The city of Santa Cruz seemed well on their way to a productive partnership with Cruzio as the two entities hammered out an agreement for a Fiber-to-the-Home (FTTH) citywide open access network. We recently learned that both parties have stepped back from the partnership, leaving the multimillion-dollar vision in a dark limbo.

The Plan

The $45 million infrastructure was to be owned by the city of Santa Cruz and Cruzio would operate it while also offering high-quality Internet access to the community. For the first ten years, Cruzio was to have an exclusive contract after which the network would become open access. There are approximately 62,000 people living in the community situated near Silicon Valley and this project was one of the larger public-private partnerships (P3).

In July, Cruzio announced that it would begin deploying fiber in one of the city’s downtown neighborhoods by Thanksgiving, ahead of any agreement to use city-owned fiber. The deployment will bring FTTH to approximately 1,000 homes; Cruzio’s plan is self-funded.

Now What?

There is nothing that prevents the two parties from picking up where they left off and reaching an agreement some time in the future, but they would need to rebuild trust. Sadly, they lost over a year as the two parties negotiated while residents and businesses across the city happily anticipated better Internet access.

These events remind us that P3s are fragile unions that are the apex of many interlocking pieces. Like a house of cards, when one segment falls, the entire structure can come tumbling down. As more local communities consider P3s to bring high-quality Internet access to residents, businesses, and local government, they need to stay realistic, consider the long term, and keep risk in their sights.

The city of Davis, California, recently released a Request for Proposals (RFP) for a citywide fiber-optic feasibility study report. The community wants to consider the options for a Fiber-to-the-Home (FTTH) network. Responses are due October 31.

The scope of the work includes:

The study should provide an analysis of options for engineering, constructing, provisioning and operating a high speed citywide FTTP network. It should feature both physical and network transport layer components required to pass and potentially connect every home, business, apartment complex, and institutional building within the City of Davis. The analysis should also consider future use at strategic infill and edge points around the City in order to support network growth through the coming decades. 

Davis wants firms to consider public private partnerships, the city’s network as an open access infrastructure, and Davis is only an infrastructure provider.

In early 2015, a group of citizens formed DavisGIG to encourage community leaders to move forward by establishing a Broadband Advisory Task Force and the feasibility study. In March, Davis established a task force to examine the possibility of deploying a network to serve municipal facilities, community anchor institutions, businesses, and residents. Incumbents Comcast, AT&T, Omsoft, and non-profit Davis Community Network offer a wide range of services now and there is little consistency for the city’s 68,000 residents.

The University of California Davis (UCD) is a major employer, as is the State of California. According to the RFP, there is a growing entrepreneurial culture springing up in Davis due to the presence of UCD’s research environment. The community wants to feed that growth with a citywide, future-proof, FTTH network.

Important due dates:

• Notice of Intent to Respond:  Thursday Sept. 22, 2016
• RFP respondent questions due: Thursday Sept. 29, 2016
• Answers to questions distributed: Friday Oct. 14, 2016
• Proposals Due: Monday Oct. 31, 2016 at 3:00 p.m. PT

Send questions to Diane Parro, Chief Innovation Officer: clerkweb(at)cityofdavis.org.

Culver City officially broke ground on its new municipal fiber-optic network in August and expects to finish the project within one year. The beginning of construction marked the realization of a process that started some time ago in “The Heart of Screenland.”

Enter Culver Connect

Culver Connect will integrate existing publicly owned fiber to improve connectivity for municipal facilities, the Culver City Unified School District, and local businesses. The design for Culver Connect includes three rings and will add 21 miles to ensure redundancy and expand the footprint of the existing network.

The open access network will connect with carrier hotel One Wilshire and a hub in El Segundo. In addition to improving capacity and spurring economic development, Culver City community leaders want to encourage competition by lowering the cost of entry for Internet Service Providers (ISPs).

In 2013, the city hired a firm to draft a fiber network design and business plan framework. Soon after, members of the business community and leaders in education spoke out in the media, encouraging elected officials to take steps to improve Culver City’s connectivity. In November 2015 the City Council established a Municipal Fiber Network Enterprise Fund to be used for construction costs.

Staff estimated that the capital costs of the network backbone would be approximately $4.9 million and initial lateral builds would be another $2 million. Staff determined operating and maintenance costs would be $150,000 per month and projected revenues from leases after three to four years of operations at around $7.1 million in total. They also estimated that revenues will cover the cost of operation and equipment depreciation once the network is fully operational. The city hopes to lease to ISPs to offer choice to local businesses.

