Posted on 23 April 2012.
Posted on 30 March 2012.
County preps for Internet service providers
As bandwidth continues to be a hot commodity and service providers put a hold on new Internet accounts, the Eastern Sierra’s need for digital infrastructure is becoming desperate.
Rather than sit idly, the Mono County Board of Supervisors chose to busy itself on March 20 with its own digital infrastructure updates during a presentation from County staff. It was an effort to get organized so that once Digital 395 goes online and Internet service flows freely through the Eastside, the County is prepared for Internet service providers (ISP) that may want to jump on the bandwagon and provide last-mile service.
Digital 395, or D395, is the project building a new 583-mile fiber network that will mainly follow the U.S. 395. Conduit and cable placement construction is expected to start in April.
As it has often been described, Digital 395 will act as the “backbone” of Internet service running up and down the Eastern Sierra, allowing for faster broadband.
“Service providers are the nerves,” added Mono County Deputy Counsel, John-Carl Vallejo. These nerves connect D395 to people’s homes.
These service providers must be awarded a state franchise in order to provide services under AB 2987, the Digital Infrastructure and Video Competition Act of 2006 (DIVCA), Vallejo continued. When the DIVCA took effect, state law for these types of service providers superseded city and county laws that had previously managed these franchises. Cities and counties do, however, do still retain some decision-making authority.
Last year when Suddenlink acquired NPG, it was also awarded a state video franchise. The term video refers to cable television. At that time, the County received a letter from the state explaining that the franchise had been awarded and that the County should “determine what, if any actions it would take pursuant to the authority provided under the state video franchise statute.”
At its meeting on March 20, the Board heard from Vallejo on the actions that it can pursue when dealing with providers both in video and digital infrastructure. The discussion quickly focused on digital infrastructure and D395.
According to Vallejo, the County will be able to weigh in on fees, rights of way, public educational and government channels (PEG channels), and penalties for a franchise holders’ failure to adhere to cable provider requirements.
These decisions directly link to D395 because when it comes time for last mile providers to branch out from the D395 backbone, they will be crossing their cables over County land and rights of way. While the County will still be able to require these providers to go through the encroachment permitting process, it will not be allowed to have exclusive franchises anywhere in the County.
“All franchises need to be treated equally,” Vallejo explained.
Which is why the County is updating its code to reflect the DIVCA changes, and working to determine its fee and fine structures. In the end it should provide one clear set of rules for all service providers to adhere by.
Eastern Sierra Connect
Following Vallejo’s presentation, representatives of Eastern Sierra Connect introduced themselves to the Board. While not directly related to D395 or to the franchise discussion at hand, Eastern Sierra Connect is another player in the local quest for digital infrastructure.
Eastern Sierra Connect (ESC) is a project of the Desert Mountain Resource Conservation and Development Council. Its goal, according to its website, is to “evaluate existing broadband infrastructure and potential future through a demand aggregation project in Mono, Inyo and Eastern Kern counties.”
It is aimed at encouraging existing and potential providers to build local broadband for unserved and underserved Eastern Sierra communities.
ESC will be working to bring the last-mile providers to the table in order to help them access a large bucket of California Public Utilities Company (CPUC) money available for building infrastructure projects.
“We need to educate the public and the providers,” said ESC Committee Member Danna Stroud.
Grant funding is not reliant on D395, but according to Stroud that project “makes us more appealing to providers.”
Stroud described ESC’s work as a “positioning exercise.” She explained that providers applying for the CPUC funding don’t need projects that would be implemented right away, but need to get in the door, and in line.
“We need to make ourselves competitive with other consortiums throughout the state,” Stroud said. There are 13 other consortiums like ESC in California.
“Eastern Sierra Connect is doing what the County would end up having to do,” Vallejo explained.
“The County wants someone in place as an interim contact for broadband activity,” Stroud added.
ESC recently received a $450,000 grant from CPUC for its operational costs.
ESC requested that a member of County staff be appointed to its committee. Since it was not part of the agenda item, the appointment will be discussed again at the Tuesday, April 3 BOS meeting.
Vallejo plans to bring the code changes related to the state franchise agreements back before the Board in the near future.
Posted on 03 February 2012.
Yes, it’s true. Suddenlink and Verizon are not taking any new internet customers. As Suddenlink corporate spokesman Pete Abel said this week, “The bandwidth – or size of the circuits that connect that area to the larger Internet – is already at capacity, meaning we cannot add new customers without compromising the experience of current customers.”
“We’re all in the same boat,” he added. “It’s a limited highway and we can only put so many cars on it.”
While that will change with the imminent Digital 395 project – Geisel says it’s expected to break ground in April and be completed by next summer – for now, new customers are largely stuck having to buy Verizon wifi cards, which are not effective in some areas (Old Mammoth Road being one example).
