News

Swelling cash reserves fuel Palo Alto's fiber effort

Growing fiber fund, success stories elsewhere in the nation, spur city's latest drive toward 'fiber to the premise'

Palo Alto officials won't be popping champagne bottles this week, when their long-deferred dream of a citywide high-speed Internet finally comes true.

That's because the dream will be coming true in Provo, Utah, a city that doesn't claim to be the technological capital of the universe and that hadn't spent the better part of the past two decades watching one effort after another end in heartbreak. On Tuesday night, the Provo City Council is set to approve a plan by Google to make Provo the third community to benefit from the company's fiber services. It follows in the footsteps of Austin, Texas, and Kansas City, Mo., the city that the Mountain View-based tech giant chose in 2011 as the testing ground for its Google Fiber system.

It also does little for Palo Alto's self esteem to know that Chattanooga, Tenn., another city with a municipal utility, already has a fiber-to-the-premise system in place, offering its customers the fastest Internet connection in America. Or that San Leandro's business-focused system, Lit San Leandro, flickered into existence a year ago -- a product of a public-private partnership. Last September, San Leandro received $2.1 million in federal funding for an expansion of its fiber-optic loop, which the city touts on its website as a way to "revolutionize San Leandro's infrastructure, positioning the City to be a major player in the high-tech and clean-tech economies."

With Palo Alto's dream becoming a reality elsewhere, city officials have in recent months renewed their vow to pursue a citywide fiber-optic network that will deliver high-speed Internet to the masses. In February, the City Council adopted "technology and the connected city" as one of its three official priorities for 2013, with several members singling out "fiber to the premise" as a central component of this priority. And in March, Mayor Greg Scharff argued in his "State of the City" that it's time to settle the city's long and frustrating debate over fiber.

"Ultra-high-speed Internet has been a Palo Alto vision for a long time," Scharff said. "Now is the time to fulfill that vision."

The city has some reasons for optimism. One has to do with finances. Last week, the council's Finance Committee learned that the city's Fiber Fund, which takes in revenues from the roughly 80 commercial customers who use Palo Alto's 41-mile dark-fiber ring, is bringing in about $2.1 million a year. Viewed as a risky investment two decades ago, the fund has in recent years become a plump cash cow. According to a new report from the Utilities Department, its reserves stand at $14.6 million in the current fiscal year and are expected to nearly double by 2018.

Furthermore, because the fiber service (unlike other utilities) is not a municipal monopoly, the city has more discretion in spending the money in the Fiber Fund than it would have with other utilities, City Attorney Molly Stump told the council's Finance Committee during an April 16 discussion of the topic. Stump told the committee that there are "fewer limitations" on this group of funds because fiber "is not a traditional utility." The council will have some latitude, she said, in coming up with policies on how to use the funds.

The brightened financial outlook has done as much as success stories elsewhere to motivate city officials. Economics are still important, but they are no longer the sole consideration. At a March 22 joint meeting between the council and the Utilities Advisory Commission Councilmen Pat Burt advocated looking at "fiber to the premise" as something more than a business venture. It would also be a community service, Burt said, and an economic-development opportunity.

The city is already eying an extension of the fiber ring to all local schools and has been working on an agreement with the school district to do so, Utilities Director Valerie Fong told the Utilities Advisory Commission during an April 3 discussion. But the grand prize remains "fiber to the premise." Last year, the commission voted 4-3 to stop pursuing the project after economic projections indicated that it would be cost prohibitive. But earlier this month, commissioners enthusiastically declared their willingness to roll up their sleeves and get back to work on this project (The commission is scheduled to consider the topic of fiber again at a special noon meeting on May 1).

Commissioner Jonathan Foster noted at the April 3 discussion that the idea of a citywide fiber network has been floating around Palo Alto for many years and said his views on the project have changed since last year, partly because of the council's new attitude about fiber. Before, when economics were the main driver of the conversation, he was more or less neutral, Foster said.

