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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 When the DIVCA took effect, state law for these types of service providers superseded city and county laws that had previously managed these franchises.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.

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.”