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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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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
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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)
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Existing Palo Alto Fiber Ring: Route Map
Underground Overhead
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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)
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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
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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
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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
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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
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Fiber can deliver an unbeatable price/performance ratio.
Why Fiber to the Home? 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. Fiber can deliver an unbeatable price/performance ratio.
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Consumer-Level Internet Access Technologies vs. Year
Per-user limit with existing wires Any technology will need considerable new infrastructure investment to go much beyond 2 Mb/s per user. But only FTTH allows inexpensive further upgrades.
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Cost of Construction vs. Year of Construction
The construction cost factors favor doing it right now.
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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
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Palo Alto FTTH Trial Topology
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Typical Pole to Home Wiring
Home installation is similar to cable modem but uses fiber.
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FTTH Trial Costs 10 Mb/s Service to 100 Homes
Construction Cost Estimate: $630 per home passed +$830 per home connected (+$380 for 100 Mb/s) Total: $350K Operations Cost Estimate: $7/month for physical maintenance $25-50/month for Internet Access, support, ISP services
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Per-User Capital Cost vs. Participation Rate
Target for Trial: 24%
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What are the Building Blocks of a Network?
Customers Residential, Commercial, Academic, Civic, Special Interest Services , Content, Web Hosting, e-Commerce, Education Competition Possible Internet Access Internet Access and Transport Network Operations Routing, Traffic Control, Security, Billing, Customer Support Natural Monopoly Physical Infrastructure Wiring, Poles, Easements, Splices, Switching Equipment
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Any ISP Any ISP City Who Does What? Trial City-Wide ~100 homes
Customers Residential, Commercial, Academic,etc 5, ,000 homes Any ISP Services , Content, Web Hosting, e-Commerce Any ISP Single IAP/ Network Operator Internet Access Internet Access and Transport Qualified IAPs Network Operations Routing, Security, Billing, Traffic, Support Network Operator City Physical Infrastructure Cables, Poles, Easements, Switch Sites City/ Private For the trial, use a single IAP/Network Operator to be cost-effective. City-wide system will be an open network.
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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
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Marketing Results August ‘98 Survey: September ‘99 Trial-Area Signup:
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
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Timeline for FTTH in Palo Alto
Fiber Ring built $2M Begin Trial construction Q1 ‘ $0.4M Begin Trial operations Q3 ‘00 First evaluations Q1 ‘01 Decide on a city-wide system Is FTTH worth doing? Should the city be involved? Should private partners be involved? Can sufficient political will be mustered? Deploy city-wide system $25M
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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
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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
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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 Mb/s over >500 meters Single-mode splices and media converters add ~$1000 per subscriber to the current costs CATV electronics add another ~$1000
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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
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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
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Open-Network Paths Public Ownership Private 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
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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.
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Thanks to... Palo Alto Community Network Brian Reid
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
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References Palo Alto Fiber Network site: www.pa-fiber.net
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
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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
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Consumer-Level Internet Access Technologies vs. Year
with existing wires Any technology will need considerable new infrastructure investment to go much beyond 2 Mb/s per user. But only FTTH allows inexpensive further upgrades.
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Detail of Costs for Services
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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.
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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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