Tag Archives: surfnet

No progress, no paperwork, no grants for California broadband projects

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Five broadband projects are about to lose funding, as the California Public Utilities Commission prepares to cancel $4.5 million worth of grants originally given to pay for construction costs. The companies that would have received the subsidies either decided not to move ahead with the project or just sort of disappeared and failed to file the proper paperwork.

Verizon had two of the projects – one in Pinyon in Riverside County and the other in the Sea Ranch area of Sonoma County. It’s not clear what, if anything, Verizon actually built, but it didn’t file necessary reports or even ask to draw down the money. So the $2.5 million it was awarded from the California Advanced Services Fund (CASF) will go back into the kitty. It’s odd – Verizon apparently finished the work but, for some reason, didn’t want the reimbursement.

Shasta County Telecom is losing $2.2 million for a fixed wireless project northeast of Redding, because it apparently disappeared off the face of the planet. The narrative in the draft resolution rescinding the grant reads like an account of a lost expedition to the South Pole: a cryptic message about bad weather, and then silence. Search parties couldn’t find their tracks and they were never heard from again.

A $149,000 DSL project in the Westport area of Mendocino County was cancelled, apparently because people in the local community were opposed to plans to build a microwave backhaul link. At least that’s what WillitsOnline told CPUC staff.

The private beachfront community of Monterey Dunes won’t be getting a fiber-fed upgrade. Surfnet Communications received a $79,000 grant from CASF to pay for 60% of the cost, plus a $26,000 loan to cover another 20%, but residents reneged on their agreement to pay for the rest. One of the problems, which the draft resolution neglects to mention, was that the CPUC took more than 14 months – 11 months longer than the time allowed – to process the application.

Assuming commissioners vote to cancel the subsidies, the $4.5 million will be recycled back into the CASF infrastructure grant account and become available for other projects.

Tellus Venture Associates assisted Surfnet with the Monterey Dunes project proposal. I am a frustrated commentator, not a disinterested one. Take it for what it’s worth.

Surfnet takes another try in the Santa Cruz mountains

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Los Cumbres is a private community in the Santa Cruz mountains with old-style DSL service. Surfnet Communications, a wireless Internet service provider in the area, is asking the California Public Utilities Commission for a $730,000 grant and a $243,000 loan from the California Advanced Services Fund to build a fiber to the home system there.

The project would reach something like 180 homes, at a total cost of $1.2 million, with the balance paid by the Las Cumbres homeowners association and Surfnet. That comes to $6,700 per household overall, with the CASF grant covering $4,000 of it. Service to individual homes will be via direct fiber connections, but the system will be fed by a wireless link, which would have less overall capacity.

It’s the second time that Surfnet has applied for CASF subsidies in the Santa Cruz mountains. The first was in 2013 for neighborhoods to the southeast of the current proposed project area. Surfnet withdrew, though, after Comcast decided to extend its existing network to cover those homes, a month after the CASF application was filed. Prior that, local residents had been clamoring for years for Comcast to build out to them.

The Los Cumbres project area is several road miles from the Comcast’s nearest system, so there’s less likelihood of a repeat preemption. But the local phone company is Verizon. As of a year ago, it claimed to offer DSL service there, at levels below the 6 Mbps download and 1.5 Mbps upload minimums set by the CPUC. But Verizon told the CPUC at a hearing in July that it had plans to upgrade its backhaul capacity, and the network diagrams it submitted backed up the claim that it will be upgrading its fiber infrastructure in the Santa Cruz mountains. Whether that’ll help boost speeds on its antiquated copper lines remains an open question.

Frontier Communications is trying to buy Verizon’s wireline phone systems in California and has generally pledged to upgrade broadband infrastructure once it takes over, but it’s made no specific promises regarding where or when those improvements will happen. As a rule, the CPUC doesn’t take future plans into account when deciding whether an area is eligible for subsidies. If Verizon or Frontier want to block Surfnet’s grant application, objections would have to be based on service that’s actually available.

Tellus Venture Associates assisted Surfnet with its first project in the the Santa Cruz mountains, but is not involved in the current one. Even so, I’m not a completely disinterested commentator; take it for what it’s worth.

CPUC awards first broadband infrastructure subsidy to an independent ISP

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Two small Monterey County last mile projects are now proof of concept for both a key assumption and a major change for the California Advanced Services Fund (CASF).

