| CETF Final Report: Executive Summary |
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Background
Universal access to affordable broadband is a prerequisite for economic growth, job creation, education and healthcare opportunities. A serious concern in California is the growing geographically imposed Digital Divide as many rural communities in the state continue to lack access to affordable broadband infrastructure. Capital investment required to serve geographically dispersed communities exceeds the likely private market returns on the sale of broadband access. Information collected from the Central Sierra Connect (CSC) Regional Aggregation of Demand Study (AOD) will help remove this barrier by identifying opportunities for increased broadband development and adoption, and enabling the creation and development of new and advanced communications in the five-county region of Alpine, Amador, Calaveras, Mariposa and Tuolumne. High speed telecommunications services are essential to economic growth and can increase access to health care, education, job training, public safety, and other much-needed services. It is clear that broadband offers immense opportunities for social, economic and educational advancement. Residents in the region are eager and willing to take advantage of these opportunities. According to the Governor's Broadband Task Force service availability maps, approximately 60% of residents in the Central Sierra region have no access to broadband. A cross-section of factors such as extreme geography, poverty, lack of population and local policy contribute to an environment where the private sector struggles with building a business case to close coverage gaps. To address these challenges, the California Emerging Technology Fund (CETF) partnered with the Amador-Tuolumne Community Action Agency (ATCAA) to accelerate the deployment of broadband and other advanced communication services throughout the region via the establishment of a regional working group comprised of county-level key stakeholders to assist ATCAA with conducting the AOD study. Methods To complete aggregation of demand, the following areas were studied: · Existing and prospective users of broadband service in the five-county region (by category or sector and location); · Demand potential (by category or sector and location); · Identification (and mapping) of served and unserved areas; · Delineation of existing and prospective broadband uses and applications; · Speed of communications (existing and for prospective demand); · Affordability and willingness to pay for prospective services (by category or sector and location); · Open-ended community perspective including assessment of both survey instrument(s) and adequacy and recommendations for improvement in the future; and · Outreach and engagement plan to inform prospective users of the results. CSC created working groups to address each area of the AOD study: Advisory Council Comprised of key stakeholders across the ConnectKentucky model of nine community sectors: Business; K-12; higher education; healthcare; community-based organizations; government; agriculture; and tourism, parks and recreation. This body provided oversight and guidance for the study. One Board of Supervisor and Administrator (or representative) from each county participated. Aggregated Demand Survey Working Group Comprised of participants from the Advisory Council as well as community members. This group helped to further develop the survey tool provided by Redwood Coast Connect to make it more specific to the needs of the CSC region and assisted with survey deployment. Infrastructure and Mapping Working Group Comprised of key personnel from local Internet service providers (ISPs), technology companies and county information technology (IT) and/or county geographic information systems (GIS) departments. This group assisted the GIS contractor in identifying and mapping local infrastructure, served and under/unserved communities and provided feedback for future build-out, and broadband rating and raking. Public Policy Working Group Comprised of local government officials and ISP personnel. This group reviewed regional, State and Federal broadband policy for potential future regional application. Outreach and Engagement Working Group Comprised of community-based, social service and non-profit organizations and community members. This group reviewed disabled access to broadband, broadband advocacy and regional 211 and telemedicine planning to ultimately create an engagement plan to reach prospective users. This group also helped prepare an American Recovery and Reinvestment Act of 2009 (ARRA) submission for a public computer center project in all five counties. Community Meetings Over 20 community meetings and an additional 25 regional conference calls were held over Alpine, Amador, Calaveras, Mariposa and Tuolumne counties to provide information to the community regarding the project. Other topics covered during meetings and conference calls include: the status of broadband deployment over the five counties; local needs, concerns and feedback; recruitment and mobilization of community members and key stakeholders towards a regional commitment to broadband