Tag Archives: ponderosa telephone

CPUC says a kiss for Cressman beats the alternative

by Steve Blum • , , , , ,

“Just so we understand, it screws five families”, said an animated Michael Peevey, president of the California Public Utilities Commission as he lambasted a move to slice $373,000 from a proposed Fresno County broadband project.

Ponderosa Telephone Company asked for a $1 million grant from the California Advanced Services Fund (CASF) to build a fiber optic middle mile line to the mountain community of Cressman, use it to upgrade DSL service for 65 homes there, and then extend it two and a half miles to five more homes in Rush Creek. But adding those five homes costs $74,000 each, more than twenty times the CASF average.

The justification offered was that Ponderosa could later come back and build out to a U.S. Forest Service station in Blue Canyon and then continue on to complete a fiber loop for the area. That seemed like a fine idea to commissioner Michel Florio, who thought that the five homes should be trimmed from the proposal on the table, and added later when Ponderosa was ready to complete the whole project.

“Over a third of the cost of the project is for Rush Creek which only serves five households”, Florio said, pointing out that average household income in the area ran as high as $80,000 per year. “It seems unjustified to me”.

But Peevey insisted that the money would be spent one way or the other. “The only point is do you exclude these five homes or not. You’re going to have to complete it eventually”, he said.

It came down to the vote. Commissioner Carla Peterman sided with Florio, but Catherine Sandoval and Michael Picker went with Peevey. Once Florio’s proposed changes were rejected, the original proposal was put on the table and all five commissioners agreed to fund it as written.

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.

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.

Ponderosa takes trimmed broadband grant in the Sierra

by Steve Blum • , , , ,

While offering a token defence of its original request, the Ponderosa Telephone Company has effectively agreed to chop $373,000 from a $1 million proposal to build fiber middle mile connections and upgrade DSL service in the Sierra Nevada near Cressman in Fresno County. The company asked for a grant from the California Advanced Services Fund (CASF) for the project, but ran into opposition at the California Public Utilities Commission.

Commissioner Michel Florio put an alternative on the table, that would remove 5 homes – at a cost to CASF of $75,000 each – from the project and ask Ponderosa to come back with a more cost effective plan to serve them and their neighbors. The revised project would reach 65 homes at a cost of about $10,000 each.

Via its lawyers, Ponderosa is now saying that’s OK

Although Ponderosa would prefer that the Draft Resolution be adopted, [Florio’s] Alternate Draft Resolution correctly captures Ponderosa’s viewpoint regarding the alternative proposal for the project:

Ponderosa stated that if the Commission determines that eliminating the Rush Creek segment of the project is a more prudent use of CASF funds, they will still consider the revised project technically and financially viable.

Ponderosa supports the Alternate Draft Resolution in the event that the original Draft Resolution is not adopted.

Although there’s a vague commitment from Ponderosa to “provide wholesale access to its network”, there’s still no specific pricing or cost formula required, as the commission has done in the past with the Karuk tribe’s middle mile project in Humboldt County and as proposed for the Sunesys project in the Salinas Valley.

The Cressman project is on the CPUC’s agenda for a vote tomorrow morning.

CPUC pushes open access to subsidised middle mile fiber

by Steve Blum • , , , , ,

Access only by fiber or snowmobile.

Once again, the California Public Utilities Commission has set an expectation that publicly subsidised middle mile fiber should be available on a wholesale basis. To gain approval for a $1.8 million subsidy for a fiber to the home system in a remote area of Madera County, Ponderosa Telephone Company agreed to sell access to the fiber backhaul line that will feed it. According to a CPUC staff presentation to commissioners

Ponderosa has affirmed that wholesale access to the network will be provided in the project area. For example, if a wireless carrier chooses to put up a tower in the project area, backhaul access will be available.

It came at the prodding of commissioner Catherine Sandoval, who pushed for “a commitment to sell wholesale backbone services” at an earlier meeting, and on Thursday cited Ponderosa’s agreement to do so as a reason for supporting the project, despite its high cost per household. Sandoval emphasised the value of middle mile access to schools, and the likelihood of it attracting mobile carriers to the area, which currently lacks cell coverage.

“Wholesale access” wasn’t made a specific condition for the grant, nor was it specifically defined. But an earlier decision approving a middle mile project in Humboldt County clearly stated that it includes making dark fiber available…

[CPUC] staff has checked with the Project team to determine if it is building sufficient fiber strands and capacity is being built into the KRRBI middle-mile part of the project to ensure that the network is able to support future demand such as access to dark fiber to wholesale providers…The KRRBI middle mile network shall be made available for wholesale access to other potential CASF grantees at reasonable rates and terms. These reasonable rates shall be at cost.

