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The Palo Alto Fiber to the Home Trial A Work in Progress Ken Poulton Palo Alto Fiber Network.

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Presentation on theme: "The Palo Alto Fiber to the Home Trial A Work in Progress Ken Poulton Palo Alto Fiber Network."— Presentation transcript:

1 The Palo Alto Fiber to the Home Trial A Work in Progress Ken Poulton Palo Alto Fiber Network

2 2 Topics Background The Palo Alto Fiber to the Home (FTTH) Trial –Network Plan –Finance –Marketing –Lessons Learned Challenges and Opportunities –Inexpensive Fiber to the Home –Open Networks

3 3 The Setting: Palo Alto Mostly affluent Adjacent to Stanford University –Long-standing emphasis on education City-owned utilities (electricity, gas, water) High proportion of engineers and other Silicon Valley types Palo Alto Internet Exchange (PAIX) City-owned dark-fiber ring (completed in 1997)

4 4 Existing Palo Alto Fiber Ring: Route Map Underground Overhead

5 5 The Setting - Problems City-owned dark-fiber ring –Fell short of (unrealistic) cost recovery goals Subscriber-owned local cable TV company –Long history of financial problems –Being sold to AT&T City government –Very cautious staff and city council –“Process-Rich” (i.e., slow)

6 6 Origins of the Palo Alto FTTH Project The Naïve Question: “Why can’t I just hook up that fiber to my house?” -- Residents The Visionary Statement: “Fiber to the Home is not a question of if, but when.” -- Brian Reid

7 7 Palo Alto Fiber Network Volunteer organization of FTTH enthusiasts ~200 members ~20 members working actively on FTTH Functions: –Education of city staff, city council, the public –Providing networking expertise to staff –Organizing the political effort –Assisting with marketing effort

8 8 Palo Alto Fiber Network Goals True high-speed network access for everyone –Scalable (user choices and future expansion) –Affordable Open Network –Promote competition –Support a variety of services –Encourage local content providers and services A fiber connection to every building in the city –Homes, schools, businesses

9 9 A Simple Plan Build a small trial first Focus on a data-only network Use inexpensive, proven, off-the-shelf technologies –10/100 Mb/s Ethernet –multimode fiber City to build and own the network Hire an existing ISP for operations Cable TV, phone, other services in the long run –may be added sooner if they help the economics

10 10 Why Fiber to the Home? Fiber can deliver an unbeatable price/performance ratio. The biggest Internet bottleneck is the Last Mile to the home. Use is growing: More users, more uses, more frequent use. Richer content: graphics, sound, video, bloat-mail.

11 11 Consumer-Level Internet Access Technologies vs. Year Any technology will need considerable new infrastructure investment to go much beyond 2 Mb/s per user. But only FTTH allows inexpensive further upgrades. Per-user limit with existing wires

12 12 Cost of Construction vs. Year of Construction The construction cost factors favor doing it right now.

13 13 Why Now? FTTH construction cost no longer dropping rapidly –Electronics now only 5% of system cost for 10 Mb/s The market is ready –Telephone modems have reached the 56 Kb/s limit –Users starting to move to medium-speed (~1 Mb/s) services There is a window of opportunity –Most attention focused on squeezing out the last dregs from existing copper infrastructure –FTTH is a natural monopoly - it will be uneconomic to duplicate this infrastructure.  The first provider to build an open Last-Mile fiber infrastructure in a given area will be the last for decades

14 14 Palo Alto FTTH Trial Topology

15 15 Typical Pole to Home Wiring Home installation is similar to cable modem but uses fiber.

16 16 FTTH Trial Costs 10 Mb/s Service to 100 Homes Operations Cost Estimate: $7/month for physical maintenance $25-50/month for Internet Access, support, ISP services Construction Cost Estimate: $630 per home passed +$830 per home connected (+$380 for 100 Mb/s) Total: $350K

17 17 Per-User Capital Cost vs. Participation Rate Target for Trial: 24%

18 18 What are the Building Blocks of a Network? Customers –Residential, Commercial, Academic, Civic, Special Interest Physical Infrastructure –Wiring, Poles, Easements, Splices, Switching Equipment Network Operations –Routing, Traffic Control, Security, Billing, Customer Support Services –e-Mail, Content, Web Hosting, e-Commerce, Education Internet Access –Internet Access and Transport Competition Possible Natural Monopoly

19 19 Who Does What? Customers –Residential, Commercial, Academic,etc Physical Infrastructure –Cables, Poles, Easements, Switch Sites Network Operations –Routing, Security, Billing, Traffic, Support Services –e-Mail, Content, Web Hosting, e-Commerce Internet Access –Internet Access and Transport Single IAP/ Network Operator City Any ISP For the trial, use a single IAP/Network Operator to be cost-effective. Network Operator City/ Private Any ISP Qualified IAPs TrialCity-Wide 5,000- 26,000 homes ~100 homes City-wide system will be an open network.

