Los Angeles issues RFI for fiber and wireless broadband network

The City of Los Angeles has issued a Request for Information (RFI) from public and private entities interested in partnering with the City and/or interested in ultimately bidding to construct all or part of the Los Angeles Community Broadband Network (LACBN). Those who are interested in bidding for the project must submit responses to the RFI no later than JUNE 30, 2014, 2:00 P.M. (PDT). Please see the RFI for details. Anyone who wishes to submit comments may do so by sending an email to LACBN@lacity.org. The RFI is the precursor to an RFP that the City plans to issue at a later date. NOTE: You can view the main RFI document on Scribd.

The purpose of the RFI is to get information that will help the City draft an RFP for an ambitious citywide fibre and wireless network that will provide speeds of up to 1 Gbps at the same or at lower prices than most LA residents are currently paying. It also aims to address the “digital divide”: the glaring lack of reasonably priced broadband options in low-income neighbourhoods. Finally the City wants to improve broadband service to increase the productivity of LA businesses that rely heavily on high-speed broadband (for example, the tech and film industries).

The City knows that deploying citywide fibre and wireless high-speed broadband service is extremely expensive and time-consuming. There are 3 ways to build a large-scale wired and wireless broadband network:

(1) The city builds the network at its own expense and owns it, then hires a private firm to run it or offer services to residents and businesses.
(2) The city hires a private firm to deploy the network. The firm bears all of the costs of building the network and owns it. This resembles the Google Fibre project.
(3) The city will encourage one or more incumbents to expand their existing networks.

In the RFI, the City states that it is interested in the second and third options, meaning, it is NOT willing to build at its own expense a fibre and wireless network across Los Angeles. This is a shame, of course, because the ideal model would be for the city to build out a city-owned fibre network and sell wholesale access to private firms that will deliver service to residents and businesses. The city-owned fibre network can also act as backhaul for a wireless broadband network, again, with private firms delivering service. In this way, Los Angeles residents get a competitive market for wired and wireless broadband.

Given that the city is not seriously considering option 1, let’s go to the other options.

To encourage a private firm (as in option 2) or incumbent (option 3) to make the immense capital investment, the City states that it may be act as an “anchor tenant” and pay the private firm or incumbent an annual fee with a 10-year commitment for the City’s own use of the network. The City requires fibre connections to hundreds of public buildings. It already spends $100M per year on communications services. This looks more politically feasible, but runs into the usual “cable monopoly/franchise” problem that has plagued cities for years and only resulted in ever increasing fees for broadband service. It might be possible for a company similar to Level 3 (fibre) or Towerstream (wireless), or a combination of these firms, to build out a network and offer access on a wholesale basis to service providers who would in turn compete to sell broadband service to LA residents and businesses.

The most successful large-scale city-wide Wi-Fi network in the US — in Minneapolis — follows the second model, but bear in mind that this is a wireless network, not a fibre network. Minneapolis hired a local ISP, US Internet, to build a Wi-Fi network that ended up covering approximately 80 percent of the city. Although US Internet paid for and owned the network, it received an incentive to do so from Minneapolis in the form of a 10-year contract at $1.25M per year for the city’s own use of the network. The contract with Minneapolis lowered US Internet’s financial risk and allowed it to complete the buildout.

The problem with the model used by other cities which hired private firms such as EarthLink and MetroFi to build their networks (which eventually never got built or were closed down) without an anchor tenancy agreement is that the private firm was forced to take on all the risk and cost of the deployment.

The City of LA is especially interested in the Google Fibre model whereby a bidder agrees to deploy fibre broadband in an area if a certain number of persons commit to subscribe to the service.

To gain access to all of the RFI documents, you have to register online and download them.

If you simply wish to see the main RFI and perhaps submit informal comments to the City, I have posted it on Scribd: Los Angeles Broadband RFI.

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