Lit San Leandro — A Tutorial
I joined the City of San Leandro in February of this year, tasked with creating a demand for the lightning fast speed offered by the Lit San Leandro fiber optic loop and connect new and existing businesses to it. Created through a unique public/private partnership between the City and Dr. Patrick Kennedy, a 30+ year San Leandro resident, booster and founder/CEO of OSIsoft, the fiber optic loop presents the City with new economic development potential — but how does it work?
The Need: OSIsoft, San Leandro’s largest tech company, relies upon fast, synchronous speeds (upload and download speeds are the same) in order to conduct its business. Its business is its PI software, which enables its users to collect, analyze and visualize large amounts of data in real time. PI software is used in a wide variety of buildings, systems and businesses in 110 countries around the world, including PG&E, the Saudi Arabian pipeline, the Seattle Kingdome, and EBAY. For a great visualization of what PI does, check out this 60 Minutes segment entitled “The Oil Kingdom” filmed in 2008 — PI software manages the massive interior floor-to-ceiling digital screens in the Saudi Arabian Command Center detailing the fields-to-ships oil flow.
The Problem: OSIsoft headquarters, located on the edge of San Leandro’s Downtown, could not get the fast, synchronous fiber optic service that it needs to operate its business around the globe. Dr. Kennedy knew that the City of San Leandro had built out its own fiber optic network in the City-owned public rights of way (City streets) to serve the City’s transportation system. So he turned to the City leaders to see what could be done.
The Solution: In October 2011, the San Leandro City Council approved the execution of a License Agreement with San Leandro Dark Fiber LLC (“SL Dark Fiber”), a limited liability company created and owned by Dr. Kennedy. This License Agreement specifies the terms under which SL Dark Fiber is allowed to access and lease the City’s conduit (the pipe that holds the fiber optic cable) to house the fiber optic cable owned by SL Dark Fiber. In consideration for this Agreement, the City receives:
- a unique economic development tool: a 10 gigabit fiber optic network that holds the potential of transforming how San Leandro does business, creating new jobs, increasing business-to-business opportunities and growing revenues for the City through business expansion and attraction (note: the fiber optic network does not provide fiber to the home at this time, a much more costly project);
- ownership of 10%+ of all of the fiber pulled through City conduit: SL Dark Fiber pulls a 288 strand fiber optic cable, providing the City with unrestricted ownership of 30 strands of fiber;
- with some caveats, the right to collect market rate rents for the use of the conduit in Year 11 of the Agreement.
SL Dark Fiber owns the fiber, but is not licensed to actually use it. To be able to use the fiber, Dr. Kennedy then created Lit San Leandro, an Interexchange Carrier licensed by the California Public Utilities Commission. With this designation, Lit San Leandro contracts with SL Dark Fiber to use the fiber. In turn, Lit San Leandro leases the fiber to Competitive Local Exchange Carriers (as it did with CrossLink), or other types of companies authorized to “light up” the fiber. These Carriers are the “last mile providers”, providing services directly to the customer. The flow chart below illustrates the business relationships.
At this time, Lit San Leandro has contracted only with CrossLink to provide services directly to the commercial customer. Other services will be added in the coming months, adding new 3rd party providers to the Lit San Leandro fiber optic network.
The Lit San Leandro fiber optic network provides San Leandro with a unique economic development opportunity, and potentially a game changer if we learn how to play the game. Cultivating an ecosystem that encourages innovation and the use of technology — that’s a critical part of San Leandro’s journey that we are only just beginning.