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Uploaded: Thursday, February 26, 2009, 3:04 AM
Palo Alto hopes for fiber network darken
City asked to invest several million a year in 'Ultra-High-Speed-Broadband System'
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by Gennady Sheyner
Palo Alto Online Staff
Palo Alto's decade-long quest to make high-speed Internet available to every residence and business in the city may require the city to invest millions of dollars in the project annually, city officials disclosed Wednesday night.
That's not likely, some City Council members indicated during a study session, while others still had hope and felt high-speed broadband would be a strong economic stimulus for Palo Alto.
The city has been negotiating with a consortium of Internet firms, led by Canadian company Axia NetMedia, in hopes of bringing the long-awaited "Fiber to the Premises" (FTTP) project to the city. The plan is to use the city's existing 41-mile "fiber ring" as the base of a citywide network capable of providing residents and businesses with Internet access at 100 megabits per second.
The official term for the project is "Ultra-High-Speed-Broadband System."
After an extended request-for-proposals search, the council last summer asked staff to negotiate a deal with the consortium to build and operate the network, which would ultimately become city-owned.
But the council specified that the city should minimize its financial investment and refrain from withdrawing money from the general fund.
The project has been on the city's radar since 1996. City officials lauded "Fiber to the Premises," and its misnamed predecessor, "Fiber to the Home," as an ideal means to encourage entrepreneurship, business growth and efficient communication throughout the city.
For years, some residents felt the state-of-the-art network was right around the corner.
But the recent worldwide economiccredit crisis caused the consortium's financing package to collapse. The consortium, trying to rebuild its financing, is now looking for an investment partner and has asked the city to provide an annual "firm commitment" of $3 million to $5 million starting in the third year after the contract is signed.
The network would cost $65 million and would provide high-speed Internet to 28,368 premises in the city. Under the latest plan, residents would be charged $7 to $12 per month while businesses would pay $17 to $22.
Because the fee would be imposed on every household, city voters would have to approve it by a two-thirds vote. A
Several council members indicated Wednesday night that they have no desire to either commit city money or rush into an election.
Councilman Larry Klein urged his colleagues not to buy into Axia's business model and suggested considering other firms or alternatives.
Councilman Pat Burt also criticized the new business plan and said the city needs to analyze carefully the incremental benefits of a citywide high-speed fiber network.
"The business model has changed and it's one that doesn't look as attractive to the city," Burt said. "How did we go from something that was a more cautious plan that at one point in time sounded like it would work economically to a more ambitious one that looks like it won't work?"
Councilman Sid Espinosa was more blunt.
"It's just so disheartening," Espinosa said. "I feel like we're going to keep talking about this to the point where the technology is no longer needed."
Others remained optimistic about the city's fiber prospects and reaffirmed their commitment to making the project happen.
City Manager James Keene said the project could transform the city in ways no one can even imagine, and said other possibilities for funding might exist.
He said the city has already submitted a proposal for federal stimulus funding to Congresswoman Anna Eshoo, House Speaker Nancy Pelosi, and U.S. senators Barbara Boxer and Dianne Feinstein. He said staff is scheduled a meeting with Eshoo and is working with the Ferguson Group, Palo Alto's Washington, D.C., contact on stimulus and appropriation requests.
He said it is not yet known how much stimulus funding might be available for cities.
Councilwoman Yoriko Kishimoto called the fiber network "the most significant economic-development tool Palo Alto can offer."
The network would boost communication and allow the city to provide residents with new services, including "smart meters," which transmit real-time data and make it easier for the city and utility customers to keep track of energy use.
"It's something that will draw companies and keep companies here, and it will allow things like telecommuting and real-time energy management," Kishimoto said.
About 20 residents attended Wednesday night's study session. A few addressed the council and urged members do whatever it takes to bring the project to Palo Alto.
Jeff Hoel said he moved to Palo Alto in 1998 because the fiber network was "right around the corner."
"I'm getting impatient," he said.
The council is scheduled to discuss FTTP at its March 2 meeting.
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Posted by Talks is cheap., a resident of the Palo Verde neighborhood, on Feb 26, 2009 at 4:43 am A city that cannot underground its power lines - is a clear indicator it should not attempt to do such projects.
Palo City councils talks - never delivers.
True as ever.
