BY BRADEN CARTWRIGHT
Daily Post Staff Writer
The city of Palo Alto is hoping its customer service will get residents to switch from AT&T and Xfinity to the city’s new fiber internet, even though the city’s proposed rates are slightly higher than the incumbent providers.
The Utilities Advisory Commission will review proposed rates on Wednesday. Residents can pay the city $75 a month for 500 Mbps, $95 for 1 Gbps or $295 for 5 Gbps, Utilities Strategic Business Manager Dave Yuan said in a report for commissioners.
For comparison, Xfinity’s rates start at $55 and are $65 a month for 1100 Mbps, according to online offers.
AT&T also starts at $55 and charges $80 for 1 Gbps or $245 for 5 Gbps, online offers show.
The city will need to overcome “switching aversion,” when residents don’t want to deal with the hassle of changing providers, Yuan said.
‘Challenges’
“To overcome challenges like this … Palo Alto Fiber can provide basic services which are easy to understand and competitively priced, with marketing and outreach that differentiates our services from other providers, such as being a locally-available municipality they can speak to in person,” Yuan said.
The city’s plans will be monthly, with free installation and a router, Yuan said.
The city hired Brightscape Networks for $50,000 in December to look at the existing offerings, “which revealed a duopoly,” Yuan said.
Brightscape Networks “highlighted the need to address challenges in serving multi-family residents where incumbents have a long-standing presence and partnerships which limit competition,” Yuan said.
The city doesn’t have a timeline for signing up customers because of “economic and market uncertainties and supply chain unknowns,” Chief Information Officer Darren Numoto said in an email on Thursday.
After more than two decades of talking about fiber to the home, Palo Alto City Council voted 6-1 in December 2022 to try out a fiber network using $47 million in savings.
Minimizing risk
Council didn’t want to risk a loan that would backfire if people didn’t sign up.
“I feel uncomfortable betting $100 million on that one, but I might bet a few million from the fiber fund on it,” then-Councilman Eric Filseth said.
As revenue comes in, the city would expand the network into more neighborhoods beyond the area around Greer Park.
Construction of the fiber network is being done at the same time the city is upgrading power lines and transformers in the pilot area.
Do I understand that the city spent $47 MM of our money to produce a service competitive to what Comcast and AT&T already offer, except that it’s more expensive than theirs? The argument that people will switch because it’s a “locally available municipality that they can speak to in person” is beyond belief.
A Utilities Strategic Business Manager is a position that is not providing any benefit to the city’s residents.
Another brilliant move by city council! Nobody is going to sign up for a more expensive service run by a bunch if amateurs.
AT&T Fiber already covers 71% of households in the city and is continuing to expand. All these households could have already signed up for fiber if they wanted it. The city claims it needs 27% of the entire city to adopt the city’s fiber, just to break even. Do the math. Xfinity also offers 1 GB service. The majority of municipal fiber services lose money, meaning the city’s already stretched finances would need to cover its money losing fiber operation at the expense of other services, like sufficient fire fighters and library hours. This year, the city is proposing raising gas rates on residents for basic needs 34% but they can because they are a monopoly. Unlike fiber, where they would have to compete with competent businesses. In summary, the value add by the city for offering fiber is small and the risk to city’s finances is large.
This vanity project was absurd from the start.
Paul D, it reportedly cost more than $100,000,000 for a city with no technical expertise running such system — one that’s been making excuses for its erratic City Council email system for at least 4 years — to try to compete with established players that know what they’re doing.
Staffers pre-selling this system couldn’t even answer the question whether areas with underground wiring could use this. (After months they finally admitted that those areas would be phased in at some later date!)
Heads should roll for this costly fiasco, esp those “leaders” who plead poverty about not being able to afford fire engines!!
Remind me again how many staffers are making more than $300,000 and why our utility rates keep skyrocketing to fund such incompetence.
Why is the city offering a service that the private sector already provides? Private companies face competitor pressure and have a vested interest in meeting customer needs quickly and effectively, reducing costs, and improving quality service.
The city, on the other hand, would subsidize itself with taxpayer dollars, avoid business taxes, not respond to market signals when it comes to prices and services, and worse, are afforded legal immunity from liability for damages that private businesses are always exposed to. Do Palo Alto city workers even show up to work? Do any city, county, and state workers in California, besides Police and Fire, come into work anymore post-2020?