Proposed by Surfnet Communications, Inc. and approved unanimously last week by the California Public Utilities Commission, the Monterey Dunes and Paradise Road projects validated the assumption that underpinned spending $10.6 million on a fiber link from Santa Cruz south through Monterey County to Soledad: that building middle mile links will lead to faster, cheaper and more reliable last mile service in underserved areas.

Although the Surfnet projects will only reach about 400 homes, it demonstrated that there is a market for dark fiber in the Salinas Valley, where 100,000 people lack access to the CPUC’s minimum standard of 6 Mbps download/1.5 Mbps upload speeds. That was a major difference between the successful Salinas Valley grant application and the failed Golden Bear middle mile proposal in northern California, which had no last mile element.

Surfnet is also the first CASF applicant to be approved without first qualifying for a certificate of public convenience and necessity (CPCN) as a regulated telephone company. New rules adopted by the CPUC in February, as authorised by a new law – senate bill 740 – last year, set strict standards for Internet service providers that don’t fit the traditional telco mold.

However, a lower entry bar appears to mean tougher scrutiny going forward, as commissioner Carla Peterman noted. “These funds are one of the first going to non-CPCN holders”, she said. “So I’d like to emphasise that the monitoring of non-CPCN holders should receive by us under these is important”.

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.

CPUC connects Salinas Valley to Silicon Valley with fast, cheap fiber

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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.

Online ride sharing companies adapting to Californian rules

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If Lyft’s customers were this happy before there were rules, just think how they must feel now.

California’s pioneering attempt to regulate online ride sharing services such as Lyft and Uber seems to be going as smoothly anyone could expect. The California Public Utilities Commission was briefed this morning on progress made since it adopted rules setting safety, training, insurance and other operational standards for transportation network companies, as it now calls them, including…

Obtain a permit from the [CPUC]…require criminal background checks for each driver, establish a driver training program, implement a zero-tolerance policy on drugs and alcohol, and require insurance coverage.

Five companies applied for permits, including Rasier, which is Uber’s California arm, Lyft, Wingz (formerly Tickengo), Sidecar and Summon (formerly InstantCab). Only Summon has made it though the process, with the other four still smoothing out rough spots in their applications.

As might be expected from entrepreneurial start ups, all five had innovative interpretations of what the regulations actually require. None proposed using traditional state-certified driving schools for their training programs, instead relying on various mixtures of online training and in person coaching. The CPUC hasn’t fully blessed those approaches – it kicked back Rasier’s original plan to just give drivers a list of schools – and plans to evaluate actual results in the fall.

Originally, these app-enabled companies tried to fly under the regulatory radar by claiming to only be connecting willing private individuals who were looking for casual rides. But as the businesses became more sophisticated it was increasingly difficult to maintain that position in the face of bitter opposition from taxi companies that were accustomed to leveraging local licensing rules to restrict competition and keep prices artificially high. After some initial skirmishing, including fines and cease and desist orders, the CPUC developed and approved the new rules last September.

In other actions, the CPUC delayed voting on three broadband projects proposed for subsidies from the California Advanced Services Fund. The contentious Cressman proposal submitted by Ponderosa Telephone Company was bumped to April to comply with public notice laws and the two Surfnet projects were delayed two weeks, so they can be taken up at the same time as the related Sunesys project.

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

Two last mile projects line up for California coastal fiber proposal

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The first two – of what is hoped to be many – last mile projects that rely on a proposed middle mile link from Santa Cruz to Soledad are now in front of the California Public Utilities Commission. Draft resolutions were published today that set the stage for the approval of a total of $343,000 in grants and loans from the California Advanced Services Fund (CASF) to partially pay for building the infrastructure needed to deliver 100 Mbps broadband service to homes in two underserved communities in northern Monterey County, at the mouth of the Salinas Valley.

One would bring fiber to a compact group of 120 homes in the Monterey Dunes community, then feed them by upgrading existing copper wires to fast ethernet standards. The other would leverage construction work along an underserved stretch of the proposed middle route to bring fiber-to-the-home service to almost 300 homes in the Paradise Road area. Both projects were proposed by Surfnet Communications, an independent Internet service provider currently operating in the Santa Cruz mountains.

The 91-mile middle mile fiber network proposed by Sunesys LLC is the key to turning these plans into reality. By offering inexpensive and reliable backhaul, it makes Surfnet’s business models feasible. The Sunesys project, though, depends on the CPUC raising the current CASF subsidy limit to pay for $11 million (83%) of its $13.3 million cost.

All three projects are scheduled for a vote on 13 March 2014. The CPUC is accepting comments, pro and con, of course. Those are due on 3 March 2014.

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

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.