City of L.A. to get fiber optic network in cash-free deal.

Los Angeles city government within the next 90 days will begin getting free access to a citywide fiber optic network -- considered the digital highway of telecommunications -- because of an unusual deal it struck in late March with a private company.

The new technology, which carries both voice and data transmission on one fiber-optic line, is considered as revolutionary to the telecommunications industry as compact discs were to the record industry.

Data transmission is about 50 times faster via fiber optics than via conventional copper phone lines, allowing entire files to be transmitted at one time. The move to fiber-optic phone lines also is part of a trend toward multimedia applications, which combine video images and telecommunications.

The Los Angeles City Council voted to allow Oakbrook, Ill.-based Metropolitan Fiber Systems Inc. to use a 13-mile, city-owned pipeline recently abandoned by Mobil Corp. to house part of a 58-mile fiber-optic loop Metropolitan Fiber is laying to serve as the "backbone" for a citywide fiber optic network.

In exchange for allowing Metropolitan Fiber to use the city-owned pipeline, the city will share ownership of the 58-mile backbone and connecting lines.

"We'll have enough fiber to light all of the city's needs and the capacity to lease to others," said Susan Herman, general manager of the Los Angeles Department of Telecommunications.

In effect, this means the city could compete with Metropolitan Fiber for subscribers.

The contract specifies that the city may use the network "in the best interests of the city," which does not preclude the city from directly competing with the company, said Herman. Indeed, the city has the option to do whatever it wants with the fiber optic network, she said.

"The city has been able to parlay a broken-down and abandoned pipeline into a 21st century fiber optic highway at no cost," she summed up.

The cash-strapped city could never have afforded a fiber-optic network for its workers had it not been for the deal it struck with Metropolitan Fiber, said Herman. Nor, she said, could it have been built so quickly.

The "backbone" loop, which extends from downtown L.A. to Glendale, Van Nuys, Westwood and back to downtown L.A., is expected to be up and running by June 1, said Kevin O'Hara, president of development for Metropolitan Fiber. The 13-mile section that will run through the city-owned pipeline extends over the Sepulveda Pass, from Westwood to Van Nuys.

O'Hara called the arrangement his company made with the City of L.A. "a deal that made good business sense for both sides."

Not only would it have been very expensive for Metropolitan Fiber to construct its own 13-mile leg along the Sepulveda Pass, but the construction would have substantially delayed the project, O'Hara pointed out.

Most U.S. cities impose franchise requirements on telecommunications companies, defining the terms and conditions under which they must operate within the city limits. But in California, telecommunications companies are franchised and regulated by the California Public Utilities Commission.

Therefore, the City of L.A. has no regulatory authority over Metropolitan Fiber but chose to enter into this deal for commercial reasons, O'Hara said.

Nonetheless, the city appears on the verge of gaining several benefits from the deal.

First, it will save the estimated $7.5 million to $9 million that Metropolitan Fiber is spending to build the 58-mile backbone. Second, the city will get free unlimited use of fiber-optic service once the network is operational. And third, since the portion of the fiber-optic network allocated for municipal use has capacity far in excess of what the city needs, the city can lease that excess capacity to outside companies.

The Los Angeles City Council is now in the process of deciding how the city should use its new telecommunications technology, said Herman.

Most of Metropolitan Fiber's existing clients are large insurance companies, stock brokerages and law firms. However, there are a number of fiber-optic applications from which governmental agencies could benefit, O'Hara pointed out.

He and Herman offered the following possible applications:

* Instead of transporting prisoners for arraignments, the courts could arraign prisoners through video conferencing. Video briefings could also be used to link the various police divisions.

* Students at an exclusive art school who wanted to take a math course could get a live course broadcast to them in a video classroom, rather than having to commute to another campus to take the math course in person.

* The city could pipe interdepartmental telephone traffic through its own lines, thereby reducing its monthly phone bill.

* Remote police stations could send fingerprints through the network.

* Data could be instantly transmitted and simultaneously edited by both sender and receiver.

* The city's social service agencies might even be able to make use of one of fiber optics' biggest growth applications -- teleradiology, or the transmitting of X-rays for analysis, O'Hara pointed out.

Metropolitan Fiber Systems, founded in 1988, currently operates fiber optic systems in 14 metropolitan areas in the United States and is considered one of the largest competitors to local exchange carriers. In L.A., the local exchange carriers Pacific Bell and GTE also offer fiber optic service.

Metropolitan Fiber's new network will not be its first such system in Los Angeles. The company set up a fiber optic system serving downtown L.A. in 1989, O'Hara pointed out, and it was "largely the success in downtown L.A. that motivated us to expand the reach of our network."