To build sustainable businesses and compete with incumbents, independent Internet service providers need the level of control over quality and costs that dark fiber provides. The commission will have an opportunity to build on these precedents, when it considers a grant application for a DSL upgrade in Fresno County, also proposed by Ponderosa, that justifies a high cost per household on the basis of the middle mile fiber required to build it.

CPUC approves $1.8 million for “fiber to the vacation cabin”

by Steve Blum • , , , , ,

No phone, no water, no power, no people. But wicked fast email.

“I’m a big supporter of fiber to the home, but fiber to the vacation cabin is a different thing”, said commissioner Michel Florio as he argued against giving a $1.8 million grant to the Ponderosa Telephone Company to build broadband infrastructure in a remote area of Madera County. His fellow commissioners did not agree, though, and the project was approved on a 4 to 1 vote.

The money, from the California Advanced Services Fund, will pay about 60% of the cost of building an FTTH system in Beasore and Central Camp, two communities in the Sierra National Forest that are tiny in the summer and all but uninhabited in the winter. The debate has focused on how much the California Public Utilities Commission would be spending per household, if it moved ahead. There was no clear answer to the question, but based on the information presented, it looks like the number is closer to the $55,000 figure that’s based on the 2010 census, rather than the $11,000 that Ponderosa claimed.

If you reckon a household as being a place where people live year-round.

Florio despatched a staffer to Madera County earlier this week to take a look. He came back with photos that showed that the area is all but closed down for the winter. Many of the “housing units” claimed by Ponderosa are tightly boarded up one room cabins, without electricity or indoor plumbing. Much of the area is only accessible by snowmobile. But if you count all that, then the cost per home probably is nearer the $11,000 claimed by Ponderosa. Which is still more than the previous CASF subsidy limit of $10,000 per household.

The other commissioners had mixed reasons for supporting the subsidy, ranging from president Michael Peevey’s what-else-will-we-do-with-the-money comments to commissioner Carla Peterman’s less than enthusiastic acceptance of a public safety argument (there’s no mobile phone service either), despite her doubts that the CPUC will “get the most bang for the buck”. Going forward, she said she wanted the commission to be proactive about finding areas with fundable broadband needs, rather than just waiting to see what proposals come in.

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.

If CPUC doesn’t change broadband subsidy rules, results will still disappoint

by Steve Blum • , , , ,

Waiting for AT&T to light up Point Arena.

The towns of Pt. Arena and Gualala in Mendocino County, on California’s northern coast sparked debate at the California Public Utilities Commission last week. Commissioner Michel Florio used them as examples of communities that don’t have Internet service at all, as he questioned whether the CPUC should spend $1.8 million to build a fiber-to-the-home system for somewhere between 32 and 159 households in the Sierra National Forest, in Madera County.

While arguing for the Madera project, commission president Michael Peevey claimed Florio was wrong. “Last Saturday, I was at Trinks restaurant in Gualala, they have Internet service there, I used it.”

Who’s right depends on what you consider to be broadband service. Peevey is correct in saying that there’s more than absolutely nothing there. Central Valley Cable offers Internet service in at least some parts of the area, but it’s less than the CPUC’s minimum of 6 Mbps down/1.5 Mbps up. AT&T, the incumbent phone company, doesn’t offer DSL in either town, and slow mobile broadband connections only in Pt. Arena. Verizon and U.S. Cellular also offer substandard mobile service. The CPUC’s field testing indicates it would be frustrating, at best, to rely on mobile providers on that part of the coast.

The facts support the point that Florio was making: spending millions of dollars to bring the best Internet technology available to dozen of homes, while leaving larger communities – hundreds or thousands of households – with antiquated and increasingly useless service for many years to come is difficult to justify.

There’s no obvious solution. Individual service providers decide where they want to upgrade broadband infrastructure and apply for subsidies. The backwoods of Madera County are served by Ponderosa Telephone Company, which also is willing to spend millions of dollars of its own money (the CPUC only pays 60% to 70% of the cost of subsidised projects). The Mendocino coast is served by AT&T, which isn’t. A new law passed by the California legislature, but largely written by lobbyists for telephone and cable companies, make it difficult – perhaps impossible – for competitors to use broadband subsidy money to challenge substandard incumbents.

But the CPUC still has a great deal of control. If commissioners don’t like the way the game is being played, they need to change the rules.

CPUC debates fairness of giving big broadband subsidies to tiny communities

by Steve Blum • , , , , ,

“It’s a little frustrating that this would be one of the last places you’d expect high quality internet service, yet you have communities like Point Arena and Gualala that don’t have service at all,” said commissioner Michel Florio this morning, as the California Public Utilities Commission discussed a proposal to give a $1.8 million subsidy to Ponderosa Telephone Company to build a fiber-to-the-home system in the remote Madera County communities of Beasore and Central Camp. It would deliver 50 Mbps download and 20 Mbps upload speeds to homes that currently lack even landline telephone service.

