After seeing their plans for a citywide fiber network fizzle last month, city officials are now considering a more phased, long-term approach to bringing high-speed Internet to the masses.
But first, staff hopes to gauge the community's feelings about a universally wired city.
A new staff report, which is scheduled to be presented to the City Council Monday, outlines a plan to keep the city's fiber hopes alive. The plan includes formally terminating negotiations with an Internet consortium, conducting a community survey to gauge local interest in a high-speed network and pursuing a phased build-out of the city's existing fiber backbone.
The city also intends to apply for economic stimulus funds, though only time will tell if its request for $65 million in federal funds will meet with approval.
The Monday meeting will give the council its first opportunity to discuss the Fiber to the Premises project since a consortium of firms that hoped to build and operate the network backed out of negotiations. The city planned to contribute portions of its existing dark-fiber network to the project, but council members specified that they didn't want to commit money from the general fund.
But a worsening economic environment effectively derailed that plan. The consortium, led by Canadian firm Axia NetMedia, suffered a loss of investors and asked Palo Alto for a heftier contribution to the new network, to the tune of $3.4 million a year.
On Feb. 25, the council held a study session to discuss Fiber to the Premises and the status of negotiations. At that time city officials debated their options and council members expressed major concerns about the consortium's latest proposal.
"The business model has changed, and it's one that doesn't look as attractive to the city," Councilman Pat Burt said at the meeting.
On March 9, Axia sent the city a letter indicating its withdrawal from negotiations.
"Unfortunately, at this stage, we now recognize that the City of Palo Alto has effectively rejected Axia's proposal," the letter stated. "From the time we got involved, we were consistent with our view of what was required to accomplish the Palo Alto objectives and we understood that meant more participation by the City than it had originally planned. We endeavored to make that clear at all stages of discussion.
"Regretfully, in spite of genuine effort on both sides, we have not been able to agree to a model that works for both parties."
But city officials indicated that a citywide network could still be possible. Utility Advisory Commission Chairman Dexter Dawes advocated for a slower, more phased, in-house effort to expand the city's dark-fiber network, which currently generates about $1.7 million a year for the city in licensing fees. The city's Fiber Optics Fund is expected to have about $7 million by the end of current fiscal year, according to the staff report.
"If this falls apart, I think the business could be expanded gradually with what we have," Dawes said at the February meeting. "Instead of a two-to-three year roll-out, it could be a 10- to 15-year roll-out with the businesses we already have."
The new staff report suggests that the city is considering doing just that. Its proposals include to "develop a plan to proceed with a phased build-out of the existing backbone, independent of the consortium."
Such a plan could be significantly bolstered if the city gets federal assistance. The National Telecommunications and Information Administration is preparing to release $4.7 billion for broadband projects as part of the federal stimulus package and city officials are currently putting Palo Alto's application together.
Bob Harrington, member of a citizen group that advises the council on the fiber project, said Silicon Valley would be a natural candidate for federal funds.
"Silicon Valley is known for being the innovation capital of the world and America has that image as well," Harrington said. "If we don't keep enhancing our innovation tools, and certainly a fiber network is a tool enhancer, we're going to lose our reputation and our power in being the leading innovator."