Light Reading
A municipal fiber network project in New Mexico is rife with controversy, from how it was awarded to the strategy it's following to whether the city needs to be involved at all.

Will Santa Fe Strategy Be a Message to Munis?

Jason Meyers
7/18/2014
50%
50%

A relatively small municipal network project in New Mexico has sparked some big local controversy, prompting cries of government favoritism, complaints about misuse of government procurement processes, and accusations of municipal ignorance about local competitive conditions.

Despite its size, the project and the ensuing debate could provide some valuable guidance for municipalities pondering network projects, as well as the network operators seeking their buildout business.

The situation stems from the City of Santa Fe's beliefs that despite the presence of several service providers, its residents don't have enough options for high-speed broadband service -- and that the options they do have are too expensive. The city considers incumbent CenturyLink Inc. (NYSE: CTL) to be a bottleneck that causes Santa Fe residents and businesses to get half the speed that nearby Albuquerque users get for the same price.

The culprit, city officials maintain, is a two-mile CenturyLink fiber route that extends from an optical regeneration and amplification site just outside Santa Fe into the city center. According to the city, the incumbent's control of that route blocks other carriers from buying affordable wholesale bandwidth and passing the lower costs on to customers.

"All of the Internet anyone can buy in Santa Fe goes to CenturyLink," says Sean Moody, special projects administrator for the Economic Development Division of the City of Santa Fe. "We're going to create the conditions for a competitive market to replace that."

The city's proposed resolution was to issue an RFP for a $1 million project the city believes will create more wholesale pricing competition, stimulating faster speeds and lower broadband prices for residents. The proposed project calls for a two-mile fiber pipe to run parallel to CenturyLink's, connecting the central office to a new, neutral co-location point for wholesale fiber providers and retail carriers. The project was authorized by Santa Fe city council as part of a capital improvements bond issue in 2012.

"The goal is to create a viable competitive wholesale market in Santa Fe," Moody says. "It will result in lower wholesale prices, which will create the condition for providers to provide higher speeds."

Controversial choice
Several operators replied to the RFP, including CenturyLink, Plateau, CityLink Fiber Holdings, and Cyber Mesa. The city selected Santa Fe-based CLEC Cyber Mesa as the sole contractor on the project, but only after it halted the procurement process for several months and then used a utility procurement law that allows the city to skip the competitive bidding process when selecting a utility service such as a water or power provider.

Moody said telecom falls into that category. John Brown, president and co-founder of Albuquerque-based CityLink, vehemently disagrees.

"The reason the loophole exists is to help save the city from unneeded costs of procurement, and it makes sense when it's applied as it's supposed to be and not abused, as it's being now," Brown says. "It's highly anti-competitive, and my personal opinion is that the attorney general's office needs to investigate."

CityLink submitted a plan to use the city's money to build a seven-mile fiber ring connecting parks and city buildings, from which it would extend fiber to the premises at its own expense, echoing its architecture in Albuquerque, Brown says. CityLink was told it was one of two finalists, but Brown believes Cyber Mesa was a shoe-in from the start and that the city is biased against his company.

"Cyber Mesa is the local hometown team," he says. "To a certain extent the city is pissy with us because we've threatened litigation to get them moving, and they don't want to have anything to do with us. This is New Mexico politics."

Moody maintains that the selection process was sound and used a three-person selection team of which he was not a member but only a facilitator -- a contention Brown calls "bullshit." "Sean Moody directed, controlled, and steered the entire process," he says.

Moody says CenturyLink told him not to waste money on the project, and Plateau's ideas weren't comprehensive enough. As for CityLink?

"He's selling gigabits to residences. That's a very good program, and I would love to see that in Santa Fe," Moody says. "If John Brown is alienated, it's because he feels he has a better program. He has an excellent program, but it wasn't what we were looking for."

CenturyLink, for its part, declined a request for an interview and would not respond to an email query about CenturyLink's own response to the RFP or directly address the contention that its fiber route into Santa Fe makes wholesale access unaffordable for other providers. David Gonzales, market development manager for CenturyLink in Albuquerque, referred Light Reading by email to the same statement the company provided to the Santa Fe New Mexican -- a statement that seems to at once lambast the city's approach and defend the Santa Fe market as competitive and open.

"While we believe that public broadband networks that compete directly with private industry are not the best use of taxpayer dollars, we support government initiatives to leverage existing infrastructure and extend broadband service to unserved areas," Gonzales wrote. "Consumers and businesses have a variety of choices when it comes to choosing an Internet provider, including cable, wireless and satellite providers. We operate in a competitive marketplace."

What's next?
Cyber Mesa, which won the project from the city, dismisses Brown's ire as "sour grapes" and says it is eager to get started on the buildout.

"We have a contract with the city -- signed, sealed and delivered," says Jane Hill, president of Cyber Mesa. "We're trying to get quotes from contractors and I'm working hard to get the first part of this project under budget. The less we spend, the farther we can extend the fiber."