20 20 Financial Model For the Trial Ownership: –City builds and owns the physical network –City chooses an ISP to provide operations and services City Council’s Financial Choices: –Recover construction costs within 5 years –Subscribers commit to repay 2/3 of the cost before construction Resulting Offer to Residents: –$1200 installation fee –$45/month to city + $25-50/month to ISP –2.5-year commitment to the service

21 21 Marketing Results August ‘98 Survey: –A single utility-bill insert and a few ads –Yield: a 4% city-wide signup rate in just 4 weeks (compared to 4% use of cable modems in 4 years). –19% in two areas with neighbor-to-neighbor campaigns September ‘99 Trial-Area Signup : –2 letters from the city (with ISP rates still not certain) –Yield: 9-15% signup rate December ‘99 Trial-Area Signup : –Will have ISP rates defined and neighborhood campaign –Goal: 24% participation

22 22 Timeline for FTTH in Palo Alto Fiber Ring built 1997 $2M Begin Trial constructionQ1 ‘00 $0.4M Begin Trial operationsQ3 ‘00 First evaluationsQ1 ‘01 Decide on a city-wide system 2001 –Is FTTH worth doing? –Should the city be involved? –Should private partners be involved? –Can sufficient political will be mustered? Deploy city-wide system 2002 $25M

23 23 Hurdles (and how we passed them) Right-of-way ownership  Have the city be the builder and owner of the network Need for fairness among neighborhoods  Expand the focus from one neighborhood to citywide survey Negative, incorrect, initial staff report  Wrote a technical and budgetary plan using staff numbers Council desire for zero financial risk to the city  Small trial, users commit up front to pay for the system Not enough subscribers without firm ISP cost numbers  Going back to finish signups after ISP signed up

24 24 Lessons Learned We found huge grass-roots enthusiasm for FTTH –High speed –Open network –New services City ownership is very attractive to residents City ownership is scary to city staff and council –Educate citizens, city staff and representatives. –Advocates must remain engaged with city staff. Cities do not run on Internet time

25 25 Fiber Choice: Current Costs vs. Long Term Flexibility Lowest cost today: –neighborhood switch sites serving ~1000 homes, distances up to 2000 meters –multimode fiber (cheaper splices and converters) –data only (10 Mb/s Ethernet, 100 Mb/s in a few years) But we may need single-mode fiber for CATV and 1000 Mb/s over >500 meters –Single-mode splices and media converters add ~$1000 per subscriber to the current costs –CATV electronics add another ~$1000

26 26 Technical Opportunities Taking FTTH From Attractive to Irresistible Cheap (~$50) single-mode fiber media converters for Ethernet and CATV Cheap wave-division multiplexing components Pole-mountable, non-air-conditioned switches and media converters –could be within 500m of homes, so multimode is enough

27 27 Open-Network Challenges Technical Implementation –No clean solution to multiple-ISP network yet Network Business Model –So far: Ownership = Control = No competition –Opening monopoly networks via regulation ineffective

28 28 Open-Network Paths Public Ownership  Most direct way to ensure an open network –Risk to public funds –Political battles to get started Private Ownership  Can move more swiftly  Existing networking expertise –No proven model that benefits from maintaining openness Public/Private Partnerships  Could have the best of each –No proven models yet

29 29 Summary FTTH is coming sooner or later; sooner is better. Open networks are a major benefit to the public. –FTTH is a natural fit for open networks –Public vs. private ownership choices Room for innovation to make FTTH more competitive. We found lots of support for publicly-owned FTTH in Palo Alto. We hope to demonstrate viability of FTTH in the coming year.

30 30 Thanks to... Palo Alto Community Network –For starting the discussion Brian Reid –For vision and inspiration Residents of the Community Center Neighborhood –For leading the way Palo Alto Fiber Network –For volunteers supporting FTTH throughout the city Palo Alto City Council –For funding City of Palo Alto Utilities Department –For doing the work and taking the heat

31 31 References Palo Alto Fiber Network site: –Major Contributors: Mike Eager, Ken Poulton, Peter Allen City of Palo Alto FTTH site: Slide: “Do U.S. Homes Really Use the Internet?” –See for results of a FIND/SVP survey estimates and projections. This corresponds to the following government survey: –See for details on the “The Digital Divide, Net II” survey released 7/28/98 by the National Telecommunications & Information Administration. Slide: “Why Fiber? ” –Snapshot from 11/99 of each listed service provider’s price structures. Slide: ”Palo Alto Fiber Backbone Route Map” Slide: “Typical Pole to Home Wiring” –Source: City of Palo Alto Utilities Slide: ” FTTH Trial Costs ” Slide: “Cost of Construction vs. Year of Construction” –Source: City of Palo Alto Utilities, ‘Fiber To The Home Trial Cost Estimates.’ –Analysis: Ken Poulton, ‘Palo Alto Fiber To The Home Trial Technical and Budgetary Report.’ ( Slide: “What are the Building Blocks of a Network?” Slide: “Palo Alto Fiber Network Trial “ –Source : Peter Allen

32 32 Palo Alto FTTH Network Phases Build the Backbone (1997)$2M FTTH Trial(Q3 2000)$0.4M –Refine cost estimates and design –Measure user satisfaction, participation rate –Make recommendations for a city-wide system City-wide Rollout $25M –Market competition –New services

33 33 Consumer-Level Internet Access Technologies vs. Year Any technology will need considerable new infrastructure investment to go much beyond 2 Mb/s per user. But only FTTH allows inexpensive further upgrades. with existing wires

34 34 Detail of Costs for Services

35 35 Expected Results of the Trial Demonstrate that FTTH is practical and pays for itself. Refine the construction and operational cost models. Work out operational details and user support. Measure user satisfaction and willingness to pay. Enable new applications that are currently bandwidth-starved. Increase awareness, demand and financial justification for a city-wide FTTH system. Reduce uncertainties and risks of a city-wide FTTH system.

36 36 Why Ethernet? It’s the standard - used in most offices in the world –10 Mb/s is the least expensive kind of network now –Familiar to all ISPs It’s easy to upgrade later –Many companies are creating new Ethernet products –100 Mb/s will be cheap in 3 years, 1000 Mb/s in ~8 years It meets the whole spectrum of data service needs - now and into the future –10 Mb/s provides enough speed for >90% of home uses –100 Mb/s option can support virtually any use today –Room to grow as demand grows

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