04 Feb

Questions about City Fiber Optic Idea

We have watched the City Council study session on fiber optic to the home and have done some research and thought additional information might be useful for public consideration. Again, we will follow the question and answer format.
The market research indicated that 34.7% of those polled definitely would or probably would sign up for the fiber optic service. Does that mean it would be success? It depends. It is unclear, particularly looking at the open-ended responses, as to why people would sign up. Some of them may think that the $60 cost would replace their entire cable bill. Of course, that would not be the case.
Exactly what is the financial risk to the City? The answer, once again, is “it depends” because it depends on just how many households sign up. A 35% sign up rate would be about 5,950 subscribers. If only, 30% sign up, then the City must cover the shortfall in payments. At a sign-up rate of 30%, that translates to over $300,000 per year from the City to “subsidize” the fiber optic network.
Couldn’t the City just charge more to cover the cost? Yes, it could. The cost would go to about $65 per month for the City to break even if 30% signed up. If only 20% signed up the cost would go to about $85 per month for Internet service only; no TV, phone or security would be included.
How would the network be built? The City would sign a lease with an outside firm that would build and operate the system. It is estimated there would be about 150 miles of fiber optic installed with about 60% underground.
How does it get to my house? Attached to the fiber optic network would be “pedestals” each serving up to 8 houses. The pedestal would be in the “right of way” not on your property. A trench would then be dug from the pedestal to your property and through your property to the point where it enters your house. The fiber optic cable would be installed in the trench. Once inside the house a wireless (and wired modem/router) would be attached to the cable to transmit throughout your house.
What will come over the fiber optic network to my house? Nothing! You will have access to the Internet so you can get email and browse the web. That is it. If you want anything else, you will need to sign up for it and pay for whatever you sign up for.
What about television? Various television options have been discussed. There is Apple TV for example. But Apple TV gives you access to television that has already been broadcast and is available on the web. There has been talk about Yandoo. Yandoo is a substitute for your cable company and charges the same amount in general. Depending on what programming options you purchase, charges could be $150 per month or more. However, you do get live TV from Yandoo.
What about telephone? There are VoIP (Voice over Internet Protocol) providers that allow you to keep your current number and receive and make calls over the Internet. Cost depends on which service you choose.
What cities have done this? There was a lot of talk about Sandy where there is about a 60% sign up. When Sandy started, there was NO cable service in Sandy. Beaverton and Hillsboro have both looked at a fiber optic network and decided against it because of expense. Sherwood built a fiber optic network and it has cost the city a great deal of money (totaling in the millions), as the sign up goal for residences was not achieved.
But how can we get fast Internet if we do not do this? Cable companies like Comcast/Xfinity that have a network that allows on-demand service are adopting a new type of transmission called DOCSIS 3.1 that brings high speed (perhaps up to 2 gigabytes) over existing cable. Comcast has already installed DOCSIS 3.1 in two cities and says it will roll out to all their customers by 2018. DOCSIS 3.1 provides speed and bandwidth greater than current cable service. The City Council has not asked Comcast to meet with the Council and discuss their plans.
We need fast Internet don’t we? Again, it depends. Very few things we do today on the Internet need gigabyte service. Only very large files or games need that speed. Most homes will be just fine with speed of 500 mbps and more bandwidth.
What is LOCAL’s position on this? Each of you has to make up your own mind whether you want the City to provide fiber optic service and if it becomes available whether you will subscribe. However, here are some things you might consider:
• Is it right for other taxpayers to “subsidize” Internet for users if less than 35% sign up? We think that is an issue of fiscal responsibility. Internet is not like water (which the City does provide as a necessity). There are alternatives to current cable providers (such as satellite); should people make their own decision on what alternative is best for them and then pay for it themselves?
• Our City’s budget does not have a surplus and there are increases coming in PERS. Where will the City get the money to pay for any sign up shortfall for the next 30 years?
• The company that will do this for the City has never done this before; however, the contractor they will use has. Is that too risky?
• Do you want the right of way and your yard trenched to get this service?
• Are you really going to save any money in total?
• Do you really hate your current provider’s offerings (such as the channels they offer) enough to change providers? The market research said customer service was a problem but is your actual cable a problem?
• Do you really think that the price of any service will stay the same for 30 years?
• Do you think it will be a hassle to switch from your current provider and get the new one set up?
• What guarantee is there that fiber optic will not be an obsolete technology in the future?
• Should the City be competing with private, tax-paying enterprise to provide such services that are otherwise already available or will be in the foreseeable future?

