Colorado to award contract for fiber highway condominiums

Jan. 1, 1999

Colorado to award contract for fiber highway `condominiums`


The Colorado Department of Transportation has announced its intent to award a contract to MFS Network Technologies (MFSNT--Omaha, NE), a subsidiary of Able Telcom Holding Corp., for a fiber-optic network that will run along Colorado`s highway system. While the partnership will be similar to those MFSNT has established with the states of New York, New Jersey, and Illinois, it will feature one unique aspect--the selling of excess duct capacity in what MFSNT is calling a "condominium" concept.

MFSNT will receive the right to install and sell capacity on fiber-optic cabling run in ducts laid along highway rights of way. The capacity sales will fund construction of the network. In exchange, MFSNT will give the Colorado Dept. of Transportation access to some of the cables for its own uses, according to Bob Sommerfeld, senior vice president of project development at MFSNT.

MFSNT will install as much as 1200 mi of conduit and cable, primarily along Interstate 70 east and west and Interstate 25 north and south. The network will include Denver, Colorado Springs, and Pueblo as well as smaller towns such as Craig and Durango. In fact, says Sommerfeld, it was the company`s willingness to go to all seven locations on the Colorado Dept. of Transportation`s list of sites that helped differentiate it from its three competitors for the award.

Like its experience in New York, MFSNT will have to line up carrier customers for the excess network capacity before it will be given the green light to start construction. Sommerfeld says four customers would be enough for the project to break even, although the company plans to line up at least six before the scheduled construction start date of this March.

Unlike the other state projects, however, MFSNT will sell the conduit space it installs, rather than lease it. The company is calling this arrangement a "condominium" approach, in that it is selling its ducts to its carrier "tenants" like townhouses. MFSNT will perform all of the installation and, most likely, maintenance services, says Sommerfeld. The carriers will be responsible for the electronics, although MFSNT will provide and maintain the electronics for the portion of the network allotted to the Colorado Department of Transportation. Vendors for the fiber and electronic equipment have yet to be determined; Sommerfeld expects MFSNT will install 8 to 24 fibers per duct using composite cable, with electronics driving the network at OC-3 (155-Mbit/sec) speeds.

The advantages of the condominium approach, Sommerfeld explains, include shared operations and maintenance costs (which should be reduced compared to those of other approaches), limited risk for each participant, reduced time to market, cost-effectiveness, maximized capital investment, and shared opportunity for revenue generation. The Colorado network should be completed by the end of 2000, says Sommerfeld. The potential value of the network could be more than $150 million, according to MFSNT. q

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