Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports
if they are used for other purposes.
Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (
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attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.
2/5/06 HB
ANALYST Goodrich/Sánchez
APPROPRIATION (dollars in thousands)
or Non-Rec
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates HB 486.
LFC Files
Responses Received From
Higher Education Department (HED)
Office of the Chief Information Officer (OCIO)
General Services Department (GSD)
Synopsis of Bill
House Bill 695 appropriates $4,000,000 from the general fund for expenditure in fiscal years
2006 and 2007 to the board of regents of the university of New Mexico for the purpose of im-
plementing a dual fiber optic network infrastructure at the university of New Mexico related to
the national LambdaRail (NLR) project for expenditure during fiscal years 2007 and 2008.
The appropriation of $4,000,000 contained in this bill is a recurring expense to the general fund
of $1,000.0 per year beginning in fiscal year 2009. Any unexpended or unencumbered balance
remaining at the end of fiscal year 2008 shall revert to the general fund.
According to LFC files, LambdaRail is a consortium of 15 members. Each member has commit-
ted to pay $5,000,000 over five years to be a member. To date New Mexico has contributed
$2,000,000, the general fund has paid $1,000,000 and the universities have contributed
Senate Bill 695 – Page
$1,000,000; yet no entity in New Mexico has derived any benefit from LambdaRail because it is
not operational even though it was scheduled to be operational by the summer of 2005.
UNM proposes to create a non-profit corporation to charge entities for use of LambdaRail. The
state would also be charged for using LambdaRail even though it would be the major contributor.
It appears that K-12 and the state would not be able to use LambdaRail unless the network traffic
deals with research. There is one access point in New Mexico – Albuquerque; and one access
point in El Paso, Texas from which to access LambdaRail. There will be no other access points,
all traffic will have to go through Albuquerque. The only way the other research universities will
be able to access LambdaRail is through the Rio Grande fiber which is costing New Mexico
State (NMSU), New Mexico Institute of Mining and Technology (NMIMT) and GSD
$2,500,000 to lease fiber optic lines from Las Cruces to Albuquerque with an option to extend
the lines to Raton and for equipment.
The project appears to be a duplicate of the Rio Grande Fiber, a consortium of NMSU, NM Tech
and GSD project a subproject of Wire New Mexico, and of the fiber ring GSD has already de-
signed and is in the process of installing. Rio Grande fiber leases fiber from Level 3 who leases
it from Qwest long distance. NLR will also lease fiber from Level 3, but it is located on the op-
posite side of the railroad tracks.
According to the HED, the Governor and legislature in 2004 recognized the need for high speed
communications by funding the first year of New Mexico’s participation in NLR. This
$1,000,000 appropriation was the first of five yearly payments that would allow New Mexico to
plug into this national optical network. So far, the one-year subscription was a partial payment
of five years, or $5,000,000. The UNM on behalf of the state is a member of NLR. The NLR
membership fee is $1,000,000 per year.
According to LFC files, in 2005, no general fund was appropriated so UNM used $400,000 of its
internal funds, and NMSU and NMIMT each used $300,000 toward the second year membership
fee. Additionally, the $1,000,000 million annual membership fee is a perpetual fee that will have
to be paid with general fund and the proposed non-profit corporation to run New Mexico’s
LambdaRail might not cover the membership fee.
According to the OCIO, neither UNM nor HED submitted a business case or an appropriation
request to the OCIO for analysis and recommendation. Moreover, it is unclear from the lan-
guage of the bill how the appropriation or proposed infrastructure is in line with the State's IT
Strategic plan and how the infrastructure will merge with the GSD existing and future infrastruc-
According to the HED, NLR will enable New Mexico’s research institutions to more effectively
access needed information, communicate with each other and be a part of the global research
community. Vital links to the private sector that are an integral component of many research ef-
forts will also be created. The current statewide collaborative effort to acquire fiber up and down
the Rio Grande corridor will then allow high speed connection to NMIMT, NMSU and the Santa
Fe metropolitan area. Continued participation in the NLR will be a direct and relatively imme-
diate benefit to all the state’s research efforts, as well as provide a networking platform which
will help grow bandwidth intensive industries, especially film and media. Applications such as
Border Monitoring, Large Arrays, Digital Film and Tele-Medicine can also use this technology
Senate Bill 695 – Page
to each have their own network across the same fiber pair.
