Mike presented a diagram of the proposed system, listing those who have contributed to the FTTH project. The idea is to connect FTTH with minimal financial risk to the city, and to offer the high level of technical capability in the community to the city to aid in fiber deployment. FTTH is a revolutionary advance, similar to bringing electricity to the home. It offers many benefits, and is a natural monopoly like water and power.
A slide was shown comparing costs for various forms of Internet access. There were many comments and suggested changes to the slide to improve accuracy and to make it more understandable.
The slide of Palo Alto & the World showing data connections is very effective.
A slide showing how the trial would be laid out was shown. The proposed trial is connecting from PAIX (anyone have any idea what this stands for?) to an ISP, then providing FTTH service to Community Center Neighborhood and Barron Park. The areas served would include schools and apartments. After the initial trial there would be a full city-wide roll out building on what is learned in the trial.
A slide of the planned project was shown. Phases are build to the fiber backbone (done), then perform the FTTH trial now to refine costs and design. Then do a citywide rollout once the true costs and issues are determined. Bob Moss suggested that it might be useful to have an interim duplex approach with fiber to nodes, and both FTTH and copper wires. Some users would have FTTH, others would use coax and have lower speeds and lower costs. Mike thought that was too expensive since there is a high labor cost for the fiber installation.
A slide breaking out FTTH costs was shown. Construction cost is 46% for labor, 35% for cables, 5% for electronics, 11% for engineering. Construction cost is estimated as $4000/home, or $753,000 for 160 homes, with 30% of the cost paid by the users up front. (Later the cost was revised to $4600/home, and that was the figure in the formal presentation).
With a single IAP (A WHO?) the construction cost is cut by $24,000, operations cost is cut by $16,000/year, user fee would be increased to $40/month, which cuts cost recovery time from 26 to 10 years. Staff report doesn't identify an ISP. A plot of components of construction cost changes over time was shown.
Cost recovery for the trial was plotted against user participation rates. At 19% participation, recovery occurs in 10+ years, at 38% participation it occurs in 3+ years.
Those who benefit from high speed access are the FTTH users. Medium speed users will have more competition so costs should be lower, property owners will have a higher value due to fiber availability.
FTTH is always connected, offer better communication than other options, offers new ways to work, provides new services such as live classes, medical service, entertainment, high bandwidth and increases the value of the system in the community.
They already passed out most of the slides to the UAC, and will provide updated versions at the meeting. We need to keep the presentation at the UAC to 10 to 20 minutes.
Statewide the libraries are being connected and it will make it possible to have access to all state libraries.
Benefits to Utilities of FTTH include diversifying revenue sources, limited financial risk, many community benefits.
Building blocks of the trial are the customers, the services provided such as e-mail, web hosting, e-commerce, education, Internet access, etc., the network operations such as routing, security, and access, and the infrastructure such as poles, easement, splices, switching equipment. Provider of the services and Internet access is the network operator/ISP, where the city provides infrastructure.
City financial risk is only 70% of the total trial cost ($530,000), because residents will pay 30% of total costs up front, giving full cost recovery in 10 years with no added users over the initial 19%. The participation rate is expected to increase and cut payback time to less than 4 years. Exit solution if participation and revenues fall short is to sell FTTH to others, and recover the costs. Participation actually will increase more rapidly once the trail is underway. There should be a clear statement that this trail is for the test areas only at this time, to prevent other areas from expecting equivalent service. The issue of cost recovery needs to be addressed carefully.
Ken showed how the FTTH trial meets various existing city policy objectives by extending the utility revenue stream, improving the city infrastructure, offering more choices for consumers, and minimizing disruption to the public rights of way, all at limited financial risk, since the asset could be sold to recover the investment.
The presentation should emphasize Palo Alto's reputation for technical excellence and for being a leader in the world. We need to keep the city's aura of superiority.
Building the roads that citizens need for the future, providing added revenue, the FTTH trial is consistent with development policy encouraged by Telecom Act of 1996, poses minimal risk to city, and allows the city to set policy by enabling IAP and ensuring fair access.
FTTH has broad support. It is not just a small group of techies who are interested in new technology, but this is a topic that has wide interest and applicability in the community.
It was suggested that there should be just 5 or 6 charts with simple, clear bullets. The other charts can be held in reserve and used to respond to questions.
Meeting was adjourned at 8:45 a.m.
Respectfully submitted, Bob Moss
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