Cornville and Rimrock are on track to receive upgraded broadband internet access by October 2023 — but Sedona, Cottonwood and Camp Verde are not.
As part of the Yavapai County Broadband Initiative, the county has committed $20 million in federal American Rescue Plan Act funds to constructing a fiber-optic network that will provide high-speed internet to unserved or underserved areas. So far, the county has awarded two contracts for network expansion.
Altice USA, which bought out Suddenlink, received $12,614,582 in county ARPA funds to expand service to Rimrock, Lake Montezuma, Beaver Creek, Cornville, Mayer, Spring Valley, Cordes Lakes, and Paulden.
Cox Communications received $3,757,763 to expand service to Congress and Black Canyon City. Altice put up $25,210,947 of its own funding and Cox contributed $6,789,755 of its own.
The unincorporated areas of the county surrounding Camp Verde, Cottonwood and Sedona, including the Village of Oak Creek, will not be included in this expansion due to a lack of clarity in Altice’s response to the county’s original request for proposals, as Yavapai County Librarian Corey Christians, representing the YCBI team, explained to the Sedona City Council on Oct. 25.
“The [Altice] proposal did not break out the unincorporated and incorporated passings [effectively, house connections] in those areas, so there was no way for the folks viewing the proposal to know which of those passings should be funded through ARPA funds and which should not, because only county funds could only go towards unincorporated areas,” Christians told the council.
“A year ago it was real crystal clear,” Vice Mayor Scott Jablow told Christians. “Every home. So when we do an RFP, if the contractor comes back with a response and a bid and they leave things out, they may not get chosen. Why would they even be considered if you put it out as proposed to us? … You’re going to just leave all these people, or the homes, without the service, and you’re just going to go to those in the county?”
“It was always the intent that we would try to get multiple rounds of funding to complete the buildout,” Christians said. “That’s not what was said to us,” Jablow replied.
“When we put out an RFP, we don’t have control over the responses we get,” Christians said. “We did say that we would accept partial proposals from folks so we could actually move on with the project.”
“Why didn’t you put it out again?” Jablow asked.
“There just wasn’t enough time,” Christians said, admitting that the county could have issued the RFP sooner, but adding that the complexity of the ARPA rules made that difficult. “We received bids that worked in areas that were part of the RFP.”
“Was it written in such a way that that was likely to happen?” Councilwoman Jessica Williamson asked.
Christians did not answer the question.
Since partial proposals were allowed, Williamson continued, “there was no intent to do the whole county, and the choice was basically the providers’ as to where they wanted to work. Is that true?”
“To a certain degree,” Christians said.
On being asked again by Williamson if they had requested clarification from the offerers at the time, he replied that if the county had told them what to do to fix their proposal, that would have been giving them an unfair advantage.
“They were not told they were deficient in this regard?” Williamson asked.
“I can’t really speak to that,” Christians said.
“The council was very, very positive about being willing to put that money there so we could be served. We were very excited and enthusiastic about this. And — full disclosure — this is extremely disappointing,” Williamson said. “Basically we don’t get a chance because the proposal was unclear. That would seem to be a critical error.”
While clarity in the RFP would have allowed Yavapai County to contract with Altice to bring broadband services to the unincorporated areas surrounding Sedona, Cottonwood and Camp Verde, it would not have enabled the municipalities themselves to be included in the contract due to federal restrictions on the use of county ARPA funds. The cities would have had to put up their own ARPA or general funds under a separate agreement with the county and Altice to receive service, which they planned to do.
On Sept. 14, 2021, the city of Sedona allocated $494,000, or 20% of its ARPA funds, as its contribution to broadband expansion in partnership with a future provider and the county, and instructed city staff to negotiate an agreement with the county to implement the decision.
“Broadband was one of the few things we were allowed to spend ARPA funds on,” said Molly Spangler, Sedona’s economic development director. She added that “one of the best things about this deal” was the way in which it would have allowed the city to leverage small amounts of city and county ARPA funds to complete a much larger project.
