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Transcript: Community Broadband Bits Episode 47
Thanks to Jeff Hoel for providing the transcript for the episode 47 of the Community Broadband Bits podcast with Judi Clark and Deborah Acosta on the public-private partnership in San Leandro, California. Listen to this episode here.
Lisa Gonzalez: Hi, there. This is the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. And I'm Lisa Gonzalez.
Judi Clark, a consultant with Lit San Leandro, and Deborah Acosta, Chief Innovation Officer for the City of San Leandro, join Chris to talk about this unique public-private partnership. The project began when a San Leandro entrepreneur could not get what his business needed from the large incumbents. He approached the city with a proposal that's changing San Leandro's economy. Here are Deborah, Judi, and Chris.
Chris Mitchell: Welcome to another episode of Community Broadband Bits. Today, we're going to head out to San Leandro. And we're going to start by talking with Deborah Acosta, the Chief Innovation Officer for the City of San Leandro.
Deborah Acosta: Good morning.
Chris: Good morning. And we also have with us Judi Clark, a consultant with Lit San Leandro.
Judi Clark: Good morning.
Chris: I'm really glad to have both of you on the phone. Judi, you and I have talked about this a little bit. At first, I was a little bit confused, not sure if this was really a public-private partnership. But as I've learned more about it, it's definitely a very interesting model that I think people should be aware of. But I hope we can start by describing San Leandro a little bit, for people who haven't had the benefit of being out there.
Deborah: Sure. San Leandro is a city that is nestled midway on the east penins- -- on the east side of the San Francisco Bay, so between Oakland and San Jose. It's a town of about 85,000 people. Historically, this town's job base has been manufacturing. So we have about 24 million square feet of industrial space, built around 1940s to the 1970s. A lot of manufacturing. More recently becoming warehouse space, as jobs, of course, were outsourced to Asia and other areas. So, San Leandro also has a high -- a very -- an excellent retail base. We actually are the center of retail shoppers from throughout the East Bay. Which is great. We don't suffer for sales taxes, in terms of our retail. However, in terms of jobs -- looking forward to the future and replacing jobs --
Oh, by the way, we also have an outstanding residential community. Lots of wonderful housing. Developments. "Cute," is the way I often -- they're often described. Very -- great family structure, with tremendous support for the local elementary and high school systems. So, it's a town that really prides itself on its being a family. And that's part of the benefits, really, as we move forward into the 21st century. And part of the challenge. How do we move forward with 21st-century technology and still maintain that kind of family and neighborhood feel in San Leandro?
Chris: OK. And so, you -- you're both working on a project now, that's called Lit San Leandro. And I'm curious what the origins of this initiative were.
Judi: So, one of the companies in town, OSIsoft, is headed by man named Dr. Pat Kennedy -- Patrick Kennedy. He's been at this since -- so the company was founded in 1980. The global headquarters are in San Leandro. And he's got -- let's see, he's in over a hundred countries -- his software -- his company -- representation is in over a hundred countries. And 900 employees globally. And 300 locally. Being a software company, they had a real strong need for good Internet connectivity, both for the teleconferencing capabilities that they do, and also, practically, sending software, you know, to their customers. Sending updates. Being able to do in-cloud services.
So, a couple of years ago, it -- you know, it became a problem, that they could not get -- they could not buy from the existing providers -- the level of service of Internet connectivity that they needed. It just wasn't -- you know, typically, the services are asymmetric. They deliver download speeds, but what OSI needed was upload speed. And they couldn't -- you know, couldn't meet their business needs.
So, Pat came to the city, and spoke with the Mayor, a couple of years ago, first and the City Council second. And suggested that he start this project -- that he create this public-private partnership, using the city's existing conduit -- in-ground conduit. Then, using Dr. Kennedy's interest in providing good service, he would bring the private part of the public-private partnership, which would be a fiber-optic cable, through the city's conduit, to provide services as an economic development play for the business community in town. This is NOT about residents. It's really about serving the businesses.
Chris: Right. I remember meeting Dr. Kennedy at a net workshop in San Francisco. And it was a very -- at that point, it was in beginning stages. And, as I understood it, it was going to be dark fiber. Has that plan changed at all? Or is it still mostly aimed at the kind of businesses that know how to deal with dark fiber?