The LOCAL Board

9 thoughts on “Questions about City Fiber Optic Idea

  1. Thank you for completing this research and for sharing this information. For the city council to enter the fiber optics contract as noted above, is absolutely fiscally irresponsible.

    So much for the campaign promises of Skip O’Neill and Kent Studebaker to maintain fiscal responsibility.

    Thank you LOCAL,
    Annie Meneakis

    1. There was a huge red flag at last weeks city council study session. When Councilor Gudman inquired when the Council would hear about competitors (Comcast, Frontier etc.) future plans for Lake Oswego the Mayor replied that that wasn’t going to happen. Seems like Studebaker has adopted the same attitude toward doing the cities due diligence before embarking on large capital projects ($30+ million) that was demonstrated by his predecessor at city hall. What a disappointment.

      Another surprising comment came from one of the gentlemen from Sandy who stated that Google Fiber had provided Sandy with a public relations coup by announcing their interest in the Portland metro area, but as yet not delivering. On the contrary, I would think that internet content providers would be doing the “happy dance.” Lake O taxpayers assume 100% of the risk and cost to construct the infrastructure and all the content providers have to do is sell data. Great deal for them.

      Thanks Gerry and LOCAL.
      Jim Bolland

  2. NO. Really.. How much faster does your internet have to be? My Cable internet if fine. I turn on my tv, punch in the channel # and it appears. I don’t have to turn on a seperate device and surf some menu to see what is on. If Internet and Yandoo is going to cost me the same as having Cable and Cable internet…Don’t waste the time or money.
    By the way, does anybody really think that this will not become obsolete in 10-15 years when something else is “Better” or Faster”
    Be very careful when investing in technology as it is always changing.

  3. After a 40 year career in an IT related field, I can assure you that technology changes will render this obsolete by the time the private fibre network is installed and implemented. In fact, likely there are already competing technologies in the private sector which will under-cut or compete with the $60. Is there an independent IT consultant(s) recommending this to the city council? If there is not a recommendation, the city should do one it’s famous ‘studies’ conducted by an independent consultant with irrefutable IT credentials.

    Or is the real plan to install the fibre network and then sell it to a competing technology? If so, what does the taxpayer get out of the transaction?

    City council, please stick to the pending issues of the city instead of heading towards another West End Building type fiasco.

  4. I have grave doubts about the City Fiber Optic proposal. I think we need answers to these concerns:

    1. The market research indicated that 34.7% of those polled definitely would or probably would sign up for the fiber optic service.

    What was the exact question asked? As you probably know, how a question is worded can skew poll results. Were those polled told that the cost was $60 a month for the service or just for the fiber?

    2. Who are the investors and owners of the private LLC partner?

    This is an important question as the private partner’s ability to deliver what is promised is key to the success of the project. There is also a question whether there is any conflict of interest.

    3. What will be the full cost per month of Gigabit service, including ISP fee, and taxes?
    Where did the $60/month number come from and is this accurate?

  5. Does anyone else think something stinks? I noticed Dave Pyle’s comments on it being convenient that the best people for the job in the entire US happened to be Lake Oswego based…! Red Flag. Are we in Silicon Valley up here? Also that Tucows company that’s deploying fiber on projects like this across the country was actually part of the proposal that came 2nd vs Symmetrical with zero experience. 2nd Red Flag. So I completely agree with DP.