Geisel spoke to Verizon corporate this week, which has also suspended any new Internet account service, including its FiOS brand bundled service package. Verizon’s FiOS fiber optic service packages High Definition TV, Internet and digital voice over Internet (VOIP) phone service. A call to Verizon’s Fiber Optic and Customer Service divisions confirmed that both cellular and landline phone service aren’t affected, but anything having to do with Internet service, via both copper wire and fiber optic delivery methods, is currently listed as not available.
Verizon service is fed to the Mammoth Lakes area via a fiber optic transmission line originating in Bishop, which contains roughly 12 strands of cable. The cable run between Bishop and Mammoth, according to various historical accounts, started off during the early 2000s. Crews compiled miscellaneous lengths of unused fiber cable that was spliced together, and coupled it to the phone lines that were already in existence up the grade.
About 80% of the way to completion, a fire near Tom’s Place in 2003 temporarily halted the progress, and at that point Verizon decided that with 80% of the cable already in place, it wouldn’t be cost effective to go back to the beginning and reinstall a one- or two-splice cable run.
The bandwidth problem seems to start there.
Technically speaking, research revealed that with fiber optic cable, every additional splice tends to diminish the cable’s performance, even if only slightly, and essentially leads to maxing out the cable’s bandwidth somewhat prematurely.
During the early 2000s, the cable was probably at or near state of the art quality, but has since aged 10 years. And at the time, many of the popular devices that are now commonplace and demand significant amounts of bandwidth, such as iPads and 4G smart phones, didn’t yet exist. Verizon’s Fiber Optic division stopped short of giving a definitive explanation, but indicated the reason could be simply that the existing fiber optic cable run is likely maxed out and doesn’t have the capacity to accommodate any new customers.
According to Jarryd Gonzales with Verizon Media Relations, the company is “working on expanding services to its customers” in this area, but it probably won’t be until the end of this year before new service might be available. Bishop, however, is unaffected and bandwidth is available there to handle new service orders.
That statement comes as no real surprise to Mono County District 2 Supervisor Hap Hazard. He pointed out that Verizon has been closely following the Crowley cell tower issue and Digital 395 Broadband Infrastructure project. Hazard commented that, based on his experience with both issues, it’s likely Verizon [and other providers] will opt to wait for access to D395, rather than upgrade the outdated, piecemeal cable run. “Their business model probably is to make a shift to last-mile provider status when D395 is up and running,” Hazard opined. “If I were Verizon, that would be the plan that makes the most sense.”
Posted on 13 May 2011.
Does saving money by shopping online still ultimately cost you in the end?
In small towns such as those that make up the Eastern Sierra, it’s quaint to promote shopping locally and feed the image of happy inhabitants supporting one another. In a tough economy, however, when people are trying to save a dime more than ever, it may not always be financially realistic.
In good times and in bad, shoppers often turn to the Internet for purchases, especially when those online retailers don’t charge sales tax. No sales tax, especially on large purchases, can lead to hundreds of dollars in savings. Online shopping, however, also leads to less money spent in local shops and less sales tax revenue in local and state coffers (which may or may not be a bad thing in your book). In the worst case scenario, those local shops close their doors. In another not so good scenario, the shops may remain, but local services are likely to be diminished and new community projects simply remain plans on a drawing board.
A piece of state legislation currently on the table hopes to give on-the-ground businesses a better chance at competing with Internet companies. AB 153, introduced by Assemblymember Nancy Skinner (D-Berkeley), would “close the current loophole in California tax law which has allowed out-of-state companies to avoid collecting California sales and use tax,” according to Skinner’s website. “Out-of-State online retailers designed their business model to avoid collecting sales tax. Out-of-state, online-only retailers cost state and local governments billions in lost tax revenue. That means that unpaid sales taxes from these retailers could help make sure we have teachers in the schools, cops on the streets and emergency personnel in firehouses.”
Currently, online companies such as Amazon do not have to collect state sales tax unless they have a nexus, or physical presence, in that state. The Supreme Court made this ruling in 1992 in what has become known as the Quill decision. Quill, an office equipment supplier, was challenged by the state of North Dakota to pay sales tax for the merchandise it was selling to residents within the state. The Supreme Court however, ruled that since Quill did not have a nexus in North Dakota, it would be unconstitutional to make the company pay sales tax to that state.
Now, however, politicians are arguing that affiliates count as a nexus. Affiliates are essentially salespeople for online companies. Someone who is running a website can put a link to a company like Amazon on their site and if a customer finds their way to Amazon through the affiliate’s site and makes a purchase then the affiliate receives a commission.
In states such as Illinois, where a law similar to AB 153 has already been passed, Amazon has simply ceased doing any business with affiliates there in order to skirt the issue. Colorado, New York, North Carolina and Rhode Island also impose some version of Internet sales tax, according to The Wall Street Journal.
