CC SR 20180605 F - Regional BroadbandRANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 06/05/2018
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA DESCRIPTION:
Consideration and possible action to authorize the Mayor to sign a letter in support of
the proposed request for proposals (RFP) for the South Bay Cities Council of
Governments’ (SBCCOG) regional broadband project
RECOMMENDED COUNCIL ACTION:
(1) Provide direction to the Mayor whether or not to sign the letter of support for the
RFP for SBCCOG’s regional broadband project.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Kit Fox, AICP, Senior Administrative Analyst
REVIEWED BY: Gabriella Yap, Deputy City Manager
APPROVED BY: Doug Willmore, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Draft letter of support (page A-1)
B. Regional Broadband Project Executive Summary (page B-1)
C. Diagram of South Bay “Priority Locations” (page C-1)
BACKGROUND AND DISCUSSION:
The South Bay Cities Council of Governments (SBCCOG) is working with the South
Bay Workforce Investment Board (SBWIB) to develop a regional broadband, fiber-optic
network. Through funding from SBWIB, a fiber-optic master plan was prepared by
Magellan Advisors to address the feasibility of a regional broadband network that would
connect to at least one city facility in each of the South Bay cities and play a pivotal role
in the region’s future. The executive summary of the Magellan Advisors report is
provided as Attachment B and the complete report is available by clicking here.
SBCCOG asserts that a high-speed capacity broadband network will allow the South
Bay cities to embrace the digital economy, smart city initiatives, integrated utilities and
next-generation economic development. Planning for these initiatives is a necessity to
remain competitive and differentiate the South Bay as a technology-savvy place to live,
work, play and learn. As more business is transacted online, broadband has become
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an even more important component to equip local businesses with the services they
need to compete and thrive in the digital economy. This master plan seeks to provide a
detailed blueprint for broadband and technology infrastructure to keep the South Bay at
the forefront of the digital economy.
SBCCOG is preparing to release a request for proposals (RFP) for this project, and
Councilmember Eric Alegria—the City’s SBCCOG representative—has asked the City
Council to consider supporting the RFP. SBCCOG has prepared a sample support
letter for the Mayor’s signature (Attachment A). As of the date that this report was
prepared, Lawndale, Rancho Palos Verdes and Rolling Hills Estates were the only
South Bay cities not yet supporting this project.
The estimated cost of a regional broadband system would be between $2.4 million and
$3 million. For Rancho Palos Verdes, the estimated cost to establish a “priority
location” at City Hall could be up to about $100,000 in non-recurring costs (NRC) and
up to about $3,100 in monthly recurring costs (MRC), depending upon data speed
(1 Gbps vs. 10 Gbps) and which cost-sharing option is eventually selected. The first
option is for total MRC to be divided evenly among the fifteen (15) SBCCOG cities.
Special construction costs would be paid upfront as NRCs by respective cities for
laterals to the backbone system. The second option is for special construction to be
financed and included in the MRC, which means there would be no upfront NRC. It is
worth noting that the costs projected for Palos Verdes Estates and Rolling Hills are
roughly double ours, while Rolling Hills Estates’ costs are project to be roughly one-half
of ours.
The proposed letter of support notes that it does not commit the City to “any subsequent
actions.” However, it is also worth pointing out that, without the participation of the cities
along the north side of the Palos Verdes Peninsula, the value and benefit of the City’s
future participation in the program may be limited due to the physical and topographic
isolation of a “priority location” at City Hall from the rest of the South Bay network
(Attachment C).
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative actions are available
for the City Council’s consideration:
1. Authorize the Mayor to sign the letter of support.
2. Do not authorize the Mayor to sign the letter of support.
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June 5, 2018
Kurt Weideman, Chair, Board of Directors
South Bay Cities Council of Governments
20285 S. W estern Ave., Ste. 100
Torrance, CA 90501
SUBJECT: Letter of Support for Regional Broadband Project RFP
Dear Chair Weideman:
The City of Rancho Palos Verdes requests that the SBCCOG Board authorize its staff to
issue a request for proposals (RFP) from data transport providers with fiber infrastructure
in the South Bay to assemble a “backbone network” that will connect facilities in each city
to an Internet point of presence.
This is a “good government” initiative with the potential to improve network services at
lower costs by purchasing collectively at wholesale prices, rather than the current practice
of cities purchasing individually at retail.
