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Can Palo Alto finally pull off high speed internet service?

Original post made by Frank Bravo on Jul 21, 2006

Would you support a public-private partnership to provide high-speed, broadband (100 megabit per second two-way)communication throughout Palo Alto? Assume this would be provided at a competive price. Do you think this makes sense?

Comments (56)

Posted by Allen Podell, a resident of Community Center
on Jul 21, 2006 at 8:06 am

Allen Podell is a registered user.

Do I think that telecommuting makes sense? Does teaching web classes from my home office make sense? Does decentralization in these days of terrorist threats make sense? You betcha! My cohorts around the world were jealous of the fiber access I had. It was reliable, never dropping out or slowing down at critical times. Speech and video feeds were perfect during my webcasts. Now, reports are not so good. Let's get with it!


Posted by Bob, a resident of Midtown
on Jul 21, 2006 at 6:00 pm

Is this wireless?


Posted by Lewis Greer, a resident of Duveneck/St. Francis
on Jul 22, 2006 at 2:16 pm

With a successful test (read profitable with happy customers) in Crescent Park, the real question is why Palo Alto doesn't have high speed broadband already.

Part of the answer is undoubtedly that Comcast and AT&T don't want the competition and are engaging in -- and will continue to engage in -- a campaign against a ubiquitous broadband offering. Part of the answer is politics. And part of the answer is that we citizens have not stepped up in support of a solution.

Other cities throughout the country have fiber to the home, high speed wireless, or a combination of those already depolyed throughout their municipalities and are finding them financially viable and extremely popular. It's too bad that Palo Alto, given its contributions to the world of high tech, lags behind in this area.

The benefits, a number of which have been listed by Allen Podell in his posting, are well known. The way to get everyone off the dime and moving forward is not so well known.

Thanks to the folks at Palo Alto online for raising the issue to more public prominence. Here is hoping the discussion leads to good things!


Posted by DIanne, a resident of Meadow Park
on Jul 22, 2006 at 7:56 pm

I think it is outrageous that for some years now, the City (that is, all of us) has been subsidizing fiber internet access for a limited lucky few. It is time to make it available to all, or sell it off to a private company. So yes, I'm in favor of high speed fiber for all.


Posted by Andy, a resident of Midtown
on Jul 22, 2006 at 11:17 pm

It absolutely makes sense for Palo Alto to offer high speed Internet connections to its residents and fiber the to home (FTTH) is the only technology capable of doing this at a reasonable cost. We are falling behind other American communities in this respect, e.g. some other cities in California and Utah, not to mention some other parts of the world. I'd like to see Palo Alto remain a uniquely desirable place to live and work, and FTTH is one such amenity that would contribute to this desirability.


Posted by Stuart Berman, a resident of Old Palo Alto
on Jul 23, 2006 at 7:28 am

High speed internet access makes even more sense now than it did when it was first proposed for Palo Alto many years ago. Private providers won't make the investment needed to offer high speed internet access to us. Government is the only remaining option, yet we are caught up in the "Palo Alto Process". I hope that some corageous or innovative city officials can break out of business as usual box and provide us with the kind of internet service that the residents of this city want and deserve.


Posted by Harry Stangel, a resident of South of Midtown
on Jul 23, 2006 at 8:49 am

Yes X 2! I would subscribe for both my home and business.

Several aspects of this idea appeal to me:

- Internet hookup fees are going to generate revenue for a very long time. I can imagine a day when internet hookup is more important and commonplace than phone or cable wires. Ten thousand households & businesses spending $30/mo = $3.6 million/year. Why send all that money every month out of the community?

- Fiber-optics can provide 100 MBs in and out without breaking a sweat, and can go much, much faster when demand eventually catches up. Wireless is important, too, but hasn't (can't?) match the speeds of fiber-optics. So, ideally, we would have fiber at home and wireless when travelling. Let's develop both in parallel; in fact the many hundreds or thousands of wireless access points would each require a fiber-optic trunk line.

- For their investments, telco and cable companies get exclusive rights and jealously guard them. Who says internet access is their exclusive domain, too? The Net Neutrality debate illustrates the junction we've arrived at. Some would prefer we stop 'clogging the tubes by dumping 10 movies at a time' while others are dreaming up new applications that would use greater bandwidth to change the world. Let's not let the telephone/cable companies sculpt our future.


Posted by Betty Schneider, a resident of Community Center
on Jul 23, 2006 at 1:44 pm

Having used fiber optic for those few glorious years we had it, I speak with knowledge about how solid, dependable, and fast it was. We had, at most in my neighborhood during those years, one or possiblly two breakdowns that were promptly fixed. I remember it wistfully, now that I have to cope with Comcast, which has had to be called at least 9 times since I have used their service in the last few months. There is no comparison!

Why shouldn't Palo Alto own their own internet access, and cooperate in keeping the money we now pay others for sketchy service, and keep the money at home?

I repeat and agree with "Andy" when he stated:

"It absolutely makes sense for Palo Alto to offer high speed Internet connections to its residents and fiber the to home (FTTH) is the only technology capable of doing this at a reasonable cost. We are falling behind other American communities in this respect, e.g. some other cities in California and Utah, not to mention some other parts of the world. I'd like to see Palo Alto remain a uniquely desirable place to live and work, and FTTH is one such amenity that would contribute to this desirability..."


Posted by Jeff Hoel, a resident of Midtown
on Jul 23, 2006 at 2:22 pm

I support the city's implementing a citywide broadband system with 100-Mb/s (symmetric) connections to homes, on which great services would be offered at competitive prices. I believe such a system would have to be a FTTH (fiber-to-the-home) system. I believe that in the future even faster speeds will be required, and FTTH is the only way to provide them. I believe that a good way to assure that great services will be offered at competitive prices is for the city to provide "open access" to competing retail service providers.

If the city can find a private partner willing to help meet these goals, fine. If not, the city should proceed on its own.

UTOPIA and Provo are good examples of communities that are implementing citywide FTTH systems with 100-Mb/s-or-faster connections that are offering great services at competitive prices. (Even better, they're "open access.") Does anyone know of a good example of a community that is implementing such a system with a private partner? I don't think we should just "assume" that would work.


Posted by Bob Gardiner, a resident of Midtown
on Jul 23, 2006 at 5:12 pm


Is it availabale through the comcast lines which currently run to our homes?

Does this require new lines? How long before wireless would/could be available?

If soon why wire?


Posted by Ellie Gioumousis, a resident of Palo Verde
on Jul 23, 2006 at 11:42 pm

I think if you will read the earlier post from Betty Schneider you will have an answer to your question asking if it is available from the Comcast lines which currently run to our homes. My answer is: First, not all of us have comcast. Second, there is no comparison of FTTH (Fiber to the Home)to anything else including wireless. Wireless will require lots more cell phone type towers and other structures, it is by far not as fast or as robust, it will not offer the large and almost instant downloads and uploads that fiber will and the city service and price could beat comcast by far.

Why do you think that Palo Alto has enjoyed utility rates far below
PG&E? Sacramento, Los Angeles, and Santa Clara all have the same system as we do; municipally owned utilities. This has provided good service, much lower rates and good revenues to these cities for many years.

The only question I have is why is it taken us so long to do this?
Much of the world is way ahead of us, many small towns in this country are ahead of us. The dark ring that is the base has been in place in Palo Alto for over ten years. I am very happy that we are finally beginning to move forward on this.

Some advantages: The cost will be much lower than comcast and we will be able to get phone and cable tv with internet all on the same (low) bill. It will be lower as more people particpate. It will provide instant and complete communications and camera facilities for the police and fire departments. The libraries will be able to ship instantly books, movies, recorded music and reference services. You will be able to have connections to radio and TV stations all over the country, (The best classical music station in the country is in Chicago) Everyone will be able to watch our government on tv rather than just those few who subscribe to the right cable company.
Medical records, school functions such as sporting events and plays and graduations will be easy to send for people who cannot attend in person.

Finally there is so much capacity on fiber that there will be lots of other uses that have not been thought of yet. An excellent talk was given about this to the Public Power Association in September 2004 by Mayor Lewis Billings, of Provo, Utah. He is a very astute and far sighted man and gave an excellent talk on the advantages of fiber and why Provo is getting it.


Posted by StevenJ, a resident of Old Palo Alto
on Jul 24, 2006 at 1:05 am

I think it could be a beneficial thing for residents and local businesses especially if we want to attract new strt-ups or even more mature businesses. Palo Alto is part of the foundation of Silicon Valley. We were once the city to be in and we had one of the first internet backbones in the world.

