Decision Near On Entrepreneur's Proposed Fiber Loop

Patrick Kennedy wants to run fiber optic cables through city-owned underground pipes. On Monday night the city council will consider a deal that could make San Leandro attractive to high-tech firms.

 From his headquarters near the downtown BART station, Patrick Kennedy presides over OSIsoft, a high-tech firm that employs about 300 people locally out of workforce of 750 worldwide.

For 30 years, OSIsoft has been one of San Leandro best-kept business secrets.

Blame its arcane speciality.

OSIsoft collects and analyzes huge amounts of data needed to run manufacturing lines, fuel processing plants and power utilities.

Enter the fiber loop

But OSIsoft has become more visible in recent months as Kennedy has to run 11 miles of fiber optic cables through underground conduits owned by the city.

These conduits currently connect city facilities, transfer law enforcement data and run traffic signals.

Kennedy wants to snake fiber-optic cables, about the thickness of a quarter, through these city-owned underground pipes.

This would create a high-speed fiber loop along major arteries of the city.

Businesses that located near this fiber loop could get a large boost in Internet speeds, Kennedy said, adding: "In the relative scheme of things San Leandro has a fairly weak broadband capability."

A local information superhighway

Kennedy plans to operate this data highway through a subsidiary, San Leandro Dark Fiber. 

This private entity would spend $2 million to $3 million to run the fiber cables through the city's pipes.

Dark Fiber would then hope to sell high-speed access to software firms, data storage centers or other data-intensive companies.

"If we build it will they come?" Kennedy asked rhetorically.

He is betting the answer will be yes.

Council to consider long-term contract

On Monday night, the council will consider a contract that would give Kennedy a 20-year license to operate his fiber loop.

That license could be extended to as long as 40 years, five years at a time.

For the first 10 years, his Dark Fiber subsidiary would pay the city $1 a year.

After that, the city and the private firm would negotiate market rates for selling data transit services.

In return, the contract would give the city about 10 percent of the fiber capacity that Kennedy installs.

Jeff Kay, a business development analyst for the city, said San Leandro could use that capacity to provide high-speed access to libraries, other city facilities and possibly work with the school district officials to wire classrooms.

Kay said the city also has the right to license its capacity to other private entitites that might offer high-speed Internet access to homes or other users.

The city has spent about $10,000 in outside consulting advice in crafting the deal and has not added any new costs, he said.

A staff report recommends the council approve the contract.

Business community backing

Kennedy's plans has support in the business community.

"It's going to provide an incentive for businesses to locate here," said Jerry Garcia, a leader of the San Leandro Chamber of Commerce. "It's one of those things that could be transformative."

Kennedy said the city already has a good sewer system, excellent electrical services and access to transportation for goods and people.

Those attributes attracted industry to San Leandro in the past. But many of those older industries have relocated.

"This is the infrastructure to repopulate our city with the next generation of industry," Kennedy said.


David October 14, 2011 at 01:19 PM
Why should the city pay $3M (and probably $6M with union contractors) of our tax dollars to lay a cable a private investor is perfectly willing to do with his own/shareholders' capital? It actually seems like a pretty good deal, the city is getting $200k or $300K or whatever worth of capacity in return for him using room in an existing conduit.
Gayle October 14, 2011 at 02:37 PM
Exactly, David. They City does not have the money and Patrick Kennedy is willing to provide the capital. I think the City is brilliant to partner with Patrick Kennedy, who has San Leandro's best interests at heart. He's also a supporter of sustainable gardening practices. Our garden exchange harvested almonds at his property in Castro Valley - he's a genuinely nice guy
Gayle October 14, 2011 at 03:59 PM
Correction...we harvested walnuts.
Tom Abate October 14, 2011 at 06:56 PM
There's note of levity for one of those stories new biz people call DBI -- dull but important :)


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