Trimmed Salinas Valley broadband project heads back to CPUC

Building jobs and a better economy.

A 91-mile fiber optic middle mile network reaching from Santa Cruz deep into the Salinas Valley is back on track, after discussions between the California Public Utilities Commission and Sunesys, LLC – the company applying for the project – led to a $388,000 cut in proposed grant funding.

A revised draft resolution, offered as an alternative by CPUC president Michael Peevey, was posted this afternoon and is scheduled to be considered by commissioners on Thursday. If approved, it would provide a subsidy of $10,640,000 from the California Advanced Services Fund (CASF), which represents 80% of the total project cost of $13.3 million. That’s more than the established limit of 60% to 70% funding, so commissioners would have to agree to an exception to the general rule, based on the significant social and economic impact the project would have in the Salinas Valley.

This latest draft also extends the time frame for guaranteed pricing on the system. Sunesys is a wholesale dark fiber company, which sells to retail Internet service providers as well as large institutional customers. In exchange for the higher subsidy, Sunesys said it would lease a pair of fiber strands along the entire length of the system to all comers for $1,550 per month and keep that price on the table for at least five years, three years more than the CPUC usually requires for CASF projects. According to the draft…

Sunesys has informed [CPUC] staff that it will honor its pricing commitment above for any contract, of any length, if it is signed during the initial five years. For example if in year four, a customer signs a 10 year contract; Sunesys will honor the above pricing through year 14.

Two Monterey County last mile projects – proposed by Surfnet Communications and reliant on the Sunesys middle mile fiber – are also on Thursday’s agenda, along with a proposal for a combo middle and last mile project in the Cressman area of Fresno County.

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.