    I looked into this further and found what I think is the biggest Red Flag that nobody at the City has noticed at all… I wonder why? The Bid that Symmetrical ‘won’ the RFP upon is now completely different, and costs us a huge amount more than they said so they could win!

    Have a think on this, my understanding of the events are as follows:

    1) 3 RFP Bids received (2 really as one was from the city itself).

    2) The RFP response from Sunstone is a predominately above ground build and the competing bid from SciFi/Ting(that great company doing this already in multiple cities!!) is all underground. I heard the competitor to Sunstone advised council that their response is based on current city utility code requirements meaning it has to be all underground to be legal! Why are we accepting illegal bids? – the video shows city staff and council members ignoring the guy when they were told this… Why?

    3) Sunstone is chosen as the preferred bid based on it being cheaper using a 20 year finance, municipal operated and us the municipality actually providing services (we have zero ability to do that surely).

    4) City staff wrote a pretty unconvincing report on why a 30 year payment agreement is no good for the city, and that a private company should not be operating the network. The city staff cost analysis even shows the difference in paying for the network over 20 years compared to 30 years.

    5) The video shows the losing bidders representative saying he has sent a document direct to council members that outlines the overwhelming financial difference between the two RFP responses – why have these not been disclosed to the public? City staff made everything else public knowledge.

    6) City staff secured approval from council members to pursue a city staff operated and run municipal ISP network. Get ready to wave your red flags!!

    7) Several weeks later City staff and Sunstone go back to council members and say they have changed their mind a new company called Symmetrical, a.k.a. Sunstone, (who by the way never existed until a few weeks prior) should be selected and under a completely different structure, No longer is it a 20 year bid, no longer will the city manage the network, no longer will the city provide internet, no longer is it built the way the said either. My opinion we shouldn’t entertain this any longer! RED FLAGS

    8) Council members ask Sunstone if they missed any costs off their original RFP bid, they say yes, $4m million dollars! Surely these guys know what they are doing?? Maybe we’ll let them off it is only $4m! I couldn’t believe how easily that was brushed off, now wait for the next bit….

    9) City members ask Sunstone what is the extra cost to make the network all underground, the Sunstone partner says at least $9m. Let me get my 5 year old son’s calculator out to work this out! That means a potential increase of $13m! In just a few weeks since they first got appointed… Who knows what the price will be in 2 months time – is this going to be another Tigard Water project, did we not vote new officials in to ensure this does not happen again! It takes all of ten minutes to Google and see that all utilities have to go underground…who is more at fault the City or the bidder, either way forget Due Diligence, this is Dangerously Dumb Due diligence! DDDD.

    10) Council members decide to skip past the alarm bells and all the red flags as if a bull in a ring and request city staff structure an agreement to move forward with Symmetrical.

    Now, I want better internet products and lower prices in the community but someone has to question what is going on that we are not being told. To me, this stinks:
    – Hometown Bidder conveniently chosen (I love local but not for a $40m tech project)
    – Dangerously Dumb Due Diligence (DDDD) Price already increased massively over $13m more!! since they ‘won’
    – The basis that they ‘won’ on has completely changed the proposition is barely recognizable
    – Symmetrical are pricing $34-35 on the infrastructure the Ting/Scifi bid was less than that $31 or $32 I think not much but still that would make it cheaper for us! Am I missing something?
    – Comcast already has miles of fiber in the community

    Why has city staff not put the brakes on this fiasco to investigate how they missed $13m off their bid as a minimum. Start from scratch with independent experts or put the whole thing on ice, why do we need to be first?

    Hey Gerry, do you know if anyone has asked council members for the analysis document that the SciFi/Ting guy mentioned?

    At least one of the council members is thinking straight: http://portlandtribune.com/lor/49-opinion/293931-170777-citizens-view-fiber-follies-part-1-too-many-risks-

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