Council takes next step toward building a fiber-to-the-home system

BY KYLE MARTIN
Daily Post Staff Writer

City Council decided last night to direct City Manager Ed Shikada to prepare a plan to bring fiber optic cables to every home in Palo Alto to speed up internet service.

The new system, which could cost as much as $126 million, would put the city into competition with AT&T and Comcast.

Installing the main base of the new cables would cost between $22 to $28 million, and getting it to residents would cost another $86 to $98 million, Shikada’s report to council said.

Last night’s unanimous council decision doesn’t represent final approval but rather just a go-ahead to begin preparing a plan council will approve later.

The big questions that still need to be answered include: Who will build the system? What parts of the system will be run by a contractor?

If all goes as planned, homes could be outfitted with the new cables within five years to 10 years.

According to estimates provide by a consultant last night, the city should be able to make money from this new utility. And even if a resident doesn’t sign up for fiber-to-the-home, they’ll benefit because AT&T and Comcast will have to bring down their rates to compete with the city, council members were told.

Mayor Tom DuBois said he supports getting residents a higher-quality internet connection if it happens in a way that saves residents money.

“I really think we do need answers to some of these cost challenges that were a cost barrier a few years ago when we looked at this,” DuBois said. “We can’t load up all these costs on the fiber network. It just won’t work.”

Councilman Greg Tanaka told council that the system would be a good service to residents, but not if it puts the city deeper into debt. “Taking on more debt is really dangerous right now,” Tanaka said.

However, Vice Mayor Pat Burt said that if the city were to borrow money to fund the project, interest rates are lower than the inflation rate. In other words, this is an ideal time for cities to issue bonds.

“I think there’s an argument to be made that everyone needs this type of service,” said Councilwoman Alison Cormack. But she said she wishes she had more information about how much it would cost and how it would get to residents.

Councilwoman Lydia Kou supported the proposal for a new internet service. But after hearing a discussion about how the service could also replace cable TV, she asked for the definition of “cord-cutter.”

The city’s consultant on the project, John Honker of Magellan Advisors from Denver, said it is a household that drops cable TV service in favor of using internet streaming services.

Resident Don Jackson, who formerly served on the city’s Utilities Advisory Commission, said he wanted the city to start working on the new internet system. So did residents Andy Poggio and Loren Smith.

And Resident Subodh Iyengar said switching to a fiber connection was “transformative” to his ability to work from home through the pandemic.