San Leandro, a Bay Area city of about 85,000 bordering Oakland, is in the news for its fiber optic infrastructure policies. A recent article in the San Jose Mercury News describes how this post-industrial city is turning itself into a center for tech jobs and investment through cheap rents, streamlined permitting, and the ease and low cost of fiber connectivity for businesses in some areas of town.
We featured San Leandro in an episode of our Broadband Bits podcast last year, when Christopher spoke with San Leandro Chief Innovation Officer Deborah Acosta and a Lit San Leandro consultant Judi Clark. Acosta and Clark gave the details on San Leandro’s innovative public-private partnership, which combines smart public investments in conduits and “dig once” concepts with private investment in the actual fiber optic strands themselves. The city has been able to access fiber for it’s own needs at minimal cost, while some businesses have access to up to 10Gbps connectivity, either through privately provided lit fiber or leasing their own dark fiber.
As the Mercury News article notes, the fiber assets have begun to pay off. Several technology parks have taken up residence in the area, including a hub of 3-D printing companies, sharing space and ideas while taking advantage of incredible data transfer speeds. One entrepreneur quoted in the article describes the office park, located in a former car factory, as “the world’s largest cluster of 3-D desktop printer companies.”
The article also notes the growing awareness of San Leandro’s economic comeback, and the role played by fiber optic infrastructure:
“San Leandro is establishing itself as a city-scale lab for innovation. Only months ago, (it) was a relatively unknown Bay Area city,” said Greg Delaune, CEO of UIX Global.
Lit San Leandro, the private company that worked with the city to do the initial fiber runs, is apparently also in talks with other Bay Area cities on potential similar projects. However, it is worth noting that there is no plan for connecting residents and this model may in fact make it more difficult to expand residental gigabit access.
The business case for residential access is always hard but is improved when high margin businesses can be connected at the same time. But when high margin businesses have their needs met first, there is little incentive for a profit-maximizing firm to invest in connecting lower margin customers, a phenomenon called cream-skimming in economics.
Communities should understand there is no magic bullet in solving the problem of expanding high quality Internet access. Lit San Leandro is seeing success but may not be the best model for all communities.