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Posted by zanon, a resident of the Esther Clark Park neighborhood, on Feb 26, 2009 at 7:18 am Glad that this project has not started yet. 10 years is not long enough to make such a decision. Go process!
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Posted by Marvin, a resident of the Charleston Gardens neighborhood, on Feb 26, 2009 at 7:28 am Talk is cheap--you hit the nail right on the head with regard to the city council. And you can always count on Kishimoto to make a "profound in her own mind" statement about everything
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Posted by Let it go, a resident of the College Terrace neighborhood, on Feb 26, 2009 at 8:05 am After ten years, when is Palo Alto going to kill this thing. It has proven to be uneconomical in cities that have provided fiber cable.
I suggest that those that want FTTP collect the required signatures for a $65 Million bond measure to be placed on a future ballot for a two-thirds approval by the voters. Then let's see how many residents are in favor of paying for this extravagance they will never use.
Kishimoto will be termed out this year. She has actively promoted High Speed Rail and now FTTP and is obviously out of touch with a large segment of the population.
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Posted by Walter_E_Wallis, a resident of the Midtown neighborhood, on Feb 26, 2009 at 8:27 am
Walter_E_Wallis is a member (registered user) of Palo Alto Online How about contracting up front to ATT and Comcast, and commit to remote meter reading and to distributed interconnected city offices? Then sell city hall. Probably enough there to get the system up.
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Posted by Resident, a resident of Another Palo Alto neighborhood, on Feb 26, 2009 at 9:49 am This is probably the best thing to happen. One day, in the not so distant future, internet access will be treated like another utility and expected as the norm. This will probably mean state of the art technology at that stage will have to be provided and anything that is done now would just be something that is obsolete. For this reason, waiting until such time as the next big thing comes along makes sense to me.
In the meantime, there are quite a few other upgrades that should be worked on. How about putting power underground so that we don't have outages every time there is a storm. Think of the money that would save.
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Posted by Anna, a resident of the Downtown North neighborhood, on Feb 26, 2009 at 9:58 am Yes, and we could fully fund the City Employee Pension and Retirement Health Accounts that will take an increasing share of the city's money over time. It's criminal that successive City Council's are kicking this time bomb down the road - pretending that the benefits promised to Unions aren't going to have to be funded somehow.
We have many fewer choices about what else to build, what services to provide, etc. than it appears because of the looming costs of providing these over-generous retirement benefits to city employees.
Funding them now would give residents and eye-opening look at the cost of these benefits, and perhaps would give the Council the spine not to completely cave in to union demands the next time the contracts are up for negotiation - like they did last time
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Posted by Sue, a resident of the Adobe-Meadows neighborhood, on Feb 26, 2009 at 10:20 am Remote meter reading by fiber is way overkill! Meter reading is a low-bandwidth requirement. My Mom lives in Utah and has a little wireless transmitter on her meters. The truck drives up and down the streets and collects the data.
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Posted by Super, a resident of the Community Center neighborhood, on Feb 26, 2009 at 10:40 am Why do most homeowners need a connection that is 10 times faster than DSL or cable? I can understand that business users might want fiber, but why should homeowners care when most personnel use comprises checking e-mail and searching the net? Let business users pay for it if they want it, but don't tax me!!! I'm already furious about have to pay the new tax for the forthcoming library project.
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Posted by Anna, a resident of the Downtown North neighborhood, on Feb 26, 2009 at 11:14 am
Super is right on. Most homeowners do not need, would not use, and would not voluntarily pay the full cost of fiber. This issue is being pushed by a few techies in town who - like any other special interest - want someone else to pay for their wants - in this case the fiber hobby horse. People like Jeff Hoel, quote in the story, think that their coolness justifies them asking the taxpayers to subsidize them.
They come up with all kinds of cool things that are coming that will mean the rest of us won't be able to live without fiber speed connections. But they've been saying that for years. The fact is if greedy telcos and cable companies can't find a way to make a profit off of cable, there is no way the technical incompetents at City Hall - who can't even design a website that works - will find a way to operate a cable system without huge subsidies from the rest of us.
FTTH isn't a general utility that everyone uses like electricity or water. It's a special interest boondoggle, dressed up by its supporters as an essential tool and path to the future.
