or at least have an active application in front of the commission. Golden Bear, Bright Fiber, Surfnet and Viasat were in the same boat, with CPCN applications pending. If a telecoms company has a CPCN, it means that it is a “telephone corporation” and can be regulated as such by the CPUC.

To one extent or another, all five applications were held up as the CPUC struggled with an institutional history of regulating telephone companies rather than ISPs and a state law, passed last year that expressly forbids the CPUC from exercising control over Internet protocol services, including VoIP as well as pretty much any other broadband-based content or service.

Nearly a year later, Schat is the first one to convince the CPUC that what it does is sufficient for it to be regulated (and given CASF grants)…

Schat Communications argues that its intention to provide “middle-mile transport service” and manage a network consisting of “conduits, ducts, poles, wires, cables and other property” qualifies it as a telephone corporation, and therefore a public utility. Public Utilities Code §710 does not preclude our regulation of “non-VoIP and other non-IP enabled” services such as the middle-mile transport intended by Schat Communications. Therefore, we agree with Schat Communications that it is a telephone corporation, and therefore a public utility subject to our jurisdiction.

It’s good news for the other applicants. Even though the law has since changed, a CASF applicant with a CPCN still has considerable advantages. It also opens up some interesting questions about middle mile service providers – say, AT&T or Verizon – that are moving toward IP-based networks, partly for technical reasons but also partly to escape regulation. It might not be as easy as they seem to think.

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

Golden Bear versus everyone else in Californian broadband subsidy competition

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Pondering options as the game dwindles away.

Counting just the money that’ll be available over the next couple of years, there’s about $107 million left in the CASF grant kitty, give or take. The remaining grant applications total $178 million, making it likely that some will be denied or drastically reduced. One proposal – the Golden Bear middle mile project in the northern end of the state – accounts for $119 million of that, which leads to three possible scenarios…

  • Most or all of the fourteen other pending projects, totalling $59 million, will be funded, likely leaving too little for Golden Bear to be viable.
  • Golden Bear is funded, somewhere in the $80 to $100 million range, knocking most of the rest off the table.
  • The CPUC adds the additional $70 million approved by the legislature earlier this year to the pot. Since that money will be collected sometime after 2015, project timelines will be drawn out.

So far, the timing of CPUC grant approvals has depended to a large extent on the complexity and contentiousness of proposals. The first batch of ten approved grant applications were relatively simple ones that did not attract much in the way of formal protests from competing providers. Golden Bear is a complicated project that has attracted a storm of challenges from incumbents, which is likely to push it farther back in line. Which would leave commissioners with a choice between effectively denying it or spending most of the newly approved CASF money on it over the next five years or so.

There’s another possibility: the Golden Bear project is rejected in its current form, then later broken up or otherwise drastically scaled back, potentially allowing it to be built (or not) in more manageable chunks over time. That would disappoint project backers and make it less likely to reach the most remote corners of California’s far north. But it’s something, which might be more palatable than the all or nothing choice on the table now. Particularly since “nothing” seems the likeliest result.

CASF applications and approved projects, as of 31 October 2013.

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

California broadband grant requests inch toward decisions

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California Public Utilities Commission (CPUC) staff have started drafting resolutions for funding at least some of the broadband infrastructure proposals submitted last February for subsidies from the California Advanced Services Fund (CASF).

The fact that staff is putting the necessary paperwork together – preliminary environmental assessments and public safety impact, for example – doesn’t mean that a project will rate highly enough to be recommended, but it does mean that the preliminary task of determining whether a project is eligible for CASF money is complete, or nearly so.

Active CASF applications, as of 18 August 2013.

The indication is that the projects that attracted the most protests from incumbent providers – Golden Bear and ViaSat are top of that list – are still in play but could be scaled back. Smaller projects have also been trimmed a bit, as applicants, incumbents and CPUC staff wrangle over whether the places being proposed for funding are truly under (or un) served.

If the Digital 395 project in eastern California gets the extra $10 million it requested a couple weeks ago, the total amount available for grants will be about $148 million. The big questions are whether the Golden Bear project will be funded and, if so, how much will it get. As originally proposed, it would have eaten up $119 million of the available money, but it’s looking likely that the size of the project will be scaled back and that it will, initially at least, be held to the 60% to 70% grant funding limit set by the CPUC, instead of the 90%+ requested.

With other proposals being trimmed too, the gap between requests and available money might narrow to the point that nearly all of the 26 currently active applications could get funded. And if the Golden Bear project is completely rejected, there should be more than enough for them all.

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.