Santa Rosa internet service provider Sonic turns 25, after humble start in McDonald Avenue home

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In the early days, Sonic was little more than a few modems, eight phone lines and personal computers operating out of a back room of co-founder Dane Jasper’s mother’s house in Santa Rosa’s McDonald Avenue neighborhood.

It was late 1994, and its precursor Sonoma Interconnect, was already hogging extra phone lines intended for neighbors on the block. When Jasper and co- founder Scott Doty called the phone company to ask for eight more lines, the company balked.

“I had used up every (second) phone line in that (telephone) cable that ran the whole 10 blocks,” Jasper recalled.

It was a time of rapid growth for the two Santa Rosa Junior College students who launched their fledgling company when the internet was for most Americans a novelty, a niche used primarily by college students and computer scientists.

The World Wide Web was only a few years old and Mosaic, the first user- friendly graphical web browser, was wowing non-techies with GIFs, gray backgrounds, black text and blink tags.

“You know, as a 21-year-old junior college student, I didn’t have an expectation or understanding that the internet would change so much of what we do every day,” said Jasper, reflecting back 25 years ago when he and Doty launched their internet venture.

They may not have been able to predict how all-encompassing the internet age would become, but they knew enough to evolve and ride the wave of each major technological innovation.

It’s the reason Santa Rosa-based Sonic has thrived even as most other small internet service providers, which numbered in the thousands across the country during the dial-up net period of the mid-1990s, have gone out of business.

The internet service industry now is dominated in the United States by four major telecommunications companies, Comcast, AT&T, Verizon and Spectrum.

In the 25 years that Sonic has been operating, the company has grown to become the largest independent internet service provider in Northern California with more than 100,000 customers. Along the way, with Jasper as its CEO, Sonic has become a champion of telecom policies promoting competition, online privacy and the concept of net neutrality.

“It’s important to have a local telecom business that is more focused on ensuring privacy and more in tune with its own community,” said Farid Farahmand, who heads Sonoma State University’s engineering science department.

Chip Pickering, CEO of Incompas, the nation’s leading trade organization calling for competition among fixed, fiber and wireless networks, has lobbied for more rivalry in the telecom industry since 1981. A leading voice in the effort to break up AT&T in 1984, he said in many ways Sonic’s successful business model in Northern California is “spreading to the four corners of the country.”

Since 1994, Sonic has been through three major business transformations, each of them a response to both government telecom policies or advances in technology.

The business began as a dial-up internet company, evolved with the advent of DSL, became a telephone company and most recently has been laying miles and miles of its own fiber-optic cable, creating its own network.

“Each of those is a real reinvention of the company, a learning new skills by the staff, a change in strategic direction,” Jasper said. “And they’ve all been driven by technological or regulatory change.”

By the end of 2018, 76% of the fixed residential ISP marketplace was served by four companies — Comcast, AT&T, Spectrum and Verizon, according to Leichtman Research Group. And the total number of residential ISP fixed broadband customers is almost 100 million.

The dial-up age

For Jasper and Doty, Sonic’s dial-up period meant learning how to manage phone lines and modems and what to do when modems overheated. It was a period of chaotic growth when the two were forced to learn “how to run a business out of a checking account.”

Back then, Jasper was a full-time student on the swim team, working two jobs and doing his part running the company.

“I’d go to the P.O. box and there’d be a few people signed up and I’d go to Kinko’s and photocopy the checks, I’d go to the bank and deposit them. I’d go home and call people and say, “OK, I set up your account, let me help you set it up,” he said.

That kind of personal customer service has been a trademark of Sonic ever since. Pickering said the company has been ranked highest in the industry for consumer satisfaction.

The company’s second transformation came in 1998, with the advent of DSL, or digital subscriber line, a technology that brought high-bandwidth data over ordinary copper telephone lines. With DSL, Sonic’s staff had to learn a whole different set of skills and obstacles, Jasper said.

In the dial-up age, Sonic could be launched with an initial investment of $9,000, Jasper said. But to be a DSL provider, you needed a much greater investment and the technology was more challenging, he said.

“I remember buying our first T3 router and we called it ‘Could have bought a Lexus’ — it was $30,000. That was huge,” he said.

During that time, Jasper served as president of the California Internet Solution Provider Association, which included about 130 members.

“We figured out that the deck was really stacked against small carriers, you needed to buy a big aggregation of circuits in order to have good economics per customer,” he said. “So for little ISPs that bought little circuits, it was a real uphill battle.”

Jasper said he launched an initiative to band together small ISPs, about 76 of them, on Sonic’s large DSL aggregation infrastructure that covered about 90% of the state. That let service providers in places like Santa Cruz or Ukiah to do what they could not on their own, he said.

Pickering said Jasper has been “a tremendous advocate for the competitive industry.”

Sonic calling

The third major milestone for the company came in 2006, when Sonic became a telephone company, placing its own equipment across its service region.

By 2010, the company launched its Fusion broadband service, which was unlimited, fast internet with unlimited nationwide home phone service.

“Later, we added unlimited international calling, a free fax line, a website, domain name,” Jasper said. “We just loaded the kitchen sink of this thing and we sold it for $40 a month.”

That became one of the company’s most disruptive business moves and kicked off robust growth. In the U.S. internet market, customers are used to paying more, incrementally, to get faster speeds.

Jasper said the service tiers are based on a false premise, that the customer is paying more because the internet service provider is giving up more.

“It’s not costing us any more if somebody has a three megabit connection instead of a one and a half megabit connection,” he said. “The fact that the U.S. market settled on a few different speeds for a few different prices is an outcome of duopoly.”

That duopoly was made up of either a local cable company selling cable- modem internet service or a phone company selling DSL.

Sonic’s fiber era

The fourth milestone came less than a decade ago, when Sonic began laying fiber-optic cable in Sebastopol as a test project. Then in 2014, Sonic entered into a public-private partnership with the city of Brentwood to build an underground fiber network.

At its Santa Rosa office, huge wooden spools of fiber cable sit in a parking lot. On a sunny day last week, under a small shade tent, a worker was being trained on how to splice the fiber cable.

The company’s fiber era is about building the “last mile” that goes all the way into a neighborhood, business park or home. It’s the last step for developing a closer relationship with the consumer, Jasper said.

“And so with each of these, we would push closer to the consumer with the equipment and technology,” Sonic’s CEO said. “And you know, if you walk around the building, you’ll see all these spools of fiber and bucket trucks and construction equipment. ... When you’re a nerd who’s into modems and the internet, that doesn’t mean you know how to climb poles and do engineering and survey work and string cables.”

You can reach Staff Writer Martin Espinoza at 707-521-5213.

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