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Albuquerque Invests $1 Million To Provide Broadband Where Broadband Exists

May 1, 2015

CNE 1Albuquerque Journal News: “Santa Fe is certainly not an unserved area. CenturyLink, Comcast, Cyber Mesa, NM Surf and a few other smaller companies service the area.” (Emphasis added.)

Despite the fact city residents have several broadband options to choose from, the city of Santa Fe, New Mexico will invest $1 million in a joint public-private sector broadband network.

Even though the Coalition for the New Economy prefers public-private partnerships over outright government ownership of broadband networks, because Santa Fe residents have several options for broadband service, asking taxpayers to invest $1 million in this project is questionable. The partnership is also worrisome because the contract for the project did not go through the traditional bidding process.

There is also a dispute over the what the typical broadband speed is in Santa Fe.

While city officials contend the average download speed in Santa Fe is 5 megabits per second (Mbps), CenturyLink says it offers packages with download speeds up to 40 Mbps, a speed that is nearly twice the national standard for broadband service. The city said the 5 Mbps figure is “a median average of self-reported speed tests anyone can do online on websites like speedtest.net.” (As a reminder, 4 Mbps download speeds are sufficient to stream video.)

The discrepancy may indicate the majority of consumers in Santa Fe don’t use faster service to its full capacity and may not see the need for the city system once it’s up and running. (As CNE readers will recall, one reason government-owned networks suffer financially is that they overestimate consumer interest and, therefore, eventual subscribership.) Indeed, city officials told the Journal News, “A typical customer may not notice much difference …”

Santa Fe plans to invest $1 million in its network, which will be built in partnership with Cyber Mesa Telecom. The system is expected to come online July 1, 2015. The Journal News said the agreement with Cyber Mesa creates a new entity called SF Fiber, which will be “a wholly owned subsidiary of Cyber Mesa.” However, “if the city chooses to go with another operator when the contract expires in 2018, SF Fiber would be fully transferable.”

Originally, the city issued a Request for Proposal to find private sector partners for the project, but, according to the Journal News, “The city ultimately canceled that process, citing a clause in the procurement code that allows cities to skip the competitive bidding process when it involves a utility …”

That upended process reveals one of the other chief issues with government-owned broadband networks: that is, when the government involves itself in ownership, it doesn’t have to play by the same rules that apply to all other broadband investors. Instances of preferential treatment like this, unfortunately, are likely to keep other providers from offering service in the city and lost competition will hurt, not help, Santa Fe consumers.