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Acquisition adds twist to broadband saga
Effects of PacketFront's purchase of DynamicCity on Palo Alto unknown, city staff say

In a curious twist in the city of Palo Alto's quest to install a high-speed broadband cable network, one of the city's current partners has acquired the unsuccessful bidder for the project.

PacketFront Inc., based in Denver, has now acquired Utah-based DynamicCity, known for the development of UTOPIA, a fiber-to-the-home project involving 14 cities in Utah, according to PacketFront Vice President Tim Scott.

The terms of the deal were not announced, although PacketFront announced that most employees and projects would be retained.

PacketFront is a partner of 180 Connect, which was selected by the City Council in January to work with the city to investigate developing a fiber network.

DynamicCity also submitted a bid for the project, but its submittal was deemed "non-responsive" because it would have the city bear all the financial risk with the approximately $41 million project.

In a letter to the city, Scott said the acquisition would not affect the company's relationship with Palo Alto.

DynamicCity's assets, people and property will give PacketFront an improved ability to design open access networks, manage operations and market its services, Scott wrote.

Joe Saccio, Palo Alto's deputy director of administrative services, wrote in a memo that the transaction "exemplifies the fluidity of the telecommunications industry and the changes the city can expect in the future."

"Accustomed to long-term business relationships, the city will be challenged to develop contracts ensuring the consistency and quality of broadband services at minimal or no cost to the city," Saccio said.

The acquisition will affect PacketFront's financial condition, he said. The financial condition of 180 Connect has also been an issue; In July, City Auditor Sharon Erickson warned the company has a history of operating losses, a tenuous cash flow and could default.

180 Connect, PacketFront, the Royal Bank of Canada, and NorthStar Capital Partners are currently developing a business plan to see if it is possible to develop and operate a network that would provide high-speed two-way cable service for most Palo Alto residents -- without requiring the city to pay much, if anything.

The plan could be completed by the end of the year.

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