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Status Check: Building a Rural Broadband Empire

Cal.net acquires fifth rural internet provider in recent years

Back Web Only May 25, 2021 By Graham Womack

A major internet service provider, Winters Broadband is not.

Founded in 2002, the company serves a largely rural area between Vacaville, Esparta, Woodland, Davis and Dixon. But Ken Garnett, chief operating officer for Shingle Springs-based Cal.net, a rural broadband provider, is all too familiar with these sorts of companies — and their potential value.

“If you’re talking to a large national firm like AT&T or Verizon or Comcast, they’re gonna tell you rural broadband is not cost-effective because it doesn’t meet their margin requirements,” Garnett says, adding that infrastructure requirements can be tough for major ISPs.

He then adds, “But for rural, we’re doing fixed wireless, and fixed wireless is much more efficient in terms of capital outlays.” Fixed wireless internet isn’t fiber-in-ground, instead allowing communications between two fixed points. “That allows us to bring service to much less dense areas in rural parts of the country,” Garnett says.

So on April 6, Winters Broadband became the fifth rural broadband provider that Cal.net has purchased in recent years. Other small ISPs purchased include Central Valley Broadband of Placer County, Mother Lode Internet of Tuolumne County, Hstar Technology Group in Calaveras County, and Fire2Wire of Stanislaus County. It brings Cal.net’s operations to a total of 17 California counties.

“We have no interest in urban or suburban,” Garnett says. “We’re looking out for the underserved communities in the rural parts of California.”

Comstock’s has looked at the challenges of rural high-speed internet before. Former Winters Broadband President Brian Horn noted a few years ago (“The Long Reach” in August 2017) about the challenges of competing with satellite service providers to bring broadband to a customer base primarily of small farmers living between his city and Davis. “We have a small user base, not thousands,” Horn said at the time. “So to try and pass that cost on (to customers of obtaining sites to install towers) is not easy.”

Horn tells Comstock’s that he sold his business, for an undisclosed sum, because he’s 74 and wants to retire. The work in his time running the company was challenging, but he doesn’t regret it. “We had an unbelievable number of loyal customers who were really happy with what we were providing,” Horn says.

Cal.net, meanwhile, saw the purchase of Winters Broadband as strategic. “It’s an area that we are expanding into through federal funding,” Garnett says. “Their network was embedded within the area that we had targeted. It just made sense to leverage their existing infrastructure rather than overbuild somebody else’s.”

The sale comes at an interesting point for the industry, with the Biden administration speaking of making infrastructure investments, including for rural high speed internet. Already, Cal.net looks to sources of government funding such as California’s Advanced Services Fund, which it has leveraged for a few years, Garnett says. The company also received $50.5 million in 2019 through the federal government’s Connect America Fund.

The ongoing COVID-19 pandemic has also had an unusual effect on Cal.net’s business. “In our industry, the pandemic has actually been beneficial in some respect,” Garnett says. “Because suddenly, everybody has to work from home and they have to educate their kids from home and have to do telehealth. And so demand has increased.”

In addition, access speeds are growing steadily, with Garnett saying that technology is starting to become available with 1 gigabyte speeds over fixed wireless and that quite a bit is available in the 100 megabyte to 250 MB per second range.

“That’s the kind of product that we’re rolling out at this time,” Garnett says. “Just two years ago, 100 MB would have been unheard of for fixed wireless. 25 MB was the state of the art a couple of years ago. It’s a really exciting time to be in the business.”

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