However, in the summer of 2022, Altice informed the city of Sedona that it had significantly overestimated the number of underserved passings in the Sedona area and was no longer interested in extending service to Sedona.
“That was the main obstacle to us spending those ARPA funds,” Spangler said. “We were under the impression there were plenty of underserved homes.”
Jim Campbell, vice president for state and local government affairs with Altice, spoke of his company’s calculations to the city council. He explained that their original proposal had identified 7,202 potential passings in the Sedona/VOC area, 2,783 of which were located within Sedona’s municipal boundaries. Later revisions showed that the number of underserved or unserved passings within the city was closer to 150. At that scale, Campbell argued, it would not make financial sense for Altice to expand to Sedona.
“Right now, to build it under market forces, it just wouldn’t be prudent,” Campbell said. “The Sedona cost without any sort of grant opportunity is extremely high.”
Federal guidelines define broadband service as an upload speed of 25 Mbps [megabits per second] and a download speed of 3 Mbps. According to Campbell, the current speeds Altice offers in Sedona are 150 Mbps for upload and 7.5 Mbps for download.
The numbers that Campbell presented were not internally consistent. He informed the council that building out the Sedona area without access to ARPA funds or another grant program would be a $60 million project, with a cost per passing of perhaps $5,000 or $6,000.
“If we can get in for $2,500 a home, that justifies building it,” Campbell said. Later, he added that “if we can get it down to $3,000, we’ll talk.”
Altice’s original cost estimate for both the incorporated and unincorporated areas around Sedona combined — as presented to the council that same day — was $14,154,627. This included 7,202 passings at an average cost of $1,965 per passing. Total city and county contributions would have been $918,639, or 6.5% of the total cost.
At an estimated cost of $6,000 per passing, the cost of building out 7,000 passings in the Sedona/ VOC area would be $42 million, not $60 million.
“Those numbers were sort of analogous,” Campbell said when asked for comment on the discrepancies, and declined to explain further. For purposes of comparison, Altice’s estimated cost per passing was $1,700 for the areas surrounding Cottonwood and $984 for the Camp Verde area.
Councilman Jon Thompson called attention to the difference between the per-passing costs for Camp Verde and Sedona and repeatedly asked Campbell and Christians to explain the reason for it. Neither responded directly to his question, apart from Christians saying that he would have to look at the data.
“My understanding is that terrain plays a big role in the cost for Sedona,” Christians said in response to a followup request for clarification regarding the cost difference.
Both Campbell and Christians suggested that the broadband improvements currently under construction will lower the cost of building out Sedona in the future and make Yavapai County a more competitive applicant to receive additional federal funding through the Broadband Equity, Access and Deployment program. Christians estimated that Arizona will receive between $800 million and $1 billion in upcoming BEAD funding.
Campbell likewise indicated that BEAD funding would make the cost of expanding broadband access in Sedona more financially feasible. He stated that plans involving BEAD funding will need to be approved by the end of 2023, with “money flowing first quarter of ’24,” and that BEAD funds would also make faster connection speeds possible.
The new connections that Altice will be installing in Cornville and Rimrock will offer minimum 100 Mbps symmetrical upload/download speeds, while Cox plans to install 1 Gbps symmetrical connections.
Sedona businessman James Curry, who was asked by City Attorney Kurt Christianson to examine the Altice proposal, advised the council that they have options. “There are other interested ISPs in Sedona,” he told the council, noting that two of those are currently running numbers on building out to Sedona.
Curry reminded councilors that the city can partner with any ISP and that it will be eligible to apply for BEAD funding on its own without having to commit to a deal with an ISP first. He also pointed out that “the ISP owns and profits from the built system at the end of the day, and that’s taxpayer money going to a forprofit company.”
Spangler was optimistic that ongoing improvements to FCC service area maps will reduce future confusion by enabling the city to audit an ISP’s numbers when it receives a proposal. “Currently we don’t have the ability to do that,” she said. “That’s always been the big mystery with broadband.”
The city of Sedona has been entertaining various proposals for broadband installation since at least 2015.
