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Palo Alto fiber vote delayed to July 9

Original post made on Jun 19, 2007

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. Council members delayed action until July 9 -- after chiding the bidder for seeking a bigger commitment of city funds.

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Comments (14)

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,"
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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 just thinking, a resident of Midtown
on Jun 19, 2007 at 2:56 pm

Hey Marconi -

Who really started the tech revolution in this town, over on Channing????


Posted by Guglielmo Marconi, a resident of Downtown North
on Jun 19, 2007 at 3:35 pm

It sure wasn't a City Council member, or City Staff member - and the fact that Lee DeForest's 1911 invention of the vacuum tube and electronic oscillator over on Channing may have been first, and the genesis of a tradition, doesn't defeat the argument above - i.e. that it was _commercial_ (not government) inventive genius that made this place what it is today.

Too many people (including the media) want to give Palo Alto "the city" credit for what some very enterprising people did. It's tiring, especially when one hears a lot of blather about innovation, and nothing innovative _done_.


Posted by Paul Losch, a resident of Community Center
on Jun 19, 2007 at 9:23 pm

"Last Mile" business opportunities typically reside with the private sector, since they are more volatile and risky than what public sector service providers, such as a City like Palo Alto, are regarded as being appropriate to take on.

That we own our utility here for power, gas, and water, is a distraction. Whether it makes sense to offer a fiber connection to the "last mile" of households should be considered in this city just as any other city would consider it, on its merits, not due to ethereal notions of utility precedent or Palo Alto's place in the techonolgy leadership realm.

I strongly support getting our infrastructure in good order, as it is the "platform" on which all municipal, community and private entities must operate. The better our infrastructure, the more success all these other operations will have, IMHO. And Lord knows, our infrastructure needs significant investment and upgrade right now, after 30 years or more of use and wear.

But, I am troubled by this fiber notion. I live in the orginal neighborhood that was proposed for FTTH, and initially was excited about it. We did not make the final cut, but I harbor no hard feelings. What has me concerned is that if this truly were a commercially viable proposition, the private partners would be willing to put their risk capital up without being fettered by government money of any sort being added to the pot. Our "last mile" experience running a cable operation locally was a perfectly fine concept, but eventually did not prove out.

Even though the likes of AT&T, Comcast, and whoever else comes over the transom deserve heaps of criticism for how they operate and price, I really have to question if our city or any city truly has the competence and capacity to manage the last mile of information technology infrastructure in a profitable and sustainable way. I think its great that we laid the ring around town--that is the enabling "platform" to my mind similar to our roads, parks, and facilities. But the last mile component gets into the operations in a very different way, and I would vote against moving forward on this proposal.


Posted by Walter_E_Wallis, a resident of Midtown
on Jun 19, 2007 at 9:30 pm

Hey, Guglielmo, you still taking credit for Tesla's invention?


Posted by Guglielmo Marconi, a resident of Downtown North
on Jun 19, 2007 at 10:26 pm

Walter, After invention, marketing and execution are what business is all about. To thge losers belong the complaints.

One way to put it: Marconi was to Tesla as Toyota was to General Motors.


Posted by Guglielmo Marconi, a resident of Downtown North
on Jun 19, 2007 at 11:16 pm

Paul, We are entering a new era of municipal governance in America. This era will require risk taking and innovation on the part of municipalities. It will also require far stronger private/public partnerships, and much more robust intra-regional cooperation. Most importantly, municipal governments will be held _accountable_ like never before. Municipal governments are going to have to _execute_ to plan. Those that are able to do this will be tomorrow's winners. We are at the genesis of this change.

There is no reason that a well-thought-through fiber deployment shuold not work at the municipal or regional level. The only missing ingredient is political will and determined leadership that is open to _structural_ innovation (as opposed to "feel good" innovation).

The above will require a willingness to stay on top of the wave of constant change, with the moxy to make that happen.


Posted by pat, a resident of Midtown
on Jun 19, 2007 at 11:20 pm

There are so many red flags waving on this project that I can't believe it's still being discussed:

- The business plan is supposed to come BEFORE the RFP. You don't select a vendor to write a business plan for you.
- The single company that responded to the RFP – saying we wouldn't have to put up any money – now wants us to pay for the business plan.
- A new player, Northstar, pops up and wants the city to kick in $15 million.
- Carl Yeats says our financial involvement could be $20m or more!

Do we have ANY confidence in 180 Connect at this point? Could we please put aside our egotism about what a great technology center we are and get real? This project is a disaster waiting to happen!


Posted by Paul Losch, a resident of Community Center
on Jun 20, 2007 at 10:14 am

Marconi--

What you say sounds great, and I share much of your point of view in concept. I think where I part company with you is how far those stretch points can go before they break.

I am a true believer that a strong, effective municipal government can do wonders for a community's success. I also believe that Palo Alto's character has benefited from such a government over its history. But, there are limitations to what we should expect our municipal government to do, and what should be left to private enterprise.

