Uploaded: Tue, Jun 19, 2007, 8:34 am
Palo Alto fiber vote delayed to July 9
Five votes needed, but council members chide bidder for not taking city's 'minimal risk' requirement seriously
With too few voting City Council members, Palo Alto's plan to link residents and businesses with superfast broadband fiber-optics hit another hitch Monday night.
Only four council members were left who were ready to vote for a contract allowing further negotiations with a consortium of firms led by 180 Connect and development of a business plan. Five votes are needed.
But there was no fifth vote: Three council members are unable to participate due to conflicts of interest, one council member was absent and one council member was opposed.
Councilwoman LaDoris Cordell said she could not support 180 Connect because of a blatant incident of racial discrimination at one of 180 Connect's 85 operations centers, where a warehouse supervisor hung a noose inside his cage office and left it there for weeks despite protests from African-American workers. She also cited risks of the project.
Council members Dena Mossar and Jack Morton had to recuse themselves due to investments, Council member Judy Kleinberg said she felt her employment with a Google-sponsored non-profit created a conflict, even if it was not a technical conflict. Barton was out-of-town.
The council finally rescheduled the matter for July 9 -- but not before 180 Connect and partners were reprimanded for not heeding the city's conditions outlined in the original request for proposals a year ago.
Several council members expressed disappointment that costs were creeping into the project that were not envisioned in the original city request for proposals. One such cost is $30,000 to over expenses involved in preparation of a business plan by 180 Connect.
The city also would need to spend $45,000 to evaluate the value of useful city assets, such as its dark-fiber ring; $20,000 for legal and financial consulting; and about $75,000 of city staff time, according to Joe Saccio, deputy director of administrative services .
Despite their support for the concept, several council members didn't shy away from expressing their aversion to statements from a new partner on the project, Colorado-based NorthStar Capital Partners, indicating the city would need to contribute approximately $15 million in cash, bonds or assets to the $50 million-or-so project.
Administrative Services Director Carl Yeats said the city's financial involvement could be as high as $20 million or more, according to figures presented to the city by NorthStar.
Yeats emphasized he would not recommend making such a cash commitment given other city commitments such as funding a new public safety building and refurbishing libraries and other infrastructure projects.
Andy Poggio, a citizen working with staff on the project, said there are numerous types of in-kind services that could be counted as part of the city's commitment.
But several council members reacted sharply to the concept of the city committing anything above a "minimal risk" involvement specified in the request for proposals.
"I'm disappointed, frankly, in the responses we've gotten so far," Vice Mayor Larry Klein said. "We meant what we said in the (request for proposals). We weren't playing games. … I'm not about to see us commit millions of dollars in cash."
He noted he is a big supporter of fiber and that Palo Alto may be the best place in the world for such a project. But he said the city is not able to make a significant cash contribution to the project, and "I'm not about to see us commit millions of dollars in cash or significant revenue stream, which is the same thing."
His biggest disappointment was the request for $30,000 to help with the business plan because it was not included in the response to the RFP. A similar request by the other bidder was a reason the 180 Connect consortion was selected, he said.
Councilman Bern Beecham proposed the delay. Assistant City Manager Emily Harrison said July 9 was the next available meeting even though it had several items that must be acted upon because they relate to the November election.
Jeffrey Mazer, managing partner of NorthStar, said the contribution could come from city assets or from a third party such as an interested business, investor or even grants.
"It's entirely possible to do this without any cash bonding," Mazer said.
It hasn't, however, been done yet anyplace else.
But if it is possible, Palo Alto is the place, several community members and council members said Monday. Mazer agreed.
"Palo Alto, in some ways, is the perfect place to do this because of its technological leadership established over the ages," Mazer said. He said he could tell potential investors, "Look, it's Palo Alto, you know this community." But strong city involvement would be helpful in presenting the case to potential investors, he said.
After discussing the issue for many years, the city formally asked for firms willing to construct and manage a fiber network for the city in September 2006. The council specified the system would be capable of transmitting high-speed video, voice and data in both directions, the city would eventually own the network and it would invest nearly no money.
