Palo Alto, Provo Eye Muni Systems

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Two Western cities -- Palo Alto, Calif., and Provo, Utah -- are mulling the
prospects of fiber-optic overbuilds of local cable and phone companies.

Palo Alto has operated a two-year pilot program, offering high-speed-data
service to 90 local homes. Now, officials for the Bay-area community need to
decide whether to move forward with a possible extension, estimated to cost up
to $50 million.

A business plan prepared for the city by Uptown Services LLC of Greenwood
Village, Colo., gave an indication of the competitive forces a municipal
fiber-to-the-home project would have to overcome.

Palo Alto is home to Stanford University, and many residents already have
either cable-modem service from Comcast Corp. or digital-subscriber-line service
from SBC Communications Inc.

The plan projected that a municipal fiber-optic plant would not generate a
profit during its first five years of operation, but it could make enough to pay
off municipal construction bonds in 15 years.

Provo also has a broadband-feasibility study in hand from Peregrine
Communications.

The study found that Provo presents the opportunity to tap into one of the
highest per-capita PC penetrations in the nation. To reach them, the city would
have to compete with two cable operators: Provo Cable TV and Comcast.

On the telephony side, Qwest Communications International Inc. is the
incumbent.

Consultants estimated that a Provo municipal system could offer services at
rates 10% lower than the broadband incumbents. A municipal system would cost
about $37 million.

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