"Now, my approach is -- let's find a way to make this happen," Foster said. "I'm not sure we'll get there but let's come back with the best proposal we can," Foster said.

Commission Chair James Cook voiced a similar sentiment.

"I think this is probably a good idea whose time has finally come," Cook said. "Maybe now it's just gotten the right kind of momentum."

To get the effort rolling, Scharff had recently created a four-member council committee devoted to explore fiber. In addition to Scharff himself, the committee includes Klein, Vice Mayor Nancy Shepherd and Councilwoman Liz Kniss, who advocated for building the dark-fiber ring in the 1990s, during her first stint on the council.

At last week's brief discussion of fiber revenues, Councilman Greg Schmid remarked on how the fiber reserve is "growing dramatically" and concluded that when it comes to fiber, "we are in a new period of time." He pointed to other cities that have recently installed fiber networks, including Chattanooga and Kansas City and argued that Palo Alto should follow their examples.

"We're in a position where we have to find out what is going on in these communities," Schmid said. "It would seem to make sense to spend some of this money to get people out there and find out what's taking place."

Comments

Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Apr 22, 2013 at 7:44 pm

Whaaaaaaat? The City is flush with money? Utilities has fiber fund which has become a cash cow?



Completely speechless.


Like this comment
Posted by Robert Smith
a resident of Duveneck/St. Francis
on Apr 22, 2013 at 7:50 pm

We shouldn't feel too envious of Provo.

Provo has spent millions on the iProvo system and have suffered an enormous amount of public grief. The deal with Google transfers the assets for $1, but the city needs to keep paying $3.3 million per year for the next 12 years. Google takes the assets, the city keeps the debts.

Provo is only one of many cities that our City Council used to hold up as "poster-children" for municipal fiber. Other cities include Bend, OR, Alameda, CA, and a consortium of cities in Utah known as Utopia. These have all failed.

Yes, we should have better communications, much better. The best way to do this is to start working with, even cooperating with, the companies that keep trying to help us out. The City Council can start with the cell phone companies to expedite the installation of the cellular infrastructure that we need.

I have no philosophical objection to the city running a FTTP/FTTH system, but I just doubt that it will ever happen.

But perhaps we can hire some of the geniuses from Provo to help us out!


Like this comment
Posted by What!?
a resident of Community Center
on Apr 22, 2013 at 9:45 pm

It seems pretty clear that "City Officials" in Palo Alto want their fiber effort of decades to succeed for little more than to stroke their deflated egos. Pathetic.

The fiber plan floated by PA has never penciled out financially, and may never.

Sounds like Jerry Brown's legacy driven craze to foist high speed rail on the tax payers, but fortunately, a whole lot less expensive.


Like this comment
Posted by Gus L.
a resident of Barron Park
on Apr 22, 2013 at 10:13 pm

"Swelling Cash Reserves", I guess that means more Sewer Pipe Art Projects, Massive Tree removal.. Good Job City, Way to go. Give yourself a raise..
Now How about lowering our Utility bills, Eh?


Like this comment
Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Apr 22, 2013 at 11:04 pm

Maybe if the City Council released any future fiber partner from "the Palo Alto Way" some commercial entity like Google or Sonic would make it a reality.


Like this comment
Posted by Astonished
a resident of Los Altos
on Apr 23, 2013 at 12:15 am

Provo, Utah? Hah! Better read these two articles from Provo's main newspaper:

1. iProvo's timeline from the beginning in 1998 to this month's Google
acquisition of Provo's fiber network: Web Link

2. The 'Google Gotcha' for Provo: Google promised free Internet to every home but it never said anything about businesses. Whoops! A
long article about that datelined Monday 22 April 2013 is here: Web Link


Like this comment
Posted by Astonished
a resident of Los Altos
on Apr 23, 2013 at 12:41 am

BTW, before anyone gets too excited about fiber to the premises, one should review the experiences of Verizon and its FiOS offering which is now being dramatically cutback nationwide due to the expense. Several news articles about Verizon's situation:

Verizon Again Confirms No Future FiOS Expansion: Web Link

Future of FIOS TV? Time to switch back to satellite? Web Link

Verizon layoffs hit members - The Electrical Worker Online: Web Link

and many more articles that can be read by Googling 'verizon cutback on fios" (without the quotes).


