California Public Utilities commission hears opposition, support for sale of Bright Fiber to Race Communications | TheUnion.com

California Public Utilities commission hears opposition, support for sale of Bright Fiber to Race Communications

An advice letter filed with the California Public Utilities Commissions as part of a pending sale of Bright Fiber to Race Communications has spurred area residents to voice opposition and support over the announced acquisition.

Nineteen letters were received and released by the commission. Those include 10 voicing outright opposition, with the remaining letters either supporting the sale or requesting more time for further review.

Race Communications has said it's hoping for the sale to occur at the end of this month, pending approval. Commission staff is reviewing the advice letter, said Christopher Chow, a public information officer with the utilities board. On Friday, Chow said he could not confirm the status of that review.

John Paul, CEO of Spiral Internet/Bright Fiber in December 2015 was awarded almost $17 million in state funds for the gigabit high-speed network. A resolution awarding the grant states that the network's fiber optics would rest primarily underground.

Among those who wrote to the commission was Michael Anderson, former chief technical officer on the Bright Fiber Network project and owner of ClientWorks. Anderson, who said he ended all association with Bright Fiber in December, wrote that he was not protesting the acquisition by Race Communications.

"I welcome Race Communications to the Nevada County community and will do everything I can to help them make their project successful," he wrote. But, he wrote, a lack of notice and number of concerns raised in the advice letter means the protest "timeframe is wholly inadequate."

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"The advice letter claims that Race Communications will 'fully comply with all the requirements of the CASF grant award' to build the network as described," Anderson wrote, " … and yet they are also planning to make substantial changes to the construction type and fiber technology, putting the fiber on poles instead of going underground …"

That change in construction was among the most-repeated concerns by those writing to the commission, saying the move from underground to aerial delivery is significant enough to warrant further review.

Anderson and other respondents said the only notice they received of the sale, and apparent changes to the project, was through coverage in The Union. The advice letter filed on June 20, initiated a 20-day comment period. But, respondents noted, that because — as the advice letter states — "(Bright Fiber) has no voice customers at present, there is no customer base to transfer or notify."

The Union first reported the planned sale on June 29, and the filing of the advice letter on July 6, which left four days until the July 10 deadline for public comment. No other public outreach was required, the advice letter states.

CUSTOMERS, OR NOT?

Though Spiral Internet CEO John Paul stated on multiple occasions that the Bright Fiber project had secured $12 million in private investment to get the project started, earlier this month he said it was the loss of an investor that kept his company from breaking ground.

High interest in the project was evident in the number of prospective customers number who signed up, he said. Though he declined to say how many people have signed up to date, he told The Union in September 2017 that the company's "Neighborhood Champions" program had helped sign up 20 percent (about 580 of 2,900 homes) of the households in the first phase of the project.

Those who signed up paid $119, the cost of the first month's bill, which would total nearly $70,000 in deposits. Some respondents to the advice letter said it was unclear where that funding would reside, as terms of the sale would mean Bright Fiber would transfer its internet service provider business to a "spin-off" affiliate.

"The assertion that Bright Fiber Network has no customers and therefore does not need any more public notice than the three days required for the CPUC filing is itself questionable," wrote David Adams of Penn Valley. "In fact, an unrevealed large number of would-be customers in Nevada County have already paid Bright Fiber the cost of their first month's bill for this service … A seeming large proportion of those would-be customers who have heard of this sale and the changes Race wants to make … are unhappy with these proposed changes and are wondering what happened to the funds they paid in over the last several years.

"At the very least more public notice and a longer period of commentary should be allowed to inform the people of Nevada County and allow them to participate in the deliberations on this proposed change."

SHOW OF SUPPORT

"As a potential subscriber who has made the $119 deposit in anticipation of receiving gigabit … service, I am fully in support of Race Communications, with a proven track record of providing internet access in areas such as ours, taking over the grant and project," wrote Grass Valley resident David White, who requested more time to review what's being proposed with the sale.

