CPAU is front loading 50% of costs with the $1,200 for connecting the last several hundred feet. And rest will be put up front by city, with repayment over a 10-year period with the expectation that they will retain or replace customers who sign up initially. They are designing it so the people who want it today vs. those who want it in the future all can be satisfied.
Van said that since he could not provide information from the CPAU report to the Council that he would respond to each of the five topics posted on the PA-FiberNet Web site. Marvin Lee was asked to introduce the five topic-coordinators and conduct the question and answer period.
Van then segued into the issues raised on the PA FiberNet list, in terms of meeting the expectations of PA FiberNet. He read off the five topic areas and asked how we wanted to conduct the session in the limited time we have at our meeting. It was agreed to go through each as far as we could go, with ten minutes allocated to each, and, if needed, to continue the discussion at our next meeting in November. The topics were: ISPs/Distribution; Cost; Applications; Community Participation; and Project Management and Roll-out as well as how best to achieve rapid citywide deployment.
He began with the first topic: ISPs. Ken Poulton noted that two main areas came up. The technical design of the network and selection of ISPs. A major question is the evolution in the city's thinking, and a second question is about talks with ISPs.
There has been reconsideration on the design. Some issues we're aware of; other issues have come up. Now we are looking at an all-layer two (2) decision. They are talking with Frank Robles of Nanospace, who is here. We also want to find from the user community what would work best. There are tradeoffs as in every good decision. One other service provider has expressed interest in participating, bringing the total to five.
Ken Poulton: Any concrete discussions on this yet?
Van: Yes, we have had discussions at various levels.
Ken: Any indication of cost and service levels?
Van: A little hesitant to be very specific , due to questions on the final design.
Frank Robles: We're talking $20 per giga-byte.
Mike Eager: Question: With Level II and level III design, are there limitations?
Van: There are limitations. For a full-scale project, we are working with segmenting the network into 20 pieces rather than using a more distributed design. Definitely it is a tradeoff. Add one point to the definition of ISP. In addition to conventional ones, we can get access through employers, Stanford, and others, so it may not be necessary to use an ISP for Internet access.
Frank: When will this start to stabilize?
Van: It will have to be very soon. We don't know now if it's going to be one trial area or two system designs. It has been a real tricky design process. Design challenges come up in areas where the line goes down a main street with side streets. If some side streets don't want service now, in the future they may, so the design has to consider future needs. A cost trade off must be made between designing the network to meet the needs of the people who are expressing interest today vs. designing a network to meet projected growth.
One factor is the trial vs. a full-scale implementation. This question has come up on a number of occasions. Is this a first step in a rollout or a trial? Everything we have done has been in terms of a full-scale rollout. But there are significant problems. The City has not approved either a trial or a full-scale roll-out. It was planned at full scale, then rolled back to a trial size. A full scale roll-out is a much bigger undertaking. There are many uncertainties that the city faces right now, and they need to be resolved before considering a full roll-out. In order to get the hardware online we need to bring together people who are not in the same organization.
A number of issues must be addressed. Service by multiple ISPs. High density, residential fiber infrastructure. Delivery of service to individual customers using networking equipment traditionally used in a single organization. Nobody is doing this today. We need to develop, test, and refine our designs. We also must validate our cost estimates and business planning models.
That's the rationale for focusing on a trial project. One of the factors to deal with is the balancing of issues within the community. People throughout Palo Alto need to participate in this trial. We need to be as equitable as possible. On a large scale basis or even on a trial basis, people are interested in participating. There are many people in the city who would not like to participate, even though almost everyone in this room would like to participate. It is important that Utilities not subsidize the service.
Another question relates to timing, and interest in all parties. Everyone in this room would like to see this implemented as soon as possible - tomorrow would work .
Marvin: Yesterday would have been better.
Van: The City has tried to position itself as a neutral provider by designing a network over which any interested party can provide service.
We are prepared to go through each of these issues and address specific points, but given the time consideration, we must open it to the leaders of each group.
Jay Thorwaldson suggested instead of ten minutes per item that we might want to continue this to the next meeting.
Harry Saal: I am a little uncomfortable with how you're going to make the decision. Hope you make it in terms of the full roll-out.
Van: I agree 100 percent. For example, when we considered an all Layer 2 solution for the trial, we considered two potential plans for scaling it to the entire community: 1.) segment the network into 20 or so semi-independent networks, or 2.) introduce Layer 3 equipment (i.e., routers) into the network when transitioning from a trial to a full-scale solution.
Second area is costs: Mike Eager - How can we make it affordable for all the residents, which means reducing the installation costs over time or by other means such as making monthly costs more moderate, which is one of the contributing factors I see to the costing model.
Van: people are concerned that the city has a 3-year payback model, which I think is incorrect. Confusion has come up with the single-node fiber pricing. Single node was positioned as a service not intended to serve homes or even all businesses. It was designed to serve providers, not individuals. Once the 144 fibers are leased there are no more The dark fiber pricing was designed to be flexible and cover all incremental costs (that is, the labor and materials required to build and the network and operate the dark fiber business) and an appropriate share of the embedded costs (that is, the cost of the poles, conduits, and other existing electric utility assets used to support the installation) to avoid electric rate payers from subsidizing dark fiber customers. The pricing was also designed to help generate new revenues for the Electric Utility that would improve its position in a deregulated electric utility industry.
