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Tuesday, April 14, 2009

Muni Broadband: Palo Alto Puts the Fat in the Fire

StimulatingBroadband.com 04/14/09 - Officials in the City of Palo Alto, California last night voted to reboot the City's troubled effort to deploy and operate a municipally owned high capacity (100 Mbps) optical fiber network. In doing so, city officials have surely helped reignite a burning policy debate over the business, legal, and technical ramifications of communications networks owned by the public sector.

In a copyrighted story in today's San Jose Mercury News, the in-region daily of Silicon Valley, Staff Writer Will Oremus describes how the City Council voted last evening to cancel current city contracts with Axia NetMedia (TSX: AXX), the open access network developer based in Calgary, Alberta, Canada. The firm had been selected to lead and underwrite a consortia of vendors to build the city fiber network. Palo Alto Online reports in a copyrighted story of today as well that a consortia financing partner backed out of the deal, forcing Axia NetMedia to request direct payments of city funds to the venture in the range of "...$4 million to $5 million a year."
 
The Council voted to hire consultants and perhaps even Washington-based lobbyists to apply for federal broadband stimulus monies in an effort to restart its fiber plan. In a move sure to make critics of "muni nets" go ballistic, councilors discussed retaining network developers from Australia and Singapore involved in high profile government supported fiber builds in those nations.

Critics of muni nets, particularly of municipal WiFi nets, who not coincidentally tend to be the same critical voices against the broadband stimulus provisions of the ARRA, allege that business and technical failure has been the norm in virtually all municipal telecom ventures in the nation. Muni net proponents counter that the record is far more positive, and far more urgent. They argue that municipal telecoms, given their accessibility, price, and high capacity, are key to economic developmental and digital divide mitigation strategies which the private sector is incapable of enabling.

Palo Alto has worked on several fiber plans through the years, befitting a city which like Cambridge, Massachusetts (human genome sequencing) and the 'beltway bandit' host communities of Maryland and Northern Virginia (the intelligence community and federal systems integrators), is one of the most information intense locations on the planet. The particular fiber venture at stake yesterday in Council chambers was launched in its deployment stage in 2008. Wired's piece about the network at the time described the total estimated capital expenditure (capex) for the project as being "about $44.2 million", and focused on the not-so-veiled threats by AT&T (NYSE: T) to litigate to stop the city's effort.

The role of networks owned and operated by municipalities is becoming one of the key flash points in the reenergized national debate over broadband -- energized again by the ARRA's broadband stimulus funds, and by the FCC's National Broadband Plan, and by a President that "gets it" when it comes to technology. The Palo Alto fiber plan certainly keys into this debate.

Additionally, Palo Alto will most likely become Exhibit A. in the parallel controversy over the definitions of "underserved" areas. City officials, economic developers, and tech savvy residents make the case that investor-owned providers like AT&T and Comcast (NASDAQ: CMCSA) can not readily provide 100 Mbps optical service speeds, although the community has an aggregate demand for those service levels. Does the present inability of investor-owned providers to deliver these speeds mean the community is "underserved"?

During the New Deal "public power" became a rallying cry for both citizen activists and rural officials on the one side, and shareholder owned utilities on the other. Today "muni nets" are loved by a cadre of urban planners, public sector telecom managers, and some niche equipment makers that sell into this market space. Most major telecom carriers and a vociferous cadre of industry-supported policy shops fulminate against them.

Franklin Roosevelt became the national champion of public power, as the movement's greatest achievements like the Tennessee Valley Authority (TVA), and the Bonneville and Hoover Dams became symbols of American national purpose and collective action against domestic economic depression. Perhaps it is too over the top to regard broadband networks as our 21st century replicas of New Deal era civic monuments.

For ubiquitous and accessible broadband to permeate American society to the point that an economic rebirth can be fueled however, the Administration of President Obama will need to champion some instances of, and models for, public broadband no less than FDR did public power.
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