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Sunset Fiber’s acquisition of the former OptiNet network took nearly three years, and expansion efforts are just getting underway.

Just over a month after completing the $50 million deal for the fiber-optic telecommunications network, its new owners are finalizing plans to extend service into different portions of Southwest Virginia.

Work to connect customers has gone on in the existing Bristol footprint since the first day, but the next phase will bring projects that have a defined area and marketing, according to Sunset CEO Paul Elswick.

“We’ve got 11 projects lined up, and we’re ready to do them,” Elswick said. “We’re doing final engineering. … We’re developing software to determine who is serviceable or not in these new areas. We will start hooking up people, rolling trucks through neighborhoods and doing selective marketing through these communities, which we think will virally spread.”

While they aren’t yet ready to disclose precisely where those areas are, they expect to announce the first projects soon. The company ordered $500,000 in materials last month as it prepares to expand.

The key for customers is to either sign up on the Sunset website or call to request service. Anyone who has already done so — even if it was two years ago — doesn’t have to take any action, Elswick said.

“Please contact us, request service, don’t get dejected if we say we can’t do it today. We are coming, we are collecting information. We are planning to come to your area, and the more people in your region that call in, the quicker we come to your area,” he said.

Sunset’s plan is to begin by connecting as many customers as possible in easy-to-reach areas. Their planning is based on the volume of requests for service.

“Obviously we want to pick some easy spots that we can hook up at lower cost quickly and get revenue started. The day we closed, we did not have a lot of money in the bank. We’ve picked some easy spots; we have a plan in place. Our biggest problem we’re working on right now is finding a way to capture people who call in, and we have to tell them we can’t serve them right now. … That becomes information that tells us where we’re going next,” Elswick said.

One area that is being connected now is in Northeast Tennessee. During the OptiNet closing process, Sunset received a $1.36 million grant from the state of Tennessee to expand broadband service to about 400 new customers in Treadway — a small community in Hancock County. Sunset has hired a contractor who is beginning that work, Elswick said.

Partner ITC’s perspective

The Sunset deal was finalized only after a new player entered the game. West Point, Georgia-based ITC Capital Partners brings more than just financial resources to the table. It owns several companies that provide broadband telecommunications services, so the company has expertise.

“We are very, very excited about our partnership with Sunset and the former OptiNet. It’s branded Sunset, but it’s the same people in the same area with the same great fiber asset. The only difference, really, is that we’re in growth mode now. Significant growth mode,” ITC CEO Todd Holt said. “Both businesses were at a standstill. They were steady-state businesses because the transaction had taken so long to make any significant progress that both companies weren’t in growth mode at all.”

That growth is to include both by directly connecting homes and businesses to the existing fiber network and deploying a newer hybrid technology called fiber-fed fixed wireless.

“It’s not quite as good as fiber to the home, but it’s a whole lot better than wireless satellite internet or DSL internet. There are a lot of regions in Southwest Virginia — that’s all the options customers have are satellite or DSL,” Holt said. “It would take us two years or longer to get to some of those areas building out fiber. We’re able to deploy the wireless fiber a whole lot quicker to reach those customers. We’re identifying the first five communities to deploy the technology.”

The wireless fiber — branded Sunbeam — is designed to be a temporary service until fiber connections can be made.

“We’ll be looking at wireless connectivity at the edges for communities that may take extra time to get fiber to them or it just doesn’t make sense to do fiber right now,” COO Ryan Elswick said. “We’re looking at solid state wireless that will do a directional beam to the house and get really good bandwidth for customers that aren’t fibered yet. Once fiber is extended to those areas, the wireless technology can then be reallocated to another community.”

In addition to its traditional Sunset fiber service and Sunbeam, the company will also deploy a product called Sunspot — which BVU called Optizone — that will be available to customers who can log in through their smart phones, tablets or laptop computers to access Wi-Fi in public locations, Ryan Elswick said.

Despite an evolving range of technology options, Holt said the fiber-optic platform won’t become outdated.

“We’re happy to be investing in the broadband space because so many people are relying on that infrastructure today, and there is no slowdown in sight,” Holt said. “We think the broadband infrastructure is not only here to stay but is going to become more valuable every year as there are more internet applications out in the world.”

Fast, reliable internet service has become as valuable as electricity in many areas, Holt said, and they expect rapid growth in this region because so many areas aren’t served or are underserved.

“From an economic development perspective — banking, financial institutions, health care, and education — those types of industries heavily rely on data and internet functionality to run their businesses and to survive today,” Holt said. “If they want to thrive and grow, they have to have fast, reliable internet. These smaller areas will dry up and go away if they don’t get better internet — just like if they didn’t have electricity.”

Federal funds to buoy deployment

Soon after the OptiNet closing was completed, Sunset learned it won a series of auctions and will receive $29.5 million in federal funding to help extend fiber-optic service in rural parts of Southwest Virginia and Northeast Tennessee. Sunset is to receive $23.98 million to connect nearly 7,000 Virginia customers in specific rural areas and $5.59 million to connect nearly 2,100 Tennesseans. The locations are based on census information.

Called CAF II funding, the money comes from the Federal Communications Commission’s Connect America Funding initiative. Sunset and other providers bid to perform the work of extending internet service into hard-to-reach rural areas.

“Rural telephone has been subsidized for years, and the FCC decided to redirect that money to subsidize broadband. We have to supply a broadband/telephone service. They know how much they’ve been spending in rural census blocks to provide rural telephone. The FCC wanted to spend less money but get the same support,” Paul Elswick said. “We were awarded the support. We have some diligence to be done for that to be complete but, as far as winning the auction, we have.”

The federal funds will be paid out 10 percent per year for 10 years, but Sunset and other winning providers have to be able to serve 100 percent of the rural areas within six years.

“That is money to help the hardest connections be connected. It’s just a matter of how much can we do at the same time. We’ve got to scale up. We’ll be hiring employees, we’ll be hiring contractors, we just have to get ourselves organized,” Elswick said.

Sunset was one of five bidders to win contracts in Virginia. The funds include areas in Buchanan, Dickenson, Lee, Russell, Smyth, Tazewell, Washington, Wise and Wythe counties.

Other winning Virginia bids came from MGW Networks, Rural Electric Cooperative Consortium, Verizon and Wilkes Telegraph Membership Corp.

Sunset’s deployment model

Sunset officials previously selected the site for a field office in Tazewell, and they hope to open it after they begin working in that area.

“That will come after projects begin occurring,” Ryan Elswick said. “The initial projects will have to come out of Bristol, but there is so much drive time for those people it will be a requirement to have a base in Tazewell where we’ve hired people that live relatively close. The take rate in the region will drive when the office opens.”

For those who signed up years ago, Sunset uses a deployment model that differs from some other providers, Ryan Elswick said. And they anticipate most everyone who signed up in 2016 when this deal was first announced likely still need service.

“We look for our customers, and we build to them,” Ryan Elswick said. “Generally speaking, those people are still in need today, and we’re using that information — when people show interest — to know where to go. When we target an area we like to know there’s community involvement, there’s community support for it, that people are excited about it, and we know we’re going to have customers when we get there.”

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