Like this comment
Posted by Midtowner
a resident of Midtown
on Apr 23, 2013 at 9:46 am

And would the installation be incremental over 100 or 200 years just like the undergrounding of power lines has been, with residents being billed thousands of dollars each in the process?

No thanks!


Like this comment
Posted by Toady
a resident of Old Palo Alto
on Apr 23, 2013 at 10:21 am

"Maybe if the City Council released any future fiber partner from "the Palo Alto Way" some commercial entity like Google or Sonic would make it a reality."

Amen to that.


Like this comment
Posted by Jim Holsworth
a resident of Community Center
on Apr 23, 2013 at 10:42 am

Palo Alto should revisit the fiber issue. There are now several cities like Chatanooga that we could use to study the financials, implementation, and usage.

Sonic.net would be a very possible partner. Perhaps we could get expertise from Google for how to do a smart installation.

Finally, we could pick just one neighborhood to make a complete working fiber network as a test case before trying to cover the city. We'd then have real cost and usage information.


Like this comment
Posted by Doug
a resident of Palo Verde
on Apr 23, 2013 at 11:51 am

It's easy to take potshots and it's important to weigh costs versus benefits. But who here loves their Comcast or AT&T internet speed?

Bravo to Mayor Scharff for his advocacy of fiber to the premise. Better for Palo Alto to be among the leaders in offering 1000 megabits/second than a laggard.


Like this comment
Posted by Rudy Wang
a resident of Midtown
on Apr 23, 2013 at 12:56 pm

I second Jim Holsworth's suggestion about partnering up with Sonic.net.

Please read the success story about Sonic.net's Fiber Ring in Sebastopol:


Web Link

Sonic.net builds super-fast network for future -
in Sebastopol



Web Link

Gigabit Internet for $70: the unlikely success of California’s Sonic.net
SEBASTOPOL, CALIFORNIA

Two things set a one-block stretch of Florence Avenue apart from other American streets. One is the quirky metal sculptures planted in front of most homes; the other is the Internet traffic coursing through recently-strung fiber-optic cables on the block’s utility poles. They offer each house up to one gigabit per second in bandwidth, making this one of the fastest streets in America.

While some other cities can also brag about gigabit access, in this Sonoma County town it costs only $69.95 a month.

The service comes courtesy of Sonic.net, the18-year-old Internet provider based in the neighboring city of Santa Rosa. And Sonic even throws in two phone lines with unlimited long-distance calling when you sign up.


Like this comment
Posted by @ Astonished
a resident of Duveneck/St. Francis
on Apr 23, 2013 at 2:36 pm

@ Astonished - you link to a forum post form 2010, and call it a news article.... FIOS is great, 100x better than Comcast. Verizon isn't cutting back at all. They are simply focusing on existing areas until before they build out new areas.

The city shouldn't run a municipal system, but a Sonic.net or Google partnership would be great. Pay them to take the existing fiber if you have to.


Like this comment
Posted by maguro_01
a resident of Mountain View
on Apr 23, 2013 at 3:32 pm

I heard a brief talk from a Google person at an IEEE meeting/talk in Santa Clara that suggests that Google may indeed have reasonable things to say about such a project and may be forthcoming. There are likely articles in trade publications about it. One thing I recall from the talk was that an area had to be done in one shot - no house or two at a time. Get agreement, get equipment out there, get the permits, get everything, and get it done. Anything incremental within an area just blows out the cost. It sounds like it may recently be at a point where it can work in costs if it's done efficiently. Companies like AT&T are provisioning all sorts of services over it - not just the pipe.