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Posted by Chris, a resident of the Midtown neighborhood, on Feb 26, 2009 at 11:21 am What!? Charge only $7 - $12 per month for this service to the home, and $17 - $22 for businesses? That's crazy. A $25 change for homes would be a GREAT deal for residential customers, and the city could still offer a break for low-income & seniors. It seems the economic model is way off the mark on competitive pricing.
To Super: DSL is too slow for downloading high-quality video content. Video streaming on demand is finally happening. A network like this means you can could watch HD movies with no download wait. I agree that customers should pay a reasonable price for the service, however.
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Posted by Greg, a resident of the Downtown North neighborhood, on Feb 26, 2009 at 11:42 am I am sure that a full internet service is not going to cost $7-12/month. The numbers in the article are probably just the cost of building the basic loop. Homeowners may have to pay extra to tap into that. And the internet service is on top of that.
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Posted by Walter_E_Wallis, a resident of the Midtown neighborhood, on Feb 26, 2009 at 12:42 pm
Walter_E_Wallis is a member (registered user) of Palo Alto Online "Why do most homeowners need a connection that is 10 times faster than DSL or cable?"
Years ago a London businessman was asked what he thought of Bell's new invention. His response - "Why do I need to talk when there is no shortage of messenger boys?"
The bandwidth for time of day metering is some more than the street scan, which is required for new installations in PG&E territory now.. Instead of PSAs whining about deferring loads at system peak, you could be charged for the cost of your use at peak, and rewarded for off peak use. Think of the benefit to electric car users of really low overnight rates. Think of going in to the office one day a week, and commuting in your pj's the rest of the time. Had Jerry Brown's one good idea, CALSAT gone ahead it might have made up for all his stupid ideas that did go through.
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Posted by An Engineer, a resident of the Downtown North neighborhood, on Feb 26, 2009 at 1:11 pm Our city council occasionally makes intelligent decisions. Bravo to them for this one.
They've opened up a huge opportunity for the self-styled techno-entrepreneurial types on this blog. Instead of wailing for this slice of local socialism so you can watch movies and start the Next Big Thing from your easy chairs at home, why not do the Silicon Valley thing? Start a startup in your garage, fiber up the town, and reap the rewards all for yourself? Then, in a few years, you could have your chaffeur drive you from Atherton or Hillsborough to the city council so you can tell them about the big opportunity they missed. Or maybe jet in from Davos. Sound like fun? Just do it.
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Posted by Anna, a resident of the Downtown North neighborhood, on Feb 26, 2009 at 1:19 pm "They've opened up a huge opportunity for the self-styled techno-entrepreneurial types on this blog. Instead of wailing for this slice of local socialism so you can watch movies and start the Next Big Thing from your easy chairs at home, why not do the Silicon Valley thing? Start a startup in your garage, fiber up the town, and reap the rewards all for yourself? Then, in a few years, you could have your chaffeur drive you from Atherton or Hillsborough to the city council so you can tell them about the big opportunity they missed. Or maybe jet in from Davos. Sound like fun? Just do it."
The problem with all of this kind of dreamy prognostication is that you're asking someone else to pay for your movie watching and garage start-ups. If fiber is such a nifty money-making deal, then it ought to be a no-brainer to convince some VC to fund it. Why should the city take a risk on this when no one investing their own money is willing to do so? Do you think the city will be able to operate FTTH MORE efficiently than a private operator would?
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Posted by An Engineer, a resident of the Downtown North neighborhood, on Feb 26, 2009 at 5:55 pm "The problem with all of this kind of dreamy prognostication..."
Anna: What we have here is a failure to communicate. We are in violent agreement. I am urging our "dreamy prognosticators" to do exactly as you recommend: get funding (VC is fine by me, city is not), do the hookup, and reap the prognosticated rewards. It's the way of the Silicon Valley, of which Palo Alto is supposed to be some significant body part. Where are our vaunted entrepreneurs?
I totally agree with your observation: "Why should the city take a risk on this when no one investing their own money is willing to do so?"
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Posted by just thinkin', a resident of the Midtown neighborhood, on Feb 26, 2009 at 6:22 pm How many gallons of oil are needed to make 1 mile of fiber-optic cable?
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Posted by Sharon, a resident of the Midtown neighborhood, on Feb 26, 2009 at 6:41 pm Verizon is rolling an excellent FIoS, fiber optic to the home, system nation wide, they can do job, city politicians cannot, remember the cable TV quagmire?
