Palo Alto Weekly

Spectrum - June 22, 2012

On Deadline: Palo Alto 'fiber' is 'hanging by a thread ... thinner than a ... fiber?

by Jay Thorwaldson

Fiber "is hanging by a thread," the caller began, following a meeting of Palo Alto's Utilities Advisory Commission (UAC) June 7.

The UAC members had voted 4 to 3 to support a staff recommendation to end city efforts to build a "fiber to the premise" (FTTP) network. The citywide project would provide ultra-high-speed connections to the Internet for everyone who wanted to, or could, help pay for the system.

There was a strong deja vu in that phone call, cut short by a cell-phone connection failure.

In my return call to longtime fiber advocate Jeff Hoel I reminded him that I had been asking for several years whether it was time to "write the obituary on fiber to the home." "Premise" later replaced "home" to reflect the actual proposal, which included small businesses larger ones already had fiber. The idea has been discussed, debated, advocated, tested and otherwise danced around since the early 1990s.

No dates have been set for consideration of the matter by the City Council or its Finance Committee.

In a detailed critique of the staff report, Hoel challenges key assumptions and conclusions of consultants and staff. He once said he moved to Palo Alto in the late 1990s because he was told that fiber-speed connectivity was "just around the corner" in a community with a century-long history of innovation.

Yet even a fiber-thin thread might be stronger than it seems. Others believe the decision to abandon the FTTP dream is premature, that some of the extensive analysis done in the city staff report is incomplete, and that the long-term economic vitality of Palo Alto might just hang in the balance.

The staff's Wi-Fi recommendation is two-phased: (1) extend the city's existing "fiber ring" built in the late 1990s to the city's nine electric substations, and (2) set up 88 "nodal access points," or "nodes," that would be neighborhood-level Wi-Fi hubs. Phase 1 would cost about $1 million and Phase 2 about $5 million, according to Jim Fleming, a management specialist in the Utilities Department.

So the multi-year community debate over extending fiber lines might become a multi-year debate over the safety of Wi-Fi antennas, a la the recent AT&T cell-phone-tower squabble. Maybe not. Wi-Fi antennas tend to be fairly small.

Ironically, the two phases would be virtually the same as for FTTP, with "the last mile" of fiber (between the nodes and homes) paid by subscribers.

The funds could legally come from the city's Fiber Fund, made up of proceeds from the city's financially lucrative "dark-fiber ring" built in the late 1990s, City Attorney Molly Stump confirmed. The fund currently is at $12.7 million, of which about $1 million needs to be kept in reserve for emergencies. The fiber ring now leases fiber to 78 commercial customers and nets more than $2 million annually.

But UAC Chair Jon Foster and two other members who voted not to accept the staff recommendation (Asher Waldfogel and John Melton) aren't convinced on Wi-Fi or that the staff has considered all financial alternatives.

Foster noted that the UAC vote was unusually narrow for the commission. He said he doesn't have strong views on fiber, but "all but dead" may be too strong a term, now at least. The key, he said, would be to broaden financing alternatives beyond the "user-financed model" that was a core element of the staff report and consultant studies.

For those befuddled by all the detailed give-and-take over fiber vs. Wi-Fi, welcome to Palo Alto. Perhaps a nutshell history might help:

When the World Wide Web burst upon public awareness in the early 1990s, some Palo Altans waxed enthusiastic about its possibilities, both technical and for community and neighborhood uses. A group called Palo Alto Community Network (PA-ComNet) was formed in late 1993 following a series of three meetings entitled, "An Introduction to the Wonders of the Internet."

By 1994, the Palo Alto Weekly was putting all its printed content directly onto the Internet, one of the first (if not THE first) newspaper to do so, and the Palo Alto Medical Foundation was creating one of the first health care websites.

In the mid and late 1990s, people began seriously discussing extending fiber community-wide. Spurred by PA-ComNet and others (including strong fiber-advocates that spun off a PA-FiberNet group), the city decided to construct its dark-fiber ring, at an initial cost of about $2 million. It faltered financially at first, but after a rate adjustment started making good money that has gotten better.

City officials created a "fiber trial" of the "community center" neighborhood in the vicinity of the Main Library and the Art Center, which ran for several years before the city (faced with mounting equipment-maintenance costs) pulled the plug.

By 2000 there was serious consideration of creating a "fiber utility" as part of the city-owned utilities operation. By fall, top city administrators were strongly behind the concept.

Many eyes were on Palo Alto. In September 2000 former Assistant City Manager Emily Harrison spoke to the National League of Cities to a packed presentation. She said in an electronic era "those cities that have the infrastructure become the centers of commerce" while those that don't begin to fade out. She also cited street trenching by competing firms, which fiber advocate Joe Villareal once termed "trench warfare in the streets of Palo Alto."

But the utility concept faltered for reasons similar to concerns cited today.

There was a final effort to put together a public/private partnership venture involving the Canadian firm Axia Netmedia Corporation, which would build an FTTP system, then estimated to cost about $45 million. But deteriorating market conditions and Axia requesting a guaranteed revenue stream killed that prospect in 2009. Close observer Bob Harrington said he believes there was a serious misunderstanding about what Axia was seeking.

Last year, the city tried hard to win a Google grant to install a fiber system, but lost out to Topeka, Kansas, despite a strong showing of support from the community.

A lingering concern about the city engaging in FTTP is that the current dominant providers of high-speed Internet access AT&T and Comcast have a "track record of aggressive tactics" to maintain market share, the staff report notes. Stronger terms have been applied, such as alleged "predatory pricing" in an attack on Alameda's high-speed (not fiber-speed) network.

So here we are, deja vu and all. Yet not many eyes are watching Palo Alto these days relating to fiber. If it isn't dead, it needs serious resuscitation. (See the Weekly's coverage of the report and studies at http://www.paloaltoonline.com/news/show_story.php?id=25673 )

Former Weekly Editor Jay Thorwaldson can be emailed at jthorwaldson@paweekly.com with a copy to jaythor@well.com.

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