Fiber Optics Coming To City: A Closer Look

I sat down with  Commissioner of Finance  Michele Madigan’s deputy Michael Sharp to better understand the agreement between the city and SiFi.  SiFi is the company that the city has contracted with to build a fiber optic network throughout the city.

As a preface let me say that Michael Sharp is not only extraordinarily knowledgeable about the city’s finances and operations in general but is also just a very nice person.  Those cynics out there who carp about public employees would benefit from spending some time with Michael to learn that there are some exceptional employees in our city.

So the first thing to understand is that Spectrum will continue to serve the city.  More on the significance of this later.

SiFi has agreed to lay fiber optic cable so that it will be accessible to every home and business in the city.

Currently, the speed of Spectrum’s service varies depending upon where you live.  The speed of SiFi will be much faster and consistent throughout the city.

Spectrum’s design has two published speeds.  One speed is for downloading data/streams and the other is for uploading.  Currently their website offers three options.  They are 100/10, 400/20, and 940/35.  The first number is the speed of the download and the second is for the upload.  SiFi intends to offer service at a rate of 1 Gig both for uploading and downloading.

SiFi uses fiber optic method which uses light as the vehicle for carrying data.  As “speed of light” suggests, this not only has greater speed now but is the vehicle for greater speeds in the future.

Mike was kind enough to email me a follow-up on this:

As we discussed, as I understand it Spectrum’s internet speed capabilities differ across the City. So any City-wide comparison may be tough.  Regarding SiFi, they have discussed offering symmetrical gig speed, meaning 1GB both download and upload. Regarding upload speed, it is becoming increasingly important as people share high-definition pictures & videos, stream their own content, and utilize data heavy applications such as virtual reality, and as businesses upload content for clients, their own websites, and data recovery.

Commissioner Madigan is correct that fiber optic cable actually allows for significantly faster speeds, as it is light being transmitted over the cable. The future ability for speeds far in excess of 1GB is part of the reason we’re comfortable with the length of the contract, as this isn’t just cutting edge technology today, but will be for years to come.

Issue of ISP

In order to access the web, a user needs more than access to a cable, there must be what is known as an ISP (Internet Service Provider).  An ISP handles the method by which the user accesses the web.  This involves many issues.  For example, what resources the ISP makes available.  For example, Spectrum, in addition to access to the web,  provides cable TV and phone services.

It is important to note that the ISP is a potential bottle neck.  While the proposed fiber optic cable offers 1Gig rate, if the ISP is for some reason sending data over this cable at a slower rate than the 1Gig rate then the potential fiber optic speed would not be a factor. The upside to this is that not every customer wants, or wants to pay for, 1 Gig speed, so a SiFi ISP may offer a lower speed connection for a cheaper price.

Currently, Spectrum offers a full range of video that includes local television stations.  Unfortunately, as far as I know, there is no way of accessing the evening news or many other television programs via a website.  So while websites such as the one supported by WNYT (Channel 13 news) has most of its stories on line, the actual broadcast is not.  As there is currently no ISP for SiFi, it remains to be seen whether they are going to provide cable services that would include local television stations.

It seems reasonable to expect that in order to compete with Spectrum, an ISP working with SiFi would want to provide similar services.

SiFi has told the city that they are hoping to get at least two ISPs offering services through their cable.

The business model planned by SiFi is to charge the ISP for using the network.  It is anticipated that the ISPs will incorporate that cost in the fees it will charge those who subscribe to their service (us).  So at this point we have no idea what services will be provided or what the cost will be.

There are several things to consider about this.

SiFi would not be making the investment in infrastructure if they did not have confidence that there would be an ISP interested in their network.  Secondly, SiFi will need to provide an affordable service to be financially viable.  There is the possibility that in order to get rid of Spectrum, their competitor, they might charge a very low fee at the beginning.  Still, even if they eliminated Spectrum, they would still need to provide their service at a fee that would be attractive.  Bear in mind that Spectrum has enjoyed a monopoly and while their fees are considerable, they have still been attractive enough to maintain a large base of users.

The ISP, not SiFi, would be responsible for hooking up the homes and businesses of users to the SiFi network.  There would likely be a fee for doing this in addition to whatever ongoing charges there might be to use the service.

Currently, according to the Spectrum web site, Spectrum’s Standard and Ultra Installation Fee is $49.99, while the Spectrum Gig Installation Fee is $199.99.  I am not sure what all that entails.

SiFi has agreements with Salem, Massachusetts and East Hartford, Connecticut.  Both are recent agreements and these communities are apparently a long way from the actual services.

