Publication Date: Wednesday, April 14, 2004
Guest Opinion: Palo Alto Fiber-to-the-home project merits closer scrutiny
Guest Opinion: Palo Alto Fiber-to-the-home project merits closer scrutiny
(April 14, 2004) by Nick Nocchi
During the evolution of the Palo Alto Fiber-to-the-home project, Comcast and the cable companies that preceded it have been more observers than active participants.
Comcast does not believe it is our role to tell any municipality what activities it should engage in and what services it should provide. That responsibility belongs to the elected officials who set policy for the city and ultimately, to the voters and taxpayers who elect their municipal leaders and pay the bills.
However, now that the project is at a critical crossroads, we believe we have the responsibility as a service provider and as a corporate citizen to participate in this discussion for two reasons:
1) We have a responsibility to our customers, employees and shareholders to look after our business interests to ensure that we are allowed to compete on a level playing field with other providers and,
2) We owe it to the citizens of Palo Alto, many of whom are our customers and employees, to raise issues about the project that merit closer scrutiny than they've received so far.
We are puzzled as to why Palo Alto is interested in embarking on a venture that has proven risky for so many other municipalities. Municipalities across the country that have ventured into this business have, for the most part, failed, and have had to rely on taxpayers to bail them out and/or subsidize the ventures.
Residents of Palo Alto should question whether this project should be under consideration as a priority for the city. In his recent State of the City address, Mayor Beecham noted that Palo Alto's budget for capital upgrades is "insufficient to maintain the parks, streets and facilities that comprise the city's half-billion dollars in material assets." Why take on another $40 million (at least) risky venture as an addition, when the services to be offered from the effort are already available from a number of strong competitors?
Aside from the financial risks, the business the city is considering entering into is complex and competitive. For video services, the city would be directly competing with Comcast, Echostar, DirecTV, and local broadcast stations. These providers face a level of competition and ongoing innovation that is far different than providing one-dimensional electric service.
Each line of broadband service, cable television, High-Speed Internet and telephone, has its own set of technological, marketing, customer service and financial challenges.
In the cable TV business alone, disciplines including programming, customer service, marketing, product development, engineering, installation, and maintenance require sophisticated expertise with skill sets that are continually evolving, triggering never-ending needs for training and hiring.
Can the city afford to spend the time and money required to acquire the expertise to compete effectively? Palo Alto already failed in this type of endeavor before, and had to sell the assets to our predecessor.
Finally, Comcast has a responsibility to our customers, employees and shareholders to ensure that we are allowed to compete on a level playing field.
This issue is simple: By entering into this business on a commercial basis, the city would put itself in the position of being both our regulator and competitor. How can it claim that it is possible to simultaneously regulate a company while competing against it in a fair manner? This issue alone has many legal and public policy ramifications that must be scrutinized.
As part of our preparation for the possibility of this competition, Comcast hired Godbe Research, a state leader in public opinion research for more than 14 years, with an impeccable reputation among its municipal, political and corporate clients. We believe it is important to understand what the citizens of Palo Alto think about this proposed project as well as how they feel about services they currently receive. This information will be helpful as we communicate about this subject in the future.
With so many questions surrounding the timing, necessity and overall feasibility of the project, now is the ideal time for city policymakers and residents to press for more definitive answers on a wide range of technological, operational, financial and legal issues, before taxpayer money is needlessly committed to support this risky venture.
Nick Nocchi is Area Vice President for Northern California Comcast Cable, based in Menlo Park. He can be e-mailed at Nick_Nocchi@cable.comcast.com.
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