& cplSiteName &

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        ADD A COMMENT
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
From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Huawei Video Resource Center
    Digital Operation Transformation Roundtable Wrap-Up

    5|6|16   |     |   (0) comments


    Industry leaders at the Digital Operation Transformation Summit give their final thoughts at the roundtable.
    LRTV Huawei Video Resource Center
    Peter Sany on Digital Transformation

    5|6|16   |     |   (0) comments


    Peter Sany gives his view on digital transformation at the DOT Summit in Barcelona.
    LRTV Huawei Video Resource Center
    James McQuivey on Digital Transformation

    5|6|16   |     |   (0) comments


    James McQuivey gives his view on digital transformation at the DOT Summit in Barcelona.
    LRTV Interviews
    Courting the Apartment Crowd

    5|6|16   |     |   (0) comments


    In this LRTV interview, AT&T's Adrian Cardwell details the changing dynamics of the MDU markets and explains how AT&T is pursuing apartment dwellers with GigaPower.
    LRTV Interviews
    Demand Surges for On-Demand Ads

    5|5|16   |     |   (0) comments


    Ed Knudson, VP, Product and Strategy at Canoe Ventures, discusses the rising appeal of VoD ads and the challenges on inserting ads dynamically in live TV programming.
    LRTV Custom TV
    Exclusive: Video Interview With Sckipio CEO David Baum

    5|5|16   |     |   (0) comments


    At his headquarters in Tel Aviv, G.fast visionary David Baum, CEO of Sckipio, provided an exclusive interview to Light Reading and showed how innovations in rate and reach, vector densities, fast reconnecting times and SFP-based residential gateways are expanding the potential of G.fast.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (1) comment


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    Showdown at the OpenStack Corral
    Carol Wilson, Editor-at-large, 5/3/2016
    Upskill U Kicks Off IoT Lectures With Ericsson
    Kelsey Kusterer Ziser, Editor, 5/4/2016
    WiCipedia: 'Meternity,' Lemonade & Chores
    Eryn Leavens, Special Features & Copy Editor, 5/6/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.