Two companies expressed interest in January and the council picked 180 Connect, a Canadian-headquartered broadband operations firm that would use the services of PacketFront, a fiber-to-the-home company, the Royal Bank of Canada and NorthStar.
In other business:
* The council spent more than an hour debating the mixed-use Alma Plaza project, which it approved on an 8-0 vote May 14. But changes in the plan and a myriad of design details stand in the way of final approval.
Several council members expressed concerns about the use of three ancillary commercial buildings and the process for reviewing and refining the project's details, including what constitutes "neighborhood-serving" uses.
With a single opposition vote from Mossar, who was absent May 14, the council required developer McNellis Partners to restrict the use of the ground floor of the back buildings, which total 5,600 square feet of commercial. The council also gave the city's Architectural Review Board and Planning Commission the ability to change the configuration of that space to one, two or more buildings if they choose.
The project includes 37 single-family houses, a moderate-sized grocery store, 14 below-market-rental apartments, a small park, a community room and several other small commercial spaces.
Developer representative Jim Baer said he agreed to the council's changes.
(Staff Writer Becky Trout can be e-mailed at email@example.com.)
Posted by Guglielmo Marconi,
a resident of Downtown North
on Jun 19, 2007 at 9:25 am
Jeffrey Mazer: ""Palo Alto, in some ways, is the perfect place to do this because of its technological leadership established over the ages,"
This is a myth. Was it Palo Alto, the municipality, or others, like H&P who started up here, that made this place what it is?
Palo Alto as a municipality followed the coattails of the magnificent entrepreneurial geniuses that settled and started up in this place. Let's give credit where it's due.
In fact, MANY other places have ALREADY started up fiber efforts, because they were able to generate POLITICAL WILL, and not afraid to INNOVATE.
In fact, there is very little left of high end entreprenuerial spirit left in Palo Alto. What we mostly have are well-heeled VC's (holding onto their cash like scared children - look at the cash reserves of most VC funds, it's a sad, sad follow up to the great heritage of innovation that these people walked into), IP firms cashing in on the structural flaws in patent law (the real gold rush in PA), and a new stomping ground for Beverly Hills-type retail shops, where a $200 Ann Taylor blouse (with $.26, yes, 26 _cents_!) of Chinese labor is the Saturday afternoon prize.
Municipal innovation? I don't see it.
Yes, we have infrastructure challenges, and they need to be met, but we need REAL: business development efforts aimed at REAL growth here in PA. Where are they?
About FTTH: Where is the effort, at grass roots, to generate a _public_ private placement, from FTTH supporters? So far, this whole thing has wreaked of passivity and conventional thinking - in a time when new, fresh approaches to funding and garnering public support have been necessary.
We need to step outside the box.
As for FTTH here, I don't see it happening anytime soon, not in the present environment.
At this point, the best thing that we can do - and the most effective - is to start up a regional effort. That would have far more "punch" when it came to the participation of private investors, and we'd end up with a far better group of potential investors. Will PA lead on this? We'll see.
One last thing. Frankly, 180 Connect is not the quality group that we need for this effort. $30K to write a business plan? They HAVE to be kidding. On that request alone, I would seriously consider dumping them.
That said, I thought LaDoris Cordell's taking the the entire 180 Connect enterprise to task *as an entire corporation* for the actions of two employees in one of their 85 offices, was grandstanding, and transparently disingenuous. Is Stanford University entirely free of racism? Of course not. Do we judge Stanford University, on the whole, based on the racism exhibited by a teeny, tiny fraction ofo its personnel? Of course not. So why then hasn't Councilwomann Cordell condemned her employer (Stanford University) in the same way, with the same vitriol, that she condemned 180 Connect last evening?
Racism is one of the world's great evils, but we need to be careful in how we characterize the entire body of a particular corporate culture, instead of making flash macro judgments based on a small sample of a corporation's behavior. That's simple common sense.
