Dozens of letters of support from Nicasio homeowners, school officials and business owners helped secure a nearly $1.5 million grant for the Nicasio Broadband Project last Thursday, according to the California Public Utilities Commission, which awarded the funds despite a budget shortfall for similar projects.
But the pressure is now on for Inyo Networks, the telecommunications company that must raise the remaining $994,052 of the project’s price tag within a year—or lose the grant. And in what commissioners called an “innovative” funding model that could be used for other broadband projects, Inyo proposed to secure matching funds by offering notes, which work like bonds, to Nicasio homeowners registered through the California Department of Business Oversight, with an interest rate of three percent per year.
Those notes “could be Marin’s biggest contribution to date toward the statewide broadband development initiative,” said Peter Pratt, a consultant hired by Marin County as a liaison with Inyo.
With construction slated to begin early next year, the project would bring up to one gigabyte of broadband to 216 homes in Nicasio, the Nicasio School, the volunteer fire department and the Marin County Department of Public Works corporation yard—with a potential increase of up to 10 gigabytes. The project involves building underground and aerial fiberoptic cable lines linked to a network leased by filmmaker George Lucas that runs in a loop from his properties to San Rafael.
Advocates have hailed it as the first step in bringing reliable, high-speed Internet to more homes in rural Marin, with Nicasio as the first link in a future fiberoptic chain branching up to Dillon Beach and down to Bolinas.
“This is the important first step in bringing true digital equity to rural West Marin,” Supervisor Steve Kinsey said. “We have a plan to aggressively move ahead to find financing and continued local support for other broadband in underserved and unserved communities along the coast. With Nicasio now underway, we can move ahead.”
The project was pitched to Inyo by the Nicasio Land Owner Association and the North Coast Broadband Consortium, which includes county governments in Marin, Sonoma, Napa and Mendocino Counties able to apply for commission grants. The consortium has identified 30 “priority areas” in need of broadband—including seven villages in West Marin.
With the Nicasio network in place, Mr. Pratt said the company and the county would move quickly toward securing more funds for projects to extend service throughout West Marin. Nicasio, he said, would act as an “anchor” for stringing Mr. Lucas’s fiber-optic network up and down the coast.
The project entails constructing a fiber-to-the-premises network to support voice, data and video services. New underground conduits would be constructed, and existing ducts managed by AT&T and the Zayo Group—which owns the fiber-optic strands Mr. Lucas leases—would also be used. Around two-dozen splice boxes would house fiber access points acting as terminals to feed from two to eight homes each.
Per the grant, Inyo has two years to complete the project, though the company has pledged to do so in just 11 months. Broadband users in Nicasio would pay $89.95 monthly for one gigabyte, with no network connection charge and $350 per service visit after signing up.
A public utilities commission staff report on the grant projected that the Internet project would have an 84-percent “take rate” in Nicasio, in line with Marin County’s 84-percent broadband adoption rate. Inyo must submit quarterly reports on its private fundraising progress. The project is the first commission grant recipient to utilize the note-offering model. Despite the uncertainties, most commissioners on Thursday viewed notes offerings as a way to prevent future project failures. If successful, they said, the model could help further their goal of providing broadband access to all of California’s communities.
“I think it’s a worthwhile experiment,” Commissioner Mike Florio said. “If these notes work, I think it’s a great thing. If it doesn’t, we’ve learned something.”
But the commission’s president, Michael Picker, expressed doubt on Thursday about whether homeowners would buy enough notes to plug the nearly $1 million gap in the project’s funding—without which the grant would be rescinded. He pointed out that several projects had failed in the past because they did not procure private matching funds.
“That’s a pretty hefty cost,” said Commissioner Picker, who cast the commission’s lone “nay” vote. “It seems like they’d have to have a broader market to make this work.”
Concerns about the project’s funding prospects were raised in April after a state bill authored by Assemblyman Mark Stone, of Santa Cruz, to replenish the advanced-services fund—which is currently over-committed by around $20 million for similar projects—was scrapped. But the more-than 40 letters of support, along with Inyo’s experience with similar rural broadband projects, swayed the commission to take a risk, Mr. Pratt said.
“There was clearly an overwhelming level of support from Marin and the community,” he said. “And quite frankly, we moved ahead of some other applications…because Inyo really knows the ropes at [the commission].”