Vallejo’s Fiber Optic Advisory Group (FOAG) and the city manager are in the middle of developing the details of a citywide fiber-optic network master plan. As part of the process, the city recently released a Request for Proposals (RFP) for a dark fiber connection to an Internet Point of Presence (POP). The RFP also includes calls for wholesale Internet services. Responses to the RFP are due on October 7.

Intelligent Integration

As we reported in 2015, the community already has a significant amount of publicly owned fiber in place controlling the city’s Intelligent Transportation System (ITS). Vallejo also owns a considerable amount of conduit that can be integrated into any fiber network. As part of the master plan the city adopted in February, they intend to build off that infrastructure and offer better connectivity to businesses, community anchor institutions, and municipal facilities. Vallejo is considering a municipal utility, operating as an Internet Service Provider (ISP), or engaging in some form of public private partnership. They are still considering which route is best for the community.

More specifically, this RFP asks for proposals for either leased fiber or those installed and to be owned by the city. The connection will link City Hall with a carrier hotel or a POP managed by a third party so Vallejo can obtain wholesale bandwidth and Internet services. For questions, contact Will Morat in the Office of the City Manager: will.morat(at)cityofvallejo.net.

Legislation improving rural Internet access and reducing telecommunications outages is headed to the Governor’s office after unanimously passing in the California State Assembly and Senate. AB 1549 creates a comprehensive statewide map of all conduit and fiber cables in California and requires new conduit to be laid during public works projects. 

“We need better connectivity in our rural communities, bottom line,” said California Assembly Member James Wood, who introduced the legislation, in a June press release.

“In past decades the public sector invested heavily to deliver copper telephone lines and electricity across the country. This is a drop in the bucket compared to those investments, but it will make a world of difference for our communities in this 21st Century economy.”

Improving Service, Lowering Prices

Internet Service Providers (ISPs) have cited the cost of laying fiber cable and conduit as a major deterrent for investing in infrastructure, especially in rural communities. That cost is mostly incurred when companies have to dig into the ground. AB 1549 helps ISPs lower these costs by mandating that CalTrans, the state’s department of transportation, notify ISPs when it is opening a trench that could house conduit. If no ISPs are interested in installing conduit at that time, CalTrans is required to install it for future use.  

A number of  local communities have similar “dig once” policies, which lower costs, but the bill is the first statewide effort in California. Santa Monica, which implemented smart dig once policies and has since deployed fiber across the community, has had a 90 percent reduction in the cost of laying fiber by coordinating fiber and conduit installation with other capital projects.

Decreasing Outages, Preventing Losses

South of California’s Bay Area with its buzzing tech startups and expensive housing, Santa Cruz County has been overlooked by the big Internet Service Providers (ISPs). The city of Santa Cruz had less than stellar connectivity, and the rest of Santa Cruz County was no better. That’s when county leaders decided to rewrite the rules.

Throughout 2014 and early 2015, the Board of Supervisors for Santa Cruz County developed a broadband master plan, created a “dig once” policy, and streamlined the regulatory permit process. Cutting down red tape at the county level encouraged both small and large ISPs to reconsider investing in Santa Cruz.

Streamlining To Increase Competition

Although large ISPs have enough money and personnel to focus exclusively on permit acquisition, smaller ISPs must find a way to contend with the permitting process with limited resources. Santa Cruz County's new policies and processes enable all ISPs interested in Santa Cruz County to compete on better terms. Under these new rules, ISPs have a more equal playing field.

The policies reduce the amount of time spent on the regulatory process for ISPs building fiber networks. A master lease agreement simplifies the procedure to use county assets for networks. Modified ordinances enable ISPs to easily install or upgrade infrastructure in the county’s right-of-way. (Right-of-way is public land managed for the public good, especially boulevards and medians along roadways.)

We spoke with Santa Cruz County Board Supervisor Zach Friend about the impact of these policies and the Santa Cruz County master broadband plan. He credited the new policies for encouraging providers to offer better services. (Cruzio is building a fiber network in the city of Santa Cruz, and Comcast decided to increase speeds without raising prices in Santa Cruz county.) Supervisor Friend also emphasized that the public discussions brought attention to the need for improved Internet access in the community.

Santa Clarita, a community of 220,000 in Los Angeles County, California, recently signed a dark fiber lease agreement with Southern Californian telecommunications provider Wilcon. The city hopes to improve high-speed Internet access for local businesses; this ten-year contract allows Wilcon to provide services via publicly owned fiber-optic cable originally buried for traffic controls. 

