State tax money spreads broadband all the way to ... Solvay

There is no shortage of broadband in Solvay or Geddes. Cable company Time Warner Cable first offered high-speed Internet service there a decade ago. Phone company Verizon started selling its high-speed FiOS service there in 2006. Yet state taxpayers are spending $1.46 million to help a small startup company build a new broadband network in Solvay and Geddes, under...

There is no shortage of broadband in Solvay or Geddes.

Cable company Time Warner Cable first offered high-speed Internet service there a decade ago.

Phone company Verizon started selling its high-speed FiOS service there in 2006.

Yet state taxpayers are spending $1.46 million to help a small startup company build a new broadband network in Solvay and Geddes, under a grant program to “facilitate increased physical access to broadband Internet services statewide.”

The company that won the funding, New Visions Powerline Communications Inc., of East Syracuse, is almost finished building a fiber-optic network to provide Internet, telephone and cable TV service. The wires will pass 12,000 homes.

The immediate result: Two Syracuse suburbs have a new low-cost competitor against Verizon and Time Warner Cable.

But another goal of the grant, according to state and company officials, is to improve broadband access in areas where there is little or none available.

New Visions officials said in their grant application that building a network in Solvay and Geddes would be the first step in their plan to bring high-speed Internet to rural areas where access is limited.

“The project will help bring universal high speed broadband to economically disadvantaged rural areas and to populations that would not otherwise have access to these technologies if deployment was driven exclusively by the market,” company officials wrote.

Carmen N. Branca Jr., the founder and president of New Visions, said his company is now in a position — thanks to the state grant — to raise money from private investors to expand into neglected rural areas. Branca said he is negotiating to raise as much as $50 million from investors.

“Our model has always been to take this and to go into rural areas that have limited access,” Branca said. “That’s the next step.”

The state grant does not require New Visions to expand beyond Solvay and Geddes.

New Visions told the state it would offer free Internet service to Solvay Public Library, but the library director said she didn’t need it.

“We get Time Warner/Road Runner for free,” said Cara Burton, library director. “I get FiOS really cheap. And then, through the county library system, I get another fiber connection. So I just don’t need it.”

Plan to use power lines

New Visions is among dozens of companies nationwide that have received state or federal grants to expand the use of broadband, on the premise that high-speed Internet should be as ubiquitous as electricity or phone service.

New York implemented a Universal Broadband Access Grant Program in 2007. So far, the state Office for Technology has awarded nine competitive grants totaling $5 million. The largest went to New Visions.

In 2009, the federal government launched a $7 billion broadband stimulus program. Some $140 million has been awarded to 12 projects in New York state.

Federal officials have targeted rural areas exclusively, but New York has not. In an effort to expand Internet use in poor urban areas, for example, the state subsidized a free wireless network in Albany and a digital literacy program in the Bronx.

Officials at the Office for Technology say New Visions has a unique business model with potential to reduce costs and to reach remote areas previously considered too expensive to serve.

New Visions applied for money under a section of the state broadband grant program devoted to increasing “physical access” to broadband. The facilities-building program was not limited to rural communities, but targeted any areas with limited broadband options, said Melodie Mayberry-Stewart, chief information officer and director of the Office for Technology.

“We tried to look at where there were still neighborhoods or pockets that were underserved, or totally unserved,” she said.

State officials did not choose projects based solely on location, said Angela Liotta, speaking for the Office for Technology. Projects were scored on a variety of criteria.

New Visions won support in part because its technology had potential to support a “lower cost model” that might make broadband more affordable in urban or rural areas, Mayberry-Stewart said.

New Visions’ grant application, submitted in January 2008, said the company planned to save money by using existing power lines to deliver broadband service. Since power lines reach even the most remote areas, state officials wanted to see whether New Visions’ technology could make rural broadband more affordable, Mayberry-Stewart said.

“One thing we do know is that every home we think has electricity,” she said. “That’s why we thought that that would be an interesting one to see if that worked — at an affordable price, and (if) the customers were satisfied with that service. Is that not also a way to get to some of these remote homes that still do not have coverage?”