Continuing support for the fiber backbone initiative will depend upon the competitive
proposals realizing the potential for better service at substantially lower costs. Support
for issuing the RFP does not commit the City of Rancho Palos Verdes to any subsequent
actions.
Sincerely,
Susan Brooks
Mayor
cc: Rancho Palos Verdes City Council
Jacki Bacharach, SBCCOG Executive Director
Doug Willmore, City Manager
Gabriella Yap, Deputy City Manager
Kit Fox, Senior Administrative Analyst
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A
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South Bay Cities, California: Fiber Optic Master Plan
Executive Summary
The Digital Imperative: Business requires network services and skilled workers
The South Bay has the opportunity to create a new and inclusive economy; supporting quality of
life through workforce and economic development. By doing so, the South Bay mitigates the risk
of what some are calling the “new urban crisis.”1 Generally, this is seen as a gap between the few
who are doing very well and the many who are
struggling. The number of wealthy households
is increasing while the incomes of middle-class
households and college-educated have shrunk.
There are plenty of low-wage, low-skill jobs and
employers are struggling to find workers with
the skills for high-paying jobs. Housing costs
have increased with congestion, but the quality
of housing stock has not. A few organizations
excel with technology, but many struggle with
it. These gaps are the results of economic,
social, and technological megatrends, which
are swamping those communities that are
unprepared to get on top of the waves of
change.
The way markets and organizations operate is changing, and needs for connectivity and skills are
changing, too. Too many South Bay organizations have limited connectivity, expertise, and
solutions. Consequently, they are under-investing in technology, which puts them at a
competitive disadvantage. Organizations are feeling pressure from customers and competitors
to do more with technology, and they generally expect their technology needs will increase.
While limited business solutions and network services are issues, w orkforce
capabilities—from executives’ knowledge to IT experts’ capacity to workers’
basic digital skills—represent the critical barrier to additional investment.
1 Scholar Richard Florida, who foresaw the return of young “creatives” to urban cores, has a new book entitled
“The New Urban Crisis” that details the problem.
Bandwidth and connectivity are critical factors to
success in today’s digital economy. Business must have
them to move, share, and use data.
Manufacturing has led the way with automation,
computer-based design, and supply chain integration,
with business processes tightly integrated with electronic
processes.
Education and healthcare have digitized assessments,
documents, and records for students and patients.
Governments, non-profits, and service industries are
automating and transforming their processes via the
internet.
High-performing organizations simply cannot work
without abundant bandwidth. Communities that don’t
have it won’t keep businesses within the community.
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The Digital Inclusion: Creating Opportunity and Economic Development in the South Bay
The South Bay is geographically and economically positioned to significantly contribute to the
global economy. This report examines how and why the fifteen South Bay cities (see Figure
below) can create a region of digital inclusion that stimulates workforce and economic
development – creating a smart region built on a fiber-optic network infrastructure.
South Bay Cities
• Carson
• El Segundo
• Gardena
• Hermosa Beach
• Hawthorne
• Inglewood
• Lawndale
• Lomita
• Manhattan Beach
• Palos Verdes Estates
• Rancho Palos Verdes
• Redondo Beach
• Rolling Hills
• Rolling Hills Estates
• Torrance
Needs and opportunities for network services—among the cities, and with local businesses and
institutions—are considered in detail. Magellan Advisors conducted interviews and surveys of a
range of local business, civic, and technology leaders to provide the information within this
report. The availability of infrastructure and services were examined, in addition to the skills,
knowledge, and abilities necessary to build and maintain regionally-driven smart city systems.
These variables are consistent with technology-intensive company capabilities.
Magellan Advisors found a clear opportunity and strong reasons to interconnect the South Bay
cities. The cities can get more internet bandwidth for a lower per megabit rate, and the cities
can share systems and data to operate more cost-effectively. The network provides means for
the cities to interconnect their sites, provide public access, and even give local institutions and
non-profits more bandwidth for less.
A Vision of South Bay’s Digital Development
The vision for a Smart South Bay starts with the cities getting more bandwidth for less—the more
efficient use of resources to more effectively meet residents’ needs. From there, the vision is for
improved regional public-sector communications. Emergency services, public works, and
transportation will be faster and more effective, making residents safer, healthier, and less
stressed. Residents use the network to increase their skills and do new types of work, earning
more online. The full vision is of high-tech companies starting up, relocating, and growing across
the South Bay, fueled by the local talent pool and by ultra-fast broadband. In the process,
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businesses repurpose old industrial sites and revitalize the cities’ neighborhoods, and the cities
develop new technology-enabled revenue streams.
