The city would need to payback over $180 million of bond debt with interest if they offered city wide municipal fiber. A significant portion of that would be to areas already covered by AT&T Fiber or will be before the city finished rolling out its service over the next 5 years. If the city failed to achieve strong subscriber rates, it would drain tens of millions of dollars from the general fund.

Here's the UPenn report showing that for 20 cities willing to reveal their financials for fiber separate from their other utility services: 11 were cash flow negative and another 5 will require over 100 years to pay back the amount they borrowed, and only the remaining two would be able to pay back on time. One of those two was essentially a business only city offering, similar to Palo Alto's current profitable business only offering.

Web Link

Also, here's another article on why Municipal Broadband is not such a good idea: Web Link

"For more than two decades, Palo Alto's elected leaders and community advocates have touted the benefits of expanding the municipal fiber network, .."

And for quite a while PA "leaders." consultants and staff have put forth another very costly consultant/outsourcing gravy train while ignoring community skeptics and legitimate objections and discussions of the financial risk. They've also been unable to answer questions about how neighborhoods with underground wiring will be treated -- as I learned when they absurdly send out emails about hooking fiber up to our poles and never got a response about what undergrounded neighborhoods were supposed to do.

":Also missing out are the northern portion of Old Palo Alto and the neighborhoods that straddle Oregon Expressway in the eastern portion of the city, including Leland Manor, Triple El and the northern portion of Midtown. These areas are among those that are already covered by AT&T Fiber, according to surveys that Magellan had conducted earlier this year. If Palo Alto opts to avoid AT&T competition, it will likely defer or forego the expansion of municipal fiber into these neighborhoods."

Duh. that's because many of those neighborhoods already have underground wiring -- but at least a few years into this costly boondoggle we have our answer.

Just kill this project. We've got no expertise to manage such a project that doesn't even reach the entire city. What a waste of money while the city pleads poverty,

We passed the point of absurdity on this project decades ago. Frankly, I'd rather focus city money and efforts on undergrounding all our utility services to make the grid more robust and reliable.

Looks like the votes are in, while only three. A colossal waste of tax payer money has already been burned on this boondoggle. There are already many options available for high speed internet service from people who know what they're doing. The City of Palo Alto isn't in that category. Put it to sleep already and stop trying so hard to be the perceived "leaders" in everything technology just because of our Silicon valley connection. No one else cares. This is just another train to nowhere pipe dream. By the time it would be completed another generation of product would make this seem prehistoric and the cost overruns would be in the billions.

Uncharacteristically confusing and incorrect summary by our intrepid reporter. The proposed option recommended by the Utility commission is a phased approach that would start in areas where the city gets the most coverage for its investment and then expand to all parts of the city. Saying it would not reach certain neighborhoods is incorrect; it’s just proposed that those would come in Phase 2. While one Utility commissioner said she’d avoid att that was not the position of the entire board and as explained at the meeting would be impossible. Att does not cover neighborhoods - it’s coverage is spotty with holes in availability throughout the city.

The fear, uncertainty and doubt campaign from the telecom providers has already started as seen in the initial comments.

Instead, FOCUS on getting grade separations planned well (we are very far from that now, especially in south PA), approved, and constructed in a timely way. Get Cubberley reasonably operational again. All of the new high density housing that is being zoned around town (mostly in south PA) will require new community service and park space and transportation system improvements. These things are huge, unbudgeted expenses in our near-term future (on municipal time scale). If grade separation doesn't get done in south PA, east/west travel for every single mode of transportation will horribly congested.

Please start working on the items I mentioned in the previous paragraph to make the CITY AS A WHOLE work well before you add to the list of extra things the city is understaffed to do well.

Prediction: The city will start doing grade separations in north Palo Alto (where there are FIVE existing grade separations today) and will delay grade separations in south Palo Alto (where there are ZERO grade separations today). Existing disparity be worsened. Then the city will report that they have spent all of the grade separation money and say, "Oh. gosh. We're sorry. There's no money left for south Palo Alto." AGAIN. Pay attention to patterns of behavior and to what your government is doing, people.

This is tough for the City to justify complete coverage. Or maybe any given other fiber sources.

We have fabulous fiber thru Sonic for $20/mo. on top of basic fee. Yes - Sonic is associated with AT&T, but (hint) it provides the great advantage of much faster to-home service than straight AT&T.

I love the idea of City owned fiber provided to all or some, but it seems more and more not to make sense (cents).

I am pretty sure the main reason AT&T is doing it's Fiber build out is to stop Palo Alto from doing it's own Internet fiber network. If the City stops or scales down its project, I bet that AT&T will slow down or stop its fiber build out in the city.

Also, once there is no competition, AT&T will certainly raise it's rates considerably.

Our infrastructure is not doing well, power outages, crime, traffic, water and sewers, and we can all think of higher priorities for all of town, not just those that are deemed to get facilities first.

Undergrounding power lines, a 50 year project, is unbelievably slow. Do we want to waste more time reading about balloons and squirrels taking out power on sunny days?