But New Visions’ business model has evolved since 2008. By the time the company won final grant approval in August 2009, its plan was to connect most customers to its network using fiber-optic lines rather than electric wires — especially in densely settled areas like Solvay and Geddes. A “very high percentage” of customers in Geddes and Solvay will get fiber to the doorstep, Branca said.

In a 2009 federal grant application, New Visions sought funding for a fiber-to-the-home network throughout Cortland, Oswego and Schoharie counties.

“Our model of fiber deployment across the county with end-to-end coverage is critical in order to accomplish the e-government, distance learning and telemedicine programs that our rural residents read about, but have yet to benefit from,” the application said.

Branca said New Visions maintains a flexible strategy that can still make use of power lines.

In remote areas, where houses are far away from utility poles, New Visions could reduce costs by using a customer’s electric drop wire as a connection to the fiber network — as long as the customer didn’t want cable TV, which requires more bandwidth than power lines can support, Branca said.

The “meshed” approach — fiber with the option to use electric drop wires — gives New Visions flexibility to compete in both rural and urban networks, Branca said.

“That’s huge,” he said.

Changes direction

Branca, 59, started his telecom career in 1975 as a salesman at American Dynatel, a Syracuse company that helped pioneer the sale of customer-owned phone equipment. Branca later became a partner. After Dynatel was gobbled up by larger companies — first Tel Plus Communications, then Siemens — Branca served as Siemens’ regional vice president of operations, supervising a work force of more than 700.

Branca later spent several years in management at Telergy, a start-up fiber-optic telecommunications company that raised $130 million from investors during the tech bubble before going bankrupt in 2001.

Not long after founding New Visions, Branca made headlines in 2004 after reaching an agreement with the Solvay Electric Department with the goal of delivering Internet service over the village’s electric wires. That fledgling technology, called power line communications, had not been widely used for Internet service, but was seen by many experts as a possible solution in rural areas.

State officials were quick to seize on the new technology. Just three months after the Solvay announcement, then-Gov. George Pataki came to Syracuse to award a $300,000 capital grant to New Visions.

Branca, who had five employees at the time, said the grant would help build a network operating center, enabling New Visions to hire more than 150 new workers by 2007.

But power line communications was not quite ready for prime time in 2004. The Federal Communications Commission did not finalize regulations paving the way for commercial deployment until August 2006, Branca said. New Visions eventually declined the grant and regrouped.

“We said, ‘Thanks, but no thanks,’” Branca said.

The technical challenge of implementing power line communications includes the need to circumvent electric transformers, which depress Internet signals, Branca said. As New Visions tried various solutions, technology evolved rapidly. The price of fiber-optic cable dropped, and demands for bandwidth grew.

Over time, Branca decided to build more and more of his network with fiber-optic cables, not power lines. Electric wires don’t have enough capacity to carry video, a critical piece of the “triple play” most consumers want, he said.

Potential employees

In January 2008, New Visions applied for a state grant to finish building its fiber network in Solvay and to extend the network into Geddes. The application listed four company leaders, each with many years of experience in telecommunications.

In addition to Branca and another senior executive, the application listed William Haddad as vice president of marketing and Macklin Zukoff as vice president of field operations.

Both men said they did not work for New Visions.

Haddad, of Canastota, said he discussed with Branca the possibility of joining New Visions, but the two never came to terms.

Zukoff, of Buffalo, said he agreed to help construct a network for New Visions if the company won federal stimulus funding, under terms yet to be negotiated. He has not been employed by the company, he said.

In a recent interview, Branca said he has known both men professionally for years, and that both were planning to join New Visions when he filed the state application.

“Both of them have been involved with the company, in ways that they’ve helped us,” he said. “They were going to come on board.”

Because the state did not finalize New Visions’ grant until August 2009, neither man ultimately joined the company, Branca said.

‘This is the reverse’

There is no consensus yet on the best strategy to make sure everyone has broadband, said Harold Feld, legal director at Public Knowledge, a Washington, D.C., public interest group focused on digital culture.

