Illustration By: Gaby Febland
Illustration By: Gaby Febland

Bringing Open Access Fiber Connectivity to Chicago

The pandemic, the recession, and Chicago’s broadband ballot initiative provide a unique opportunity to embark on an ambitious public works project

In the Weekly’s October 14 issue, City Bureau’s Lynda Lopez reported that in addition to public officials and a graduated income tax amendment, Chicagoans will also vote on a non-binding referendum about whether Chicago should ensure citywide access to broadband internet.

The referendum provides a unique opportunity to envision a more innovative way to connect Illinoisans—through investment in an open access broadband network. An open access network is one that is built and financed, usually by municipalities, communities, or through private-public partnerships, and then leased to private internet service providers, like Comcast or AT&T. Similar projects exist throughout the country, including in Washington State, Colorado, Maine, and Kentucky. The largest such network in operation in the United States is the Utah Telecommunication Open Infrastructure Agency, or UTOPIA. It was created in 2002 when a consortium of eleven cities in Utah along Salt Lake convened to create one of the most ambitious public works projects in Utah history. It began as a way for cities to install fiber optic connectivity to cities and lease Fiber-to-the-Home wholesale to existing telecommunications corporations. UTOPIA executive director Roger Timmerman likens open access networks to how roads, bridges, and airports are constructed by the city for residents, yet still allow for private companies like FedEx and UPS to conduct business.

UTOPIA has since evolved into a massive fifteen-city infrastructure body spanning Utah’s northeastern quadrant that offers services such as smart irrigation, traffic control, water meter reading, and air sensor controls to combat wildfires common in the area. However, the public company is mostly known for offering high-speed internet access that dwarfs the speeds offered by private Internet Services Providers, or ISPs. They range from 250 Mbps up to 10Gpbs, 10-100 times the speeds capped by companies like AT&T, WOW, and Comcast, which operate in Illinois.

One important caveat of these infrastructure projects is that they are not cheap, and it can be difficult to put a specific price tag on initial financing. Justin Marlowe, editor-in-chief of the academic journal Public Budgeting & Finance and a professor at the Harris School of Public Policy at the University of Chicago, whose area of research is infrastructure and municipal financing, pointed out that KentuckyWired, another open access network, had problems financing the service.

“It’s difficult to estimate what the demand is going to be once the service is up and running,” said Marlowe. “[KentuckyWired’s] bonds were way off. They were able to refinance, but it was much more modest.”

Timmerman believes that KentuckyWired also vastly underestimated the barriers. “Fiber construction is hard…they ran into all sorts of problems when it came to construction and permitting and then they had to change their designs.”

Estimates on the initial cost of UTOPIA range from $185 million to $475 million, when including interest and grants. In a webinar by UTOPIA’s C-level executives, executive director Timmerman explained that it took four years before the project became self-sustaining and for loans to be paid back. It is currently funded by revenue bonds paid for by subscribers through fees and dues. Such a system in Chicago would require municipal bonds like those issued for the construction and maintenance of toll roads.

According to Marlowe, financing such a network in Chicago is “possible, but knowing how to price it correctly is a challenge.” There’s also the issue of getting elected officials on the same page.

With UTOPIA, KentuckyWired, and similar frameworks across the country, the base cost for such a project rests in the hundreds of millions of dollars. UTOPIA also faced significant pushback from the telecommunications corporations based in Utah. In a 2003 New York Times interview, the former president of the Utah division of Qwest Communications, which has since been absorbed by CenturyLink, claimed that such a network was unnecessary, comparing the project to investing in a Rolls-Royce when a Chevrolet will do.

In a phone call, Kimberly McKinley, the chief marketing officer of UTOPIA Fiber, explained that in the beginning, the company battled CenturyLink for years in the courts, eventually settling with the company.

Timmerman said the bottomless funds that are at the disposal of lobbyists for companies like Comcast and Time-Warner have been a hindrance to developing the network. Organizations like the Institute for Local Self Reliance (ILSR) and Next Century Cities are only a handful of advocacy groups that can lobby for increased access to broadband, but in a limited capacity due to their lack of funds and their 501(c)(3) tax-exempt status.

Christopher Mitchell, director of the Community Broadband Networks Initiative for ILSR, mentions that the telecommunications companies and banks like Macquarie Capital and Partners, which underwrote the project and thanks to a deal signed by the previous governor were paid $93 million in penalties by the state when the project was delayed, are the reason that KentuckyWired has struggled. Said Mitchell: “There was too much risk on the public side and they haven’t hit the key milestones.”

Eighteen years after the project was introduced, McKinley asserts that the open access model has been crucial in lifting smaller internet providers that otherwise would never have been able to compete with the giants in telecommunications that have a near-monopoly in some regions of the United States. This has thus increased the competition in the private sector, resulting in lower prices and expanded access for consumers.

However, despite the predictable challenges that would come from introducing such a project to Chicago, this year the United States finds itself in a global pandemic that has created a recession. Interestingly, this provides the perfect opportunity to invest in such a project. There is a principle in Keynesian economics that states that when markets are in recession, the government must step in to create jobs and stimulate the economy. This is the same driving principle in the American Recovery and Reinvestment Act (ARRA) of 2009, commonly called the Recovery Act, which brought hundreds of billions of dollars into the economy for roads, bridges, and other infrastructure projects across the nation. McKinley explained that UTOPIA was one of the projects that received approximately $16 million in federal funds from the Recovery Act.

There is “no question broadband and access to broadband is a boon to communities,” said Marlowe. He went on to explain that the CARES Act passed earlier this year did provide some taxpayer dollars for IT infrastructure projects around the country. “Broadband is as good as any investment for economic recovery.”

As Lopez reported, Connect Illinois and Chicago Connected are plans that are already in place across Illinois and Chicago to provide internet access to underserved communities. However, these programs stick to the Federal Communications Commission’s current definition of broadband access as 25 Mbps download and 3 Mbps upload. McKinley argues that this is insufficient for today’s needs, especially considering stay-at-home orders that have drastically increased demand for at-home internet. According to a spring study by Kids First Chicago and the Metropolitan Planning Council, one in five Chicago Public Schools students lacks access to broadband at home, most of them Black or Latinx. In South Side neighborhoods where according to a 2018 WBEZ study approximately fifty percent of the residents lack reliable internet service, open access broadband would be a game changer—the difference between enough bandwidth to handle one spotty Zoom call or several in HD. McKinley maintains that UTOPIA’s model is scalable and durable enough to serve the needs of tomorrow; the same fiber-optic lines that were installed nearly two decades ago are the same that are in use today.

“In fact, it’s the most future-proof infrastructure out there”, Timmerman said. “Technology has made leaps and bounds over time, but the fiber…doesn’t have any foreseeable end of life. It doesn’t degrade like copper. It’s in a conduit and it’s in a really strong outdoor cable that doesn’t degrade.”

As far as the origins of UTOPIA, executives there are adamant in saying that the company was created, not by one single person, but by the city leaders in participating cities. “City leaders made it happen,” McKinley said. When asked if such a project can be launched in other places, she said: “Absolutely, it can work anywhere if you have the right team and the right dynamics around it. But I think this is an appropriate way for the future of broadband across the United States.”

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Francisco Ramirez Pinedo is a freelance web developer and writer based in South Chicago covering labor, tech/cybersecurity, politics, immigration, arts, and design. This is his first piece for the Weekly.

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