Nevada County Supervisor Heidi Hall and Alison Lehman, who will take over as county CEO later this year, were also among those expressing support of the sale to Race through letters. At their request, letters from Hall and Lehman, and Sierra Business Council Vice President Kristin York, were included among those forwarded for review despite being filed two days after the July 10 comment period deadline.

"My constituents are seriously impacted by the severe lack of broadband access and would benefit from the ability of Race Communications, Inc. to provide fast and reliable internet access," Hall wrote.

Lehman said the rural county area is in dire need of better internet access, which would have a positive impact on economic development.

"The delays in the project due to existing provider challenges and the difficulty in raising the private matching investment funds by Spiral Internet has been frustrating and detrimental to our community's economic development," Lehman wrote. "I was pleased, earlier this year, to hear that this local company was considering offers from existing telecommunications providers to move the Bright Fiber Network Project forward."

ANTI-COMPETITIVE, discriminatory?

Among those opposed were letters from ColfaxNet and SmarterBroadband, fixed wireless internet service providers that operate in the area.

"This proposed stock purchase agreement is specifically anti-competitive and discriminatory due to the enormous government contribution of $16.7 million that was given to our competitor creating a government-sponsored monopoly that will compete with us in our already-served areas in direct contradiction to the spirit of the CASF fund," wrote Lynele Juchau of ColfaxNet. "The grant is a public asset and should not 'sold' to anyone (especially for an individual's profit) without the same scrutiny that the original application endured."

Stephen Coran and David Keir of Lerman Senter, a communications and media law firm based in Washington D.C., wrote on behalf of ColfaxNet and SmarterBroadband. They suggest the CPUC suspend the advice letter and rescind the grant, or at least request additional information by requiring Race Communications to re-apply for the CASF grant funding.

"The Advice Letter fails to demonstrate that allowing the transaction to be consummated would be reasonable in light of omission of material facts underlying the grant, the material change in the network architecture, the expansion of other fixed broadband networks into the funded service area and material changes to Caliofornia (sic) law regarding CASF grants," they wrote.

Letters to CPUC: Bright Fiber/Race Communications by The Union on Scribd

OUTRIGHT OPPOSITION

Of the 10 letters that outlined clear opposition of the project, and requesting it to be denied, seven appeared to be either paraphrased or copied verbatim from a single source.

Those letters, which include a submission from Nevada City City Council Member Reinette Senum, took issue with the shift from underground fiber-optic network to one that includes both underground and aerial delivery. Those letters also voiced concern over increased fire danger with "overburdened power poles," local control over public right of ways, "$400 billion" already paid by ratepayers to the telecommunications industry and what they consider "bait-and-switch maneuvers" with the change in construction noted in the advice letter.

"The CPUC must also understand this is financially discriminatory for the people who have paid once, twice perhaps and now will pay again for an inferior and dangerous new infrastructure design (wireless on poles)," Senum wrote. "Do they know they have already paid for this service through their ratepayer fees and U.S. subsidies?"

"A great number of Bright Fiber customers (let's call them what they are) are very unhappy regarding Race's intention to install primarily above-ground "aerial delivery on existing poles in existing rights-of-ways" and are wondering what happened to the funds they paid over the course of the last few years."

There is no mention of wireless technology as part of the planned network project in the resolution awarding the $16.2 million grant to Bright Fiber or the advice letter filed last month on the acquisition by Race Communications. However some letter writers said they were confused by the term "aerial delivery" in the advice letter, and were unsure if that meant wireless technology.

Among the letters protesting the sale, seven concluded with the same, or a slight variation of, final paragraph.

"If Race wants to purchase Bright Fiber and continue to install an all-underground system, that would be beneficial. But the Commission and regulatory counsel should not simply help Race cut corners on costs. Allowing a sale from Bright Fiber to Race may enrich a company that publicly states wireless is quicker and cheaper for them, but it does not serve the best interests the public."

Contact Editor Brian Hamilton at bhamilton@theunion.com or 530-477-4249.