Hill believes a fiber-to-the-home project like CityLink proposed shouldn't be the domain of a municipality anyway.

"Google can do that, but I'm not sure a government entity is well-suited to that kind of a project," she says. "The idea here is to start in a way that will bring in competition and offer better wholesale rates, and hopefully that will stimulate more development."

Beyond the fiber run, Cyber Mesa is also putting in a data center to give non-CLECs access to the network and put competitive providers closer to end customers, she says.

Under the conditions of the contract, the city has created a wholly transferable entity called Santa Fe Fiber to sell wholesale capacity. After four years, Moody says, the city has the right to designate an entity other than Cyber Mesa to operate Santa Fe Fiber.

"All of this was to fit into existing law and not compete with providers," Moody says. "We will never be a telecom provider and we will never be a CLEC."

Moody describes the solution as a "light touch" that is intended to encourage market-based solutions. Other municipalities have taken similar approaches, opting for public/private partnerships to promote competition and economic development rather than providing services themselves. (See Taking a Different Path to 1 Gigabit.)

"I want to keep intact the incentive for a fiber provider to build out their own network, or connect to anchor institutions, or increase broadband speeds using LTE or fixed wireless," he says. "I don't want to step on any market forces that are doing their jobs. It's the least thing I could do that I thought would create a viable market."

Time will tell whether the city's approach will indeed bring more broadband offerings to Santa Fe and drive market pricing down -- or if any of the jilted providers decide to file a lawsuit against the city, as Brown of CityLink believes will happen. ("I suspect at some point CenturyLink will take litigation action against the city over this," he says.) And depending on the outcome, one relatively minor municipal project could end up providing valuable lessons for municipalities about vendor selection processes, evaluating competitive bids, and how -- even if -- a municipality should get involved in the world of broadband competition.

Jason Meyers, Senior Editor, Utility Communications/IoT, Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
7/22/2014 | 1:12:22 PM
Re: Politics of technology
I contacted some of Jason's freinds, and at least one of them said he is a thing of beauty...

Here at Light Reading the editors all have 'beats', which identifies the topics they spend muich of their time delving into -- you can see a full list of beats along with editor profiles on the About Us page

About Us

And one of Jason's beats is Gigabit Cities, and the move towards faster fixed broadband infrastructure.

But all editors are required to write about anything at any given time, if it is interesting and important. 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/22/2014 | 8:36:33 AM
Re: Politics of technology
When I hear "IoT" the first thing that pops to mind is ... Jason Meyers. Which is weird, because Jason isn't a thing at all. He's just like us, mostly. But he is Light Reading's IoT POP.
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
7/22/2014 | 12:16:13 AM
Re: Politics of technology
My bad Jason. Somehow I had associated your name with IoT. My mistake. My apologies.
jasonmeyers
50%
50%
jasonmeyers,
User Rank: Blogger
7/21/2014 | 8:28:19 AM
Re: Politics of technology
nasimson - definitely not related to the Internet of Things - that is one of several areas I am covering. 
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
7/20/2014 | 2:02:06 AM
Politics of technology
There is more politics here than Technology. Or should I say the politics of technology. The develpoing world is ripe with such examples. Jason I don't see how this piece is related to Internet of Things.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/18/2014 | 4:40:50 PM
Re: Separation and the City
Mitch,

I think the only question that I have is why did it have to pay to have it done?  If there is so much business, why didn't the competitive market solve the problem?  The concern I would have is that the city just gave $1M to a local company.  I would think it could have bid the job and have companies pay for a job like it.

Just a question.

seven

 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/18/2014 | 4:18:25 PM
Re: Separation and the City
If Santa Fe -- or any locality -- isn't getting the service it wants from the private sector, it should be free to start its own. 
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
7/18/2014 | 2:26:28 PM
Re: Separation and the City
Bravo for Sante Fe. Talk of fast lanes and the Netflix-Comcast brouhaha, has convinced me that the idea of municpal/state-owned networks need to be seriously reconsidered. Such networks built and operated for the benefit of residents (and not just people viewed as customers) can be both profitable and provide better services.
jasonmeyers
50%
50%
jasonmeyers,
User Rank: Blogger
7/18/2014 | 11:37:01 AM
Separation and the City
Should municipalities get into the nitty-gritty of broadband competition -- especially in regions with a lot of competing providers already -- or should they take a backseat and focus on running their cities and towns? Setting aside concerns about how this project was bid out, the Santa Fe example seems like a relatively hands-off approach, though I'm fairly sure the existing providers won't agree with that assessment. 

 
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
1959 Newsreel: Make Phone Calls – From Cars!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/24/2014
Meet the Phantom Network for NFV
Ray Le Maistre, Editor-in-chief, 10/23/2014
Like Us on Facebook
Twitter Feed