Two big projects awarded construction subsidies by CPUC

by Steve Blum • , , , , ,

Meeting in Redding yesterday, the California Public Utilities Commission approved requests for a total of $19 million in grants from the California Advanced Services Fund for two projects, one on the far northern coast and the other in the Tehachapi mountains of southern California.

Race Telecommunications received $12.6 million to build a fiber-to-the-home system in the Tehachapi pass area of Kern County. The Karuk and Yurok tribes received $6.6 million for a combination middle and last mile project in Humboldt County.

CASF applications and approved projects, as of 17 October 2013.

The Tehachapi project is the first FTTH build in the current round of CASF proposals to get funded. Ten of the thirty-two subsidy requests were for FTTH projects and, for the most part, were met with vigorous opposition from incumbents, particularly cable companies. Charter Communications used the delay created by the months-long CASF review process to upgrade its networks in California City and Mojave, scuppering two other Race FTTH proposals, and Comcast did the same to an FTTH build submitted by Surfnet Communications in the mountains of Santa Cruz County.

The resolution approving the Karuk application contained conditions that could set a precedent for future CASF-subsidised middle mile projects…

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.

Dark fiber is an essential ingredient for building competitive last mile networks. Not surprisingly, incumbents are reluctant to sell dark fiber to anyone, preferring to meter out costly – and highly profitable – managed bandwidth service. Where dark fiber is available, from a city like Palo Alto or a subsidised private system like Digital 395, the cost of Internet bandwidth drops, availability jumps and the local economy gets a boost. If the CPUC follows through with this precedent, those benefits will be available to even more Californians.

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.