With California currently drowning in $26 billion of debt, Skinner has pulled the idea of e-fairness out of the closet, dusted it off, and repositioned it as a way to save the day. Critics argue that even if the bill were passed, the amount of sales tax that would actually be collected would be a drop in the bucket at approximately $500 million per year. Then there’s the question of the negative consequence of California affiliates losing portions of their income, should Amazon and other big box stores opt to drop them in order to avoid a nexus.
Locally, however, some businesses are excited at the prospect of being able to compete with online sales.
“It would be a good thing,” said Dave Leonard, owner of the Booky Joint. “It would change consumer habits because they [Internet companies] couldn’t sell at a loss.”
Craig Hansen who owns and operates Mammoth Business Essentials, which not only sells office supplies but also serves as an alternative mail center in Mammoth Lakes, sees first hand the large amount of Internet shopping going on when packages are delivered for his patrons to pick up.
“There is a lot of Internet shopping and price is the biggest motivator,” Hansen said. “If they [consumers] had to pay sales tax it would make a difference.”
Or would it? One local, Dave Levy assessed that his shopping habits would only change “in the case that it affects the out of state purchase cost to the point where it was no longer the least expensive option.”
Another local consumer and business owner, Clayton Mendel, was torn between his positions of buyer and seller.
“I’m split on this,” Mendel said. “I don’t like it as it is another piece of unnecessary legislation. Currently individuals are supposed to be paying use tax on things they buy online from out of state. However, as a business owner in town, I like it, as it helps close the price gap between buying local versus ordering online. [The state] already makes me collect sales tax on firearms people order from out of state anyway. [Mendel is the owner of Eastern Sierra Armory].”
On a more political note, Mendel said he dismissed the notion that the state would be able to fix the budget through taxing people and businesses.
“All it ends up doing is driving people, businesses and revenue out of the state,” he explained. “Maybe they should look at cutting expenses. A good place to start would be with the full time legislature that we pay to come up with crap like this.”
Skinner’s website, however, promotes the notion that sales tax helps support towns. It goes toward infrastructure needs and wish lists of things communities would like to see built. In Mammoth Lakes specifically, shopping locally rather than online means more money for parks, trails and recreation since Measure R dollars are collected on sales tax.
“There is so much we want to do, but we can’t without tax,” Hansen said.
Big Brother and the Use Tax
Warning: If you’ve never heard of the Use Tax Law and don’t want to have to worry about reporting something else on your income taxes, stop reading now.
The California Use Tax Law has been in existence since 1935. It is meant to be a safety valve for the state when it doesn’t receive sales tax on a purchase, and to act as a stopgap to keep people from buying out of state in places where there is no sales tax (i.e. Delaware, New Hampshire, Montana, Oregon and Alaska). When you shop online at stores such as Amazon, you are supposed to report these purchases on your income tax return so that the state can collect Use Tax from you. Many people ignore this tax since often their online purchases do not add up to amounts that would be noticed by the state.
AB 153 would make businesses selling the product responsible for collecting the tax, which many people feel is the way it ought to be. The state, however, continues to grow more desperate to collect taxes and on a parallel track to AB 153 is looking at a Big Brother-type operation that would track online purchases to collect Use Tax.
According to a May 3 article at CBS Sacramento.com, the State Board of Equalization recently reviewed a controversial plan that would police online purchases.Under the BOE proposal, California would be authorized to spend up to $10 million to hire private vendors to track down what you purchase over the Internet. The controversial topic has been dubbed as a way for the state to hire “Internet Police” and another case of “Big Brother” looking over your shoulder.
One member of the BOE, George Runner, who was interviewed in the CBS article, didn’t think the proposal had any legs.
“One of the ideas is, ‘Well, we think there might be some people who will sell us data,’” Runner warned about the proposal. “That will tell us what kind of credit card transactions or private transactions that a Californian may have made in purchasing something out of state,” he said in the article.
Supporters of the proposal think it could generate up to $1.1 billion in uncollected taxes, but because of the controversial nature of the topic, the BOE has pulled the item from its calendar for now and asked for further study.
Posted on 05 November 2010.
Does 395 project threaten local mom-and-pops?
As Frank Herbert wrote in his Dune series, “Fear is the mind killer.”
The question in the minds of many local businessmen is whether or not they have something to fear from Praxis, the company spearheading the Digital 395 project, and Inyo Networks, an internet service provider affiliated with Praxis.
And whether that translates into a small business and jobs killer.
“If people are happy with their current service providers, then they will stay with them,” said Michael Ort, CEO of Praxis, the company spearheading the Digital 395 project that was recently awarded funding from the American Recovery and Reinvestment Act.
