Telecommunications utility concept has lost momentum on the issue lately. Deregulation issues plus loss of Bernie Strojny as Assistant City Manager reduced the momentum on telecommunications issues. Strojny was the main player for getting the fiber ring installed. The RFP which was proposed by staff and which is being reviewed by Policy & Services Committee of City Council on the 9th is low cost, low risk, but may not result in anything acceptable in the long run. There is a new opportunity for participation. The Telecommunications Advisory Panel will be reactivated. It is important to have people at the Dec. 9 meeting to show interest in the plan. If there is no interest the RFP will die on the vine.
The issue of competition is a major concern. A full telecommunication network providing broadband service to all addresses in Palo Alto would be nice, but it may not be done due to the high cost and the uncertainty of return on investment. Logical first step is tying the fiber backbone to coax to the home. This is a possible approach, but it requires an alliance with Cable Co-op, which is difficult due to the uncertain financial condition of Cable Co-op. The City is looking for a strong financial partner, and there is strong opposition to underwriting Cable Co-op because of the perception that Cable Co-op is weak financially. This could leave the city in the position of sitting back and waiting as to see what happens to Cable Co-op. This is a major hurdle. Outsiders also are wary of entering the area with the chance of Cable Co-op acting as a competitor.
To push the issue forward PA-COMNET should identify council allies who will bring the issue forward. This is not a hot topic with anyone, but it can be important to several of council members. Need is to find sponsors on the City Council and senior staff to support the issue and sponsor it if possible.
Jay thanked Paul, and asked who on the staff might be allies?
Paul replied that Van Heimke is excellent and did a fine job of learning about the issue. Most logical supporter would be Ed Mirzak, but deregulation is so major a problem that he is distracted by it. Possible supporters might be June Fleming or Emily Harrison, but both are risk-averse. Best approach is to meet with them and see who is leading on the issue now, if anyone. Since Strojny left there is no clear leader. No clear recommendation at present for someone to take the lead at City Hall. On the Council both Joe Huber and Ron Anderson were interested in the subject but were not well informed. Liz Kniss has been a supporter of improved telecommunications services in the past. Gary Fazzino was quieter than expected on the topic. Both have lots of other issues and other groups asking for attention. Micki Schnieder also could be interested. Ron Anderson has strong interests in community connection - schools, libraries, homes, etc. Not sure of Dena Mosser and Sandy Eakins interest, but Eakins has a computer background and should be interested in the technology. Dick Rosenbaum is interested in promoting the utilities. All are supporters or potential supporters, but none are leaders on this topic.
Keith and Margaret Cooley mentioned the Cable Co-op factor, and that the effort to educate the community on the broad band network has not been fully successful. The forum on Sept. 25 was useful but did not really invigorate the community. Are we seen as having a legitimate issue?
Paul said at one end of the spectrum this is a free market and if we entice companies to build the network and sell services that's what we should do. Another end of the spectrum says this is a community resource and we should do it regardless of profit, like schools and streets. There is little support that this is a community resource on either staff or council. To the extent that PA-COMNET promotes the community resource issue it will fall on deaf ears. Council is very fiscally conservative.
Mary Jo Levy asked how much do we need to educate the community? How do we convince people that it is an important part of life?
Paul said the issue isn't lost, it just isn't won yet. Council can change if the council members hear from constituents.
Joe Villareal asked if this meant that the city utility would not be bought if this was 100 years ago?
Paul said if it can be shown to be profitable, they would go for it - the original utility was seen as profitable from the beginning. The competitive electric utility situation has them concerned, but it really is not a major issue since the City will still own utility infrastructure and get income from electric power distribution. The concept of becoming a distribution system can be extended to fiber. The city does not want to spend money to wire every address and hope people buy it.
Jerome Fox said the phone company has the resources, but seems uninterested in serving individuals. Will they provide service?
People's experience generally was that PacBell isn't interested in serving homes at this time. They really are interested in commercial accounts, and the recent merger with SBC just emphasized that. PacBell even abandoned the cable service in San Jose after putting in millions.
Bob Moss commented on council and staff interest which has been expressed for telecommunications and the opportunities for significant profit from a high speed data system in the area. It also opens an opportunity to extend utility services to other areas and take advantage of deregulation in areas like Sand Hill Rd. and central Menlo Park., Shoreline, etc. Offer data services first, and then offer utilities later and wean major users away from PG&E which has a lousy reputation. He asked about the comment at the Council meeting about limits on tax free bond financing.
Paul said that the constraints on tax free bonds are partly smoke screen.
Tom Passel spoke on Cable Co-op as a valid partner with the ability to perform despite financial issues, as demonstrated by the successful cable modem service to over 200 users, paying rather high rates.
Bob noted that Harry Saal had asked several months ago about the cable modem rate structure and why the cost and difference in rates. Bob had been too busy to answer in detail, but it works in general as higher cost for guaranteed higher data rates. The system is all coax, so there are limits on how many users it can accommodate. The total is unclear, but it is somewhere between 500 and 2500 per trunk, with 5 trunks. No one else is offering cable modem service over a pure coax system. The others all have at least some fiber. The cost is structured so that for higher rates the number of users in the same area are limited, thus assuring the minimum data rates are present at all times. Since fewer users can be allowed, the cost/user has to be higher.
Tying into the fiber will allow more high speed users, and can allow lower rates and still guarantee high data rates.
Margaret asked why the referral to committee instead of consent approval last Monday?
Paul was surprised at the referral, but thought it may relate to general concerns about the role of the UAC (Utility Advisory Commission). There have been comments made by some council members and staff about the role of the UAC.
Bob noted that it's common to refer items to committee if there is a particular issue or concern by some council members. Also there was a comment by a council member about not wanting the UAC to micro-manage, so it may be uncertainty about responsibilities that caused the referral.
Jay asked how can PA-COMNET be effective? We were major players in the past and should be in the future. Van Heimke should be recognized for his efforts on the issue, maybe with a resolution or something.
Paul said we have to get the message out about the importance of high speed telecommunications to the community, and that it is a clear benefit to everyone, plus it has the opportunity to be a significant source of income.
Meeting adjourned at 8:45.
Next meeting Jan. 7, 1998 at 7:30 AM