Gennady: the correct usage is "fiber to the premises".

Web Link

Fine job of reporting.

Thanks, @Leslie York, and sorry for the error, which has been corrected.

@ PaloAltoVoter,

“The fear, uncertainty and doubt campaign from the telecom providers has already started as seen in the initial comments.”

I gather you are one of the proponents who will be “rankled” by the conservative option. After ignoring all the objections, you need to remember that it’s not your money, the City is not a hedge fund, and I’m rankled that this should take up any more time or resources that are needed for the City to meet basic responsibilities which require more and more money. Insulting that you think that the telecom “competition” is getting in the way.

"He [Hoel] pointed to promising examples elsewhere in the country, including in the city of Chattanooga, Tennessee, which implemented a citywide fiber system that made the city enough money to pay for itself."

For at least a decade, Chattanooga has been the sole cited example of a successful municipal fiber network. Why has nobody been touting a much longer list of glittering success stories? Because either nobody else has seen it pencil out, or they built and busted. In either case, municipal fiber seems an unpromising prospect, civic boosterism notwithstanding.

Chattanooga received a $116 million in subsidized federal funds and launched their city wide initiative early before there were any fiber competitors. The majority of value created is from their business offering a smart grid benefits, not from their residential service, according to their own study.

Can no one kill this project? It has never made any sense, the competition is far ahead, and the costs are unacceptable. There are many much higher priority projects (flood control, grade crossings, housing, ...) that deserve the Council's full attention.

AT&T is not even considering fiber for areas with underground utilities. These residents will be waiting a very long time for fiber from AT&T. Whether this is because of additional regulations or increased costs is not clear (maybe it is both) as I have heard both excuses from AT&T. It is in these areas with a more challenging setup that the city should step in.

"For more than two decades, Palo Alto's elected leaders and community advocates have touted the benefits of expanding the municipal fiber network"-- for the same two decades, Palo Alto's elected leaders and community advocates have touted the benefit of rent relief for those wrongfully evicted. I guess what this says about PA is, "justice moves at a snails pace" and fiber optic will be obsolete in the 20 years it will take the city figure out how to fund something nobody wants.

Jguislin I live in an area on the edge of CP with underground utilities. I have AT&T fiber and it works great. Not sure where you got your info from, but it’s not accurate.

Fiber companies don’t invest in Palo Alto because the city council keeps talking about doing a taxpayer subsidized system. If council dropped it permanently I suspect we’d see the providers proceed with their own investments.

@Curmudgeon -- There are many examples of successful municipal FTTP networks. The MuniNetworks website writes about them.
https://muninetworks.org
This Community Network Map (cited in the staff report) says there are 83 citywide municipal FTTP networks, and another 260 municipal FTTP networks that are less than citywide.
Web Link
This 2017 article lists 56 citywide municipal FTTP networks.
Web Link
Fairlawn, OH, deployed citywide and has a take rate of 68 percent. Residential 1 Gbps (symmetrical) internet is $55 per month.
Web Link

Just to clarify after reading all the reports - the proposal is to consider 3 options:
1. a commitment to a complete build out of the city upfront
2. A phased rollout with the first phase to a portion of the city, get real data and experience, and then based on success continue to rollout to the rest of the city.
3. Only building out the backbone for city uses

As one of the comments mentioned, there is no option currently that would rule out going to all neighborhoods, its really a decision around how to phase construction.

Re: "...A map provided by Magellan Advisors identifies areas that it deemed as most suitable for municipal fiber because of lowest cost, highest density, least competition and highest demand. Map courtesy city of Palo Alto..."

That map is already out of date. If the city hasn't noticed AT&T trucks in Midtown near Alma running new fiber.

Does the city think that AT&T and Comcast are just sitting around?

/marc

@Tom DuBois, why are ANY of these plans priorities when the city's so inept it doesn't realize some neighborhoods have been undergrounded for DECADES and is shocked when so informed???

Why the rush to waste OUR money when the city's incompetent and allegedly so broke it needs to impose new taxes WHILE raising our utility rates even more?

Someone's making out like bandits keeping the consultant gravy train running and sure isn't the residents who couldn't even say NO WE DON'T WANT THIS on the laughable city "survey"!!

@Tom Dubois,

“its really a decision around how to phase construction. “

To be more blunt, you are phasing what you have money for. If borrowing is off the table, you expect to just keep coming back for more? Why not raise/drain money from someone else to compete with AT&T or to entice people with “competition.”

@LocalResident -- The Yoo study you cite has been debunked here.
Web Link
Yoo claims it would take Chattanooga EPB 412 years to turn positive. The rebuttal says EPB has already paid of all of its FTTP equipment debt.

Re the ITIF hit piece you cite, I didn't find a debunking of it specifically, but I did find this 01-24-22 article that debunks a similar ITIF hit piece, and identifies ITIF as a telecom-backed think tank.
Web Link

@OnlineName, you seem to think that the City isn't aware that some Palo Alto neighborhoods have undergrounded electric wires. That's ridiculous. The cost of undergrounding fiber in these neighborhoods has been included in the overall citywide FTTP cost estimate.

