After the Rancho Santa Fe Association signed a $13.5 million letter of intent with Hotwire Communications offering to bring 10 gigabit high-speed internet service to the community, there has been a lot of excitement but a lot of questions as well.
To help bring awareness to what services are available currently in Rancho Santa Fe, resident Lindsay Short arranged for Orion Cable CEO John Santhoff to give an informational talk at the Rancho Santa Fe Golf Club on June 1.
As disagreements flared up between residents, Santhoff and members of the Association board and tech committee, the meeting turned ugly with shouting and swearing. Short put an end to the disruption, reiterating her intent for a simple, informational meeting.
“I will not have this shocking behavior here this evening,” Short said. “This is a friendly neighborhood and you’re making it unattractive.”
Santhoff said that Orion has been offering services in the Ranch since 2006, as long as he has owned the company that he considers his “baby,” his business that he said he takes very personally. Santhoff said Orion already has an “extensive infrastructure” within the Covenant—including over 15 miles of underground conduit and more than 10 miles of aerial plant.
“The need for high-speed internet in the Ranch is not years from now, the need for high-speed internet is right now,” Santhoff said. “We have it in place and we could service the majority of the people (over 900 of approximately 1,600 homes). It’s 100 megabits right now and we could scale it to one gigabit in weeks and service over 50 percent of the homes.”
Santhoff said by the end of 2016 they will be up to 300 megabits and they could be up to one gigabit if they have a commitment from 1,000 homeowners.
“Not only is Orion Cable here and now but we are willing to work with the Association to build out gigabit internet to 100 percent of homes in the Covenant at no charge if the Association is willing to guarantee 1,000 subscribers,” Santhoff said “This is similar to the proposal currently on the table but our proposal requires no money.”
Orion did participate in the Association’s request for proposals on the broadband project but the company was not selected. As tech committee member and outgoing Association director Philip Wilkinson said, the offer that they were presented by Orion in November 2015 was not free but instead was $14.4 million for high-speed internet up to one gigabit.
“In your proposal, we give you $14.4 million and we get nothing back,” said Mike Licosati, tech committee member and Association director. “In Hotwire’s system we get 50 percent of the revenues back so this will essentially pay for itself in 10 to 15 years.”
Wilkinson said one of the reasons the Association did not select Orion was because of their concerns with Orion’s hybrid system of fiber-coaxial cable (“coax”) and its capability to deliver 10 gigabits “symmetrically,” meaning for both upload and download speeds.
Santhoff said that the reason the bid was for $14.4 million was because the Association could not guarantee subscribers in order to do the build-out of the system. When he saw that Hotwire was now being “guaranteed” 1,200 subscribers he said his numbers now work.
“I’ll do it for free if you’ll guarantee subscribers and, in my case, because we already have infrastructure out there, we can do it cheaper than anywhere else,” Santhoff said.
Wilkinson stressed that the Association has not guaranteed subscribers to Hotwire. He said that the Association itself has set a threshold of interest from 1,200 subscribers before they feel confident taking it to a community-wide vote.
He said they began outreach last week to generate those 1,200 subscribers — the hope is for the vote to occur in the fall.
Wilkinson said what their decision to choose Hotwire really came down to is the difference between coax and fiber because he said you cannot achieve cannot achieve 10 gigabits up and 10 gigabits down with coax.
“Cable cannot achieve the same upload and download speeds as fiber. It’s impossible to achieve in a distribution network like this,” said John Honker, from the Association’s consultant Magellan, noting there are factors with the community’s multiple distances and multiple nodes. “When we looked at fiber versus coax, fiber has a much higher tolerance for distance and a greater capacity to provide upload and download speeds.”
Santhoff disagreed with that assessment and said that DOCSIS 3.1, the latest coax technology standard, is deployed across the country and is providing gigabit data rates right now.
Honker said that it may achieve 10 gigabits on download but not upload and that coax only achieves the upload speed in “very specific scenarios very few and far between.”
Tech committee member John Ryan tried to explain the difference between the two in layman’s terms: “It’s a highway.”
“Coax is maybe a two-lane highway and as you add more customers, you need a wider highway,” Ryan said.
He said as more cars are added to the highway, it affects speeds. While Cox offers him 90 megabit speed, he sees more of a range of 60 megabits.
“What I notice is that if my kids are in town, I’m down to six, At peak internet hours, like on Friday and Saturday when everybody’s watching Netflix, mine goes down to nothing,” Ryan said. “Fiber offers a 20-lane highway, not a two-lane highway. So you may be correct in your assumption that coax can handle a gig or 10 gig but eventually people are going to want more bandwidth and they’re going to be more people jumping on the highway, which goes back to: we need fiber optic.”
While Santhoff and other residents have said there has been a “lack of transparency” on the high-speed internet project, improving internet service has been a discussion of the Association board for the last five years.
The Association first established an ad-hoc broadband committee back in 2011. The committee explored every option and met with Orion as well as Cox, Time Warner Cable, AT&T U-verse, AT&T Wireless 4G LTE, Verizon Wireless 4G LTE and also looked at the potential for fixed broadband wireless, satellite and other DSL T1 lines.
The Association’s new technology committee began its work in 2014, again meeting with a number of providers.
Updates on the committee’s progress were frequently provided at board meetings. Rancho Santa Fe faced challenges in that the major providers were only looking to build in high-density areas. Major providers were also asking that Rancho Santa Fe pay to build the infrastructure —basically paying for them to expand their business — without the Association maintaining control or the revenue sharing benefit.
In February 2015, the committee began exploring alternative options such as Rancho Santa Fe building and owning the infrastructure in a partnership with a provider.
Magellan Advisors was brought on to assist with the broadband project in March 2015 after a feasibility study was independently funded by Covenant residents Fred Luddy, Eoin O’Shea and Todd Mikles.
As part of their study, Magellan also completed a survey in which 500 Rancho Santa Fe residents responded.
In September 2015, Magellan recommended that the partnership model was the most appropriate for Rancho Santa Fe because it involved some buy-in and stake in the project as well as a long-term revenue source and more support for property values.
After putting the broadband project out for a request for proposals in September 2015, the Association received 11 responses and narrowed it down to the final two providers.
Updates on the committee’s progress were provided at monthly board meetings and the Hotwire letter of intent was approved at the board’s May 5 meeting.
Residents can learn more information about Hotwire at rsfcommunications.com.