deployment and adoption. Survey Process The objective of the residential survey was to assess the potential demand for broadband in the Central Sierra Connect five-county region, using five CETF metrics. The surveys gathered demographic information to help facilitate analysis of the results and were completed between November 2008 and January 2009 based on a statistically significant random telephone sample of 396 responses. Survey methodology is detailed in the appendix. The top opportunity identified for broadband adoption in the region is expanding access to broadband service. The demand is significant and broadband adoption is critical. Offering affordable, ubiquitous broadband is an essential element of a long-term strategy to invest in the future of the region. Residential Demand and Price Points A variety of characteristics influence whether consumers purchase (or adopt) broadband service. The residential demand shows about 40% of respondents do not subscribe to the internet as they report that broadband is not available for their household. Of these responses, the majority (46.3%) reported to be in the low-income category. Alternatively, about 40% do subscribe to broadband and the majority (61.5%) of these respondents reported to be in the high-income category. About 7% reported that they didn’t want or need broadband and only about 6% reported that broadband was too expensive. Of those who reported that broadband is not available for their household, 84 respondents would be willing to pay for broadband and 36 respondents would be willing to pay for enhanced high-speed broadband. Though the majority of respondents pay $11-29/month there is a wide spread in monthly plans. Some in this category report that they don’t have access to broadband and others report that they do. Most of this group reports that their internet is too slow. Many respondents who report paying over $75/month also report slow internet speeds and gaps in service. Though the majority pay $11-29/month, respondents are consistently willing to pay more than this ($20-$40) for broadband. There is only an 8% gap between those who don’t have broadband and those who can’t have broadband due to availability. There is a strong potential uptake rate for broadband. The potential to bundle services with cell phone or TV plans may be an attractive growth opportunity for service providers as only about 10% of the respondents currently report having bundled services. While rural households are less likely to adopt broadband, the findings indicate that this difference may be related in large part to the lower availability of broadband to these households. The findings show in the chart below that willingness to pay is not a top adoption concern for the region. Those in the high-income band are willing to pay for higher cost satellite services, for example, to get broadband speeds whereas the low-income group is less willing, but even those in the low-income band are willing to pay for Digital Subscriber Line (DSL) at comparable price points, if broadband were or becomes available. 
The qualitative data shows a strong frustration in the region toward the lack of access to broadband. Respondents have remarked that the region is much too slow in implementing access to broadband. In addition, respondents have noted an inequality in access between neighboring areas within the community. Though some respondents were hopeful that this survey would help expand availability, more of the respondents simply wanted to know when broadband would be available because of their readiness to subscribe. As the region moves forward in local broadband efforts, providers will need to be very cognizant of regional frustration focus on realistic expansion plans and implementing them in a timely manner. It should be noted that the survey was conducted before the full impact of the economic challenges were realized. Today, the region's attitude toward affordability or willingness to pay may have changed with increased unemployment. Additionally as the region replaces jobs and the workforce improves job skills, the lack of broadband availability may become a barrier to adoption and economic recovery. Business Demand and Price Points The workplace survey was based on a random telephone survey sample of 123 respondents completed in the December 2008 through May 2009 timeframe. The business survey questions used were from the Redwood Coast Connect survey, allowing consistent comparisons of data from region to region. Local businesses still lack broadband, with over 20% of local businesses reporting access through dial-up or internet services digital network (ISDN) service. Businesses feel that access is critically or very important to their success. Most of local business respondents are satisfied with the service provided by their Internet service provider. However, greater than 20% are either unsatisfied or very unsatisfied with their service. Traditional market forces are not at play, an example of the region's pent-up broadband demand; respondents are willing to pay more for services than they are currently paying; and there is a willingness to pay higher rates by those without service since broadband is not yet available. 