But some experts say government should resist giving subsidies to private companies in areas where other companies already offer service.

Scott Wallsten, a Washington, D.C., telecommunications analyst, said public money is too precious to spend in communities that already have two wireline providers, such as Solvay and Geddes.

“It’s hard to imagine how this could possibly be a good use of funds,” he said.

Wallsten, vice president and senior fellow at the Technology Policy Institute, a think tank, recently served as economics director for the Federal Communications Commission’s National Broadband Task Force. In his opinion, broadband stimulus programs should spur investment where there has been none from private companies.

“This is the reverse,” he said of the New Visions project. “You’ve already got the private investment — and then you do the public investment.”

New Visions offers low prices in Solvay and Geddes. The company charges residents just $29 a month for a super-fast, 25-megabit-per-second Internet connection. Stand-alone broadband service typically costs $50 from Verizon or $55 from Time Warner Cable.

“It’s really a good price,” said customer Rena Oriend, of Solvay, who signed up with New Visions more than a year ago.

New Visions had 200 subscribers as of June 30, according to its most recent report to the state. But the company, which has focused on building the network this year, plans to step up its marketing efforts soon, Branca said.

New Visions also plans to apply for cable TV franchises in Solvay and Geddes, so that it can offer the “triple play” of Internet, phone and TV, he said.

Red Creek can wait

The Federal Communications Commission estimates that as many as 24 million Americans — just under 8 percent of the population — live in areas where they can’t get broadband, defined as Internet download speeds of at least 4 megabits per second. The federal government is still working with states to map out where the dead spots are, but New York state is assumed to have fewer than most.

Still, you don’t have to travel far from Syracuse to find areas where dial-up Internet is the only option short of an expensive satellite connection.

David Sholes, superintendent of the Red Creek school district 35 miles west of Syracuse, estimates that half of the students in his schools have dial-up at home. That includes Sholes’ own children.

“You really can’t download anything with dial-up,” he said.

Some rural communities are clamoring for better broadband. For more than two years, Branca, of New Visions, has met with town and county officials around the state — including Cayuga, Cortland and Oswego counties — to gauge consumer interest and to develop strategies for collaboration.

In Oswego County, New Visions proposes to combine consumer broadband service with a project to install fiber connections to the county’s emergency communications towers to enhance radio communications.

The company applied this year for federal stimulus money — a $12.8 million grant and $29.8 million loan — for the Oswego County project. The application did not receive funding.

Last year, New Visions applied for a $39 million grant and a $41 million loan to supply fiber-to-the-home throughout Cortland, Oswego and Schoharie counties. The project did not receive funding.

Ready to branch out

Thus far, New Visions has been reimbursed $1.1 million of the $1.46 million state grant, according to the comptroller’s office. The money has paid for equipment such as fiber-optic cables and computer servers, as well as attachment fees that New Visions pays to connect its cable to poles owned by National Grid and Verizon.

Branca said the grant helped New Visions reach critical mass — with a network passing 12,000 homes — and to hone its methods of construction and customer service. The company is ready to grow, he said.

“This grant has helped us do all the things we needed to do to take this to the rural market,” Branca said.

Rural broadband can be expensive.

In the Port Byron area of rural Cayuga County, telephone company TDS Telecommunications recently won a federal grant of $639,218 to extend its DSL service to 166 rural households. That comes to $3,850 per household.

Dave Mason, who lives in Keene, a mountainous 1,000-person town in Essex County, is well acquainted with the cost of rural broadband. Mason helped organize a grass-roots project to attract broadband.

Under the auspices of the High Peaks Education Foundation, of which Mason is secretary, organizers raised nearly $300,000 in private donations so that the local mom-and-pop cable TV company could extend broadband lines to more than 90 percent of local households. The effort also received a $100,000 state grant, obtained by state Sen. Betty Little.

Even after all the fundraising, a 3-megabit connection in Keene costs $100 a month. If the government has money for broadband, it should focus on rural areas, Mason said.

“That money should go to areas where people have nothing,” he said.

Contact Tim Knauss at tknauss@syracuse.com or 470-3023.