An adequate business analysis should be performed so we fully understand the pros and cons as well as expected costs to deploy and manage such a thing. It will also be important to adequately filter any input or objections raised by the current broadband emcumbants. I'm guessing they will not be happy to even let such a concept get past the concept stage.

It is also dependent upon the community showing they want such a thing. Is it too late to add something like this to the November voting activity?


Posted by mjmarcinik, a resident of Greenmeadow
on Jul 24, 2006 at 8:41 am

Do all Palo Altans deserve a month long city sponsored Hawaiian vacation? Why sure, but since the city as of late has been on a downward spiral in providing basic city services I believe Hawaiian vacations and city sponsored high speed broad band should be put low priority. Furthermore, and fundamental to getting Palo Alto back on track is the need to reform our government. We need something similar to a Proposition 13 to limit the amount of studies the city can perform and how often they can be performed for the same issue. While the city goes into the red and civic groups go begging for funds to augment the city's cuts in real public services the city council irresponsibly spends millions to perform study after study on high speed internet. which then are forgotten a year later.


Posted by Peter M. Allen, a resident of Community Center
on Jul 24, 2006 at 9:12 am

Yes, yes, yes! I had fast and reliable lit fiber to my home for 4+ years as part of our utility's FTTH Trial. Everyone in Palo Alto deserves this quality of service!

When Palo Alto builds a First Mile optical LAN as a seventh utility everyone will have access to the equivalent of electronic public roads. This will enable 1) Local control of the utility as we have for electricity 2) Equal opportunity for access by every resident and business and 3) Neutral and equal access for service providers who would then compete on the quality of their service.


Posted by Andy, a resident of Midtown
on Jul 24, 2006 at 1:20 pm

I have previously posted my assessment that our city should move ahead with high speed Internet access to homes and businesses via Fiber to the Home (FTTH); please see above if you missed it. I'd like to respond to two significant concerns expressed by others here.

The first is wired (via copper or fiber connections) versus wireless connectivity. I have no personal nor financial bias and use both wired and wireless on a regular basis. In my house I have s simple rule: if it doesn't move, wire it. Why? Because wired connections always have one or more of the following adantages:

1. Faster
2. More reliable
3. Less expensive

So at my house, laptops and Palm devices are wireless; everything else is wired. And our city should take the same approach. Houses pretty much never move and should be wired. Once an FTTH infrastructure exists in PA, we can build a wireless one on it very inexensively and have the best of both worlds. Wireless is an adjunct to wired for all densely populated areas of the city; wireless is not a replacement.

The second concern use of city funds. Like the other utilties, FTTH will be a revenue source. We did the surveys, we did the business plan, we ran the multiyear trial, and so we know that people will subscribe and pay over a long term for FTTH in PA. FTTH will ultimately increase our city's revenues. It's an investment that will benefit the community and provide income to the city.


Posted by Noah, a resident of University South
on Jul 24, 2006 at 2:14 pm

Here's another vote of confidence for FTTH and the willingness of private individuals to pay for it. FTTH could probably be done with either a co-op, or public/private partnership, but in either case the city of Palo Alto should retain ownership of the system (unlike the Comcast and ATT monopolies).

I'd happily pay for FTTH, and as an early adopter would happily pay *more* than my current ATT or Comcast rates would be. The reason? Having 100Mbt service would make Palo Alto as a community, and my home very competitive on a global scale. I've avoided telecommuting on occasion, even though my office allows it, on days when I need the bandwidth to get my job done. My wife telecommutes and often sits thru long delays to upload/download files. This is all due to the telecom's intentional limitations on the system to prevent commercial usage of residential services.

You know I'd vote for FTTH in Palo Alto, but how much would I pay? I can say right now, I'd immediately sign up for 100Mbt service at $75/mo, and probably even at $100/mo. I'd know that I could reliably switch to VOIP (Comcast seemed to throttle my Vonage phone). I'd also know that I could easily do video on demand for the currently limited providers (with many on the horizon).

Finally, this would make Palo Alto a continuing center of technological innovation, encouraging more startups to be started here.


Posted by Stephen Reller, a resident of Community Center
on Jul 27, 2006 at 8:26 am

It's a great idea and a great investment for our future. Wireless is convenient but far less capable of handling what data lines will require in years to come.


Posted by Holla, a resident of Adobe-Meadows
on Jul 27, 2006 at 4:08 pm

If Santa Clara County is considering putting up a network for the whole country, why should we waste money on doing this? C'mon people, it's called fiscal discipline.


Posted by Holla, a resident of Adobe-Meadows
on Jul 27, 2006 at 4:10 pm

Country, not country. Sorry.


Posted by Holla-Back, a resident of Midtown
on Jul 27, 2006 at 9:33 pm

Can you provide us with more information regarding this county-wide netword plan? Is it going to be run through fiber? I don't think some people truly understand how fast this fiberoptic internet service is supposed to be. Can you imagine going back to 28.8k dial-up? We will think the same about AT&T and Comcast broadband once this FTTH is fully functioning throughout the city. And yes, i'd pay more for it too! For those concerned about losing wireless, fear not! In fact your wireless may even be blazing once you connect the router to the FTTH ethernet cable!!


Posted by Bob Gardiner, a resident of Midtown
on Jul 27, 2006 at 11:06 pm

Sorry, this is strictly an economic decision, and seems to be a mute argument until we know the cost of 500kbps (comcast equivalent?) using wireless vs wired (with same security and reliability). Does anyone have an educated guess of the cost of each?

Even if achievable, why do I want to pay $100/month when I can get all the bandwidth I need for $45/month from comcast?


Posted by Noah, a resident of University South
on Jul 28, 2006 at 8:17 am

Hi again,


why do I want to pay $100/month when I can get all the bandwidth I need for $45/month from comcast?


Why? Two reasons. One: Comcast is not $45/mo, it is $55/mo, but I suppose you are also a cable subscriber. This is typical of the current telecom/monopolies such as Comcast and ATT. ATT also requires you to pay for a POTS (plain old telephone...) phone line just to be able to pay them for DSL.

Two: Reliability, quality of service, and next-generation features. I don't suppose you have tried VOIP phone providers such as Vonage? I did - and what did I find? That during peak Comcast usage times (when the whole web was slow), my VOIP phone line quality degraded to the point that we couldn't use it. At the same time, I've purchased tv shows from the Apple / iTunes music store, and would certainly appreciate a connectoin that is ~ 25x faster than Comcast.

While you may get all the bandwidth you need, I'm guessing you don't telecommute to your job or try out the very latest high-bandwidth services online. This is ok :) Not everyone needs the top speed, but you might appreciate the reliability the next time you go to use your Comcast connection and it is down for 24hrs, like ours was quite often. At the same time, with a 100Mbt connection, a TV startup might offer you video on demand at much more attractive prices than Comcast, letting you pick and choose the channels or even shows you receive and pay for.

With a public, co-op, or public-private run system, it is definitely possible to have several tiers of service. You might be able to pay less (say the same as Comcast's true cost of $55) for 3-6Mbt service, while I and others would happily pay more. If done right, this might easily be revenue-neutral to the city. I know I and many others would pay a high up-front cost for such a connection - easily $500/$1000, if I knew I could re-coup those costs...

A simple idea to pay for this is as follows (and the numbers may be way off):
The first x (say 1000, or 6 months) sign-ups pay $1000 each. The next y (say 2000, or second 12 months) sign-ups pay $500 each, and so on. This would directly pay for the fiber connections around the city and direct to homes. Early adopters could get signed up early at a cost, but the cost would decrease as the fiber would already be extended to greater areas of the city. Finally, say most of the sign-up/connection fee would be returned gradually to the customers in the form of a monthly discount (perhaps $10-$20/mo). This is almost the exact model cell phone companies do, except in reverse. The equivalent with cell companies is that they take the up-front cost (pay for the cell phone), but lock you in to a long committment with a termination fee. In this case, users essentially commit to the system for a given duration, loaning the system the start-up costs needed for their home, but recoup those costs over time.


Posted by Brendan R., a resident of South of Midtown
on Jul 28, 2006 at 9:26 am

I think it's a matter of necessity, not luxury. To me, this is a "need to have".