Councilwoman Cordell's coming down on 180 Connect like Al Sharpton is something that was uncalled for within the context of last evening's meeting, especially given the facts of the case that Ms. Cordell used to her grandstanding advantage.
Here's hoping that we move forward on this effort in a way that is befitting of a city that claims to have a heritage of innovation. Let's see some innovation in government, that government can rightfully take credit for.
Posted by Sanford Forte,
a resident of Evergreen Park
on Jun 20, 2007 at 11:39 am
I have to weigh in on this one, as you've touched on something that is crucial to for our current and future policy makers to understand.
In your post above, you said: "As a old wise techonology consultant once told me--"Most of the technology is there, it is just badly distributed." Government can foster an environment so that the private sector moves more quickly to getting it better distributed."
This is exactly what the Palo Alto effort is all about, helping to better distribute a technology that has been held back from main line consumers by an oligopolistic telecommunications sector. Believe it or not, we are talking about something that could be ann essential ingredient in halping Palo Alto to maintain a reginoal municipal hegemony that has begun to slip away. At the very least, Palo Alto should be working (as someone pointed out, above) with other cities in the region to make community-owned FTTx a regional reality.
Here's a white paper I wrote for the FCC. It may shed some light on why a municipality should be involved (in the present regulatory environment) in deploying optimal comm unications technology for its citizens.
Just before writing that paper I had spent some time working for a a UK-based broadcasting corporation's private venture capital group. I performed financial and market analysis and diligence on American telecommunications and digital media-based opportunities. From that experience I learned that America's telecommunications and IP capabilties were fast becoming second rate in terms of service levels, costs, and accessibility, compared to most developed, and fast-becoming-developed nations.
(I also learned from that experience how not to finance and deploy municipal fiber networks, and was a passionate oppoenent of the first effort to do so here, as it was badly managed, with almost no sound business diligence applied)
We have to do something about America's - and in this case, Palo Alto's - _disadvantage, relative to most of the developed world - in the communications sector, as the telecommunications regulatory environment in America is stacked against the consumer.
This unacceptable situation is _hurting_ every one of us, every day - economically, and socially.
Going back to what you just wrote, I think the difference that you pointed out with the poster you were responding to (above) is one that can best be described as "municipal government as we understand it" vs. "what municipal government has to become if we're to thrive". The latter position is the one I hold.
There is simply no reason that local governments cannot become a efficient, effective, active promoters of change and innovation in the telecommunications sector. To deny this is to make a claim that human beings cannot improve performance, or change - an argument that would be false on its face.
What we're grappling with here - as are other communities - are ways to alter the status of municipal government to an entity that maintains and runs infrastructure, _as well as_ one that promotes the further efficiency of that infrastructure, including making necessary enterprise additions to infrastructure that maintain the competitive profile of the municipality.
Essentially, what I'm attempting to suggest is strategic municipal business development (something that we will hear more about, soon enough). This is something that most communities don't do, but will find themselves having to do in order to maintain hegemony, or just stay even in a far more competitive and fast changing future than American municipal governments have ever experienced.
To date, Palo Alto has not been able to break far enough away from conventional modes of municipal management and policy-making, to a place where we actively and _effectively_ promote civic opportunity (to build necessary infrastructure) to the _grass roots_, including FTTx.
As someone stated above, we require political will to make this happen. The current Council has been hobbled by recusals of various members on this issue, but has mnanaged to hang in there. That said, we still need to ratchet this effort up a notch or two, with a good dose of additional grass roots effort coming from those who are most passionalte about this issue. Our City Council will _not_ be able to pull this off by itself. (for instance, a _community-based_ private placement means a campaign - one quite different, and run in an entirely different way than a campaign for infrastructure bonds - something like this could be carried out with very little official involvement on the city's part, but would include the city's blessing. Political will doesn't just mean "politician's" political will - it implies that citizens get involved in ways that are far more proactive than the current effort represents)
It's most important that we keep the FTTx initiative alive, and permit ourselves (without spending money on conventional risks, or half-baked integrators) to muddle through to an effective _and profitable_ solution to an FTTx deployment here. We have to keep trying.
