The Palo Alto Fiber to the Home Trial

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The Palo Alto Fiber to the Home Trial

• A Work in Progress
• Ken PoultonPalo 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

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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)

4
  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 ATT
• 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 QuestionWhy cant I just hook up
  that fiber to my house? -- Residents
• The Visionary StatementFiber 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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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 Costs10 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
• e-Mail, 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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Who Does What?
Trial
City-Wide

• Customers
• Residential, Commercial, Academic,etc

5,000-26,000 homes
100 homes

• Services
• e-Mail, Content, Web Hosting, e-Commerce

Any ISP
Any ISP

• Internet Access
• Internet Access and Transport

Single IAP/ Network Operator
Qualified IAPs

• Network Operations
• Routing, Security, Billing, Traffic, Support

Network Operator

• Physical Infrastructure
• Cables, Poles, Easements, Switch Sites

City
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 Councils 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
• 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 1997 2M
• Begin Trial construction Q1 00 0.4M
• Begin Trial operations Q3 00
• First evaluations Q1 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

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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
  1000 Mb/s over gt500 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 OpportunitiesTaking 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
• 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
• 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 www.cpau.com/fth
• Slide Do U.S. Homes Really Use the Internet?
• See www.cyberdialogue.com/isg/timeline/forecast.ht
  ml for results of a FIND/SVP survey estimates and
  projections. This corresponds to the following
  government survey
• See www.ntia.doc.gov/ntiahome/net2/charts.html
  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
  providers price structures.
• Slide Palo Alto Fiber Backbone Route
  MapSlide Typical Pole to Home Wiring
• Source City of Palo Alto Utilities
• Slide FTTH Trial CostsSlide 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.
  (www.pa-fiber.net)
• 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.
34
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?

• Its the standard - used in most offices in the
  world
• 10 Mb/s is the least expensive kind of network
  now
• Familiar to all ISPs
• Its 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 gt90 of home
  uses
• 100 Mb/s option can support virtually any use
  today
• Room to grow as demand grows