The key point for service providers in the region is to provide more reliable, faster service to the businesses at an affordable cost. The survey responses show that the economics of affordability are not what one would find in a traditional supply-demand situation because local businesses are suffering from lack of competitive broadband and a potential pent-up demand for high speed and reliability. Overall Survey Implications Throughout the five-county region the theme is clear with both residents and businesses: There is an immediate need for affordable, fast, more reliable, and accessible broadband. Businesses are more willing to pay for better availability, but less willing to pay for assistance or support. Service providers have market opportunities in cell phone data plans, Voice over Internet Protocol (VoIP), mobile broadband, and hotspots. The five-county Central Sierra region is a rural unserved and underserved community, where access is the first, but not the only challenge. The survey shows that access is not an income, willingness to pay, age, race, or education level issue. 
In summary, the survey results present an accurate snapshot of the region's broadband gaps and needs, and the region's frustration. It is a clear message to providers and community advocates that broadband availability is needed now, as illustrated in the above tag cloud. Supply Amador, Calaveras, Mariposa and Tuolumne counties are served by fiber optic lines traveling east from the San Joaquin Valley (mainly along state highway corridors). Two major companies control the backhaul with the exception of two small wireless internet service providers (WISPs). These WISPs provide wireless broadband service to areas that are prohibitively expensive for the major providers to service. All other local providers currently receive backhaul from the two major companies. Alpine is served in a bifurcated manner due to the high mountain pass between the two residential areas on the East and West slopes. It receives wireline access on the western side through the Calaveras connection to Kirkwood, and bandwidth comes for the county seat of Markleeville from Nevada via WPTI Telecomms's POP in Gardnerville for the county T-1 line which does not serve residents or businesses. The East slope's limited connectivity is expected to expand in the future thanks to one awarded and one pending United States Department of Agriculture (USDA) Rural Utilities Service (RUS) Community Connect grants. The key to providing last mile service is affordable, competitive backhaul independent of the major companies as the return on investment (ROI) is too low for deployment otherwise. ARRA and CASF possibilities Mother Lode Broadband Project (MLBBP) With assistance and support from ATCAA CSC, the MLBBP (Mother Lode Internet of Sonora and partner Rapid Link of Sacramento) was awarded $2.9 million by the California Advanced Service Fund (CASF) to help improve infrastructure through deploying new independent backhaul and wireless service to bring high-speed connectivity to unserved residents of Alpine, Amador, Calaveras, Mariposa and Tuolumne counties. A second multi-million dollar application for underserved communities is pending and anticipating approval in the near future. Upon completion this project is projected to provide service of up to 14 Mbps to over 95% of the regional population of unserved and underserved residents. California Teleheath Network (CTN) The project is a statewide telemedicine proposal partially funded by CETF to improve access within rural and underserved areas to high quality, collaborative health services through a dedicated telehealth network. 36 medical facilities in the region were deemed eligible for participation in this Rural Health Care Pilot Program which will bring expanded wireline and wireless service to the region, with potential public and commercial uses of the expanded statewide network. Alternative Scenarios and Other Expected Deployment Open Range Communications Open Range was awarded Rural Development funds to provide 4G broadband service to two areas in the Central Sierra Connect region: Phoenix Lake in Tuolumne County and Ione in Amador County. Open Range has also applied for ARRA funding to expand those two sites substantially to surrounding areas. Golden State Cellular (GSC) GSC plans on expanding their current cellular network to provide 3G mobile broadband service to all five counties in the region. Deployment is expected in early 2010. ThrockWISP and REMNet These are two independent wireless providers purchasing bandwidth from a third independent provider in the San Joaquin Valley. The companies plan on expanding further into Calaveras, Mariposa and Tuolumne counties as they provide special service to very remote areas with extreme terrain challenges which may not be served by MLBBP. Great Basin Internet Service Washoe Tribe of Nevada and California was awarded Rural Development funds in 2008 to provide broadband services to the community of Woodfords, CA with GBIS as the service provider for deployment. WPTI Telecomm WPTI has applied for Rural Development funds to provide broadband service to the community of Markleeville, CA and is currently in the due diligence process with USDA. Major Findings and Conclusions The Central Sierra region faces many disadvantages inherent in its rugged terrain, large