Staff recommends approval of purchase request 42689 to Presidio Networked Solutions for hardware related to the communications utility system upgrade for a total cost of $127,919.56.
PURPOSE OF THIS PURCHASE
Communications is deploying two new kinds of equipment: two routers and one bandwidth management tool. Routers are the building blocks of the Internet. A router is basically a sophisticated computer that manages many connections between other computers. Routers that are connected by means of all kinds of wires, cables, radios and fiber optics throughout the world make up what we generically call the Internet. Although routers have a great deal of built-in information about where other computers are located, they are remarkably naïve in that unless specifically instructed otherwise, they allow any given computer to use as much Internet capacity as is available. A “bandwidth management tool” is another computer that knows how much Internet capacity each specific computer within a group is allowed to use. It allows each computer to only use its allocated amount of Internet capacity. When a good router and a good bandwidth management tool are put together, you have an efficient system.
When one of the City’s Internet customers attempts to access the Internet, the customer’s computer will first connect through the City’s fiber to our new bandwidth management tool. That tool will measure how much Internet capacity the customer is using and not allow the customer to use more capacity than what is being paid for. The bandwidth management tool will pass the connection on to our router where it will be marked for its final destination and sent on its way, out to the Internet.
The bandwidth management tool also studies each chunk of Internet data that a computer uses and knows in very broad terms what kinds of programs are using the data. It can speed up some connections like voice or video that needs to be connected in near real-time. It can slow down some connections, such as an old-fashioned file transfer, that can afford to be delayed a second or two. Or, it can just plain stop some connections, like capacity-hogging, borderline illegal music-sharing. All of that is broadly called “bandwidth filtering,” and the bandwidth management tool can be given very specific instructions about how to handle those different kinds of Internet capacity. Each customer can have different sets of instructions, depending upon how that customer wants Internet capacity handled.
The bandwidth management tool will also keep track of information about how much Internet capacity each customer uses and what generic kinds of Internet data each customer is using. That information can eventually find its way into various reports that will be available to our customers.
WHY COMMUNICATIONS IS DOING THIS
Communications currently offers Internet capacity at very expensive price points. We have taken steps to lower our prices and are ready to begin really competing in two markets for Internet business. First, we will compete for wholesale Internet bandwidth, selling to companies who sell smaller chunks of capacity to end-users. Second, we will compete for enterprise bandwidth, selling to somewhat larger companies who need to use the public Internet for various purposes and who need the kind of really good Internet connection that the City provides.
Although Communications already has two perfectly good, functional routers, we need a new one for two basic reasons.
First, each of our existing routers can only process a maximum of 45-million bits each second. This is called “throughput,” and would be stated as 45 Megabits per second, or 45 Mbps. That capacity is fine for our existing customer base which when combined only adds up to 28 Mbps (but, when we adjust our Internet prices downward, we think that some of our existing customers will decide to keep paying the same dollar amount and just sign up for more capacity. More significantly, we have a handshake agreement with a customer ready to buy 100 Mbps, which in itself would overwhelm our existing routers. We also have two other potential wholesale customers; each probably wants 50 Mbps. Within the next six months, we will bid on another very large enterprise opportunity of about 200 Mbps. The new router will have a rated throughput of 10-billion bits per second (also referred to as 10 Gigabits per second). This router will enable the City to earn significant new volumes of revenues from its Internet capacity line of business.
Second, each of our existing routers can only connect to the Internet at a rate of 100 Mbps. While we could buy multiple streams of Internet capacity, each at 100 Mbps, that would be very expensive. The optical equipment that connects the backbone parts of the Internet (to which the City will connect in the “upstream” direction) is available in versions that run at 100 Mbps, 1 Gpbs, 10 Gbps and 40 Gbps. The most economical upstream Internet connection for the City at this point will be a 1 Gbps connection. Our new router will be capable of doing that, while our old routers cannot.
We are buying two routers because a single router becomes a “single point of failure,” which introduces some challenges in selling wholesale Internet capacity. Wholesale buyers of Internet capacity place a high value on the reliability of their suppliers’ networks. We have given our supplier, Cisco Systems, our requirements, and they have engineered a pretty robust solution for us. If one of the routers fails, the other router picks up the load.
We also asked Cisco Systems to give us design that will allow us to initially deploy the two routers at a single location and subsequently move one of the routers to a different location but retain the same functionality. This will give us the flexibility to physically grow the Communications Utility network in a way that accommodates the geography of where we find customers.
Similarly, we have a bandwidth management tool that has the same limitations as do our routers: inadequate throughput and upstream connections that are too slow. Our current bandwidth management tool also has very limited abilities with regard to filtering Internet traffic. It further has extremely limited report-generating capabilities. With the new bandwidth management tool, we will offer advanced bandwidth filtering services at both basic & premium price points and custom reporting services, again at both basic & premium price points.
Cisco Systems engineered the bandwidth management tool with the same requirements in mind as for the routers. Although we are only initially buying and deploying one tool, it is a model that can be linked to others of the same model. The additional units can be deployed either at the same place as the first one, or at different locations. Although we are only buying one unit initially, it does not become a “single point of failure.” It is configured so that if it fails, the Internet capacity simply passes straight through. In that case, we lose the bandwidth management capability, but do not experience a loss of connectivity to the Internet.
WHAT NEW REVENUES COMMUNICATIONS ANTICIPATES FROM THIS
With regard to revenues to be generated through the Internet line of business, we are aware of specific opportunities annually totaling $75,000 for which the City can immediately compete. We are aware of further specific opportunities annually totaling $70,000 for which the City will compete within the coming year and other specific opportunities annually totaling another $75,000 for which the City will compete within two years. Other smaller opportunities will likely arise. Bandwidth filtering services and reporting services will give the Utility opportunity to generate incremental revenue.
In pursuing this line of business, the Communications Utility is further serving its fundamental mission of providing very high speed connectivity throughout Lake County at the lowest price points.
The purchasing division posted an invitation to bid on-line through BidSYNC.com as well as direct notifying vendors capable of providing the requested hardware. On Friday, July 30, 2010 two responses to the Invitation to Bid were received. The total bid amounts are summarized here.
Presidio has been determined to be the lowest responsive and responsible bidder. They have bid each of the necessary items as specified.
1. Approve the purchase request to Presidio Networked Solutions for a total amount of
2. Such alternative action as the Commission may deem appropriate
The cost for the purchase of hardware is $127,919.56. This project is budgeted in the upcoming 2010-2011 Communications Capital Projects budget at $104,611.00 (Router & Net Enforcer Bandwidth Manager). In order to complete the project in this fiscal year, the necessary funds will be taken from the Communications Utility’s fund balance. The final 2010-2011 budget will be adjusted to remove this project.
Prepared by: Mike Thornton__________
Attachments: Yes __X__ No _____
Advertised: __ Not Required ___X___
Dates: __________________ ________
Attorney Review : Yes___ No __X__
Reviewed by: Dept. Head ________
Finance Dept. _______JB_________
Deputy C.M. ___________________
City Manager ___________________
Account No. _045-5099-539.6410___
Project No. __450008_____________
WF No. _____WF0680339 / 001____