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Home My WebLink About2002-05-06 City Council (3)City of Palo Alto City Manager’s Report 7 TO: FROM: HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT: UTILITIES DATE: SUBJECT: MAY 6, 2002 CMR:168:02 FIBER TO THE HOME TRIAL PROGRAM UPDATE AND TRIAL PARTICIPANT FEE RESOLUTION RECOMMENDATION Staff recommends the City Council approve: 1.The proposed fees of $85 per month for Fiber to the Home Trial Participants, and o A resolution to adopt Utilities Rate Schedule EFTH-T for Fiber to the Home Trial participant fees. BACKGROUND On November 13, 2000 (CMR 422:0~)) Council approved staff’s recommendationsto construct and operate a Fiber to the Home (FTTH) Trial within the following-guidelines: 1.Establish a construction budget of $680,000 for the project, allowing staff to complete the construction in-house. 2.Expand the scope of the trial beyond Internet to other services, including to the extent it is legally possible, video, telephony and other digital services, in order to understand the fee base better to finance a ful! build-out of a FTTH network. 3.Charge participants a nominal fee for the services provided. 4.Allow staff to. look for partners to deliver new services and demonstrate new technologies. CMR:168:02 Page 1 of 4 The following goals were set for the trial: 1.Evaluate construction techniques and determine, the feasibility and cost of a system-wide rollout. 2.Determine if the system can be operated reliably. 3.Determine customer expectations and measure satisfaction with the services. 4.Test new services that could be supported over the fiber network. 5.Develop service pricing methodology, cost model, and business plan for a system-wide rollout. 6. -Determine financial feasibility and possible funding methods. Subsequently, an additional $400,000 was budgeted for FY 2001/02 to develop t,he business case and other work required to make an informed decision about a system-wide build out. On November 19, 2001 (CMR 410:01), staff presented an update to Council on the progress of the FTTH trial. The following important events were noted in that report: ¯Construction of the FTTH network was substantially completed in October and within the budget of approximately $680,000. ¯The City of Palo Alto signed a contract with Marconi Communications, whereby Marconi has dedicated networking equipment, installation, training of CPAU staff, and support for the duration of the trial. The Marconi equipment supports phone, video, and Internet. / ¯Staff successfully completed a request for proposals (RFP)~or services, and contracts were awarded for Internet, phone and customer support services. ¯A FTTH Advisory Team was formed and is Supporting staff in the business case development process. The team consists of: a Utility Advisory Commissioner, a Council member, the Assistant to the City Manager, the Director of Utilities, a FTTH participant, and the Utilities Telecom Manager. ¯Local phone service is being provided through the trial to. test the phone service capability of the equipment. Participants were urged to maintain their current phone So that they are not reliant on the experimental service for emergency calls. ¯Participant fees for the trial were recommended at $85 per month. The participants will be expected to pay for video and long distance phone service should these be offered through the trial. CMR:168:02 Page 2 of 4 DISCUSSION The following developments have occurred since theNovember report: ¯Both Internet and phoneservices are now operating superbly, and are delivering high speed service reliablyl Participant responses have been positive. ¯Video service has not been offered due to unresolved legalconcerns. ¯The video service will be tested through-the installation of a 16-channel test station, but will not be offered to the participants. A display/demo installation is planned for construction in the Civic Center lobby. ¯. The Main Library FTTH installation has been equipped with a wireless router allowing the public to bring their own laptops to the library and access the.~ FTTH wirelessly. ¯There has been business case study activity in several areas: ¯A market survey firm has been hired to conduct various market surveys of Palo Alto customers regarding relevant market issues, including their attitude toward the City and local telecom competitors as service providers. ¯An RFP for business case services closed February 26~. One of the respondents will be selected to prepare a business case study. When completed, the study will be presented to Council with recommendations regarding a citywide build out of the FTTH service. The report is scheduled for completion ip September. // In an informational i:eport on November 19, 2001 (CMR:410:01) staff suggested a FTTH Trial participant fee of $85 per month. This fee is based on the methods discussed in CMR 422:00 and previous agreemen’~ts between the City and the participants. Staff believes that the services being delivered tl~.ough the trial have proven to be commercially reliable rand that the $85 fee is now appropriate to put into place. Even . though video is not being offered, staff is now recommending approval of this rate. The rate will remain in place until the cancellation of the service by the City or withdraw from the trial by the participant. During the trial, participants will be expected to pay for any additional services which they personally subscribe to, such as, long distance telephone service or video fees, should video eventually be offered. RESOURCE IMPACT CMR: 168:02 Page 3 of 4 Approval of this rate proposal has no long-term revenue impacts. It is designed only for the duration of the FTTH Trial Program and is not intended to fully recover the trial costs. In the event that FTTH becomes a citywide effort, rates will have to beestablished based on rate settling principles which incorporate, amongst other things, the full recovery of thb FTTH build out including the costs of the trial. POLICY IMPLICATIONS These recommendations do not represent a change in current City policies. TIMELINE The effective date of the proposed rate is May 6, 2002. ENVIRONMENTAL REVIEW The adoption of the resolution does not Constitute a project under the California Environmental Quality Act; therefore, no environmental assessment is required. ATTACHMENTS A: Resolution B: Rate Schedule PREPARED BY:¯ DEPARTMENT HEAD: CITY MANAGER: Manager, Telec~r~nunications¯ D~e~or of Utilities ENIL) HARRISON Assistant City Manager CMR:168:02 Page 4 of 4 RESOLUTION NO RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ADOPTING UTILITY RATE SCHEDULE EFTH-T OF THE CITY OF PALO ALTO UTILITIES RATES AND CHARGES PERTAINING TO FIBER TO THE HOME TRIAL PROGRAM SERVICES The Council of the City of Palo Alto .does-RESOLVE as follows: SECTION i. Pursuant to Section 12.20..010. of the Palo Alto Municipal Code,. Utility Rate Schedule (Fiber to the Home Trial Program Services) is hereby adopted to read in accordance with Sheet EFTH-T-I, inclusive, attached hereto and incorporated herein. The foregoing Utility Rate Schedule shall become effective May 6, 2002. SECTION 2. The Council finds that the revenue derived° from the authorized adoption enumerated herein shall be used only for the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under the California Environmental Quality Act; a California Public Resources Code section 21080, subdivision (b)(8). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney Mayor City Manager Director of Utilities Director of Administrative Services 020423 svn 0072150 FIBER TO THE HOME TRIAL PARTICIPATION FEE - UTILITY RATE SCHEDUI~ EFI’H-T Bo APPLICABILITY: This schedule applies to Fiber to the Home (FTI’H) Trial Program participants. TERRITORY: ’ Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City or for which the City has an easement. C. FEES: Per Month Each FrTH Trial Participant .................................................................$85.00 Do SPECIAL NOTES: The FT’I’H Trial Program participants are households in the Community Center Neighborhood that received a fiber optics connection from the City to test various residential services over a fiber network and evaluate the feasibility of a business case. °Participants are responsible for all charges of products and services to which they personally subscribe over the FTTH Trial network. {End] CITY OF PALO ALTO UTILITIES Issued by the City Council CITY OF PALO ALTO UTILITIES Effective May 6, 2002 Original Sheet No. EFTH-T-1