There is not a single institution or household that would experience anything other than a net positive gain from the economies and efficiencies brought by an FTTx deployment here. If one spends time parsing out the payback solely in terms of an effective leveraging of local communicative assets - and further takes time to compute in additional fiscal and social benefits, there is no other way to turn than say "let's do it!"
Whether we have to work with a third party is open to question. I'm convinced that a local, privately held consortium could deliver up a beginning toward ubiquitous FTTx, scaled in a way that delivers profit, meets demand as it occurs, and stimulates further enterprise growth as it continues.
Posted by Paul Losch,
a resident of Community Center
on Jun 20, 2007 at 12:55 pm
A thoughtful posting, much appreciated. As I said to Marconi earlier, much of this makes a ton of sense conceptually, there can be differences of opinion on where the grey areas start and end, in terms of municipal involvement.
The situation as you describe it, with the US lagging appreciably in its technology infrastructure is consistent with what I have observed first hand and in my various readings. I don't pretend to have the sort of background or expertise that you have, but I think I follow this enough have a general understanding to agree that this country has a lot of catching up to do. ( I know enough to be dangerous. ;+} )
I will take that a step further and say we locally in Palo Alto have the capacity and potential to take these matters into our own hands and demonstrate what can be done. People have expressed various thoughts about Mayor Kishimoto's ideas around getting Palo Alto "Greener," but we do have a heritage of forward thinking and taking some risks as a municipality on ideas that are not mainstream when they get started here. (Count the hybrid cars in town.) In that respect, I do agree with the comments that as a candidate city, it may not get any better than Palo Alto--although there are others equally up to the challenge.
Again, I will not get into the specifics of this RFP, as I think there is a larger question that must be thought through around this idea.
If I take your point about a "to be" model of municipal government participation in this effort, I think there are many other aspects to this than the current discussion has as its focus. There is a great deal more to this than pulling a little glass strand from a pole to an exterior wall of a house. You and Marconi both are suggesting that we need to take a look at new and different models of municipal involvement on forward looking efforts such as this. I can get behind such a suggestion, but it is not clear to me that such thinking has taken place here. If the current FTTH idea is the test case to demonstrate that larger point, is it really designed to prove out that part of the concept? Frankly, I don't know, but my hunch is that the answer is "negative."
I tend to be a "glass half full" kind of guy, but there are some down sides here that seem to be glossed over. What if this specific approach doesn't pan out? Forget the financial side of it, although that discussion deserves its own thread. Just think about what it implies for other potential "to be" municipal models' likelihood of moving forward. At the start of any game, be it in sports or business, getting points on the board early does wonders for creating momentum, traction, credibility, success and future opportunity. If this is teed up as the test case, we sure as hell better make sure that huge element is very well thought out, we only get one first chance. Have we done that here? I can't tell.
And just exactly is that "to be" role? From what I have seen, Palo Alto's money and "good offices" to enable the project to go forward are what is being sought here. Maybe that's the right role, maybe it's not, but shouldn't we be having a discussion around what alternative roles and levels of involvement could be? Maybe other options have been discussed by those actively involved in the effort, and this approach, as best as I can understand it, is the one they think has the greatest chance of suceeding. If so, it stll leaves open the question of what other options were considered, and how is it that this one came out on top? Has such a discussion taken place for the benefit of the public?
I am a bit cynical also about what the private companies are expecting from Palo Alto here. Palo Alto, or any government entity, should be the "enabler" here that creates the opportunity for these guys to succeed. In such a role, we provide a valuable service to the community we serve, and enjoy some of the financial fruits of the effort if it is successful. My evil twin tells me in this case, it may be more of a situation where the private participants are trying to keep their risk profile less exposed by using our scarce dollars for their experiment. With all the technology risk capital invested around here by folks working just blocks away from City Hall, there is something about this that just doesn't seem right to me, with my current understanding. Done right, this is as scalable as FaceBook or YouTube, to pick some au courant technology plays.