Broadband Communities

MAY-JUN 2013

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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COMMUNITY BROADBAND Can FTTP Work in Palo Alto? Municipal fber to the home has succeeded in cities left behind by the major broadband providers. In a city that already has good broadband service, the story is more complicated. By Stephen Blum / Tellus Venture Associates W ith a very successful municipal dark fber business to its credit, the city of Palo Alto, Calif., has seemed to many an ideal place to build a fberto-the-premises (FTTP) system. However, the retail broadband business is diferent from the wholesale side. Both the city government and prospective private partners have concluded that an FTTP venture would not be able to support itself. Subsidies – from taxpayers or outside investors – would be necessary for many years, at least. So far, no one has been willing to pick up the tab. From an engineering perspective, FTTP is an easy case to make in Palo Alto. Te 41-mile fber backbone that runs through much of the city can provide the necessary backhaul capacity, including connectivity to Tier 1 Internet facilities. Te municipal electric utility ofers access to poles and conduits. Te town is relatively densely packed, averaging about 33 single-family homes per block, except for a few houses in the western hills. Demographically, it looks like prime FTTP territory – at least at frst glance. Palo Alto is a college town and home to high-tech startups and global technology giants alike. Average household incomes and property values that are high even by California standards empower afuent consumers. Te incumbent providers – AT&T and Comcast – have seen the numbers and responded. Both deliver high levels of service 46 | BROADBAND COMMUNITIES | www.broadbandcommunities.com at competitive rates. Comcast, for example, ofers 100 Mbps service and, by all accounts, can actually deliver it to the relative handful of households that are interested in buying it. Tat's where the real story begins. For the most part, Palo Alto residents are happy with the service they are already getting. At the least, they are content enough that there's been no groundswell of support for city-subsidized FTTP service. More than 10 years of vigorous and vocal debate and fve rounds of studies, tests and analysis notwithstanding, the governing assumption has been that any FTTP venture has to be self-supporting. In 2001, the city connected 66 homes in a central neighborhood to test the technical feasibility of delivering television and Internet service via fber. At a time when DSL and cable modem services were barely mainstream, Palo Alto was living up to its reputation for innovation. Te test was successful, to the extent of proving that FTTP technology works. Tis success led to a business feasibility study in 2002, which projected that a city-operated FTTP system would pay for itself. TROUBlE IN PARADISE Over the next few years, a couple of problems emerged. First, the fnancing assumptions were based on the city's ability to get low-cost bond fnancing backed by just the FTTP venture. When those assumptions proved wrong, the alternative – taxpayer-backed bonds – was not | May/June 2013

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