Light Reading

Will Santa Fe Strategy Be a Message to Munis?

Jason Meyers

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
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. 
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.
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.
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. 
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.
User Rank: Light Sabre
7/18/2014 | 4:40:50 PM
Re: Separation and the City

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.


Mitch Wagner
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
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.
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
Steve Saunders provides an overview of white box networking and introduces a new "slim line" version of the OSI 7-layer model.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Custom TV
Delivering Service Agility in the Virtualization Era

11|25|15   |   5.41   |   (0) comments

Interview with Massimo Fatato, WW OSS Business Lead, Hewlett Packard Enterprise.
Wagner’s Ring
How Might Open Source Fail?

11|24|15   |     |   (7) comments

Open source, SDN, and NFV are looking inevitable – but performance, standards proliferation and regulatory capture could derail the movement.
LRTV Custom TV
NFV Lifecycle Orchestration – a Fresh Vision for Telco

11|23|15   |   6.40   |   (0) comments

Simon Osborne, CTO Comptel, and Heavy Reading's Caroline Chappell reveal the business impacts of new SDN and NFV, and what the term service orchestration actually means. Together they define Lifecycle Service Orchestration and how the virtualized future will look for telecoms operators.
Between the CEOs
Cisco's Virtual Role in Saudi

11|20|15   |   12:15   |   (1) comment

Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
LRTV Huawei Video Resource Center
Huawei Leads With Kubernetes for Cloud PaaS

11|19|15   |   08:26   |   (0) comments

Huawei is looking to Kubernetes as a key tool for building robust open source technologies for customers and partners, said Ying Xiong, chief architect of cloud platform at Huawei, in an interview with Light Reading West Coast Bureau Chief Mitch Wagner at the recent Kubecon conference.
Women in Comms Introduction Videos
WiC in London: The Highlight Reel

11|19|15   |   5:33   |   (1) comment

NetCracker's Mervat El Dabae headlines an inspiring morning in London with help from leading women from Vodafone, TalkTalk, Hyperoptics and Ciena.
LRTV Documentaries
Why Saudi's So Hot for New Tech

11|19|15   |   05:07   |   (0) comments

Light Reading's Steve Saunders reports from Saudi Arabia, a hyper-competitive market desperate to embrace the next generation of communications technologies and services.
LRTV Custom TV
Why Data Models Deliver More Value Than Information Models

11|19|15   |   5.08   |   (0) comments

Stefan Vallin argues that more automation is needed to manage end-to-end services and the hybrid networks they run on, and that data models are key to achieving this.
Telecom Innovators Video Showcase
SDN Management & Orchestration in the WAN

11|17|15   |   7.20   |   (0) comments

Carol Wilson and Packet Design CTO Cengiz Alaettinoglu discuss CSPs' SDN service delivery and assurance requirements. Learn about a modular approach to building automated control, orchestration and management functions for the WAN that are policy- and analytics-driven.
LRTV Custom TV
Flash Networks: Optimizing for Radio Spectral Efficiency

11|17|15   |   3:34   |   (0) comments

Today most optimization vendors only focus on optimizing voice or data. Ofer Gottfried, Flash Networks' CTO, shows how improving data throughput and maximizing spectral efficiency reduces capital and operating expenses while also providing a platform for user engagement.
LRTV Custom TV
Making Pay-TV User Experiences Millennial-Friendly

11|16|15   |   6:42   |   (0) comments

The unique challenge of reaching and engaging Millennials is driving pay-TV video experience transformation that can include higher quality UIs, viewing of multiple content streams at once and seamless transitions between handheld devices and the television.
LRTV Huawei Video Resource Center
Huawei Electric Power Summit 2015 – Addis Ababa, Ethiopia

11|16|15   |   1:28   |   (0) comments

Huawei, together with Ethiopia's Ministry of Water, Irrigation and Electricity, hosted the Huawei Electric Power Summit 2015 in Addis Ababa, Ethiopia. The event gathered industry experts and senior executives of global electric power companies to discuss emerging industry trends including: improvements in new energy conversion efficiency, reduction of line losses ...
Allot MobileTrends Report H2/2015 reveals how daily online behavior can be used to discover smarter ways to profile customers and propose valuable, real-time offers to them.
Hot Topics
Samsung to Sell Wireless Networking Unit?
Dan Jones, Mobile Editor, 11/23/2015
Sprint, Verizon Face Reorganization, Job Cuts
Dan Jones, Mobile Editor, 11/20/2015
Sprint to Get $1.2B From New Leasing Venture
Dan Jones, Mobile Editor, 11/23/2015
How Might Open Source Fail?
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/24/2015
Frontier Gives Telco TV a Boost
Mari Silbey, Senior Editor, Cable/Video, 11/24/2015
Like Us on Facebook
Twitter Feed
December 15, 2015
Virtualizing Cable Services
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
Mobily CEO Ahmad Farroukh talks to Steve Saunders about the realities of being a mobile operator in Saudi Arabia.
Cats with Phones
Can't Find the Phone on Thanksgiving? Click Here
Check under the cat! (hint: bottom right)
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and for copper plant evolution and the various deployment possibilities for FTTH/B.