Judi: This is actually quite a unique partnership. Public and private, but there are two -- actually, two companies on the private side. There's San Leandro Dark Fiber, which owns the fiber, offers dark fiber as an option to companies that are big enough, and have the IT infrastructure, to be able to use dark fiber. But there's a second private company, as well, called Lit San Leandro, which is one of the things that we're talking about today. And Lit San Leandro is offering the lighting services. They work with the telecom providers, to -- any telecom provider that wants to -- to light the serv- -- to offer lit services -- Internet service provision -- to companies that need a package of that nature. They offer Internet service and also phone service.
Chris: OK. So, if I understand this correctly, then -- and I'm just going to take a step back. In Palo Alto, for instance, they have dark fiber. And in that case, in our investigations, we've found that it's just -- it's doing tremendously, but it's somewhat limited to companies that have the expertise and the know-how. And so, it sounds like, here, we have an iteration on that, and an improvement, in that you have conduit that's owned by the city, that's used by a partner of the city to get fiber optic throughout the conduit. And then you have this -- yet another partner, which is Lit San Leandro, which is, then, providing some of that expertise, to make sure that a variety of businesses can take advantage of it, not just the super-tech-savvy ones. Is that right?
Judi: Absolutely. And even more importantly, we're using the commercial community -- and other ISP providers, who can provide specific services. That's who Lit San Leandro actually deals with. So, Lit San Leandro is not the service provider. But they actually contract with service providers to provide the services to the business. So the business itself doesn't have to know what has to be done. The service provider actually provides the business.
Chris: Are you able to disclose any of the service providers?
Judi: Well, the main one with Lit San Leandro is CrossLink Networks. They provided most of the services in the area. CrossLink Networks is a non-dominant CLEC. So they are allowed to also provide phone services.
Deborah: And, in addition, we will be adding other service providers, as we discover needs that the business community has. And other service providers that can provide that particular service. So, this is not an exclusive with CrossLink. We will be adding more.
Chris: And I think this would be a good question for you, Debbie. Is -- what is the city getting in return for the partnership? The city has the -- owns the conduit. And it is letting -- I mean, obviously, there's benefits for job creation and for encouraging economic development. But, what else is the city receiving as a result of this partnership?
Deborah: Well, there's no question that in the early stages, there's a lot of MARKETING benefit to this. So, it is being recognized and increased nationally. I mean, Chris, you and I just met over at a broadband -- National Broadband Summit in Dallas, Texas. Whereas, a few years ago, why would the city have even had a presence there? So, Lit San Leandro is receiving interest about the unique public-private partnership. We've actually had a lot of presence in the press over the last few months. The FCC Chairman, Julius Genachowski, made a point of coming to visit here, to find out what this 10-giabit network was. And that was in the wake of announcing his challenge to the U.S. mayors that he'd like to see a 1-gigabit city in every state by 2015. So -- and our mayor said, does 10-gigabits count? And, of course, he was quite fascinated, so he came down.
Deborah: And so, on the heels of that, a tremendous amount of marketing. We also received an award by the San Francisco Business Times -- their most prestigious award. The 2012 San Francisco Business Times Real Estate Deal of the Year Award. Because basically what this is is infrastructure. And that's about real estate. So, marketing, of course -- especially free marketing -- is always beneficial, especially when it's very positive, and would cast your city in an innovative light. So, that's extremely helpful.
Now, of course -- but, of course, that's not the reason we did it. The reason we did it was because it's going to absolutely provide economic development benefits. So, as new kinds of businesses come in, and telecom business -- and telecom jobs, in particular -- studies have shown -- and I'm certainly reading a fabulous book right now called "The New Geography of Jobs" -- which verifies that the new technology jobs that are being created at least five and a half additional jobs are created because the salaries for those jobs are so great. Entire industries are built around it, especially in the service industry.
Chris: So -- and just to dig into that for a second, for -- to make sure people understand -- this is something that, actually, a colleague of mine, Stacy Mitchell, works on. And I might be taking this on a little bit of a tangent, but I think it's important. Which is to say, when you have those sort of jobs that require a high level of expertise -- that pay a lot -- those people, then, live in the area, they go to the local shops, and that money stays in the economy, because they're spending it locally. Right.
