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

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

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. 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. 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. 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. 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. 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.

11. 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.

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

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. Palo Alto FTTH Trial Topology

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

16. 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

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

18. 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

19. 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.

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. 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

22. 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

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. 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. 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

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. 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. 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

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. 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

31. 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

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. 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.

34. Detail of Costs for Services

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. 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