With more people than ever before banking on high-speed internet for their work, school and entertainment needs, Palo Alto is preparing to resuscitate a project that has stifled generations of city leaders: expansion of the city's municipal fiber network.
Palo Alto's dream for expanding the dark fiber network to every corner of the city has been flickering on and off for years, with prior councils exploring different business models that relied, to various extents, on private sector partners and that invariably ended in disappointment. Palo Alto's most promising foray into citywide fiber expansion occurred in 2009, when the council was on the brink of a deal with a consortium of companies led by the Canadian firm Axia Netmedia Corporation just as the economic downturn hit and the deal swiftly collapsed. After that, the city flirted with other partnerships, including with Google, only to inevitably end up jilted, disappointed and back at step one.
The current council, like most its predecessors, is fully on board with expanding the city's quietly successful fiber network, which premiered in 1996 and which today generates more than $3 million in revenues from about 220 business customers. But while the dream is the same, the circumstances are dramatically different. The city is no longer banking on the private sector for help, opting instead for a do-it-alone approach that gives it greater control over its fiber destiny (albeit, with greater risk). The city's Utilities Advisory Commission strongly supports the effort, having voted unanimously last week to move ahead with a plan that would connect all neighborhoods to the expanded fiber network within five years. Utilities Department staff, which in the past has been reluctant to challenge private sector incumbents in the broadband market, is now preparing to implement a plan that would significantly expand the fiber network.
The COVID-19 pandemic, which pushed the demand for high-speed internet connection to new heights, has raised the project's political prospects, turning what was once a community moonshot into a practical necessity. During its recent discussion of economic recovery, several council members, including Mayor Tom DuBois, made a case for renewing the city's push toward Fiber to the Premise, a system in which nearly every home and business is connected to the municipal fiber service. DuBois, a longtime proponent, also highlighted the project last month in his State of the City speech.
"We have the opportunity to create a new city utility and deliver superior service to our residents," DuBois said.
Having declared their will to expand the fiber network, city officials are now exploring the best way to do so. On April 21, the city's Utilities Advisory Commission dove deep into the latest analysis of the city's fiber prospects and reached a unanimous consensus on the best path forward. The commissioners agreed that the city shouldn't just build the citywide fiber system, it should also serve as the internet service provider. They also agreed that rather than taking a phased approach in which residents in some neighborhoods would get fiber service in the early phase of the expansion while those in other parts of the city would wait for future phases, the city should try to cover the entire city within five years.
Much of the early legwork for the expanded fiber network has already been completed. The city's consulting firm, Magellan Advisors, has designed a system that would add 44 miles of fiber to the existing municipal network. This includes 432-count loose-tube fiber cable that would support various city departments and services (including traffic signals and broadband connection) as well as a 144-count fiber cable to support the electric utility by providing redundancy and supporting grid modernization.
"This becomes a citywide infrastructure that strengthens your ability and capability to be able to govern and empower the community," John Honker, CEO of Magellan, told the commission on April 21.
The initial expansion of the fiber network would cost between $22 million and $28 million, a hefty but not insurmountable sum for a municipal utility that currently has a $30 million enterprise fund. Because this expansion focuses on municipal services rather than homes and businesses, it falls well short of Fiber to the Premise. Yet because the newly installed fiber network would stretch across all neighborhoods, it would enable the city to move ahead with a broader expansion at a future date.
The commission, for its part, made it clear that it wants the expansion of fiber to go well beyond municipal uses. It also agreed that unlike in the past, the city shouldn't depend on private companies for help. Commissioner Greg Scharff, who as a two-time mayor is well acquainted with the council's fruitless struggle to expand the fiber system, suggested that seeking out private partners (an option that was presented by Magellan) would likely be a waste of time.
"In the last 10 years that I've followed Fiber to the Premise, every time we go out and try to do some sort of public-private partnership, either people don't bid or it falls apart," Scharff said. "The more you explore it, the more there is opportunity for delay."
His colleagues largely shared his enthusiasm, even as they acknowledged the risks that the project would necessarily entail. The commission supported Magellan's proposal to conduct a community survey, put together a risk assessment and move ahead with additional engineering work, both for the near-term expansion of the fiber network and for the ultimate build-out of Fiber to the Premise. The commission also directed staff and Magellan to accelerate their community outreach efforts and to issue a survey to gauge customers' willingness to sign up for the new utility.
The firm expects to complete its additional work, as well as the survey, by the end of March 2022. Once that's done, the commission and the council will further refine the fiber proposal and consider funding mechanisms for the broader expansion, which according to Magellan's report is expected to cost more than $90 million.
Despite the high costs and potential risks, the commission enthusiastically supported advancing the fiber effort.
"We've all lived through the last year of COVID-19," Commissioner Loren Smith said. "And if anything, it has certainly highlighted the need for very, very extreme levels of broadband services in our homes, when we ourselves at work online full-time, when our children are online full time.
"Yes, we are getting back to some degree of normalcy, but that is not happening quickly."
Commissioner A.C. Johnston agreed. An upgraded fiber system, he said, would bring significant benefits to the community.
"This is important progress for something that's very important to the community," Johnston said. "And I want to see us keep moving forward."