According to the GSD, oversight by the state Chief Information Officer (CIO) and the Informa-
tion Technology Commission (ITC) should be required to ensure compatibility with similar gov-
ernment-funded network projects. The proposal is ambiguous regarding the location(s) of the
infrastructure build. GSD is implementing a project to establish fiber capacity in many locations
in Albuquerque, specifically in the downtown area. If these routes and locations overlap, there
may be some degree of redundancy. In addition GSD questioned whether the technical design is
documented, how the network will be used, who would be the beneficiaries, and what protocol
will be used to manage the network.
According to the OCIO, NLR is a major initiative of United States research universities and pri-
vate sector technology companies to provide a national scale infrastructure for research and ex-
perimentation in networking technologies and applications. It appears that this funding request
will provide New Mexico research institutions (UNM, NMSU, NMIMT) access to collaborate
with research entities in the United States through UNM.
According to UNM’s IT Plan, $1,000,000 is to reimburse the three universities their prior year’s
investment. The IT Plan also includes a project for a fiber ring that will go around 505 Mar-
quette, 401 Broadway and 104 Gold for $992,000 that appears to duplicate work underway by
According to GSD, if the project were to conflict with state network architecture requirements of
the state CIO and ITC, there may be a negative impact on GSD operations.
According to the HED, the management of the New Mexico LambdaRail initiative could be done
by an independent non-profit organization board of directors, with memberships by the three
New Mexico research universities.
According to the HED, the current statewide collaborative effort to acquire fiber up and down
the Rio Grande corridor will then allow high speed connection to NMIMT, NMSU and the Santa
Fe metropolitan area. The technology will be "plugged into" by leveraging existing technology
According to the HED, to encourage participation, a cost effective pricing strategy will be im-
plemented that will cover the annual membership fee and the operational costs. The pricing strat-
egy is to have affiliates pay a fee according to a proposed fee structure. If an affiliate is also a
connector, that is an organization who provides connectivity to other affiliates, a bandwidth con-
nector fee would be assessed. This approach allows affiliates to pay for the bandwidth level that
they need while allowing New Mexico to increase the bandwidth of the NLR backbone connec-
tion as needed.
Senate Bill 695 – Page
According to LFC files, the state would also be charged for using LambdaRail. Additionally,
NLR can only be used for research purposes.
According to GSD, an alternative could be to lease from a local telephone company or establish
partnerships with GSD to maximize capital infrastructure and minimize duplication of effort and
Higher education institutions receive indirect cost revenues from federal contracts and grants.
This money is unrestricted in the sense that the governing board of the institution has the flexibil-
ity to choose which projects are supported with these funds. A great deal of this money is used
as seed money to develop new research and public services projects at institutions. A portion of
the indirect cost revenue, or earned overhead, is used to support items such as the salaries of the
accountants responsible for monitoring the contracts and grants, or for paying utilities and other
expenses required to maintain the space where the contract and grant activities are housed.
The higher education funding formula allows institutions to retain 100% of this indirect cost
revenue. One of the purposes of retaining these funds is to provide seed money and matching
funds for projects such as the one proposed in this bill.
Request that the $2,500,000 investment by NMSU, NMIMT and GSD be allowed as a property
contribution rather than requiring a cash payment.
The results of not funding this project would be that UNM would lose its seat on the board of
directors, its ability to connect to LambdaRail and the $2.0 million paid to NLR.
According to the HED, the first year's subscription (in 2004) to LamdaRail did not benefit the
state without a continued annual subscription to buy membership which costs $5,000,000. The
status will remain the same, and the research universities will continue to operate without the
high speed bandwidth.
According to the OCIO, consequence of not enacting this bill would be simply maintaining the
status quo.
According to LFC files, state research universities and other institutions of higher learning al-
ready use Internet2 for research purposes. Internet2 reaches a far greater number of state loca-
tions than will LambdaRail. Not providing additional funds will result in loss of a seat on the
national board of directors, the state’s initial $1,000,000 investment and the three research uni-
versities’ investment.