The central factor for deploying cable is density.  In order to make the project financially viable there must be a concentration of potential users.  The potential of a project for a company like SiFi is density.  Mike told me that downstate there are already competitive networks serving the same areas such as New York City and the suburbs.  Westchester, for instance, is supporting both Verizon FIOS and Optimum.

As far as we know, there is no comparable fiber network for communities of our size.

Mike explained to me that Commissioner Madigan, city attorney Vince DeLeonardis, and he worked on the negotiations with SiFi, along with City employees from DPW, Engineering, and IT.  He told me that they received excellent technical support from NYSTEC which is a not for profit that receives substantial funding from New York State in a addition to other grants and contracts to work with local governments and non-profits.

In their agreement, SiFi agreed to split the costs of a city position that would play the role of liaison with SiFi during the construction phase.

The agreement requires that the SiFi network be fully functional within 48 months.  As I understand it, SiFi plans to go operational incrementally as they deploy their network.

New technology allows them to dig a narrow and fairly shallow trench along the city’s right of ways and then cover it.  This technology means that they can do the deployment relatively quickly.

I view this project with great optimism.  Having fiber optic cable as a resource will add to the quality of life for the residents of the city and make businesses more competitive.

 

7 thoughts on “Fiber Optics Coming To City: A Closer Look”

  1. Good job keeping us informed.
    I was surprised to see our Mayor taking over the PR on the City Hall fire. I always thought the city’s buildings were under the purview of DPW. Our Commissioner is noticeably silent.

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  2. Download and upload speeds are completely controlled by the ISP. As noted in your article, Spectrum can provide 1 Gbps speed (business only, not yet to all homes in upstate NY) but comes at a high cost. This will be no different if/when SiFi is available, so it would serve us much better if the City put their focus on getting a lower cost service from the ISP. Only then will Spectrum respond with lower cost service (for the same data speeds). If the quality of service (reliability, speeds as advertised) is equivalent between cable and fiber optic, the user won’t care about the actual technology used, only how much it costs.

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    1. Henry–I was surprised at your comment about the Commissioner of Public Works. He was very much a participant in the TV news video Mr. Kaufmann posted about the damage to city hall and has been quoted extensively in the press.

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      1. I don’t subscribe to any newspapers, so maybe I missed Skippy’s comments about the fire. All the video that I saw, and all the online info had Mayor Kelly out front with the PR. Skippy “ya know” has never been much with PR, “ya know” so maybe you have some documentation of his remarks, or whatever. Not trying to be confrontational, just sharing my observations.

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  3. Letter published in the Saratogian — Thoughts ?

    Letter: Agreement could be costly for Saratoga Springs residents

    Posted: 09/02/18, 3:52 AM EDT |
    0 Comments

    Saratoga Springs residents should be urging its city council to reconsider a recently approved agreement with SiFi Networks to construct a citywide fiber-optic system. While Saratoga’s “Smart City” goals are commendable, this agreement raises very serious concerns for Saratoga Springs residents and businesses.

    There is not a demonstrated need for an additional network in Saratoga Springs, which is among the most connected cities in New York State. Residents and businesses have multiple wired and wireless choices for broadband service, and already have access to gigabit speed Internet. Successfully achieving the community’s “Smart City” objectives will require new investments in equipment, not construction of a duplicative network.

    Equally important, the agreement comes with significant financial risk and obligations for city taxpayers. If the project fails, city taxpayers will have to bail out the developer for its expenses plus a 10 percent “profit.” Meanwhile, the contract is for 30 years (double the period allowed for cable franchises under state law), with a company option for an additional 30 years, potentially locking the city into the agreement for more than half a century. The city will receive no franchise fees for use of its property, but will be required to provide open access to city infrastructure, and provide the company with rent-free space. The contractor won’t be subject to the obligations or liabilities applicable to other providers under the city’s laws, and the city waives all its rights if the company files for bankruptcy. Permit fees are waived, and the developer’s permits get priority review. For just $45,000 a year the city is also obligated to employ “a single point of contact” for the company. That’s right, the agreement requires a dedicated city employee who will address all system issues and serve as a resource for the company, a special benefit not offered to other businesses doing business with or within the city.

    This is a financially lopsided agreement for Saratoga Springs taxpayers. And even if this network is actually developed, it will be left to other, unidentified companies, to provide content, and install wired or wireless connections required for various “smart city” applications. All of this comes at additional costs and, frankly, could be done with existing network resources.

    This is a one-sided agreement with significant risks for city taxpayers, who should demand a second, more detailed, review.

    Kenneth J. Pokalsky

    Vice President

    The Business Council of New York State, Inc.

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