Posted by Terry Andre, a resident of Barron Park
on Jul 28, 2006 at 9:35 am

Yes, but my main concern in such a deal is that, again, it easily devolved into a situation that allows one provider to control what content and services are allowed over the fiber. That is not free market. And is the reason that, for nigh on 10 years now, I have supported public utility ownership of the fiber, so that multiple providers of Internet connection, TV, FM radio, telephone, other video/audio/content can provide their offerings and each homeowner can make its own decision based on the quality and price offered.


Posted by Peter M. Allen, a resident of Community Center
on Jul 28, 2006 at 10:10 am

Noah has some very elegant ideas here on financing. This town is a hotbed for innovative ideas, yet his financing model may fill the void left by anyone in doubt that a $40M bond would work. Still at question though is who will underwrite the $40M iff it fails?

The main reason that our city staff (legal and financial) is not moving forward with creating our Seventh Utility is the palpable risk of failure. Yes, we've had a successful trial, survey, and business model, but we are extremely legally and financially conservative now in the wake of Spring 2000. City Hall lacks the drive, vision, and courage of 100 years ago (and even six years hence). The landscape is different and effective government is more complex today. That's why they need to hear from us, and your comments in this forum is but one vital step towards success.

Of the 600 homes in the Community Center canvased door-to-door in 1999, 125 (20%) of us handed the city a check for $500 to get in line for the Trial, with another $700 committed upon first light. The Trial lit up 70 homes using a gerimandered footprint covering 25% of the homes passed. Back then the cost of FTTH was around $4000. Today it is $1200 per home passed - we could pay this off in the first month in my neighborhood! How about yours?

The Community Center neighborhood has challenged other neighborhoods to voice their solidarity. Baron Park is ready. College Terrace, Ventura, University North, and Midtown have brilliant activists but remain unorganized. We need feet on the street networking.

I wish that I could respond to the upcoming RFP as if I were the city. Perhaps a group of us can, actually. Jeff Hoel has commented that should the RFP fail to yeild a savory proposal for a public/private partnership, it is his hope that City Hall will hear that "We need to do this ourselves" rather than "I guess the idea doesn't work". Amen, Jeff!

Note that one of the elements that Noah's proposal will do is to make the innovators pay more upfront than followers. We should be pretty used to that consumer model by now.

Note that our city's own 10 Mbps coaxial based network is antiquated and, in the words of Senator Ted Stevens, a bunch of "tangled up tubes". I recommend that our own city be among the first FTTP customers, with every city facility and school pitching in their early share. Thank you, Noah - your proposal has strong merit.




Posted by Frank Flynn, a resident of Ventura
on Jul 28, 2006 at 12:17 pm

Looking these comments it's amazing we don't have it already. They are pretty one sided.

I certainly to support this idea not only because I'd use it but also because I believe long term this would be a money maker for the city.

I'm trying to remember why we didn't do this before - wasn't there a fear of being in court for a long time as AT&T and Comcast fight to protect their monopolies and fear of the $40 million price tag? Aren't these still concerns? How will we over come these issues?


Posted by Richard Johnsson, a resident of Duveneck/St. Francis
on Jul 28, 2006 at 12:55 pm

I strongly favor FTTH in Palo Alto. I have pledged to the city at least two, maybe three times, that I would pay $1200 to get my home connected.

Wireless is nice, but there's no comparison with the quality of service and the potential bandwidth of fiber.


Posted by Jeff Hoel, a resident of Midtown
on Jul 28, 2006 at 2:51 pm

Re Bob Gardiner's question (above): "Even if achievable, why do I want to pay $100/month when I can get all the bandwidth I need for $45/month from comcast?":

Who says it's $100/mo? In UTOPIA, a multi-city, muni-owned FTTH system, you can get 15-Mb/s Internet service for $40/mo, and 8-Mb/s service for $34.95/mo. For more information on retail service providers and prices, see:
<Web Link>

In Loma Linda, CA, which also has muni-run FTTH system, you can get 5-Mb/s Internet service for $29.95/mo.
<Web Link>

Palo Alto's prices might turn out to be different from either of these. But it's interesting to know what other communities think is possible and worth doing.

Also, even if you NEVER need anything faster than Comcast's current Internet service, if muni FTTH fiber were to pass your home, your property value would go up, and the city could attract savvy new businesses, and your neighbors could telecommute.
<Web Link>


Posted by Jeff Hoel, a resident of Midtown
on Jul 28, 2006 at 3:33 pm

Re Holla's question (above): "If Santa Clara County is considering putting up a network for the whole county, why should we waste money on doing this? C'mon people, it's called fiscal discipline."

Wireless Silicon Valley, a project within Joint Venture Silicon Valley, a non-profit organization, has issued an RFP about building a wireless system covering 1500 square miles in parts of Santa Clara and San Mateo Counties, and they have received 7 bids.
<Web Link>
(In other words, Santa Clara County isn't doing it, and not all of Santa Clara County will be covered.) So far, it's not a done deal.

Even if it were a done deal, that doesn't mean a muni-run citywide FTTH system in Palo Alto couldn't be financially successful. FTTH can offer services wireless can't.


Posted by Bob Gardiner, a resident of Midtown
on Jul 28, 2006 at 9:02 pm

The Utah plan sounds great. But this is palo alto.

How come so many communication companies have gone bust charging exponentially higher prices?

Does the city of palo alto have better management? I don't think so.

Are there guarantees the utah service providers will hold their prices? What is there track record? How long have they been providing this service?


Posted by Bob Harrington, a resident of Embarcadero Oaks/Leland
on Jul 29, 2006 at 8:10 am

COMMUNITY LEADERSHIP AND PARTICIPATION IS KEY: It is very encouraging to see so many Palo Altans from all over town being so supportive of a community-owned open ultra high-speed network serving all Palo Alto premises in this Town Square discussion. Community participation alone can assure the financial success of our community-owned network. Once about 40% of the premises passed by the fiber optic lines signs up for one or more services offered on the network, breakeven will be achieved. That means financial risk will have been reduced to ZERO. Who wouldn't sign up for services that are more reliable, better quality and less cost than those available any other way, especially when signing up for services from the community-owned network immediately supports our own community?

RATES DECLINE ABOUT 40%: Studies and recent experience shows that rates decline about 40% when a community-owned open fiber network lights up just about anywhere in the world.

AMERICA IS 18TH AND FALLING: Most of the ultra high-speed community networks, unfortunately, are lighting up outside America...South Korea, Japan, Hong Kong, Sweden, the Netherlands, Switzerland, France, England, Finland, Norway, Canada...all are ahead of America in broadband penetration. If we want to leverage our leadership role on the Internet that Stanford has helped America achieve so far by being the incubator of Netscape, Yahoo, Google and Facebook, this is the right thing for Palo Alto now. Provo and the UTOPIA cities in Utah are among the leaders raising the communications bar in America. Executives from both of those networks continue to be very helpful assisting Palo Alto's efforts toward our own community-owned fiber optic network.


Posted by Allen Podell, a resident of Community Center
on Jul 29, 2006 at 10:06 am

I love the innovative suggestions on creative financing, and can't help but wonder this: Why not offer Palo Altans a share in the system? Pay $4000 for FREE monthly internet service for 10 years at a 100mbs service level. Pay less up front, and the service charge per month increases. There are lots of us who would belly up. We buy the home equipment and the line drop, and a share of the installation. The bandwidth/up-front share tradeoff would need to be worked out, say $3000 up-front for 15Mbs service, etc?????
Want to reduce you monthly gas bill? Telecommute!
Fill your big screen TV with the video feed you want, now!
Want to see your grandkids in Florida?
Think new paradigms. Wireless doesn't have the bandwidth for the above.


Posted by Allen Podell, a resident of Community Center
on Jul 29, 2006 at 10:26 am

If I borrowed $4000 today on my home equity loan for this home improvement, I would have to pay $15/month interest on that loan. To pay it off completely in 15 years would be $40/month amortized. This is still a good deal for 100Mbs fiber service, given that my erratic Comcast access comes in above $50/month.


Posted by Arthur Keller, a resident of Adobe-Meadows
on Jul 29, 2006 at 11:55 am

For so-called high speed Internet, I now have a choice between DSL (either through Pac Bell or one of their partners, or through Covad or one of their partners) or cable. The dominent providers (Comcast and Pac Bell/SBC/AT&T) do not let me put servers on their Internet connection. Some of Pac Bell's partners and Covad's partners do let me run servers. None of these services is more than 8mb/s to me and 768kp/s from me, unless I pay well over $100 per month. And at about 13,000 from the telco central office, DSL is effectively limited to about 1.5mb/s to me.