The South Bay’s Digital Infrastructure Costs
Current Network Costs by City
The South Bay has extensive network infrastructure but it is inconsistent and fragmented. Several
South Bay cities own fiber-optic, wireless, and other infrastructure, but some have only basic
connectivity. Much of the cities’ infrastructure is not interconnected to other network
infrastructure, including other cities. There are multiple facility-based providers with
infrastructure in the South Bay area but it is not consistently available or readily accessible.
The costs to get to and connect through a fiber network can be prohibitively high. Generally,
network infrastructure and services are more available on the west side of the South Bay, and to
the north. Eastern and southern South Bay cities have less infrastructure and fewer options. El
Segundo, Manhattan Beach, and Redondo Beach have made significant infrastructure
investments, and Inglewood is actively studying needs and opportunities.
City
Contracted
Mbps Actual Mbps Monthly
cost
Monthly cost per
Mbps
Down Up Down Up Down Up
Carson 100 100 100 100 $1,500 $15.00 $15.00
El Segundo 100 10 75 7 $531 $7.08 $75.86
Gardena 200 200 200 200 $2,600 $13.00 $13.00
Hawthorne 50 50 42 19 $3,7002 $88.09 $194.70
Manhattan Beach 100 100 93 42 $7,8003 $83.87 $185.71
Inglewood 1000 1000 850 750 $6,000 $7.06 $8.00
Rancho Palos Verdes 150 150 149 152 $275 $1.85 $1.81
Redondo Beach 100 100 40 38 $6,300 $157.50 $165.79
Rolling Hills Estates 50 50 49 46 NA NA NA
Torrance 308 317 54 54 $3,933 $72.39 $72.84
Averages $3,627 $49.54 $81.41
Total $32,639
2 The City of Hawthorne is currently contracted with two service providers for 50 Mbps circuits at rates of
$2,100 and $1,500.
3 The costs for Manhattan Beach at the time of the survey in 2016 were for a 50Mb circuit. In June 2017, the
City is transitioning to three 1Gb circuits at a rate of $1300 each for a total of $3900 per month. This results in
a 50% cost reduction while increase transport capacity by 5900%. Reducing the monthly cost per Mbps to
$2.30.
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Currently, the cities are paying about $50 per Mbps download and $81 per
Mbps upload per month.
Future Fiber Network Costs Models
Future gigabit services cost estimates range from $1.25 Mbps to $0.68 Mbps
per month for bandwidth from 1 Gbps to 10 Gbps and over one to three year
contracts.
Cost estimates to build out a fiber network with gigabit capacity that will connect South Bay cities
total between $2.4 million and approximately $3 million, and include non-recurring and monthly
recurring costs for a 5-year period. This initial cost estimate is based on current industry pricing
and assumes that one priority location within each city would be connected and that IP/transit
service capacities would range from 1 Gbps to 10 Gbps. The table below provides an estimate for
monthly recurring costs for 12 to 36 month terms.
Estimated Provider IP/Transit
1x10GE Port 12 Month Term 24 Month Term 36 Month Term
Price/Mb Total MRC Price/Mb Total MRC Price/Mb Total MRC
1Gb Commit $1.25 $1,250.00 $1.13 $1,130.00 $1.05 $1,050.00
2Gb Commit $1.20 $2,400.00 $1.08 $2,160.00 $1.00 $2,000.00
3Gb Commit $1.15 $3,450.00 $1.04 $3,120.00 $0.95 $2,850.00
4Gb Commit $1.10 $4,400.00 $0.99 $3,960.00 $0.90 $3,600.00
5Gb Commit $1.05 $5,250.00 $0.95 $4,750.00 $0.85 $4,250.00
10Gb Commit $0.85 $8,500.00 $0.79 $7,900.00 $0.68 $6,800.00
Initial cost estimates per city are outlined in the table below and are based on priority locations
provided by South Bay cities.