In the FTTH trial, however, less than 50% of initial costs are recovered in advance. The monthly fees were designed to allow for complete cost recovery over a ten year period.
The decision to construct the existing dark fiber backbone required a balancing of objectives, one of which was to limit financial risk to the city. Nearly all of the existing fiber backbone was constructed using existing poles or conduits. In some cases CPAU can install additional fiber cable at reasonable cost; in other cases the new conduit would be needed. The dark fiber pricing was designed also to be sustainable so that the network could be expanded by adding new conduit when necessary. CPAU is projecting mature net revenues of $1 million or better as soon as peak demand level is met.
Also CPAU is projecting mature net revenues as $1 million or better as soon as peak demand level is met. With fiber to the home, the City is looking at a 10-year financial model. Half up-front and remainder through financial payments. We're getting commitment from people participating. We want people who commit to the trial to be really committed, just as city is committed.
Marvin Lee asked if there is potential for outside sales with the present fiber structure? Could stores at Stanford Shopping Center use it for business? It appears they cannot.
Van said he was asked to structure charges higher up front to make sure people are committed to the trail.
Comment: We must distinguish between trial and long term service. Model for trial doesn't fit long term.
Van agreed they would have to reconsider the structure if it wasn't intended to pay all costs of the trial from users over the time of the trial.
Margaret Cooley was concerned by Van's comment that financial incentives for residential users would not likely be provided because it would be at the expense of residential non-users who would not gain any benefits. Is the implication that there would be no time payments for installation such as for undergrounding?
Van said that would not be his decision to make.
There is a real potential benefit to non users in increased property values if our community had an extensive network of FTTH.
Harry Saal said there should be cost recovery at some point, but it could be 5 or 10 years.
Van noted that the funds came from utility reserves, and was viewed as a way to get a higher return than other investments such as T bills. It also provides useful capital assets for the city. Utility funds can't be used for community benefit in this trial. There's no precedent for public benefit subsidies, as the city council hasn't consider it yet.
Third issue was Applications. Comment: Have you considered time of service pricing? Delivery of phones and video over system, video cameras for public safety, all will be possible using the fiber. Can other fibers be consolidated with the city system? How are they evaluated?
Van noted FTTH only adds value to real estate if people want and use the fiber, and it does add costs. Savings will be a fraction of the electrical bill, or $5 to $10/month, so it takes a very long time to pay off. Also there's expense to set up time of service meters at customer premises. Studies show it takes a very long time to pay back the cost of capital. In terms of security, the idea of cameras everywhere is a bit scary. Consolidation of existing cables requires present cable owners to agree, and based on current experience that's unlikely.
Question: Has there been anything done to get businesses interested and to have them use the service?
Van: Only 10 of 1000 responses are storefront type businesses. Home businesses are a much larger market and had more responses. For businesses costs are relatively low, and are attractive. Also many in homes are interested in telecommuting to businesses in PA.
Jay Thorwaldson said that's very interesting because if 20 or 25 telecommute it has a big benefit for businesses.
Bob Moss said many companies are spending money for carpooling and other efforts to reduce traffic, but not often for telecommuting. His employer pays for shuttle busses to Caltrans and incentive payments to carpooling. There should be publicity and focused efforts to promote telecommuting. Maybe the city can ask for telecommuting payments as well as traffic mitigation payments for new developments.
The fourth issue was Community participation.
How can FTTH be structured to benefit citizens? It should be done for residents, not WebTV or Compaq.
The fifth issue was Project Management - Short term vs long term goals - clearly define them at the front end so we know what was successful. User experience, what will the customer see, what will be provided, how will service be maintained, etc. It seems to be a project management issue and they need to be looked at. Van felt that the current Telecommunications Advisory Panel was more to advise on policy and other large issues. There might be need for a panel that would be advisory to the CPAU on operations and procedural strategies. Van agreed it was useful to see the feedback. Are there suggestions for the city, or for Pa-ComNet to be get involved?
Comment: The commercial environment also is of concern. How can the fiber ring improve it?
Van said the City also is interested in improved commercial utilization of the fiber, but staff is limited. There's a need for help, but the more are involved, the harder and longer it takes to get things done. Has to be a balance between time to get things done and the need to find good answers. There's also an accountability issue since the city has to worry about how it conducts the operation and is accountable.
Van showed example of connection device and cables that could be used, and they are small and easily fit by a PC. They have a step by step installation sheet, plus a list of providers who can do installations. PA-ComNet can help also by offering with installations. The City can't add staff so they have limits on what they can do.
Imsong adjourned the meeting at 8:38 AM. Next meeting Nov. 4 - Topic? Emily Harrison said the City can't assure us that they'll have the final staff report by Nov 4.
Warren Kallenbach noted that Neighborspace is working on setting up a local network. Having a discussion on how neighborhoods such as Barron Park conduct neighborhood conferences may be a useful topic.
Respectfully submitted by the PA-ComNet Tag Team - Warren Kallenbach, Jay Thorwaldson and Bob Moss
webmaster - Louis Bookbinder (650) 494-1589 booky1@earthlink.net
http://home.earthlink.net/~booky1 - revised 6 Nov 1998