HomeMy WebLinkAbout1998-11-09 City Council (7)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:NOVEMBER 9, 1998 CMR:424:98A
SUBJECT: STATUS REPORT ON FIBER TO THE HOME TRIAL
This is an informational report and no Council action is required.
BACKGROUND
When Council approved the dark fiber ring (backbone) project in August 1996, one of its
goals was to accelerate the deployment of a broad range of advanced telecommunications
to all citizens and businesses in Palo Alto. At that time, Council also agreed that the City
should not construct a high cost ($70 million estimate in 1996) fiber optic system throughout
the City and stated its desire to enhance telecommunications services while maintaining
limited or no risk exposure to the City. Council also stated that it did not desire to be in the
business of providing cable television, one use of the fiber.
On February 4, 1998, the City Council authorized staffto solicit proposals from companies
interested in accelerating the provision of advanced telecommunications services to every
address in Palo Alto through the expanded use of the City’s existing utility infrastructure
(existing pole space, conduits and fibers from the backbone) (CMR 458:97). The purpose of
the Universal Telecommunications Service Request For Proposal (UTSRFP) process was to
solicit proposals from companies interested in working with the City in partnership to
expedite making affordable, advanced telecommunications services available to every
address in Palo Alto. The focus was on high speed data transport and Intemet access. The
first draft of the UTSRFP has been nearly completed. In preparing the UTSRFP, a fiber to
the home (FTTH) trial project was proposed to collect information which might be useful
in evaluating responses to the UTSRFP.
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The draft UTSRFP was expected to allow for a wide range of technological solutions. The
nature and complexity of the subject required that staff design a process for identifying and
addressing questions that would closely involve the Telecommunications Advisory Panel
(TAP), the Utilities Advisory Commission (UAC), the Finance Committee and the Policy and
Services Committee (P&S).
A consultant was hired to assist in the writing of the RFP. During the preparation of the
RFP, staff recognized that there was the potential to provide high speed telecommunication
services to residential areas using an all fiber network. This design could result in a network
that would be more advanced than any commercially deployed network currently used in
residential areas. Discussions of this design between staff and the consultant resulted in a
suggestion that it might be beneficial to delay the UTSRFP and conduct a FTTH trial in a
residential area. A group of approximately 33 households in the neighborhood near the
Community Center supported this concept and expressed a desire to participate. Staff and
the consultant initially supported evaluating this concept and discussed the concept with the
TAP. TAP endorsed the concept in May, 1998 and suggested a trial area of possibly 200
homes with one or two school sites. At that time, only preliminary cost estimates and time
schedules were available. On July 13, 1998, staff informed Council (CMR256:98) of this
FTTH trial concept and said staff would return to Council with a recommendation
including cost estimates, recovery of costs, neighborhood interest and schedule, ff the trial
was to proceed. Staff embarked upon a six week effort to identify residents interested in
participating in the FTrI-I trial. To ensure fairness, staff informed all Palo Alto residents of
the potential opportunity to participate in the FTTH.trial by including a flier with the Utilities
bill statements, placing an ad in the Palo Alto Weekly, posting information to the City’s web
site, and sending letters to neighborhood associations. Staff received approximately 900
responses from all over the City by the deadline ofAugnst 31, 1998.
DISCUSSION
The FTTH trial concept is theoretically a sound design that could potentially enable high
speed telecommunication services to residential areas, but at this time has never been
installed and operated in an outdoor residential environment. Staff is completing its review
of the estimated trial costs for a small (35-50) home trial area and a larger (100-175) home
trial area. This review includes: an estimate of the time to recover these costs, financial
risk to the electric utility if these costs are not recovered, impact on staff to implement the
trial, impact on customers if the trial is unsuccessful or terminated, impact on staff if the
trial is operated and maintained for the time period to recover costs, and benefits derived
for a UTSRFP. Preliminary engineering estimates show the costs of a small trial to be
between $335,000 and $480,000 and the costs for a larger trial to be between $715,000
CMR:424:98 Page 2 of 3
to $1.25Million. These costs would be recouped over a 10 to 16 years period excluding
annual maintenance costs, under the plan that was conceptually proposed. Staff is also
working on estimated costs of full scale implementation and identification of financing.
Staff will provide detailed information on all these issues at the December 14, 1998
Council meeting.
ATTACHMENTS None
PREPARED BY:Edward J. Mrizek
DEPARTMENT HEAD APPROVAL:
J.
Director of Utilities
CITY MANAGER APPROVAL:
EM~-Y HARRISON
Assistant City Manager
cc: UAC
TAP
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