low-income, senior and disabled populations and geographically dispersed residential areas. This translates into a hesitation on the part of service providers to deploy due to unsustainable ROI. The sparsely populated areas of the region have not attracted the same level of investment and innovation as urban areas of the state. Lack of Investment A regional strategy to maximize private sector return through broadband adoption on capital investment along with full advantage of ARRA opportunities can stimulate market solutions as a potential "Anchor Tenant" situation; i.e. California Teleheath Network, Mother Lode Broadband Project, Corporation for Education Network Initiatives in California (CENIC), Open Range to close coverage gaps. Additional leverage for closure of coverage gaps is continuing work on local public policy by creating an environment conducive to stimulating further private sector investment. Pent-Up Demand The top opportunity for broadband adoption is expanding access to broadband service. The demand is significant and broadband adoption is critical. Over 92% of survey respondents are willing to pay for DSL or enhanced high-speed Internet, yet almost 40% report that broadband is not available to their household. Multiple Build-Out Barriers Expensive backhaul; lack of access to potentially available "dark fiber;" California Environmental Quality Act (CEQA) review hurdles; and uneven right of way (ROW) requirements make deployment of broadband an unequal, burdensome, virtually insurmountable barrier for local companies wishing to expand their footprint. Local applicants to CASF and ARRA have been forced into "marriages of convenience" with each other to leverage existing infrastructure but also are creating unique regional solutions to avoid burdensome CEQA and ROW issues and bring in independent backhaul from major carriers. Further work with the Policy Group is recommended to ensure regional broadband policies are adopted. Difficulty Aggregating Demand Due to the competitive and proprietary nature of service provider data, the high expense of traditional data collection, and the challenges of explaining technology issues to a non-technical population, the study turned to alternative methods for completing the project that may benefit future projects. Key factors that contributed to project completion include: · Strong leadership in building a large, broad-based community coalition to keep the public "fired up" and moving forward; · Social media and social networking as a new tool and training mechanism to facilitate communication past traditional email, newsletters and phone conferences; · Free and open source applications (FOSS) to keep down costs and open the process to as many non-technical people as possible; and · Turning to the region itself as a reliable source of information, first with the demand survey as a part of the mapping process and culminating in the launch of a "Crowdsourcing" application that will track the location of the service, the price, the speed, and customer satisfaction with the service provided. Outcomes and Next Steps Community Participation and Coalition Building Over 100 local participants worked together to keep the project moving forward. This same group of people is prepared to continue to work towards broadband deployment and adoption in the future. Mother Lode Broadband Project (MLBBP) With assistance and support from ATCAA CSC, the MLBBP (Mother Lode Internet of Sonora and partner Rapid Link of Sacramento) was awarded $2.9 million by CASF to help improve infrastructure to bring high-speed connectivity to unserved residents of Alpine, Amador, Calaveras, Mariposa and Tuolumne counties. A second multi-million dollar application for underserved communities is pending and expecting approval in the near future. Regional Plans in Place Working groups are in place to start 211 and regional telemedicine and are currently striving to find funding to continue the work. USDA-RUS Community Connect Applications Two applications were successfully submitted for communities in the region; one is currently in due diligence. Final notice for grant awards for USDA-RUS Community Connect is currently on hold due to ARRA applications but the community coalitions are still conducting letter writing campaigns and contacting local elected officials to bring attention back to the community applications as soon as possible. ARRA Applications ATCAA participated in the successful submission of CETF's ARRA application for $1.25 million for public computer centers and computer training for the CSC five-county region. The working group has two further applications to submit on subsequent ARRA funding rounds, depending on the outcome of the first round application. The grant application details plans and leadership for several key community programs as follow-on to the CETF project, keeping the adoption momentum alive. Future Adoption Planning The regional working group anticipates applying for funding for future deployment and adoption projects as funding becomes available, along with a regional 211 start-up. CSC grant awards from the California Consumer Protection Foundation (CCPF) and California Virtual Campus serve as a model for future adoption projects. The Central Sierra Connect region is grateful to CETF for the grant and resources that made the project possible. |