The California Emerging Technology Fund (CETF) has funded several regional broadband consortia in northern and central California. At its third annual Rural Connections workshop in Redding this week, representatives from six groups presented the results of their work over the past couple of years. Two, covering California's Gold Country and Redwood Coast, stood out as having made genuine progress toward bringing Silicon Valley-grade Internet service to areas that are otherwise off the broadband map.


 Gold Country Connect provides prospective investors
 with broadband planning toolsBrent Smith, CEO of Sierra Economic Development Corporation, and Connie Stewart from Humboldt State University had success stories to tell. Three key lessons stood out:

1. Seek out motivated investors, including competitive local exchange carriers and independent Internet service providers, and find ways to improve their business cases and nudge them towards your goals. Don't waste everyone's time trying to bribe or bully them into accepting your plans or implementing your programs. A patchwork of operating networks beats a pristine concept with no takers, every time.

2. Do your homework and make sure it's A-grade. Simple, quantitative market research that identifies market gaps and charts statistically valid demand at defined price points is pure gold to private sector investments analysts. A centralized broadband mapping project with service provider buy-in, like that run by Chico State University, puts the cards face up on the table and lets everyone get down to business without posturing and poor mouthing.

3. Subsidies help, but don't necessarily need to be large. A guaranteed loan, a little local capital, even a tax break can tip the balance for a potential private sector broadband investor. When bigger subsidies are needed, the lion's share of the risk can still fall on private investors. The California Advanced Services Fund will do a 40% match against private capital in underserved areas, and that's been enough for hundreds of kilometers of fiber.

Unified community support is important, and creates a level of comfort that the project can be implemented. Leadership is needed to gain rights of way, permits and variances, and overcome bureaucratic inertia. Business analysts are more impressed by political muscle and professional, statistically valid research than they are by crayon drawings from a third grade class.

Real progress in other CETF-sponsored consortia has been hampered by a focus on community feel-good exercises and unworldly research. Evidently, Chico State's mapping expertise is not matched by its economics department: someone there seems to think you can do a demand aggregation study without asking tiresome questions about price elasticity. The good thing about this kind of conference is that public sector decision makers get to see what works and what doesn't, and can respond appropriately.

The last item on the conference agenda was the decision to come back for a fourth year. Expect to see a longer list of success stories.

The California Public Utilities Commission (CPUC) unanimously approved a $4,975,009 grant from the California Advanced Services Fund (CASF) to the Central Coast Broadband Consortium (CCBC) on Friday, 20 November 2009. The grant pays for 10% of the approximately $50 million fiber optic trunk line network planned for Santa Cruz, Monterey and San Benito counties on California's central coast.

CCBC system map
CCBC's CASF and associated federal stimulus grant applications are managed by Tellus Venture Associates, which also does the financial planning and budgeting for the project. In August, the CCBC submitted a proposal for a $40 million grant to the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program (BTOP) and the Rural Utility Service's (RUS) Broadband Initiatives Program. The remaining $5 million has already been committed by consortium members.

CPUC's approval follows endorsements by California Governor Arnold Schwarzenegger and congressman Sam Farr, who represents the three county region. NTIA and RUS are reviewing the grant proposal, with a decision expected next month.

The project would create a 428 mile fiber optic backbone linking unserved and underserved areas to better served communities, and connecting the entire region to Tier 1 Internet facilities in Silicon Valley. Using a loop architecture, any point on the network would have two independent paths to any other point, and to the Internet.

Current plans are for the system to be operated by a cooperative, which will offer access on a wholesale basis to last-mile Internet service providers and major institutional customers.

California Governor Arnold Schwarzenegger and California Public Utilities Commission (CPUC) staff have signed off on a 428 mile fiber optic trunk project for Santa Cruz, Monterey and San Benito counties on California's Central Coast. These approvals make it more likely that the project will receive federal stimulus money through the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program (BTOP).

The Central Coast Broadband Consortium (CCBC) applied for grants to the CPUC's California Advanced Services Fund and BTOP in August. In round numbers, CCBC asked for $40 million from NTIA and $5 million from the CPUC, with the remaining $5 million coming from local agencies and organizations.

BTOP grants only fund 80% of proposed projects. A special law passed by the California legislature in August allows the CPUC to contribute 10%, if proposals also meet state funding requirements for unserved and underserved areas. CPUC staff reviewed the CCBC proposal, determining that it is a qualified and viable project and recommending that the commission approve it at its next meeting on 20 November 2009. Matching funds for other California broadband stimulus projects will also be considered then.

