Los Angeles opts for gigabit via unicorn to the home

by Steve Blum • , ,

The City of Los Angeles took the next step toward creating a city-wide, gigabit capable broadband system by issuing a request for proposal, aimed at attracting bids from companies or, presumably, other types of organisations that want to build and operate it.

Earlier this year, Steve Reneker, the city’s general manager of information technology, asked “are we creating a unicorn here?” The answer is unequivocally yes.

The RFP can be summed up as pay us for permission to build a city-wide gigabit network and then give service away for free. The city wants a gigabit-capable network that reaches pretty much every home and business in Los Angeles, plus WiFi coverage. As part of the deal, the winners would have to give away service for free to at least some households and to WiFi users.

What is the city offering in return? Not much. It’s offering to streamline permit processes, although applicants would have to pay for this “concierge” service, and make city assets available either at market rates or, in some cases, reduced initial rates that will ramp up over time.

The City of Los Angeles has two assets that might make this dream feasible: utility poles and ducts and a dark fiber back bone network, both owned by the department of water and power. Both are on the table, but with only minor concessions. For example, the city says it “is willing to consider reallocating space on [utility poles] to expedite access to [utility poles] by winning Proposers”. Otherwise, space on those poles is available on standard terms and conditions. In other words, except for maybe a more cooperative attitude from the city, there’s nothing that winning bidders would get that they can’t get any day of the week.

Dark fiber would be available in relatively generous quantities at a rate of $100 per strand per mile per month, ramping up to $250. However, the city is only willing to lease fiber in bundles of 12 strands, which means it’s really $1,200 per mile per month at the start and climbing to $3,000 per mile per month by year 8. And after year 10, all bets are off.

The deal Los Angeles is offering is less attractive than the minimum terms that Google Fiber wanted in its quest for compliant cities. It’s hard to imagine a credible bidder making an proposal that comes anywhere near what the city wants, unless incumbents like AT&T or Time Warner can see a way to use the city’s meager offer to enhance their existing business model.

The RFP process runs until mid-November.