Nice to see that the most fiscally-irresponsible option (full build-out) lacks political support. As for a partial build-out, let's be real -- any Phase 2 is likely to take 50-100 years to accomplish, as with the still-nowhere-near-completed undergrounding of utilities.

Why don't we put that energy and those resources into upgrading the power system so people can actually install and use EVs and electric appliances?

Mayor and Council, City of Palo Alto
December 16, 2022

Dear Mayor and Council:
I am writing concerning Fiber to the Premises. I welcome the latest plan which seems to reduce the amount of city risk in fiber. However, I have an alternative approach which I think will work better.

I suggest that you partner with AT&T (or another provider if that is workable) to meet actual city needs without requiring much city investment. Here is how:
• The city would contract with AT&T to provide the connectivity for the traffic monitoring and similar projects. This seems like a worthwhile project but does not require wiring everything in the city.
• The city would identify areas that do not have adequate coverage (either AT&T or Comcast) with AT&T undertaking to provide coverage. I am opposed to building connectivity in areas that are already covered by a vendor that customers could use. Comcast should be considered a fully competent provider of Internet services even if not, strictly speaking, "fiber".
• The city could also consider selling its dark fiber business to AT&T or another party. I suggest capturing the value before it is too late.

My goal here is to focus the city's resources on projects that it alone can do and to get the city out of the fiber business without more effort. There is a lot of work that needs to be done.
Thanks in advance.

Robert Smith

Bob Harrington invited me to my first Muni Fiber meeting in 2004. Bob is a visionary. He saw Muni Fiber as an natural City service. On the UAC I advocated for fiber. An opportunity came along in 2008, but it was so badly designed I was pleased when the financial crisis killed it off.

A dozen years later a lot has changed. Gigabit internet is table stakes from Comcast and AT&T. Streaming is killing cable. Phone calls are all on the mobile network. Zoom is mission-critical service for many households. A strong single-play internet service makes sense.

Yet the only thing that matters for a fiber service is “take rate”: how many people sign up in each district. 25% is break-even. The question is: “Can we win 25% of Palo Alto households with a City Fiber service?”

Comcast will argue “You need at least Internet and Video”. AT&T will argue “You need Internet and mobile phone”. What can the City do?

We haven’t seen a service or marketing plan, but the most important goal is to get as many households connected as fast as possible. Some ideas: free 10Mbps. Cheap 100Mbps. Pricing a “backup connectivity” tier so households with Comcast or AT&T add Muni as a failover service. I’d also light up a #PALOALTOFIBER# WiFi network alongside the fiber to promote the fiber service. I’m sure there are a dozen better ideas and we should try them all.

I’d love to see the incumbents partner with us. We’ve tried and they’ve rebuffed every approach.

Money in the Muni Fiber Fund can only be spent on fiber expansion. Whether we do it alone or with partners is just business terms and risk management.

No matter what happens next, we owe a big “Thank You” to Jeff Hoel for attending every City meeting on fiber for the last 20 years and pushing for it to become a reality.

"@OnlineName, you seem to think that the City isn't aware that some Palo Alto neighborhoods have undergrounded electric wires. That's ridiculous"

I thought so, too, but you didn't see the response I got from the CPAU employee of our fair city who first wanted to know what neighborhood I lived iin that had underground wiring -- even though my address was in the email!!! and she was evidently too lazy and/or clueless to figure out my neighborhood from my address) -- and then if I knew which other neighborhoods had been undergrounded since I'd mentioned that my neighborhood wasn't the only one in my email.

I wrote back, saying I'd await her response about how neighborhoods like mine would be treated and never ever got a reply.

With the type of customer service, can you imagine how well they'd deal with frustrated web users!

Asher Waldfogel, why do you say that Utilities fiber fund money can only be spent on fiber expansion? That fund doesn’t have the same strictures as with gas, water, electric, and wastewater.

Still wasting money trying to compete with 2 major internet providers that are providing good service. You can't keep up technologically. There are 21000 households in PA. So this current proposal would waste$2000/ household. That's over 3 years of my current AT&T cost.

But but if they don't do this, how else could they double the number of city employees making more than $400,000 a year in a city with 66,000 -- which is more than the president of the US.

More chiefs needed, stat! No more low-wage indians. Oh wait. Are we allowed to use those words anymore? I think we are supposed to change every noun to the word "noun" to represent fairness.

"More nouns needed, noun! No more noun-noun nouns."

The Transparent California numbers for 2022 will be coming out soon.

I hope that the city is keeping abreast of the progress AT&T is making in getting fiber throughout Palo Alto. Midtown should be live in the next couple of weeks, based on the number of AT&T trucks working in the neighborhood.

By the time the city gets done with all their studies, this will be a waste of time.

/marc

Not only a waste of time but a waste of money spent on staff time and consultants.