The biggest trend in the Internet is contributed content, yet the capacity limitations are designed to make it easier to serve me content from large providers than for me to serve my content out to the world.

FTTH sponsored by the City of Palo Alto will help all city residents. Those who sign up for its services will benefit from better services at lower cost. Those who don't sign up for its services, yet have TV service from Comcast will likely see lower costs to compete with FTTH. Residents and small businesses will flock to Palo Alto for the reliable high-speed and low-cost Internet service, thereby indirectly increasing City revenue. And FTTH will encourage home-based Internet-based businesses, telecommuting, and such services as telemedicine, thereby reducing traffic.

Palo Alto is exploring how to increase City revenues. FTTH will be an investment that pays benefits (financial and other) to the City, just as the City of Palo Alto Utilities has benefited the City for over a century.

Think how reliant we have become on the Internet. This reliance is expected only to increase.

Finally, while I certainly would like to see bids submitted by for-profit entities and consortia, I would also like to see a grassroots, community-based effort at writing a proposal that describes what should be built. I recommend that those of us who are knowledgeable about these technology issues and business strategies engage in an effort to submit a formal bid. Even if such a bid does not get accepted, it does advance the process forward and influence the eventual outcome. Here's the community's opportunity to describe what doing it right means; let's sieze that opportunity.

P.S. It's Adobe Meadow, not Adobe-Meadows.


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 29, 2006 at 1:09 pm

FTTH deployment via public/private partnership is something that I have long advocated for. Assuming the deal was structured in a way that makes fiscal sense (not a difficult thing to achieve), this is the way we should be going. After some years of resistance to this idea, it's gratifying to see that so many FTTH supporters and Council members have come around to this way of thinking.

As far as a grassroots effort at writing a proposal that describes what should be built, we have been there and done that, and failed. I don't thinkn it's wise to venture in that direction, again.

Four things:
1) Let's first take a look at the RFP's that are coming forward. If nothing is appropriate, pehaps *then* we can look into tweaking one of those, in cooperation with the most suitable vendor(s), for a deployment.

2) If we find someone with the capacity to deploy, in a deal that makes sense, the FTTH effort will take further _organized_, grass roots efforts, to the neighborhood level. We're talking about a well-honed PR effort that helps ordinary citizens to understand the benefits of a local FTTH network. The effort should be presented in ways that eschew technospeak, and refer to the everyday entertainment and municipal efficiency and revenue uptake advcantages of an FTTH deployment. Rather then reinvent thte wheel ofo technological diligence applied to what the _best_local system can be, we need to think about that aspect of community adoption. This is where the last local effort to deploy FTTH fell flat on its face.

4) We need to bring in large scale, local institutional stakeholders.

4) Following is a fairly long private placement framework that could be modified in any number of ways. I put this forward to PAU and Council a few years ago when the idea of private/public partnership was receiving a lot of resistance.

Here's the framework - note that some of the numbers have changed, but the geberal idea is there.
***************************
Suggested Funding Models for Municipal Communications Infrastructure
by Sanford Forte

Palo Alto is considering the construction of a municipally-owned-and-operated communications infrastructure. Currently, three financing models have been put forth – a general bond, financing from CPAU's reserve fund, or a combination of both.

What follows are some general, to mid-specific suggestions for alternate means to funding a new Palo Alto communications infrastructure. They both follow a private placement model – many variations on this theme are possible.

1) Pursue direct investment from local institutions that would profit most directly from the deployment of local communications infrastructure.

Many private (commercial and otherwise) organizations would experience direct benefits from a CPAU-run communications infrastructure. Lower cost structure, and economies would result.

Many agencies serving the public – e.g. Stanford University (including Stanford University Hospital), Veteran's Administration Hospital, public and private schools, etc. – would also benefit from lower costs, and increased efficiencies within their respective domains.

Given the above, CPAU should create a sensitivity model that illustrates the quantifiable benefits gained by local institutions if a municipal communications infrastructure is built, versus not being built. The model should illustrate clear cost savings, opportunity costs (if the network is not built) and other quantifiable benefits – e.g. enhanced consumer convenience and/or choice as a result of the network's presence.

The data drawn from the sensitivity analysis should then be used as part of a local campaign directed at promoting the benefits of a municipal network to local institutions. Largely, this campaign should point toward soliciting at least a significant portion of the funds necessary to build the network.

Additional benefits resulting from such a campaign would be to create a working dialogue, focused on how local institutions can cooperate – financially and otherwise – to get the network built. Either way, a benefit is derived for Palo Alto.

Many organizations have direct means – or direct access to peripheral means (e.g. foundation capital) – to make significant financial contributions to a municipal communications build.

Within this scenario, CPAU would be designated as "owner" to the network, with quantifiable benefits – including any contributions from a bond or CPAU's reserve fund - created by the network over time considered as CPAU's 'investment' capital. Essentially, the benefit profile presented to potential contributors should be modeled (accurately) in a way to show a real return on investment to operations through benefits obtained via participation in the network.

Following is a partial list of local employers (with employee numbers) who would stand to benefit from a CPAU-run information utility. (note: the numbers in this list have not been updated since 2003)

•Stanford University: 5,000+
•hp: 5,000+
•Space Systems/LORAL, Inc.: 3,000 - 5,000
•Varian Associates: 1,500 - 2,000
•Palo Alto Unified School District: 1,636
•Alza Corp: 1,500+
•Palo Alto Medical Foundation: 1,500
•Roche Bioscience (formerly Syntex Corp.): 1,000 - 1,500
•Veterans Affairs Palo Alto Health Care Systems: 1000+
•Stanford University Medical Center/Hospital: 750 - 1000

2) Pursue a regional Private Placement solicitation for long-term investment.

It's a given that most established private equity groups - i.e. venture capital, and other private equity investment – are not interested in funding initiatives that do don't project at least 7-10x ROI (often more) within a specific range of time (2-5 years).

However, many individuals and organizations within Palo Alto have access to considerable private capital. CPAU should be approaching those individuals and organizations as potential investors in a city-owned-and-operated municipal communications build.

Palo Alto would thus enter the domain of gathering funds by the issuance of a Private Placement. Essentially, this action would involve the solicitation of funds from individuals and institutions willing to consider a long-term, measured risk - based on the long-term future promise of a municipal network, and a return on their investment.

Initial returns to investors would be deferred until the network showed a profit.
(note: other payback scenarios could also be construed)

The majority of shares would be owned by CPAU.

Any private placement investor would have the option of transferring owned shares.

Following is a representation of how many investors it would take to accumulate $40M through a private placement, given different share prices within the offering. Thus, if the cost of one share was $1M, the $40M goal could be reached with 40 individual investors (or less, if some investors chose to buy more than one share).

(note: •Estimated mean Palo Alto household income in 2000: $103,700* (* Source: "Projections `98" Association of Bay Area Governments)



•Estimated mean household income in 2000: $117, 574 (source: Palo Alto Online: Web Link)

Assume fund raising goal of $40M, at one person (or institution) per share.

•40 people - $1M@

•80 people - $500K@

•160 people - $250K @

•320 people - $125K @

•640 people - $62, 500K @

•1080 people - $31,250 @

•2160 people - $15,625 @

•4320 people - $7663.00 @


Again, both examples above are brief scenarios, and meant to present only a sample of what's possible. The very least we should do is investigate these possibilities, in order to bring more funding flexibility to this potentially great opportunity.




Posted by ALLEN PODELL, a resident of Community Center
on Jul 29, 2006 at 1:59 pm

Hey,
I'm delighted to see all the real data come out, but I want more to see the dollars roll out.
If homeowners decide to foot the $4000, they should get a preferential rate. Jeff is right about rate structures, and someone else needs to do the details on exactly what speed service costs what. I am simply saying that a large part of the funding for this slow moving enterprise could be quickly obtained from those who would benefit, and could even get a tax deduction. I can't imagine why we couldn't get some immediate bucks from some companies in exchange for their getting a good deal on rates, also. It takes companies longer to make decisions, but some will jump for it. If funding, not desire, is the issue, then let's throw it open. Venture firms want 10x returns, but all we want is a lower rate for our service in exchange for an up-front investment. Essentially we are willing to settle for a low percentage return. Isn't this what a cooperative is about?
So, forget about venture funding.