Deborah: Correct. Absolutely. Exclamation point! And so -- and then, in addition, as new companies come in and fill the spaces, that are not necessarily empty right now, but they -- as they come in, there will be -- these buildings will be put to a higher and better use. So, instead of a -- companies coming in and paying at warehousing rates -- which are maybe 85 cents -- 50 to 85 cents a square foot -- for some of these larger buildings, they could be repurposed into technology buildings, where, with the 10-gig fiber being pulled in, maybe now you’re looking at rents of $1.50 to $2.50 a square foot. That, in turn, leads to larger revenues for the city, in terms of our business license fees. As well as, again, new kinds of people in those buildings, who, increasingly, want to shop locally, who want to eat locally, who want to create -- go to bars, and art galleries. And it's a whole different kind of feel. And that's really where the cultivation of a health tech and innovation system comes in.
Judi: Chris, this is Judi. If I could just jump in, here, there's another thing, too, that's a little bit less obvious. Since we come from a manufacturing base -- an industrial base -- there's quite a few parcels of land that are about an acre or two acres between office buildings. And that hasn't had a lot of coverage. You know, there may be a copper line out there, or there may be a T1, which gives one and -- a little more than one point and a half megabits per second. One -- not -- you know, not even your DSL speeds. So if you get this kind of coverage out in those areas, you can't really do any kind of a modern business. And one of the things that this loop is doing is bringing fast gigabit service to some of these areas that are underserved, or more significantly, unserved, by the telecom incumbents. And by the cable incumbents. So we're really bringing new life to an old area.
Deborah: Right. Where you have an undeveloped piece of property, now you have the potential, as we are, right now, looking at a three and a half acre site next to our BART station -- or our rapid transit station -- that is being entitled, as we speak, for a 400,000 square foot tech campus. That would NEVER have happened before the fiber was put in. It just wouldn't have happened.
Chris: Right. There's always the option that that company could have pulled their own fiber, and could have gone to a lot of hassle. But why would they ever want to, if they could just find a location that already has it? It makes a lot of sense. Is the city also getting some level of fiber from the partnership?
Deborah: You betcha. The agreement -- the license agreement stipulates that of the 288 strands, that the dark -- the San Leandro Dark Fiber is pulling, the city gets 30 strands in this initial tranche. And then, in the future, for any additional expansions of it, the city will get ten percent of all -- of any of the fibers that are being pulled.
Chris: And I should have covered this earlier, but is there an interesting story behind how the city came to have all this conduit available?
Deborah: They built their own transportation network ten years ago. They were very far-sighted. As a matter of fact, we have a lovely room downstairs here in our City Hall, where you go into it and you can see cameras that have been placed all over the city, that is being fed by the fiber optic loop, where you can literally see the transportation links live. It -- the fiber optic loop also connects all the municipal buildings. So, yes. Far-sighted.
Judi: I have to agree with that. It really was far-sighted. You know, not every community in the East Bay had this vision. But we really did have some visionary people in charge some years ago.
Chris: That's always good. And we're trying to give some ideas to some visionary people today. It's never too late to start building those conduit systems.
Deborah: Well -- and then, the other thing that we have here is, we are developing an open-trench policy, Christopher. And that's important. It means, every time you turn over the dirt, for any reason, or you're drilling into the street, PUT IN CONDUIT. It doesn't matter that we can't light it up yet, or put fiber into it. Put it in. Track it. Eventually, you're going to figure out how it can be used.
Judi: There's one more thing, too. Jim Baller -- as many of your listeners know Jim Baller, the wonderful telecom legal analyst and lawyer -- he was wonderful at suggesting, at some point, that we also consider an open roof-top policy, that some of our buildings could benefit from -- being, when we put in a wireless point, to have a policy that would promote the open use of roof-top space for the purpose of serving other areas of the city, as a temporary measure, to try and, you know, build in a capacity while we're also trying to build in the physical infrastructure.
Chris: That's a good point. And I think that's often overlooked when we're talking about the conduit policies. I'd like to just push a little bit more on that in particular, and just ask -- what -- you know, I think -- maybe a different way of framing this would be to say, if I'm in a city -- if I'm in St. Paul, and the city has not been very proactive thus far -- is it enough to just say, OK, hey, public works, put conduit in the road whenever you're around, and map it? Or is there another level of planning that has to take place before you get to that point?
Deborah: Ideally, you'd want to understand -- especially depending upon your general plan -- where you want your pockets of commercial activity to go. So -- and we're talking, of course, about commercial activity. The fiber-to-the-home -- that's a whole different issue that I'm not even going to contemplate.
Deborah: ... ** huge. But there's no question that -- I know that we even get push-back from our own public works director here. He has been very -- he has been very, um, adamant with me that he doesn't think that that policy is actually a very conducive -- is not -- is a very beneficial one. Because he would like to see a plan. And there's no question about it, because every time you trench and you have to put conduit in the ground, it costs money. And, where's the money?