Ort was responding to concerns from local internet service providers in the Eastern Sierra regarding the impacts that Inyo Networks’ connection with the project will have on their own businesses.
Ort is also the President and CEO of Inyo Networks, an internet provider company that is also a partner in the California Broadband Cooperative, which will operate the Digital 395 network once it is completed.
“CBC was created so that no one owns the Digital 395 project,” Ort said. “The community will own the network because the community will be the members of the co-op.”
Digital 395 is a wholesale company, according to Ort. It won’t sell directly to businesses and residences, but it gives service providers the opportunity to tie into the project on an equal footing and provide broadband to the area at the most inexpensive rate, he said.
Aaron Schat, owner of internet service provider Schat.net, described the Digital 395 “middle mile” project like “a water pipe running through the center of the valley. The ‘last mile’ is the pipe that goes to your house.”
Digital 395 will lay the middle mile “pipe” or fiber. It will then be up to service providers like Schat.net and Inyo Networks to provide the last mile service.
“It’s cool to get faster internet, but is it cool to get it by robbing me?” Schat asked, representing some local fear that Inyo Networks will present unfair competition among service providers. “We’ve built up the area as best as we could and now we’re going to get wiped out,” Schat said, referring to the 16 years that Schat.net has been servicing the community.
Schat is under the impression that Inyo Networks received a $20 million grant that it will be able to use to offset the costs it will incur to hook into Digital 395. By using grant money, Inyo Networks would not have to be concerned with recouping these start-up fees and would be able to offer lower rates to customers than the other providers who would be paying for their connections out of their own pockets and would therefore need to recoup their fees and would not be able to lower their rates.
Ort said Schat’s fears are unfounded.
In regard to the $20 million grant award, Ort said the confusion was coming from the fact that there were two grants floating around with Inyo Networks’ name on them.
“The first grant was the Digital 395 grant,” Ort said. Knowing that the entire project would cost approximately $101 million, and that ARRA grants require matching funding, the proponents of the Digital 395 project went first to the California Public Utilities Commission (CPUC) and its California Advanced Services Fund, or CASF, grants to try to secure funding that would be brought to the table as the match when the project approached the feds.
“CASF requires a certificated company to apply for the match,” Ort explained. “The CBC had not been formed yet, so Inyo Networks acted as the certificated company,” which is why Inyo Networks’ name is on the request to CASF for just under $20 million ($19,294, 717).
CASF awarded the match, but it was contingent upon Digital 395 getting funded the remainder of the money by ARRA and the Broadband Technology Opportunities Program. That award, approximately $81 million, came in round two of the funding awards, which was announced in August of this year. These two grants, plus the 1 percent that the applicant provided, made up the $101 million needed for the Digital 395 project.
“Zero dollars are going to Inyo Networks from these grants,” Ort said.
The second grant from CASF with Inyo Networks’ name on it was one that the company had indeed applied for to go forward with projects of its own.
“If I remember correctly it was about $1.7 million that we applied for from the state,” Ort recalled (according to the resolution that The Sheet found on the CPUC’s website it was actually a bit more than $2.2 million). The CASF grant was approved with Resolution T-17229, but again, it was contingent on receiving funding from federal grants.
“We decided not to pursue the grant on the federal side because we thought it would be too confusing to people,” Ort said. Therefore, a second resolution, T-17272, was approved by the CPUC which rescinded the original resolution, effectively taking the money back since matching funding was not pursued.
“Digital 395 was not funded in the first round of [federal] awards,” Ort explained. “So we had to make a decision and we decided that Digital 395 was the most important thing, which is why we decided not to pursue the Inyo Networks’ projects. We left the money on the table in order to get Digital 395 over the hump.”
Inyo Networks had hoped to deploy broadband technologies to underserved communities in the Eastern Sierra.
“We weren’t going to do anything in Mammoth and Bishop because those areas were already being served,” Ort said. “We used maps that were provided by the CPUC and local providers such as Schat.net to find the underserved areas where bandwidth was not fast enough and we had wanted to provide last mile connections to these areas using WiMax, which is like WiFi but with bigger bandwidth.”
The plans, as mentioned, were ultimately scrapped in favor of solely pursuing the Digital 395 project, but Ort claimed the threat of new competition pushed some local providers like Lone Pine Television to improve the speed of their network.
“Having the possibility of another provider brought the price down and improved service,” Ort claimed.
Lastly, Ort responded to Schat’s critique that Verizon already has a cable running up and down the 395, so the Digital 395 project is a redundant effort.
“They [Verizon] do not have fibers running end-to-end, and they are 20 years old.”
“The Digital 395 funding is a great opportunity that will never come again,” Ort concluded. “The providers should move forward positively with this gift and make something happen with it. I challenge them to take the benefits and pass them on.”