Did anyone read the Smart Cities contract?
The Smart Cities contract creates enormous liability for Saratoga Springs. This first of two Smart Cities articles asks, “Why did our officials sign it?“
On January 7, The Times Union reported the City last summer signed a long-term contract with SiFi Networks to “design, install and maintain a fiber optic network” for Saratoga Springs. The article quoted Michelle Madigan saying, “I started the Smart City Commission and this is one of the main projects to come out of it.” On the surface this seems like a no-brainer – bring really fast Internet connectivity to Saratoga Springs to stimulate economic growth. Madigan claims the agreement “will come at no cost to the city while also lowering the cost of being connected because multiple providers can hop on the network, giving consumers a choice. “SiFi will interface with the providers,” Madigan said. “The more providers they have, the more competition it opens up.” If only it were so…
Let’s look at five main problems with the contract the city signed:
- The contract lasts for 30 years, with an option at SiFi’s discretion to extend the contract for another 30 years. It’s SiFi’s choice whether to continue the contract, not the City’s.
- If SiFi does not deliver, the City cannot terminate the contract unless they pay all SiFi’s costs, investments, plus 10%. Otherwise, the city must allow SiFi to continue trying and must pay a monthly fee for any working connection SiFi installs (even if it takes 10 years). So, if SiFi connects the DPW building, but not the Municipal building, the city must pay for the DPW connection, even if it does not connect to the Municipal building.
- SiFi has never delivered a successful installation anywhere in the US. Over the past 5 years, it has made many proposals, but none have been implemented – except Wichita, KS where three municipal buildings have been connected (the Saratoga contract calls for several hundred connections). To lay cable, SiFi plans to use micro-trenching, which inserts cable into a small grove cut into the street. A Canadian study concluded that micro-trenching was risky in cold regions and many installers will not use micro-trenching in the Northeast, because of the risk of frost damage every winter.
- There is no Service Level Agreement – no guaranteed up time. If a cable is damaged by frost or for any other reason, SiFi has 120 days to fix the damage and no obligation to provide an alternative connection while repairs are underway. If the damage affects the Municipal building, the building will have no computer connection for up to 120 days. If SiFi is unsuccessful in 120 days, they get to keep trying, because the City cannot impose penalties and performance fees, or terminate the contract.
- There is no guarantee that Internet providers will sign up to deliver household connections to you and me. The contract just requires SiFi to provide connections to the City. They are not obligated to even try to recruit Internet providers.
Ms. Madigan is quoted as saying, “”The city is fully cognizant of what we are doing. I’m not seeing the risks.” An inexperienced provider, 60 years of obligation, no way to terminate without huge costs to the City, no guaranteed level of service, no assurance households will ever benefit. No risks, fully cognizant?! Who read this contract?! Why was it signed?!