Publication Date: Friday Feb 6, 1998

TELECOMMUNICATIONS: Fiber loop plan clears key hurdle

The Palo Alto City Council has given its initial approval for a plan to bring high-speed telecommunications services to every address in the city.

Council members voted unanimously Monday to begin the search for a company that would connect homes to the city's new fiber loop.

"This is rather an astonishing step to be moving toward some sort of universal access," said Council member Liz Kniss. She reminded her colleagues that it was only four years ago that the city was developing its own Internet site. "(Internet) has become a household word now."

Mayor Dick Rosenbaum also voted to approve the plan, but voiced two concerns. He said he found it hard to believe that the provider the city chooses wouldn't demand an exclusive contract, thereby putting the city in an "anti-competitive" stance. He also called the plan--to connect every home in Palo Alto to the city's fiber loop backbone--a form of "speculative technology" that he would be "loathe to put city money into."

City staff assured council members that the search could begin in June or July. Van Hiemke, the city's telecommunications manager, said he expected 5 or 6 proposals to bid for the job.

One such proposal will come from Cable Co-op, the local cable provider that hopes to pay off its $40 million debt by selling itself to a joint power agency (JPA) that would be formed by two or more cities and selling $63 million in revenue bonds. The money would also help upgrade the cable system and connect it to the fiber loop, bringing faster connections to residents through cable modems.

The plan, which would make Co-op the operators of the franchise but would put ownership in the hands of the cities, was proposed last week. John Kelley, president of the Cable Co-op board of directors, asked the council on Monday to speed up the paperwork necessary before a search for a provider can begin. He said Cable Co-op needs an answer sooner than in the fall, the projected target for choosing a provider.

"Cable Co-op is in a position where we need to make some decisions in very short order," Kelley said. The company has a $3 million balloon payment due in the late spring.

Also voicing an interest in becoming the provider was Pacific Bell, whose spokesman told the council on Monday night that the Digital Subscriber Line (DSL) technology his company is developing would serve as a viable connection to the city's fiber loop.

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