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 29, 2006 at 3:49 pm

The data I presented above was presented at least three times prior to policy makers and city staff, in addition to some of the core supporters of FTTH here (I'm one of those). Again, I'm delighted to finally see the conversation leaning inn the direction of local (or other) private/public partnerships.

If we're going to see "more dollars roll out", as you put it, local citizens and other stakeholders _must have a comprehensive view_ of what the long term benefits are, presented to them in a way that they understand. This has _never_ been done. Why? Because FTTH has always been driven in Palo Alto by those who are already-sold early adopters, or techies, or both.

As far as involving large commercial stakeholders, this is a no-brainer from the marketing side. For instance, I wonder what the projected savings would be for the Palo Alto Medical Foundation is FTTH could be used for cutting-edge online diagnosos or patient monitoring. Someone has to take the time to _market_ these things into the community in a way that speaks to more than slightly lower prices for broadband, or the _magic_ of broadband. It has to be real.

This may sound ironic, but I would suggest taking a look at some of Comcasts or Dish TV's best promotional efforts. What was the thrust of othose campaigns? how did they get people to WANT to sign up.

If we accept the inherent advantages of fiber (ideally, with a wireless network running parallel, to enable mobility and access), a well-thought-out campaign to the neighborhoods _and_ commercial stakeholders should yield substantial interest and cash.

One last thing, the network will NOT sell on price advantage alone. That is a losing strategy. It has to sell on flexibility, scaleability (potential for growth in ways that supercede the large national networks), sustainability, and variety of content (choice).

If you're talking about saving people $10 more than Comcast, and that's all, with a little spice about the _promise of broadband_ thrown in, it's not going to happen.

From a strategic standpoint, what's required is a thorough look at what the responses to the RFP is. Work with those vendors, comparing and contrasting what's possible in terms of the above requirements (choice, price, flexibility, etc.), and try to make the best deal.

If you want an even more robust rollout, it _will_ require a strong marketing effort.

Lastly, I would suggest that any local diligence put into place here _not_ include the kind of mismanagement and bungling that went on with Cable Co-op. If we do this, let's do the marketing, work hand-in-hand with vendors, and let the thing run with as few local self-appointed "experts" and "managers" in the mix as possible.


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 29, 2006 at 3:55 pm

btw, Allan is 110% right about venture funding. This is not something that Angels or VC's will ever get close to. the returns and timelines just aren't there.

The "angels" are going to have to be local citizen and commercial stakeholders who have the vision (and some means) to carry this thing forward. The rewards are a more robust local communications infrastructure; more content choice; probably better pricing; an ability to attract small research-based business; etc. etc.


Posted by Arthur Keller, a resident of Adobe-Meadows
on Jul 29, 2006 at 4:41 pm

If we assume a rollout along the lines of Utopia, covering the entire city east of 280 but in priority order based on density of signups, how many households would we need to sign up in order for the system to be revenue positive after financing?

I suggest that households indicate their interest in signing up for service in one or more of 3 ways:

1. Getting an employer to commit to paying for a telecommuter connection.

2. Committing to sign up once available for a minimum of 2 years from date of signature (not date of installation).

3. Buying a $10,000 municipal bond from the City of Palo Alto to help finance the construction of the system.

I suggest a committee be formed to obtain signups of the above, including working with local employers.

I'm wondering if it would be worthwhile to include the faculty housing areas of the Stanford campus, as I would expect the rate of signups to be high, which would help fund the project.


Posted by Bob Harrington, a resident of Embarcadero Oaks/Leland
on Jul 30, 2006 at 6:16 pm

CALL FOR PRIVATE SPONSORS: A sponsors' syndicate should be formed from among the entities listed below a) to provide leadership and b) to alleviate Palo Alto's risk in identifying and working with private partners to build and operate a municipally-owned ultra high-speed open broadband network.

The United States, and especially Silicon Valley, needs a more aggressive telecom model to accelerate ultra high-speed broadband deployment to every premise. There are just too many major enterprises with significant investments in intellectual capital in our region for us to collectively continue to tolerate the significant restrictions being imposed by our nation's obsolete telecom strategy and structure. As America falls further behind world leaders in broadband penetration, a more rapid roll-out of high-speed broadband becomes ever more urgent for our country. It is well-known that our nation's major telecom companies just do not have the balance sheets necessary to get the job done alone.

Palo Alto is about to issue an RFP seeking an acceptable municipal model that provides the impetuous to a more rapid roll-out of high-speed broadband locally. Thus, to get the ball rolling in Silicon Valley, each and every entity listed should consider becoming a sponsor of the Palo Alto network and should be pro-active in making their interests known to any member of the Palo Alto City Council: AboveNet, Actel, Adaptec, Adobe, Advanced Micro Devices, Affymetrix, Agile Software, Agilent, Align, Alcatel, Altera, AOL, Apple, Applied Materials, Applied Signal Technology, Ariba, Arthrocare, Aspect Communications, Asyst Technologies, Atheros Communications, Atmel, AT&T, Avanex, BEA Systems, Bechtel Telecommunications, Bell Microproducts, Borland, Brocade, Cadence Design, California Water, Calpine, Cisco, CNF, Coast Distribution, Coherent, Connetics, Covad, Cox Communications, Credence, Cypress Semiconductor, Dionex, DSP Group, eBay, Echelon, Electronic Arts, Electronics for Imaging, Embarcadero Publishing, Ericsson, Equinix, ESS Technology, Essex Property, Exponent, Extreme Networks, Finisar, Foundry Networks, Franklin Resources, Fujitsu Network Communications, Genencor, Genentech, Genesis Microchip, Gilead Sciences, Google, Granite Construction, Harmonic, Hewlett-Packard, Hyperion, IBM, Informatica, Integrated Device Technology, Integrated Silicon Solution, Intel, Intersil, Interwoven, Intuit, Intuitive Surgical, iPass, iTown Communications, IXYS, JDS Uniphase, Jupiter Networks, KLA-Tencor, Komag, Kyphon, Lam Research, Landec, Leadis Technology, Lexar Media, Linear Technology, Lockheed, LSI Logic, Lucent Technologies, Macrovision, Magma Design, Mattson Technology, Maxim Integrated Products, Maxtor, McAfee, MediaNews, Mercury Interactive, Micrel, Microsoft, Molecular Devices, Motorola, National Semiconductor, NASA Ames, Nektar Therapeutics, Netflix, Netgear, NetIQ, Netscreen Technologies, Network Appliance, Network Equipment Technologies, Nextel, Novellus Systems, Nvidia, Omnicell, Omnivision Technologies, Openwave Systems, Oracle, palmOne, Pacific Gas & Electric, PacketFront Inc., Pannaway Technologies, Photon Dynamics, Pinnacle Systems, Pixar, Plantronics, PMC-Sierra, Portal Software, Power Integrations, Proxim, Quantum, Rambus, Redback Networks, Robert Half International, Roche Pharmaceuticals, SanDisk, Sanmina-SCI, SAP, Serena Software, Siebel Systems, Silicon Graphics, Silicon Image, Silicon Storage, Siliconix, Sirf Technology Holdings, SJW, Solectron, Sonicwall, Stratex Networks, Sun Microsystems, Symantec, Symmetricom, Synaptics, Synnex, Synopsis, Tellabs North America, Terayon Communications, Tibco, TiVo, Trimble Navigation, Ultra Clean Holdings, Ultratech, Varian, Varian Medical Systems, VeriSign, Verizon, Veritas Software, Verity, Visx, Vulcan Inc., WebEx Communications, West Marine, Xerox, Xilinx, Yahoo, Zoomy Communications, Zoran, Joint Venture Silicon Valley, Palo Alto Downtown Business and Professional Association, Rotary Club of Palo Alto, Palo Alto Chamber of Commerce, Palo Alto Club, Palo Alto Medical Foundation, Kaiser Health, Stanford Hospital and Clinics, Lucille Packard Children's Hospital, El Camino Hospital, Baker & McKenzie, Coblentz Patch Duffy & Bass, Cooley Godward, Davis Polk, DLA Piper Rudnick Gray Cary, Dorsey & Whitney, Earthjustice, Fenwick & West, Gibson Dunn & Crutcher, Keker & Van Nest, Lieff Cabraser Heimann & Bernstein, Morrison & Foerster, Nixon Peabody, O'Melveny & Myers, Orrick Herrington, Pillsbury Winthrop, Ruby & Schofield, Sideman & Bancroft, Skadden Arps, Townsend and Townsend, Walkup Melodia Kelly Wecht & Schoenberger, Weil Gotshal & Manges, Wilson Sonsini, Accel Partners, Applied Ventures, Benchmark Capital, Bessemer Venture Partners, Canaan Partners, Draper Fisher, Goldman Sachs, Greylock, Hummer Winblad, Institutional Venture Partners, Intel Capital, Kleiner Perkins, LightSpeed, Mayfield Partners, Merrill Lynch, Mobius, Mohr Davidow, Morgan Stanley, New Enterprise, Norwest, Palo Alto Venture Partners, Redpoint, Sand Hill Capital, Sequoia, Sutter Hill, Trinity Ventures, UBS Securities, U.S. Venture Partners, Versant, Ellis Partners, Fry's Electronics, Glenborough Realty Trust, Keenan Land, King Asset Management, Marcus & Millichap, McNellis Partners, Melcher Development, Mission West Properties (Berg and Berg), Mozart Development, Peery-Arrillaga, Premier Properties, Renault & Handley, R&M Properties, Roxy Rapp & Company, Silicon Valley Association of Realtors, Simon Property Group (Stanford Shopping Center), Sobrato Development, Spieker Partners, Summerhill Homes, University Circle, Vance Brown, Wheatley Properties, and WP Investments.