For the moment anyone who needs it already has DSL or cable, those who do not can use the library.
In fact it would have been better to have spend the money for libraries on a city wide wireless system linked to a 21st century knowledge management system.
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Posted by newyankee, a resident of the Midtown neighborhood, on Feb 26, 2009 at 11:14 pm Most folks comment here because they either support or oppose an issue. In this case I will be different and declare that I BOTH strongly favor and oppose the fiber measure.
Delivering reliable high bandwidth communication to the home (or premises) will ultimately prove as insightful as the original utility infrastructure. However, the current Palo Alto government is totally unprepared to accomplish or manage such an important program.
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Posted by Paul Losch, a resident of the Community Center neighborhood, on Feb 27, 2009 at 12:32 am The City of Palo Alto can only deliver a Hummer here, and most folks in residential areas don't need a Hummer.
This is a proposed infrastucture concept, which is an appropriate thing for the City to consider. It also is cutting edge conceptually, which Palo Alto is known to do, and is commendable.
This particular proposal does not pass the sniff test. If we had fiber to home, who would use it compared with what they can get from current carriers? What about the supply side--would stuff that the home users value be enhanced sufficiently to justify the investment?
The benefits to the community as a whole have not been adequately justified for this concept to go beyond its current stage.
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Posted by Justme, a resident of the Duveneck/St. Francis neighborhood, on Feb 27, 2009 at 3:22 pm I hate to say it, but the implimentation US utilities are looking at for smart meters is brain dead. One might think that having meters remote-readable from the main office is a good idea, we can save the cost of the meter reader, but guess what: He is still needed, and paid, and billed to you (through utility costs) so that he can read your water and gas meter. They are not lookins at an all-in-one solution that gets all the meters on your house read remotely.
In europe, there is a standard called M-Bus that is designed for communication between meters, so when your electric meter gets read, your other meters get read too. It works, it is in place and functioning, and it is available to the US market. But the US utilities are not the least interested in a functioning system that could save you money on your bills. Mr. Meter Reader will apparently be around for a long time to come, entering your yard, spraying mace on your dog, disturbing your daytime naps.
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Posted by Resident, a resident of Another Palo Alto neighborhood, on Feb 27, 2009 at 3:58 pm Interestingly, in Britain and other european countries, utilities bills are quarterly rather than monthly. This means that fewer meter readers are required, thus a saving. The various utilities still get money coming in each month as different areas get billed on different months. For those who want to, there is an option of paying a standard fee for the two off months rather than waiting for the larger three month bill.
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Posted by JustMe, a resident of the Duveneck/St. Francis neighborhood, on Feb 27, 2009 at 5:15 pm That is interesting.
The biggest problem I have with the meter readers is that they only come by every 3 or 4 months, and the bills you get are estimated based on those readings. This meand that if you decided today to cut your usage, you might not see any change in your bill for 3 or 4 months, which can be very frustrating. Then you get the next bill for $75 because you overpaid all those months, and you still do not have a true picture of how much you have cut back.
With smart meters, the meter can snapshot your exact usage at midnight at the end of the billing period and you get a true and accurate bill, no more guesstamates. And, if done properly, the billing data (and power quality information the utility needs to improve their service) can be uploaded directly to HQ without the need to have anyone cruising your neighborhood, which is only marginally better than Mr. Meter Reader.
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Posted by HST, a resident of another community, on Mar 1, 2009 at 9:36 am Once again this comment section is rife with misinformation. The whole point of the Palo Alto FTTP project - and how it differs from other muni FTTP projects - is that the city has been trying to get the private sector to fund the project almost entirely and insulate the community from financial risk. A model was in place for private investment and ownership of the network for 25 (or 30?) years for the private sector to recoup their investment at which point the FTTP network would revert to public ownership. Recent economic conditions has \thrown a wrench into these gears (and many others)but it's important to not loose sight of, or put blinders on to, the basic construct of the FTTP proposal.
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Posted by just thinkin', a resident of the Midtown neighborhood, on Mar 5, 2009 at 1:21 pm Let's try again..........
OR perhaps no one cares.............
Posted by just thinkin', a resident of the Midtown neighborhood, on Feb 26, 2009 at 6:22 pm
How many gallons of oil are needed to make 1 mile of fiber-optic cable?
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