Wednesday, March 19, 2008

How one city in Silicon Valley tries to solve its bandwidth problem

Silicon Valley is renowned as the technology hub of the world, yet broadband speeds are, at best, 10 percent of what is available in markets such as Japan, Korea and Northern Europe. Why is sufficient bandwidth such a rare commodity in this global center for innovation and what’s being done about it?

“We are an innovative region, innovation is our life blood. Not having world class communications in a city like Palo Alto becomes a threat to our brand”, says Bob Harrington, a resident of Palo Alto and an advocate for the community citywide fiber initiative started in 2001.

As opposed to the copper cables of telephones and television wires, fiber optic cables convey information in the form of hyperquick laser pulses. Consumers hooked up with fiber-optic communication can get speeds up to 1000 times faster than standard DSL and Cable networks. The future promises even more. In recent experiments, broadband rates of up to 14.000 Gigabits per second have been reached over a single fiber.

While Palo Alto does have a limited municipal area fiber network and the incumbent cable and phone providers have some fiber in the city, cost and availability means that the vast majority of the residents, small and middle-sized companies have to do without fiber.

“Today the infrastructure is not in place so if you want fiber, it takes a lot of time, money, and effort to get connected”, says Brian Ward, Utilities Account Representative at the City of Palo Alto. “Residents call us all the time saying they want access to high-speed Internet so we’re eager to find a solution that works for everybody”, says Ward.

This problem is not unique for Palo Alto. Finding functioning business models to build fiber to the home in places with low population density is a challenge currently facing communities across America. Thus even though it is the self-proclaimed high-tech capital of the world with some of the highest property values in America, with only 60,000 residents, Palo Alto is too small to warrant a purely private Fiber to the Home investment.

Not having a solution for the business model challenge in low density environments is hurting the competitive position of the U.S. According to the Organization for Economic Cooperation and Development (OECD), the U.S. has dropped from 4th to 15th place in the world when it comes to broadband penetration since 2001. The International Telecommunications Union’s digital opportunity index which considers price and capacity shows even worse ratings with the U.S. coming in at 21st place. Broadband subscribers in the U.S. pay twice as much as their Asian or European counterparts for one-twentieth the speed.

Broadband policy in the United States is focused on driving "facilities based" competition and maintaining relatively light regulation, thus giving state agencies limited or no jurisdiction over broadband providers, including telecommunications, wireless, and video carriers and satellite providers. While this policy has succeeded in driving more private-sector investment in broadband infrastructure, it also means that it is difficult to get companies to invest in the deployment of fiber in less profitable areas.

In 1994, with strong citizen encouragement, Palo Alto first started exploring the possibility of building a city fiber network in phases, a fiber network designed to serve big companies would be built first, then if proven feasible, a citywide fiber to the home network would be added. A 32-mile city-owned fiber network was built in 1996, designed to serve big companies who could install and manage their own electronics on either end of the point-to-point fiber strand they leased by the mile by the month. It was, and is, quite successful.

In 2001, planning for a citywide "fiber to the home" network began in earnest. However, the project was suspended in 2005 by the city council because of regulatory issues and because it was considered too expensive to carry out with public funding alone. The city has been searching for a legally and financially viable solution ever since.
Now it seems they may finally have found one.

“Working 9 to 5 is not enough in a place like Silicon Valley," Harrington says. "Our most important innovative assets, the people, go home at night and we need to make sure they have continued access to reliable communications. If you want to work from home, a Mickey Mouse connection is not enough."

Through a public Request for Proposal (RFP) process, the city of Palo Alto identified a private consortium that has come up with an innovative business model for enabling the building of the network.

“The plan our group has developed has the potential to transform the way citizens in Palo Alto live, work and play with very limited risk to the city”, says Matt Wenger, President of PacketFront Inc, one of the companies in the consortium and a global pioneer in community fiber networks.

The consortium has proposed a model that would leverage existing city assets like rights-of-way, conduits, and poles to create the stimulus necessary to attract private investment in "fiber to the home" projects.

"The idea behind our approach is to enable cities like Palo Alto to achieve their vision without the financial, legal, or operational risks usually associated with community owned and operated networks,” says Wenger. “Both the public and private sectors are daunted by the expense of building fiber to the home in small communities like this. Only by working together can we overcome those obstacles.”

The consortium hopes the city will formally agree to participate in the project in the next few months. If the city does, proponents claim they will be able to connect the first residents and businesses before the end of the year.

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