NTIA sent all 176 California requests to the governor's office for review. The governor endorsed 64, of which 30 were for broadband infrastructure projects (the remainder were public computer center and "sustainable broadband adoption" proposals). The next step is for NTIA to determine if the CCBC application meets its initial screening criteria and is eligible to move to the second, more intensive due diligence stage of review. That decision is expected within the next couple of weeks.

Tellus Venture Associates did the financial planning for the CCBC project, creating plans and budgets for the construction and operational phases, preparing the required financial documents for NTIA and the CPUC and developing sources for matching requirements and other funding needs. Tellus Venture Associates also managed the application process for the CCBC, identified and documented eligible service areas and, along with the City of Watsonville, Blue Pacific Computer, the Monterey County Business Council and other CCBC members, did the necessary economic and demographic analysis to support the application.

California State University, Monterey Bay was the lead agency for the application, filing it on behalf of the CCBC. CSUMB's Wireless Education and Technology Center is the host organization for the CCBC, playing the central role in creating, organizing and shepherding this community based initiative.

The California Public Utilities Commission (CPUC) put on a great show in San Francisco on Friday. Hosted by Commissioner Rachelle Chong, and featuring State of California CIO Teri Takai, Susan Walters from the California Emerging Technology Fund (CETF), and several very well prepared staffers, the workshop covered the essential details you need to know in order to apply for NTIA's BTOP (Broadband Technology Opportunities Program) grants or RUS's BIP (Broadband Initiatives Program) money, and to have a hope of getting matching funds from either CPUC via the California Advanced Services Fund (CASF) or CETF.

The presentations and audience questions shed some light – sometimes intentionally, sometimes not – on what's going on behind the scenes as the mad scramble to file applications by the 14 August 2009 deadline continues. The presentations, handouts and other items of interest are posted on my website.

Here's how I see it...

BIP Loans and Grants
The Rural Utilities Service is out in front by furlong, before they've even hit the first turn. RUS has more than 70 years of experience milking Washington on behalf of its clients and it shows. It's going nearly all in on this round, offering $2.4 billion now and leaving only $300 million for future rounds. That way, the rural carriers it supports can come back for NTIA money in the second and third rounds. And its written its rules to favor the good old boys. Existing recipients of RUS pork get explicit priority for funding, and the grantmaking criteria – which look impenetrable to the uninitiated – are as familiar as a dead armadillo to those in the know.

BTOP Broadband Infrastructure Grants
If you're a regional telephone company, you live and breath the detailed documentation required to submit an application. Broadband availability and subscribership levels down to the census block level? No problem, we have a junior analyst keeping our database warm just in case someone asks. Plans certified by a professional engineer? Financials done to GAAP standards? Long list of people we won't fire, I'm sorry, of jobs created or preserved? No worries, it's already posted on our web site. And so it goes.

For well prepared community broadband proposals – projects that are well along the pipeline – there's a glimmer of hope. Everyone else, get in line and expect to stay there, even if you've kept your project under the $1 million threshold because you thought it meant an easier ride. $1.2 billion is on the table this round. Here's how I see the applications shaking out:

• Rock solid proposals, written almost as if they knew in advance what the questions would be: 500 to 1,000, mostly incumbent telcos and big MSOs (okay, in innovative coalitions and public/private partnerships with blah blah blah).
• Arguably complete applications that might or might not withstand several rounds of reviews, including a 30 day challenge period when the telcos can rip them to shreds: maybe 2,000 applications, covering a mixed bag of CLECs, cable companies, cities, middle mile providers and eternally optimistic entrepreneurs.
• Hail Mary requests for $999,000 written by the summer intern: 5,000 requests from middle managers who want the boss to think they did it by working through lunch hour. Caveat: this estimate is subject to revision. There might not be 5,000 middle managers still employed in America.

Infrastructure projects funded: 100 to 150, mostly to the big telcos, with some small fry included to make it look like the fix wasn't in.

BTOP Public Computer Center Grants
Every school, community college, local government, Boys and Girls Club and Elks Lodge with a grant writer will apply for this one. Expect 10,000 or more applications for the $50 million available, with maybe 500 awarded. The bulk of the money will go towards program costs, not hardware, which means something like 1,000 jobs funded for a year or less.

BTOP Sustainable Broadband Adoption Grants
Huh? Oh, you mean you didn't know we're giving priority to projects that are allied with larger ARRA-funded stimulations? Sorry about that, but if you've scored a big health services or education grant, be sure to stop by the BTOP desk on the way out to pick up a few million for a telemedicine or distance learning add-on, after all we have $150 million that's shovel ready this round. Everyone else, well, thanks for sending in those 20,000 applications, and we apologize for not explaining what sustainable broadband adoption means. We figured it would be really funny to just let everyone guess.

Don't forget to reapply in round 2!