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Strategy for Creating a Smart Region: How the South Bay Can Get Smart
The South Bay cities can improve operations, spur economic development, and create new job
opportunities with a middle-mile regional advanced technology network. The overall goal is to
enable new, sustainable, technology-based economic development, to grow and keep high-
performing companies with high-paying jobs. The South Bay cities can almost immediately get
much more bandwidth and internet connectivity at a much lower cost per megabit. So, the
network makes short-term sense. The network is a platform for a range of smart community
applications to support quality of life and government performance.
The concept is to incrementally build-out fiber-optic connectivity—starting with the cities. By
beginning with connecting the cities to each other and to the internet via fiber-optic cables, the
region prioritizes its initial municipal needs with a longer -term vision of promoting economic
development and expanded smart city services . Initially, private providers build and run the
network. The cities jointly purchase data transport and internet bandwidth. As cities develop
their own infrastructures, starting with conduit and poles, they can spur private technology
investment. Benefits increase as municipal offices and community institutions are
interconnected. The infrastructure evolves into a publicly owned network to meet public
purposes parallel with private services for businesses and residents. The steps are:
1. Establish an agreement or understanding among the cities to jointly
purchase network services.
2. Identify additional network users and funding mechanisms.
3. Adopt broadband-friendly policies across the South Bay.
4. Request competitive bids to build-out and run the network.
5. Build-out a provider delivered network.
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6. Collaborate with private sector to launch smart community
applications, identify municipal revenue opportunities.
7. Integrate municipal infrastructure into the network and expand network
reach.
The network will give the cities much more internet bandwidth for much lower per megabit rate:
60 to 70 times more bandwidth at about half the average cost per city! The network also allows
the cities to better share data and resources for essential services, such as public safety. Initially,
the network is designed to connect one site in each city via a private provider, to be expandable
to serve a range of community institutions, including all local government facilities, and to
incorporate publicly owned infrastructure. The public infrastructure i nvestment can catalyze and
complement private investment to serve businesses and residents.
Much, if not all, of the initial cost of network can be covered by savings on the cities’ current
telecommunications costs. Bringing other network users in will fur ther spread the costs, making
it even more economical for each city. If funding can be found to deploy public facilities in key
areas, network reach and performance will be even greater and recurring costs will be even
lower.
N OW is the time for SMART -Net
Now is a prime time to begin realizing the vision of a smart South Bay. Much of the SMART-Net
can be provided by the region’s substantial but fragmented fiber infrastructure. Small,
incremental investments by the cities, made in a coordinated but independent manner, are an
economical way to enhance and extend the existing infrastructure. This opportunity may not be
available in the future as the market changes. At the same time, the cities are interdependent,
sharing many demographic, economic, and geographic resources. When a large employer has a
downturn, everyone is impacted. The South Bay cities have an opportunity to leap ahead
together, but are also at risk of being left behind.
Digital technology has transformed the economy. Many market leaders of yesterday are gone
because they could not adapt. The highest-earning and fastest-growing companies focus on
intangible assets—computer code, digital data, and electronic systems. They can virtually locate
anywhere with high-capacity networks. Highly adaptable and capable workers are the key factor.
Economic attraction and retention comes down to a simple reality . . .
You must have digitally skilled people and extensive network infrastructure.
Technically savvy people and companies simply will not go or stay anywhere
without lots of bandwidth and easy connectivity. Broadband ha s become a
utility that is necessary for work, play, and everyday living.
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6.06 The South Bay Fiber-Optic Master Plan.docx | June 2017
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Figure 22. High-level map of SMART-Net
The South Bay should incrementally evolve the network into a community-based owner-operated
network. The dual evolutionary paths would be (1) increased availability of publicly-owned broadband
infrastructure developed via BIIPs and (2) establishment of a broadband authority with the resources to
maintain and manage the network. As these paths converge, the initial SMART-Net provider can either
simply hand operations over to the broadband authority or continue as a partner, using the network to
sell network services to businesses and residents.
To initiate a discussion and more in-depth design process, Magellan Advisors began with the goal of
connecting one site in each of the fifteen South Bay cities (see). As Figure 22 and Figure 23 shows, SMART-
Net would interconnect the cities and provide access to numerous data centers and service providers. We
used data that Magellan has on file regarding service providers in the region to provide a model network,
including preliminary cost estimate. This is a speculative design. The layout and pricing are based on
limited information. Different providers are likely to implement this model in different ways. For these
reasons, the design is only a starting point for dialog about the SMART-Net concept and design, and the
costs should be considered rough estimates.
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