Palo Alto and its neighbors on the Peninsula are scrambling to keep affordable high-speed Internet in place at schools, city halls and other public facilities after Comcast has proposed to drastically raise service fees next summer.
The cable giant is currently charged with running the Institutional Network (I-Net), a fiber-optic cable network that connects 70 public facilities in Palo Alto, Menlo Park, East Palo Alto, Atherton and portions of San Mateo and Santa Clara counties.
A preliminary proposal lists fees of $2,200 to $3,300 per month per site, meaning that the Palo Alto Unified School District's annual bill for its 20 I-Net sites could be between $528,000 and $792,000. Ravenswood City School District's annual bill for its 12 sites could be between $316,800 and $475,000.
But officials emphasize those are preliminary proposals subject to serious negotiations.
Since 2006, 51 of the 70 connections in Palo Alto and its partners in the Joint Powers Authority (JPA) have been gradually activated (or "lighted"). The network enables voice, video and data communication internally and between the sites, according to a recent staff report.
But a recently passed state law and Comcast's recent proposal is threatening to make I-Net much costlier for local schools, community centers and other public buildings.
The agreement between the cities and Comcast expires in July 2010 and Comcast's proposed rates for future I-Net service has been characterized by Palo Alto officials as excessive and unreasonable.
But Palo Alto, which negotiates cable rates on behalf of the coalition, may have little leverage in its negotiations with Comcast. The Digital Infrastructure and Video Completion Act (DIVCA), which state legislators passed in 2006, has taken away local agencies' powers to negotiate franchise agreements and placed that power in the hands of the California Public Utilities Commission.
The state law also specified that existing cable franchise agreements would not be enforceable after their expiration dates. The agreement between Comcast and the Joint Powers Authority (the coalition) expires in July 2010.
Melissa Cavallo, cable coordinator for the JPA, said in a recent report that officials have been meeting with Comcast for the past five months in hopes of extending I-Net service beyond July 2010. On Oct. 16, Cavallo sent Comcast a letter lamenting the lack of "forward progress in developing reasonable options" for continued use of I-Net. The cities, the letter notes, are "disappointed and frustrated by Comcast's unwillingness to respond meaningfully" to the cities' I-Net concerns.
The loss of I-Net would hit East Palo Alto particularly hard. The city lies close to sea level, which makes use of underground copper wires for Internet service extremely unreliable. According to Cavallo's letter to Comcast, the Internet network at East Palo Alto schools frequently went down before I-Net was installed. When this happened, the letter notes, "school principals would have to scramble and use cell phones to receive calls from frantic parents who could not communicate with their child's school."
"The adverse educational impact on our students of not having access to the I-Net fiber bandwidth will be substantial," Cavallo said in the letter. "For the last several years, we have strived to use technology to accelerate the learning of our students and give teachers better access to tools that will engage students and accelerate student achievement.
"The backbone of that plan is the fast bandwidth that the I-Net provides, and not having it will stop our progress in its tracks."
Comcast has offered the JPA cities two options for continuing bandwidth coverage: leasing I-Net or creating "managed Ethernet service" networks at each jurisdiction that wants the service.
Under a preliminary Comcast proposal, each city that wishes to lease I-Net would have to pay between $2,200 to $3,300 per month per site. This means that the Palo Alto school district, which has 20 I-Net sites and is currently struggling to close a $5.7 million budget deficit, would have to pay $528,000 to $792,000 a year to keep the network in place.
The Ravenswood district, which covers East Palo Alto and eastern Menlo Park, has 12 I-Net sites and would be charged between $316,800 and $475,200 annually.
Meanwhile, switching to the localized Ethernet networks would effectively force the JPA to abandon I-Net and eliminate the cities' ability to exchange information freely through the network. Palo Alto and its school district would also cease to receive free Internet service, as they have since 1994.
Joe Saccio, deputy director of Palo Alto's Administrative Services Department, said Comcast's proposed rates for I-Net would essentially enable the cable company to bill the communities twice for the fiber network. The network's construction was funded by cable subscribers and according to the staff report, Comcast has already largely (if not completely) recouped those costs.
"It's felt that all the ratepayers had already paid for the system that Comcast had put into the ground through their rates," Saccio said during the City Council's Oct. 19 study session with state Sen. Joe Simitian. "It's double charging the infrastructure is already paid for and they want to continue to charge the districts for it."
Saccio also said that Comcast has refused to acknowledge and accept the cities' position that the company is required to transfer, free of charge, public, education and governmental (PEG) access channels. The channels are being operated by the Midpeninsula Community Media Center.
Comcast spokesman Andrew Johnson said the company's policy is not to discuss terms and conditions under negotiation outside the negotiating table. But he said the company takes issue with the assertion the JPA has made regarding the proposed rates.
The company is committed to negotiating in good faith with the JPA, he said.
"I will say that we plan to and will charge competitive market rates that will reflect the current demand and supply of fiber networks in the Palo Alto region," Johnson said.
Saccio told the Weekly that the city could ultimately look into expanding its own dark fiber network to local schools if Comcast's rate ends up being excessive. But he said it's too early to tell what the I-Net rates will end up being.
"Even though Comcast listed those substantial amounts, it's hard to say what its end position is going to be," Saccio said.