Pacific Grove City Council steps back from negotiations for lightning-fast Internet.

Just over a year ago, Pacific Grove City Council made a deal with London-based SiFi Networks to install fiber-optic Internet cables through the city’s sewer pipes. The company announced it had selected P.G. as a California “FiberCity,” intended to showcase speeds of up to 1 gigabyte per second – 20 times faster than the fastest DSL connection – and the network would be installed by the end of 2015. SiFi would cover the construction costs, up to $40 million.

Turns out almost none of those promises were delivered. Construction isn’t on schedule, and under a restructured set of agreements, the city could be on the hook for some of the costs.

In a revised deal still under negotiation, City Manager Tom Frutchey says, SiFi would construct and install the network. Internet service providers such as AT&T and Comcast would pay the city for each customer who signs up, he says, and the city in turn would use that money to lease the system from SiFi for 30 years. When the term is up, the city would own the system. According to staff calculations, P.G. would net $1 million over 10 years.

SiFi representatives could not be reached by deadline.

Despite Frutchey’s recommendation to move forward, councilmembers were skeptical, voting instead on May 20 to continue the item to June 17 – with more details on the state of the fiber-optic industry, a more specific proposal and a clearer assessment of the city’s risks.

“I believe high-speed fiber optics would be really great for the city,” says Councilman Bill Peake, who voted to put off the decision. “I’m concerned with the city taking on financial risk.”

Councilwoman Casey Lucius cast the lone vote against giving SiFi more time. “When this initially came to us a year ago, the premise was, there was going to be no cost to the city,” she says. “But it turns out there will be a cost to the city, and we couldn’t even put our finger on what that cost would be.”

P.G. Chamber of Commerce President Moe Ammar says he spent hours with SiFi representatives back when they first proposed the deal. “And then they vanished, and they’ve delivered absolutely zero,” he says. “In theory it’s a great idea, but they haven’t been able to get [Internet] providers to sign on.”

Frutchey blames himself for the council’s hesitation, saying he didn’t take enough time to help councilmembers understand the relatively complex opportunity. “I screwed up, pure and simple,” he says. “It was too much for them to gobble up in one sitting.”