Has anyone done a graphic presenting costs/time for the last decade or so with inflation adjusted? What about Japan, Korea, and Hong Kong where FTTH is in wide everyday service because it's national policy? Mountain View's experience with the city wi-fi net courtesy Google is mixed partly because it's a 2.4Ghz network on a leafy city, and because the network wasn't maintained (it seems to be coming back, though). In a desert city with few trees, wi-fi may be a more affordable solution though with a lower data rate.

If the "Palo Alto Process" would be in place every step of the way then costs would skyrocket. Of course public debate and buy in or not is absolutely necessary but in this case especially continuing through the project would make it so expensive it's not worth even starting. California law presently makes it much too easy for anyone to stop anything or at least harass it - a large expense.

From the homeowner's view basically city government exists on the peninsula to increase the price of houses or distribute outside funding to neighborhoods. At least that's what it reads like in local papers and with house prices, no wonder. The history of development in California induces cynicism also. But a case may actually be made for fiber, IMO, and near-100% buy in may be attainable. In the future one of the first home-buyer questions would be "are you on fiber here?" Try to involve the whole population, not just the usual activists from one demographic though the city is changing.

If the cabling is buried, only a short time after the project in an area is done visual evidence of it will be gone. For a city that can propose so much money for a 'signature' bicycle bridge, it's hard to see objection to fiber except extreme cost. Actually, a lack of citizen's confidence in the ability of a city to do a frugal and effective project must be a key to this one and any other.


Like this comment
Posted by Carlito waysman
a resident of Old Palo Alto
on Apr 23, 2013 at 3:47 pm

>Viewed as a risky investment two decades ago, the fund has in >recent years become a plump cash cow. According to a new report from >the Utilities Department, its reserves stand at $14.6 million in the >current fiscal year and are expected to nearly double by 2018.

Just watch how that fund slowly dies once the new minted bureucrats benefits and salaries dig into it.

City run fiber service? really? Is it that Comcast and ATT, are not good enough for the politicians and the few snooty Palo Altans. Why overburden Palo Alto taxpayers in creating a new bureaucracy, when the private sector is already providing the service?
The utilities department would better serve Palo Alto in redirecting all that money from the "dark" fiber "plump fund" to pave the city streets that are in terrible state of disrepair.


Like this comment
Posted by A Noun Ea Mus
a resident of Professorville
on Apr 23, 2013 at 5:30 pm

Swelling cash reserves (blush)....Oh PA Online you are making me randy.


Like this comment
Posted by A Noun Ea Mus
a resident of Professorville
on Apr 23, 2013 at 5:31 pm

Oh but I do declare...while a little southern belle such as myself loves to see such swelling....is it sustainable?


Like this comment
Posted by Paco
a resident of Palo Alto Hills
on Apr 23, 2013 at 6:09 pm

Perhaps the City can release all recorded and unrecorded reserve fund accounts that city officials now squirrel away while declaring deficit budgets. Last count is reserve funds are now in excess of $300,000,000.


Like this comment
Posted by bill g
a resident of Barron Park
on Apr 23, 2013 at 7:55 pm

In our neighborhood many use their computers almost entirely for e-mail. They don't need higher download speed especially if it costs them several thousand dollars to install. Before committing to an FTTP system, find out who is willing to pay for it.

This is not a necessary public utility like electricity and water to which everyone must subscribe. I don't need it and would resent being forced to subsidize the unknown percentage who want it.


Like this comment
Posted by PatrickD
a resident of Barron Park
on Apr 26, 2013 at 8:39 am

I believe Google tapped Sonic.net to run the Stanford FTTH project. It would be wonderful if we could use them for FTTH in Palo Alto.

Here's a link:
Web Link


Like this comment
Posted by just thinkin'
a resident of Midtown
on Apr 26, 2013 at 12:10 pm

Since PA prides itself on being in the fore-front of tech, let's jump in the fiber while the world is going wireless.... we'll be a leader in a field of one plus none....


Sorry, but further commenting on this topic has been closed.

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