A Wild West Imbroglio Under the City

By Tech Bytes ANDREW WEBB Of the Journal

Less than a year after they took it over, a Wild West-style imbroglio has enveloped the operators of a Downtown Albuquerque telecommunications cable ring and a related data center.

In January 2006, local Internet businessman John Brown and real estate broker Mike Mattioli announced they had teamed up to buy parts of a 6-year-old, 4-mile-long ring of high-capacity fiber- optic cable linking about 20 buildings through city sewers. Their company, BCG Assets, aimed to continue the service provided by the ring’s builder, Maryland-based CityNet, and Albuquerque-based Oso Grande Technologies, which bought the entire ring in 2005 after CityNet filed for bankruptcy-court protection.

But the BCG partners sued each other and parted ways in September, each alleging the other owed money.

Then, in November, one of BCG’s customers, Prism Group Inc., sued BCG and Brown, alleging Brown had, in November, illegally entered a data facility he had previously sold to Prism and cut its connection to the ring and its Internet service.

Both Mattioli and Brown say that despite the flurry of lawsuits, the fiber ring has and will continue to operate successfully.

“It’s become very robust,” Mattioli said.

CityNet built the system in 2001 at a cost of about $3 million, using high-tech robots to snake the cables through Downtown sewer pipes. Backed by $100 million in venture capital, the company had contracts to do the same in cities across the United States, where it aimed to upgrade older downtown telecommunication networks with minimal trenching and very little disruption to traffic.

Several local Internet service providers, such as Albuquerque- based OneConnect IP, which also owns Las Cruces-based ZiaNet, signed on to offer Internet access over what, in the industry, is called “dark fiber” provided by CityNet. In the wake of a telecom industry bust in 2001 and 2002, CityNet filed for bankruptcy-court protection in 2005, and Albuquerque’s Oso Grande took over the fiber ring’s operation.

Almost exactly a year ago, BCG, backed by unnamed investors, took over maintenance and management of most of the system, touting its high-end capability as one of many enticements for companies to locate in the Duke City’s downtown. They said they paid about $1 million for 21/2 miles of the fiber ring, maintenance trucks and other related assets.

Mattioli is a broker at M2, which specializes in commercial development Downtown. Brown is a longtime Albuquerque Internet business person, who has run various service providers and sold equipment, such as telephones for voiceover-Internet protocol, or VoIP, service.

Another company operated in part by Brown, IXNM, offered Internet access over BCG’s ring. Brown and Mattioli also started a data and server “collocation” facility Downtown, called ServerCondo.

Prism, an information systems firm specializing in the travel industry, was a customer of ServerCondo, installing its own servers in the facility. It also got Internet service from IXNM over BCG’s fiber ring.

In August, Prism formed a subsidiary company to purchase ServerCondo, but continued to rely on BCG and IXNM for high-speed fiber access and Internet connectivity. According to Prism’s breach- of-contract suit, filed in Albuquerque’s Second Judicial District Court Nov. 21, Prism hired Brown to continue managing ServerCondo, but terminated his employment in early November.

Soon thereafter, the suit alleges, Brown asked for a 5-year contract between Prism and his companies, BCG and IXNM, to replace the monthto-month arrangement. Prism alleges Brown threatened to cut off their Internet service, which Prism estimated would cost it $100,000 a day in lost business. The suit also alleges Brown did, in fact, cut off Prism’s service for five hours Nov. 18 after the company did not meet his demands for a $30,000 lump-sum advance payment for 2007.

To do so, the suit alleges, Brown trespassed on property owned by ServerCondo, which was by then the property of Prism.

Judge William Lang issued a temporary restraining order in late November, barring Brown, IXNM and BCG from cutting service to Prism, and ordering Prism to continue to make monthly payments of about $1,300.

Brown and the plaintiffs are in mediation, Brown told the Journal. The case is still pending.

“It is IXNM’s opinion and BCG’s opinion that Prism Group was making use of our resources and not paying for them,” he said.

In an interview, Brown said BCG has expanded to serve about 26 buildings Downtown, and that a new set of investors had entered the picture. He said he and Mattioli have parted ways, but declined to detail their current business arrangement.

Mattioli sued Brown in Albuquerque’s Second Judicial District Court in November for unpaid debt, and Brown answered with a similar countersuit. Both are still wending their way through the court process.

(c) 2007 Albuquerque Journal. Provided by ProQuest Information and Learning. All rights Reserved.