Judi: Yeah. It's a lot of money. It's not just a little money.
Deborah: But it's going to cost -- and my argument and push-back is, but if you have to open it again later on, to actually purposefully build out the fiber -- you know, the network -- it's going to cost even more money. You've already got the ground open. The conduit itself doesn't cost that much money. Put it in the ground. So, we definitely have to take this into Council, to develop a policy around it, and funding for it. And, yes, planning is optimal.
Chris: Thank you, Debbie. The -- I heard Judi say, as well, that the costs were significant. And I think, in this case, it helps to put a frame around that, because I think a lot of people aren't aware of how incredibly costly roads are. And my understanding is that, often, adding conduit to an existing road project is on the order of one percent. It's, often, sort of lost in the details.
Chris: And I don't want to minimize that, because budgets are tight and we don't want to waste any money that we don't have to. But I just want to see if you would agree with that, Judi.
Judi: Yes. Yes. We're building the superhighway. You know, we're building the highway to the 21st century. It's ludicrous, in my mind, to argue about that one percent. Put it in.
Chris: OK. So this is -- this has been terrific. And, as we head toward wrapping it up, there's one last area I want to touch on. And I think most of this conversation -- Debbie, you've been saying things that I typically hear from a "CIO" that's a Chief INFORMATION Officer. But your title's "Innovation."
Chris: And I understand that you're doing a number of things to not just make these connections available, but to build what you're calling a healthy tech and innovation ecosystem. And so I hope you can tell us about that.
Deborah: It -- everything's connected. So if -- for those of your audience who've read "The Tipping Point," after I read that, I realized, I'm a connector. I'm a dot connector. I see things and connect things in ways that other people don't necessarily see. So, while some may think, oh, well, as the Chief Innovation Officer for the City of San Leandro, your job description says, you're supposed to bring in, and attract, and retain, and expand companies, as an economic development initiative, with -- attached to the fiber. And my understanding, because I've been doing this work for a long time, it's not that simple. The tech ecosystem demands -- especially the workers demand -- a lifestyle. So, they want -- they don't want to drive cars. They're interested in sustainability. They want to live -- they're more comfortable in dense housing over retail, where they can go down -- wake up in the morning and go down and get their favorite cup of coffee. Or, in the evening, they don't want to cook dinner; they go to their favorite restaurant, or favorite restaurants, which are in walking distance. There is a sense of this co-working places -- places where techies can hang out, just for the heck of it, and be able to have conversations about current things. And ways of connecting. So it's that open economy. It's that shared economy. And a healthy tech ecosystem reflects that, at all levels, from infrastructure to where the people live. And having available **s that can move you there. And having interesting and cool things to do. Events. It's all part of that ecosystem. And we can NOT be successful unless we're aware of how important that is.
I love the Kansas City playbook. I learned a lot from that one statement, that, you know, a prospective Internet economy is 90 percent sociology and 10 percent technology. And I truly believe that.
Chris: Terrific. Are there any closing comments that you want to offer, Judi?
Judi: You know, thank you very much for reaching out. This is an unusual situation, not really one of the cookie-cutter implementations. And I think it's beneficial to take a look at this particularly unique kind of setting. So, thank you very much for that.
Chris: Absolutely. I'm excited, as well, that you were so open to share all that you're doing, and I really wish you luck. I'm sure we'll be looking in, to find out what benefits you've brought to the community, and what other communities can learn from you.
Deborah: Yeah. Check back with us in about six months, Christopher, and I'll bet you there will be more, and even more 12 months from now. But we're moving fast.
Chris: All right. That sounds great, and I have to -- I have one more excuse to try and get out to San Francisco again. So, thank you for that.
Deborah: Oh, we'd love to have you here. Come on down.
Chris: Thank you for coming on. You were terrific guests.
Lisa: Thank you to Judi Clark and Deborah Acosta from San Leandro, California. You can learn all about the project from litsanleandro.com , including more about the history, and about Dr. J. Patrick Kennedy, whose idea is bringing economic development to the City of San Leandro.
Send us your questions and comments. You can e-mail us at email@example.com . Our handle on Twitter is @communitynets . This show was released on May 21st, 2013. Thank you to Eat at Joes' for their song, titled "Eat at Joes," licensed using Creative Commons.
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