The New Agreement

From the City Council’s June 28th agenda, the new agreement includes the following:

• Initial anticipated annual revenues of $72,256 based on $840 per year per fiber mile.
• Annual fiber lease rate adjustment based on [Consumer Price Index] (CPI) for the Los Angeles area.
• Initial anticipated lease of 86.02 total fiber miles.
• City maintains control and ownership of all fiber at all times.
• Lease of dark fiber is not exclusive to Wilcon.
• City may opt out of the contract without cause after ten (10) years.

Santa Clarita and Wilcon can extend their agreement on identical terms for three consecutive periods of five years following the original ten-year term, leading to a potential contract length of twenty-five years. 

Using Existing Assets To Promote Business Connectivity

The third largest city in Los Angeles County is home to the Six Flags Magic Mountain amusement park, a handful of aerospace engineering firms, several medical equipment manufacturers, and a strong business community. Yet, local industry groups like Santa Clarita Business Journal (SCBJ) identified unaffordable Internet access as a major barrier for local businesses, as highlighted by its May 2015 publication. 

The City Council recently published its 2020 Goals, which include two Internet-specific objectives:

The city of Grover Beach, California, recently finalized a 10-year agreement with Digital West, Inc., to bring gigabit speed fiber to local businesses. The coastal town in San Luis Obispo (SLO) County wants to attract tech companies like those making waves in Silicon Valley and the "Silicon Beach" in Los Angeles. 

Terms of Agreement

The agreement specifies that Grover Beach will maintain ownership of the conduit system and lease Digital West conduit access at an annual rate of 5.1 percent of total fiber revenue. Digital West will build, own, and maintain the fiber-optic network, several lines of which will be leased to the city for public administrative use. Upon approval from both parties, the 10-year agreement can be renewed in 5-year increments.

A May 2016 Grover City staff report provided an optimistic forecast from Digital West:

The forecasted revenue amount speculated by Digital West Network, Inc. for the City is estimated to grow from a first year projection of $4,437 to $112,302 in year 10, for a total over the 10 years of $602,285. This amount is much higher than the originally predicted 10 year projection of $32,038 per year represented by Digital West Network, Inc. in 2014. The increase projections are due to the fact that they plan to add the residential market to our options which is projected to fall under the lease agreement. This brings greater benefit to the community, as well as more revenue commission to the City. 

We outlined the network’s projected costs in a story last year.

Fiber Surfin’ USA

The Central Californian coastal city hopes its unique location near a trans-Pacific cable landing station will attract scores of investment and cause the moniker “Silicon Dunes” to stick. Pacific Crossing’s undersea cable is part of a four point fiber ring connecting the Japanese cities of Shima and Ajigaura with Harbour Pointe, Washington, and Grover Beach.

As the city of Santa Cruz and local Internet service provider Cruzio bring their negotiations to a close, the parties have been working diligently to dot all the i's and cross all the t's. Announced in June 2015, this public private partnership intends to build a multi-million dollar fiber network throughout the city.

[W]e’ve been locked away in our Santa Cruz Fiber Project underground bunker with our partners at the City, engaging in high-level cogitation, extreme fine-tuning and the general hashing out of every little detail of the project and the agreement.

Local news station KION covered the benefits of faster Internet service, especially for the small business community in Santa Cruz. The news station also includes a clip from a recent “City Hall to You” community meeting where people learned more about the network.

A Small Business Town

“It's absolutely critical. Without high-speed Internet activity here, we would be dead in the water,”

Explained Susan Pappas, the owner of True Olive Connection, a local olive oil store. She described how her business would fall apart without high-speed Internet access. Everything from printers to inventory would stop working.

At the “City Hall to You” meeting, Santa Cruz Economic Development Manager J. Guevara laid out the facts, emphasizing how Internet access is not just for tech startups. High-speed Internet access makes small businesses function and helps job-seekers find employment. Guevara told KION,

“Over 82 percent of the businesses in the city of Santa Cruz are 10 or fewer employees. This is a small business town and Internet is the infrastructure that makes it all possible.”

Infrastructure from Santa Cruz and Cruzio

The South Bay Workforce Investment Board (SBWIB) is now accepting submissions from firms interested in developing a Fiber Optic Master Plan for the organization. Interested organizations need to act quickly, however, as the submission deadline is tomorrow, June 1st, 2016, 5:00 p.m. (PST).

For details on the project budget, the scope of the work, timeline, and other important information, check out the Request for Proposals (RFP) from the SBWIB.

You can also contact Chris Cagle, Regional Affairs Manager, via email at ccagle(at)sbwib.org with questions.

The SBWIB is a non-profit organization working to provide employment and training programs through its four business and career centers. The organization serves the California communities of Carson, El Segundo, Gardena, Hawthorne, Hermosa Beach, Inglewood, Lawndale, Manhattan Beach,  Redondo Beach, Lomita and Torrance.