Commissioners are wrestling with the project’s cost per home reached – somewhere between $55,000 and $11,000, depending on whose numbers you believe. Either way, it busts the CPUC’s cap – so far – of $10,000 per home for California Advanced Services Fund subsidies. The U.S. Census Bureau counts 32 occupied residences in Beasore and none at all in Central Camp but Ponderosa claims there are 159 occupied dwellings between the two areas. The Forest Service says the census figures are low but so far hasn’t endorsed the higher number. It’s clear, though, that many – likely most – of the houses in the area are vacation homes.

“The very purpose of the CASF program is to do these kinds of things,” said commission president Michael Peevey, as he pushed to move ahead with the grant. “How much more information do we need?”

At least a clearer idea of how many people actually live there, according to commissioners Catherine Sandoval and Carla Peterman. There was a fundamental concern about how to manage CASF fairly. “Many of the people paying the surcharge [that funds CASF] don’t have access to this level of service”, said Peterman.

In the end, commissioners asked staff to get better numbers and come back in two weeks. Then they’ll have to decide if the needs of people in the area justifies raising the current subsidy limit. Florio was was skeptical.

“If these are cabins where people go to get away from the city”, he said, “people may be going there to get away from the accoutrements of modern life”.

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.

CPUC takes more time on broadband subsidy limits

I can explain that…

The California Public Utilities Commission is again bumping a decision on a particularly expensive broadband subsidy request for another two weeks. Commissioner Michel Florio pulled the $1.8 million grant proposal made by the Ponderosa Telephone Company for a Madera County fiber-to-the-home project from tomorrow’s commission agenda. As is customary practice, no reason was given, but it’s the second time this application has been put on hold.

It’s easy to spot what sets this California Advanced Services Fund application apart from the ten others that commissioners have approved without discussion in the past couple months: the amount of money they would be spending on each household in the proposed service area. If you count potential customers the way Ponderosa prefers – include vacation homes, vacant houses, people who share living quarters in the back country of the Sierra National Forest – the CASF subsidy would be $11,000 each for 159 potential customers. If you just look at the 32 actual households – rather than buildings – counted in the last census, that figure jumps to $55,000.

Either way, it’s high. On average, commissioners have approved $2,200 in subsidies for each potential customer reached by the nine last-mile projects in the current round, with a maximum so far of $3,800 per home for an FTTH project in Boron. A tenth grant – $6.6 million – for a combined middle and last mile project on the far northern coast came in at $8,100 for each potential customer reached by the last mile segment. But most of the cost is for the 82-mile fiber backhaul, which will also be available to many more homes and businesses along the way. It’s not an apples-to-apples comparison.

In past years, commissioners have spent as much as $10,000 per home on CASF-subsidised projects. This current batch is different, though. Due to changes made last year, CASF grants can pay up to 70% of a project’s cost, up from the previous 40% limit, which might be a reason to go higher. On the other hand, there’s a lot more money being requested by more projects this time, more than is currently available. Maximising the number of people reached by holding down per household subsidies is one way to manage that problem.

It’s possible that Florio could release his hold request before tomorrow morning’s meeting, but I don’t expect it. The Ponderosa application is likelier to reappear on the commission’s 5 December 2013 agenda.

Update 14 November 2013: As expected, a decision on Ponderosa’s Madera County project has been pushed to the CPUC’s 5 December meeting.

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.

CPUC faces a decision on broadband subsidy limits

Broadband construction subsidies are averaging $2,200 per household, as the California Public Utilities Commission works through the current round of proposals submitted for California Advanced Services Fund grants. Nine applications for last mile projects have been approved so far, with an estimated reach of 9,700 homes and totalling $21 million.

CASF approved projects, as of 31 October 2013.

The most money – $3,800 per household passed – is going to an FTTH project in the high desert town of Boron. A DSL upgrade in Boonville, in Mendocino County, is getting the least, $270 per home, including both a $123,000 grant and a $41,000 loan. Reckoning on just the grant amount, the per household subsidy in Boonville is $202.

A combined middle and last mile project in Humboldt County has also been funded, at a cost of $6.6 million to CASF. Its immediate reach is estimated at about 700 homes, which puts it at $8,100 per household, but that includes the cost of a 82 mile backbone connection to an Internet hub down the coast, which is expected to support other last mile Internet service providers once it’s built.

The only project that commissioners have looked at and put on hold is a $1.8 million FTTH proposal in Madera County. Depending on how households are counted, it’s either far out of the current range at $11,000, or astronomically so at $55,000 per home passed. They’re scheduled to vote on it next Thursday at their 14 November 2013 meeting, although it could get bumped again. It’s an opportunity for commissioners to set a per household limit on broadband construction subsidies. It’ll be interesting to see what they do with it.

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.