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 30, 2006 at 8:14 pm

While Bob's list is a great list of mostly regional movers and shakers, it would be better to hit them up to support a regional network - e.g. this is the kind of list that JVSV shuold be working in support of its wireless Silicon Valley initiative.

What might be more effective would be to tease out the Palo Alto firms in the above list, surmise what immediate benefits would accrue if they and their employees has access to local fiber, and then make personal one-on-one contact, by phone or in person. In one word, 'sell'.


Arthur Keller's call for the purchase of municipal bonds is closer to home, and laudable.

I support his call for the city, or some volunteer group to form that has both tech and development personnel on board. That, in addition to targeting Palo Alto firms from Bob Harrington's list (above), in addition to additional local stakeholders (PAUSD and neighborhood associations come immediately to mind) might lead to the kind of robust support that gets this thing rolling with something that to date it is sorely lacking - i.e. cash.


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 30, 2006 at 8:26 pm

Incidently, Palo Alto might even find a way to conjur some variation of the "broadband bonds" defined in the link below.

As one of a few principal founding members of Telophase Communication Networks, I and one of my partners at the time brought the idea of broadband bonds to the FCC. The FCC liked it, but the time was not politically right to take the idea forward and make it a reality. How about Palo Alto? Perhaps there's a chance to do some fiscal innovation, and create a debt vehicle that's unique. Think about how Palo Alto might cretae a variation on this idea, which was originally suggested as a national debt vehicle.

Go to page three of this link Web Link to see what we put together at the time. There's some other good stuff on the Telophase site as well.


Posted by Bob Harrington, a resident of Embarcadero Oaks/Leland
on Jul 31, 2006 at 2:22 am

IT'S RISK, NOT FINANCING, THE CITY IS CONCERNED ABOUT: Raising money via bond issue is a no-brainer for a AAA-rated credit like Palo Alto. For the network build and operation, city leaders and department managers are concerned about how to mitigate the risk of loss. Cost controls, offering products/services with profit margins and the TAKE RATE of profitable services are the keys. As a community, we control our own destiny regarding take rate. Once a community-owned network is committed to and is being built, every member of the community immediately has a special incentive to order services provided by the network. Doing so assures the network will be quickly profitable and drops the risk of loss to the community to ZERO.


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 31, 2006 at 3:22 am

You're leaving out the major component - i.e. PEOPLE (i.e.CONSUMERS).

I find Bob's last comment worrisome, and a pretty hefty assumption, especially in light of the fact that we've never been able to get more than about 50 people excited enough to put up any cash for fiber (and those were mostly subscriber fees submitted by the fiber test customers).

Of _course_ risk is an issue; who said it wasn't? And the consternation over the ever important _take rate_ has EVERYTHING to do with whether or not a muni fiber network can sufficiently _differentiate_ itself to attract the number of Palo Altans necessary to reduce the risk profile. "Build it and they will come" was the faulty assumption that drove the last effort into the ground.

With respect, I think it's a bit naive to assume that if the city builds a fiber network, "they (citizens), will come". To say that "every member of the community has a special incentive to order services provided by the network", just because the city owns it, will NOT magically translate to a take rate sufficient to reduce the risk profile you speak of.

Citizens are _consumers first_ when it comes to communications services; when are we going to learn that lesson - the lesson that ALL major communication providers (competitors for any muni network here) know, and use so well? We had better start, or end up looking foolish.

If we're going to get this thing going, we'd best move in a direction that _sells_ citizens and stakeholders on all the things I've mentioned prior (just selling 'price' and city pride just isn't going to hack it). Comcast will have a field day with that.

If we don't MARKET this thing in a way that INVOLVES citizens early on - as the savvy consumers that they are - and doesn't take them for granted, we're looking at another Cable Co-op boondoggle, guaranteed.

Again, I laud Arthur Keller's ideas for financing, and suggest a further look at the "broadband bonds" idea suggested earlier (which could be nicely morphed by the city to fit our circumstance, or feed into what Arthur has suggested).






Posted by Peter M. Allen, a resident of Community Center
on Jul 31, 2006 at 10:40 am

Facts: 125 of 600 Community Center homes in the late summer of 2000 each sent in $500 checks to the CPAU to reserve a place in our FTTH Trial. That's about 20% willing to put our money where out mouths are - up front. The CPAU then (wisely) gerrymandered the Trial district so that 25% of the homes passed were part of the FTTH Trial. These 70 homes paid $85 for each of 50 ultra fast and reliable months, ending in December of 2005.

Let's see Evergreen Park (et al) get organized and committed before rashly stating "we've never been able to get more than about 50 people excited enough to put up any cash for fiber". *We* have. Can you? Let's see feet on the street instead of endless debate, please! Let's see constructive ideas and proposals instead of trashing other's viewpoints and success.

We can at least agree on:
a) We seek to create a public telecommunications utility.
b) We would like a First Mile Optical LAN (min 100 Mbps).
c) We would like to foster Open Access and Net Neutrality.

Yes, there are issues of financing, service, and wireless that need to be resolved. On those we can organize and caucus.

BTW - the principals behind the three tenants above are:
a) The taxi company should not own the road
b) If it doesn't move, wire it (using future proof infrastructure).
c) Fair access for users and providers is essential to success.

Op ed:
Point a) actually helps enable point c). Point B is visible today in every corporation (LANs). Wireless is an important convenience enabled by wired stations who 1) Are good citizens by not taking up shared and limited wireless bandwidth and 2) Are even better citizens by taking traffic in and out for wireless solutions.

I also think that with risk comes ownership. It will be challenging for any RFP respondent to take the risk up front and hand over ownership later. Perhaps some respondent will be visionary enough to enable city ownership, but it will likely come with other ongoing and operational concessions. Partnership is indeed an appropriate word, but difficult to enact in times of complex governance.

Anyway, there are enough voices in this forum to make this blog relevant and successful. Thank you Jay and staff!


Posted by Sanford Forte, a resident of Evergreen Park
on Jul 31, 2006 at 1:43 pm

It needs to be said that all the money raised for FTTH in Palo Alto was raised by citizens who were _recipients of_ service in the FTTH trial, or their neighbors. That was the point I was trying to get across, a point (really, a plea) that I've repeated for four years - i.e. that that effort needs to be _repeated neighborhood-by-neighborhood_, and include key commercial and non-profit stakeholders. The ONLY way for that to happen is through a _coordinated_ offert to promote a wide array of benefits to _neighborhood associations_ and other key stakeholders. It's as simple, and as labor-intensive, as that.

There was a post this morning on Web Link (interested parties should register and get involved). That wise post pointed out that the same people involved in the FTTH effort over past years are the ones mostly talking in this forum.

My plea - again, a plea that has continued over much of the last four years - is that this group find some way to organize - together - an effort to reach out _uniformly_ to neighborhood associations, commercial stakeholders, and so on. I have - as has Arthur Keller, recently in this forum - suggested that we do just that.

Thus, I'm suggesting that everyone interested jump on the Web Link PA Fiber list and organize a meeting, post haste. I will put that post up as soon as I finish this one.

