Santa Cruz is hemmed in by rolling hills, graduating into coastal mountains, which are cloaked by dense coastal redwood forests that capture the tufts of fog as they roll off the sea. From a business perspective, this relative isolation poses challenges, creating lots of potential for bottlenecks in shipping and transportation.
But Peggy Dolgenos, CEO of local internet service provider (ISP) Cruzio, has never looked at it that way. After starting the company with her husband Chris Neklason in 1989, she has found that the town’s separation from the rest of the Bay Area has given Santa Cruz room to grow.
“The geography is difficult for infrastructure,” admits Dolgenos. “But while a lot of ISPs have been pushed out by the big boys, we’ve thrived.”
Soon Cruzio will celebrate the unveiling of Santa Cruz Fiber, a project that involves installing fiber optic cable downtown to bring speeds of 1 gigabit per second to customers—50 times faster than what many customers receive now.
In its initial run, the $45 million privately funded project will bring cutting-edge internet capabilities to about a thousand downtown homes and businesses. The company aims to go live next year.
Robert Singleton, the campaign’s senior marketing strategist, says locally owned, high-speed internet might be Santa Cruz’s least divisive political issue.
“Even if we can’t agree to put housing anywhere, we can all at least agree that we want to watch Netflix faster,” says Singleton, who’s also the executive director of the Santa Cruz County Business Council.
In May, Cruzio secured permits for the project, which will involve digging small trenches under the street to build the first run of the much-anticipated network from North Pacific Avenue to the Cruzio building on Cathcart Street. Cruzio negotiated last year with city leaders to create a public-private partnership and build a bigger network, but talks fell apart, leaving it to seek private funding. If it’s successful, Cruzio will secure more funding and keep expanding the network.
As they prepare for a ribbon-cutting on Wednesday, Aug. 16, local officials hope high-speed internet in downtown will attract more tech companies to the city—particularly as thousands of workers commute over Highway 17 on a near daily basis. A 2014 Civinomics study found that 61 percent of those commuting out of the county have a job in a technical field.
Santa Cruz Vice Mayor David Terrazas says the new project should reduce the number of techies in Santa Cruz leaving town for work.
“Having the resources to do their job here will help create an environment that will nurture tech businesses,” says Terrazas, who will speak at the Cruzio event—along with Congressmember Jimmy Panetta and Bud Colligan, co-chair of the Monterey Bay Economic Partnership. Network construction will begin in the days following the launch event.
Besides the faster speed and the hope that fiber will spur more companies to establish headquarters in Santa Cruz, it will have a non-economic upside, too, Terrazas says.
“It has environmental benefits, as well,” he says, given that less commuting will help cut emissions locally.
Not to mention that a large number of government services—like meeting agendas for the city and county, applications for birth certificates, drivers licenses renewals and local ordinances—are online. So it’s little wonder that the city was exploring a partnership with Cruzio last year in an attempt to bring high internet speeds to every person within city limits by 2018. The plan, however, would have required a 30-year bond by the city, and significant capital investment that ultimately made city leaders balk.
Their failure to see eye to eye created some confusion, with the Santa Cruz Sentinel reporting “Cruzio Deal Dies” in a headline this past spring—and neglecting to mention in the article that Cruzio had almost finished securing permits for its own privately funded version.
Guevara, economic development manager for the city of Santa Cruz, says that after the city and Cruzio parted ways, the two parties have “been able to pivot” and work together in other ways.
“The city has helped through the permit process,” he says, “while Cruzio has pursued building its own network in downtown Santa Cruz.”
Cruzio will initially charge customers about $50 for the service. Dolgenos says Cruzio’s affordable price point is only possible because the company will be saving money by not renting infrastructure from large ISPs like AT&T.
Many areas don’t have local ISPs that are vested in their communities and receptive to customer concerns. Most small providers that cropped up during the Wild West of the internet during the 1990s have since been gobbled up or driven out by the big companies. According to a 2015 report by the American Consumer Satisfaction Index, 61 percent of U.S. households have either one or zero alternatives when it comes to high-speed broadband providers in their communities.
“If you have a monopoly, companies can raise prices and lower service costs,” says Dolgenos, pointing to the poor customer service reputations of cable companies who rely more on their customers’ lack of options than satisfaction or earned loyalty.
While Cruzio’s initial project will focus on the downtown area, the company wants to offer an upgraded suite of fiber-backed projects to other areas of the city and beyond.
“It’s not just downtown, we have organic farmers who have demand for high-speed internet,” Dolgenos says.
Dolgenos says Cruzio wants to fill the niche left by the big ISPs, ones that won’t spend dollars on infrastructure in rural areas where there’s no opportunity for big profits.
Recent studies show that 43 percent of rural Californians have no broadband access, a problem that affects much of Santa Cruz County.
For the most part, Dolgenos says Santa Cruz and its residents actually benefit from the large ISPs’ neglect, as it opens the door for a local service.
“Santa Cruz is an open-minded place,” she says, “and the people are open to alternative solutions.”
Cruzio Internet will host a launch party on Aug. 16 from 5:30 to 7:30 p.m. to celebrate the beginning of construction for its downtown fiber optic network. The event will be held at Cruzio, 877 Cedar St., with free beer and wine. For more information about the event or Santa Cruz Fiber, visit santacruzfiber.com.