Our government serves us best when it provides reliable, consistent, excellent platforms on which the community overall can operate. It also has an important role in "leveling the playing field" so that those less fortunate can avail themselves of certain resources that help keep the community healthy and balanced. As I use that lens to look at this "last mile" proposal, it does not exhibit such traits.

I question the true "demand" that exists for this "solution." HD plasma TV's are really cool, but I, lke most people, don't have one yet. Similarly, DSL and cable work just fine thank you for the preponderance of households right now too. Just as the private electronics manufacturers are showing the way for us to migrate from our current boob tubes to HD plasma, so too should the private service providers take on the risk and lead the market to FTTH.

That is not to say that FTTH is not superior, it by all means is. But the "market" it serves at present is fairly small, and to develop that market, replacing cable and DSL eventually, I do not see a compelling argument that a municipality should take on that role, even in a public/private partnership, competing with existing carriers who are fully capable of doing the job when the value propostion is compelling enough for them.

Again, I am talking about the "last mile" on FTTH. I applaud what we did with the fiber ring, and we should do more things like that when they present a compelling value propostion to businesses and people who can tap into it.

I am not even going to get in the companies involved in this particular RFP. It sounds like there may some questions around that as well, but for me, this one never should have gotten this far. What we learned from the FTTH trial was enough for me to conclude that Palo Alto should not be getting involved in this any further. I'm a marketing guy, sometimes test markets don't work out, and you kill products after such test markets. This one to me fits that category.

One final, indirectly related thought--there is a ton of technology that is now commonplace elsewhere in the world that does not even exist in the US. Go to Scandinavia, you will be amazed. One thing our governments here could do at all levels is foster a regulatory environment that is much more amenable to things like FTTH becoming worthwhile for the private sector to pursue. 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.


Posted by Sanford Forte, a resident of Evergreen Park
on Jun 20, 2007 at 11:39 am

Paul,

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.
Web Link

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 David Lieberman, a resident of Professorville
on Jun 20, 2007 at 12:48 pm

Sanford Forte writes:

"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."

OK. So stop whining and do it. If you make a profit, good for you. If you lose your shirt make sure it is YOUR shirt and not mine.

At long last this whole idea of city owned telecommunications is going to die.

David


Posted by Paul Losch, a resident of Community Center
on Jun 20, 2007 at 12:55 pm

Sanford,

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.


Posted by Sanford Forte, a resident of Evergreen Park
on Jun 20, 2007 at 2:15 pm

Paul,

You raise some good points.

Any effort to deploy FTTx here would not "prove out" any predetermined model of government - it would rather be a way to show that a project like this can be financed and scaled in a way that removes the city from any direct fiscal risk. This is essentially the position that I have lobbied for since day one.

I agree with your position of the city being the enabler; that's about as far as one can reasonably expect the city to go, especially given the reality of othe preconditions and circumstances that currently define (and constrain) the hoped for FTTx deployment.

Many current FTTx proponents here are somewhat misleading themselves into believing that a private equity "white knight" is going to ride in and make FTTx happen. Again, as stated prior, the current requirements in place by the city mitigate strongly against that possibility. This is borne out by the fact that only one rather insufficient group (180 Connect) put up a bid (wanting PA to pay for the business plan, no less - good grief!).

What I'm angling for here is having the city move into the position of enabler and endorser of a mostly private effort, and do it in such a way that PA can leverage its political capital and right of way assets to help create a 21st century communications infrastructure.

Like you, I have doubts that this will happen. Palo Alto's current governance structure mitigates the kind of flexibility and speed that is required to make "deals" like this happen. That's the subject of another post.

With the above as a given, our policy makers should not let the impetus for this project die; we need continue to search for ways - in cooperation with the most ardent proponents of FTTx - to make FTTx a reality.

One poster above (Marconi, I think) pointed out that private equity in Europe is beginning to see the forward value of funding municipal FTTx networks. We need to be looking in that direction, as well as deploying a coordiniated grass roots effort here, to begin making our future. At the very least, we should be discussing possibilities with our regional neighbors about this, as more than an afterthought.



Posted by Paul Losch, a resident of Community Center
on Jun 20, 2007 at 2:48 pm

Sanford,

We shall see where this particular proposal ends up.

If private risk capital is getting placed for such things as this in Europe, we should be educating ourselves on how they are going about it, and try to adapt some of the practices and approaches that are working effectively elsewhere.

While I feel good about some of the innovation that has taken place over the years in Palo Alto, I am sad to say that sometimes we seem to have difficulty looking past our boundaries to understand how other places are doing things that could have merit when attempted here. The World Languages issue the school district is struggling with is a great example of that in another context.

This does tie in with the larger question I have posed in prior postings about what the Character of Palo Alto is, and what the key pillars are that make up that character. Infrastructure and a thriving business community are two of the pillars I have suggested. Taking a technology opportunity as a way that could strenghten those pillars with innovative municipal approaches is a nice beacon to be shooting for. I remain skeptical that the current "last mile" FTTH matter we have before us is a good one for making the point.


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