Finally, it's all well and good to wax eloquently about how great broadband is, and what it can do, and how we might raise revenue from it. In all this we keep forgetting that CONSUMERS with preferences have to be brought into the picture. (and savvy consumers, at that, who will be paying for the network, and assuming some of the risk). CONSUMERS pay attention to a variation of things, and thus have to be sold on a wide array of benefits and advantages through an organized effort. Piecemeal attempts, neighborhood by neighborhood, just isn't going to cut it.

Things like risk, availability or modality of financing, etc. are just empty words without motivated consumers who understand benefits. That's the way the commercial world works; we ignore the fact that we're talking about a commercial enterprise, with rather low barriers to entry, at our peril.


Posted by Paul Diamond, a resident of Duveneck/St. Francis
on Jul 31, 2006 at 1:52 pm

I said this at the council meeting in January - it is incredible that Palo Alto has such poor broadband support today, and it is clear that the private providers are not worried about supplying high speed at reasonable cost any time soon. The next HP will be developed not in a garage, but over a broad band connection - the only question is whether it will come from Mt View, or Sunnyvale, or Cupertino - at the current rate, Palo Altans will not be able to participate.


Posted by Tim Bell, a resident of Evergreen Park
on Aug 1, 2006 at 3:26 pm

I just voted Yes in favor of FTTH. This household would use it.

We understand a long term (multi-year) payback proposition, and we
would be willing to put in money up front to get this started so
we all reap the benefits now and into the future.

Palo Alto owns the utilities. The community should leverage that
opportunity to install FTTH and solve the 'last-mile' problem in
a forward looking way.


Posted by Betty Schneider, a resident of Community Center
on Aug 1, 2006 at 4:34 pm

I would certainlly support a high speed fiber optic to the home. We had it for a few years, and it is sorely missed now. Comcast is a pitiful substitute.


Posted by Gary Lindgren, a resident of Professorville
on Aug 1, 2006 at 4:48 pm

What is meant by competetive price. Are you talking about a television and phone service too. I think you need to define exactly what you have in mind for the FTTH service. Also what would typical prices be for the various services. I now have a 5 Mb/s DSL service and this is fine for my needs. But I don't have cable. AT&T is working on upgrading their offering of internet services to include 2 HD + SD IPTV channels + phone + very high speed internet service. This would be a big competitor for the city utility.


Posted by Sanford Forte, a resident of Evergreen Park
on Aug 1, 2006 at 7:37 pm

Gary's post very nicely reinforces some of the points made above re: the dangers of making gross assumptions about "build it (the network) and they will come" - as well as the dangers of promoting network benefits based almost entirely on price. His comments also aptly illustrate how low the barriers ('barriers to entry) are to entering the local "market" that any muni communications utility thinks it can easily own.

I bring these points up to show that local consumers must be motovated to subscribe and support a community network only by a wide array benefits (not only price and broadband speed) .

Again, just some of those benefits are as follows:

1) Long-term economic benefit to the city
2) Ability to make Palo Alto communications robust enough to attract certain kinds of new business.
3) Creation of local applications that positively impact current, and yet-to-be-discovered cross-efficiencies among schools, municipal government, libraries, and so on.
4) Price
5) Choice of content
6) Speed of access (broadband)
7) Multiple service levels.
8) Forward scalability and flexibility of the network
9) For commercial stakeholders, the ability to enable things like telecommuting,offsite training, etc. in ways that have been heretofore impossible. MANY other sound ROI rationales can be created for commercial stakeholders in attempts to gain buy-in suffucient to garner cash or other substantial contributions.
10) etc. etc.

#1 is especially important, because citizens can be helped to understand how their "communicative assets" (i.e. communicative actions that are sent over the network, and charged for), can be kept "at home", to benefit city coffers, instead of leaving town in the form of payments to commercial telecommunications providers. This point MUST be stressed over and over, to help citizens understand what's at stake in terms of local economic growth. This would be especially imporatnt in the early stages of a deployment, because incumbents would certainly use the market to challenge the muni network's offerings. Community understanding, loyalty, and involvement will help innoculate the network to outside attempts to disrupt the local market.


Posted by Bob Harrington, a resident of Embarcadero Oaks/Leland
on Aug 2, 2006 at 12:58 am

INTRANET SPEED 100 Mbps BOTH UP AND DOWN: The beauty of a community-owned network is that all traffic within the network goes at the full 100 Mbps. Only when you pass "through the gate" onto the Internet is the speed likely to be throttled back to price tiers starting at $39.95 for 15 Mbps, then modestly up from there for 30 Mbps, 50 Mbps and 100 Mbps. Small and medium size businesses (about 4,000 in Palo Alto) will enjoy huge rate savings for far superior services. See MStar site for UTOPIA pricing. Prices should be identical on Palo Alto fiber network.

OPEN NETWORK MEANS PRICE COMPETITION AND MANY CHOICES: Open fiber networks that have been in business for 5 years or more in Sweden and the new FTTP network under construction in Amsterday today each host between 70 to 100 service providers. Since every home and business can uplink at fiber speeds, many new and innovative services are home-based. Both Yahoo and Google started in Stanford dorm rooms with fiber service. Triple and quadruple-play services plus gaming, community search, home security, emergency preparedness and system back-up sites are big in Europe.


Posted by Jeff Hoel, a resident of Midtown
on Aug 2, 2006 at 5:49 pm

Re Bob Gardiner's questions and comments from 7-28-06 (above):

"The Utah plan sounds great. But this is palo alto."

I don't understand this comment. Does Bob think Palo Altans are somehow less capable than folks in Utah?

"How come so many communication companies have gone bust charging exponentially higher prices?"

I invite Bob to be more specific.

"Does the city of palo alto have better management? I don't think so."

Palo Alto must manage its utilities pretty well, or we wouldn't have utility rates that are a good deal compared to rates in neighboring communities. UTOPIA contracts out the day-to-day management of its network. We could do that too.

"Are there guarantees the utah service providers will hold their prices?"

UTOPIA, as the wholesale network service provider, could make rules about the retail prices of retail service providers if it wanted to. I don't know if it does. If there are enough retail service providers, competition may be a better way than rules to serve the public interest. Only recently, XMission offered 15-Mb/s service at $44/mo; today, it's $40/mo.

"What is there track record? How long have they been providing this service?"

UTOPIA started serving customers last year; they're still building out infrastructure. See:
<Web Link>


Posted by Sanford Forte, a resident of Evergreen Park
on Aug 3, 2006 at 2:02 am

on Bob Harrington's last comment:

NOW you're talking. How about massaging your post into an outreach message to neighborhood associations - talk about how participation in the network returns local communicative assets back to the city, instead of leaving town. Then fine-tune it to public institution and large commercial stakeholders in a way that resonates with their business and other forward strategies. Tie the large stakeholders together with the neighborhoods and other small groups. Gather a group of interested people, dedicated volunteers - backed by the city's _including City Council's_ moral support (no money, yet) - and _sell_ the idea. Voila!

The problem here is that there is no _inherent_ demand for the services you mention. Yet, if properly promoted, demand, enthusiasm, and community pride (not to mention real cash) would likely be generated. Community understanding, pride-of-ownership, and real, demonstrated value to all grades of consumer are the current missing ingredients. That's easy to fix.




Posted by David Lieberman, a resident of Professorville
on Aug 8, 2006 at 10:50 am

Hey look. Right now anybody can get 1 megabit/sec free in any number of cafes and in homes in a good part of Palo Alto. You can get equivalent DSL in your house for about $15/mo. Within 18 months access will be free just about anywhere in the city.

The great bulk of residents use the internet for e-mail and for reading on-line newspapers and googling for information. This works just as well at 1 megabit as at 100 megabits. Why would they subscribe?

I am a heavy internet user and make my living (such as it is) writing software. Given the choice of 100 megabits for $50 or 1 megabit for free which would I choose? What a question! How is PA utilities going to compete against free?

BTW, I checked the Provo UT web site and the local newspaper. iProvo has signed up half the number of subscribers projected for this phase of operations. It cannot meet bond payments and has just gotten a "loan" from the city's general fund. I predict that within 6 months there will be calls to shut down or sell the system.

Also, I looked at service offerings on iProvo. Highest bandwidth offered is 15 megabits. Prices for services (phone, internet, TV) are higher than available prices from commercial suppliers in Palo Alto.

Another story. A company called RCN spent more than a billion dollars laying fiber and hooking up subscribers. Technically, the system works great and I know a number of people who use their service. About 2 years ago they went bankrupt and wiped out all of the equity of stockholders. The bondholders got the system for essentially nothing and now own it. They are STILL losing money.

Communications is a fiercely competitive business. If you think that little old PA can compete in a market where there will be a dozen competing suppliers all of them with enormous resources you are living in a fantasy world.

So if you want to build and pay for a system which will end up being owned by the bank (while Palo Alto's infrastructure continues to deteriorate because of a lack of funds), go for it.



Posted by pat, a resident of Midtown
on Aug 11, 2006 at 10:02 am


From: Pat Marriott
Sent: Thursday, August 10, 2006 9:31 PM
To: 'city.council@cityofpaloalto.org'
Cc: Jeff Hoel
Subject: Pat Marriott's letter to council about "Fiber," 8-4-06

Council Members:
While I hesitated getting involved in an email dialogue on this emotional topic, I felt the need to respond to the comments made by Jeff Hoel (below)because he is missing the point. I am not challenging the many benefits of fiber and high speed Internet access.

** Putting aside the technology issues, which seem to dominate the discussion, where is the business plan -- specific to Palo Alto -- written by someone on the city staff who will be held accountable for the success or failure of said plan? **

In addition to emphasizing the obvious, there are a few comments in Hoel's email that require a response. I had asked:

- Will it (FTTH) bring new business to the city? What proof points do you have?
- How much will it cost the city to build it, install it and -- more important -- to support it?
- How many new employees will have to be hired?
- What other city services might have to be sacrificed in order to pay for this new service?

Hoel responded that in answer to my first question I should see: "Measuring Broadband's Economic Impact" at
Web Link

This report is from an industry publication. According to its website, "BROADBAND PROPERTIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises . . . " The report indicates that ". . . broadband access does enhance economic growth and performance. . ." and no doubt has a great deal of information that would be useful to include in a business plan. But it would not serve as a standalone document to secure venture capital for someone starting a FTTH enterprise.

Hoel said that the intent of the RFP is to find out the answers to my other questions and "The point of the currently proposed RFP is to get bidders to supply the business plan."

The idea of publishing a RFP without a business plan is naïve at best and dangerous at worst. One cannot expect bidders to be objective. To expect a bidder to write your business plan is asking for bogus data that would supposedly prove the project worth doing and the bidder the right company to hire. Real companies do not ask vendors to provide business plans.

I stated that my priorities for city resources included fixing pot holes and sidewalks and public safety. Hoel replied, "The money for citywide FTTH won't come from a pot that could otherwise be raided to pay for the things Marriott says she wants first."

Is there a secret slush fund in the Palo Alto budget that would pay for FTTH? Are there staff members with time on their hands waiting to work on FTTH?

At Web Link Hoel is quoted as saying, "In 2004, the city came to realize that there might be no attractive way to fund citywide FTTH, given California law."

So where will the money come from? That's one of many things a business plan would tell us.

I will post these messages at Palo Alto Online, which is the appropriate place for them and any responses to them.
Web Link

pat
>
> On Aug 9, 2006, at 7:14 PM, Jeff Hoel wrote:
>
Council members,
> >
I'd like to respond to Pat Marriott's letter to Council of 8-4-06,
15:38, "Fiber."
> >
Jeff
> >
-------------------
Jeff Hoel
-------------------
> >
From: Pat Marriott
Sent: Friday, August 04, 2006 3:58 PM
To: Council, City
Subject: Fiber
> >
Council Members:
> >
I see that the FTTH discussion is still alive and well in the
council chambers.
> >
We are in the midst of a long term budget crisis with no clear
answers as to how we will pay for essential items like road
repair and major infrastructure improvements. Layoffs are
being discussed. Our retail tax base is dwindling with no plan
for retaining and attracting businesses. Kishimoto and Klein,
in their Weekly Guest Opinion, acknowledge these problems and
say, 'We on the City Council will soon have to decide whether we
have the institutional bandwidth to continue pursuing a leading-
edge citywide data network on top of all these "must-haves".'
> >
Having watched the city government fumble its way through
endless
discussions and debates on libraries and police buildings with
little real forward movement or accountability, it's beyond my
comprehension that anyone would still be discussing FTTH as a
city project.
> >
I don't doubt the technology, though I wonder if anyone on the
council or city staff has a real understanding of it.
> >
Is Marriott saying she doesn't doubt that the technology works at
all or that it can be used to implement a system that is financially
viable? Officials in UTOPIA understand the technology well enough to
delegate the details of implementing and running the network to a
contractor specialist.
> >
Kishimoto and Klein talk about preserving "net neutrality and
open access," but apart from using these terms as "god-motherhood-
apple pie" benefits, I don't see how the city would preserve them.
> >
Does Marriott acknowledge that UTOPIA is preserving them? I don't
see why Palo Alto couldn't preserve them the same way.
> >
Voting on an RFP at this time is putting the cart before the
horse. If your were running a company, and were responsible -- and
accountable -- to your shareholders, you would want the answers
to the following questions before voting on whether to invest in
fiber:
> >
- By the time the city gets around to actually building it, will
there be some new technology that's better?
> >
If the city gets around to actually building it anytime soon, then
no, there will not be some new technology that's better. Any number
of experts say this. The theoretical bandwidth limit of the
(singlemode) fiber infrastructure would be at least four orders of
magnitude greater than the 100 Mb/s speeds the RFP requires,
supporting at least four generations of order-of-magnitude optronics
upgrades. So it ought to last for decades. Optronics upgrades can
be done for individual homes that require it without affecting
others.
> >
(Recall that the city has promised undergrounding of utility
Lines for many years, but few of us enjoy that benefit.)
> >
The city's undergrounding of utility lines isn't really relevant, is
it?
This project has to take a long time because it's expensive. For
one thing, the courts have determined that what it costs the
incumbent cable and phone companies per year has to be limited.
> >
- Will it bring new business to the city? What proof points
do you have?
> >
See: "Measuring Broadband's Economic Impact"
<Web Link
%20Broadband%20Eco%20Impact,%20Lehr,%20Gilett,%20Sirbu.pdf>
> >
- How much will it cost the city to build it, install it and --
more important -- to support it?
> >
The intent of the RFP is to find out.
> >
How many new employees will have to be hired?
> >
Ditto.
> >
What other city services might have to be sacrificed in order to
pay for this new service?
> >
Ditto.
> >
- What will it cost to subscribe to the service?
> >
Here's where to look to find out how much UTOPIA customers are
paying for FTTH services:
<Web Link>
I think the pricing is competitive. It's not cast in stone that
Palo Alto's prices would have to be exactly the same.
> >
How many average citizens actually need it AND would be
willing to pay for it?
> >
How many citizens would admit to being average? It would be all
right with me if the city sent out an invitation to sign up for
service to all homes in Palo Alto and committed to building the
system if enough people signed up. I'd be happy to go door-to-door
to encourage sign-ups.
> >
In other words, where is the business plan with an ROI model
Using REAL DATA vs. wishful thinking?
> >
The point of the currently proposed RFP is to get bidders to supply
the business plan. (That wouldn't be my first choice, but it might
work.) Would Marriott accept REAL DATA from UTOPIA and Provo? It's
hard to get REAL DATA about the future.
> >
Years ago, when I was working for one of the top companies in
Silicon Valley, we were developing a secret "killer" product. We
built a special demo facility, to which we invited CEOs, CIOs,
engineering VPs and other executives of Fortune 500 companies.
They were all thrilled with the product and raved over its
capabilities. We thought we had done our market research well.
There was just one problem: we never asked for an order. When
the product was announced, no one bought it.
> >
Palo Alto isn't talking about developing anything that is so
original it has to be kept secret. UTOPIA works. Provo works.
What's wrong with doing the same thing?
> >
Kishimoto and Klein say that "Palo Alto's quality of life is
dependent on a complex network of economic, environmental and
social mechanisms that all work together." True enough. So
let the city focus on doing its job of fixing and maintaining our
infrastructure (long overdue), providing essential services like
police and fire departments and living within its budget. Let
private enterprise take care of cable and Internet access. A
"fat pipeline" will mean very little to me if I can't drive
through the city without bumping through potholes or walk safely
without tripping over broken sidewalks or being attacked by a
pursesnatcher.
> >
The money for citywide FTTH won't come from a pot that could
otherwise be raided to pay for the things Marriott says she wants first.
> >
This shareholder will hold you accountable for focusing on
PRIORITIES.
> >
Pat


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