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City draws up Net solution ; CivicNet aims to bridge Chicago's big digital divide
Rob Kaiser
25 February 2002
Chicago Tribune
Chicago is dangling a carrot before a group of cash-starved telecom companies: A 10-year contract to provide all of the city's voice and data services, which should yield at least $31 million annually.
But there's a catch.
The winning bidder must engineer a dizzyingly complex networking task.
Chicago wants to string fiber to about 2,000 city-owned facilities, including every school, library, housing project, firehouse and police station. The city's hope is that once the network is installed, telecom firms will extend it to homes and businesses that otherwise wouldn't have high-speed Internet connections.
While other municipalities have undertaken similar projects, the scale of Chicago's effort is unprecedented. CivicNet, as the city calls it, will test whether local government can leverage its buying power to get firms to bridge the digital divide without entering the telecom business itself.
The project's complexity is apparent on a map showing the locations eligible for connections. With dots spread throughout the city, from a firehouse at 138th Street to an elementary school near Howard Street, Chicago appears to have been struck with a severe case of chicken pox.
Connecting those dots will require linking a mind-boggling maze of fiber, threaded through sewer pipes, under streets and along elevated train tracks.
While issuing requirements for CivicNet, city officials are largely looking to telecom executives to figure out how the project can be accomplished.
"We're cautiously optimistic that we're going to get some good models ... [but] if we don't, then we know either the timing wasn't right or what we're asking for wasn't right," said Chris O'Brien, Chicago's chief information officer.
Chicago, like other communities, is trying to address a problem that threatens to stifle economic development.
Businesses are increasingly likely to locate in places with easy access to high-speed Internet connections. Yet telecom companies, deterred by an industry slump and the complexity of building large networks, aren't lighting up fiber networks as quickly as communities would like.
"The way Chicago is approaching it takes that reality into account," said John Mazur, a principal analyst at research firm Gartner Inc.
Some utilities have constructed their own fiber networks, leasing out excess capacity to companies and Internet service providers, which in turn deliver it to homes.
In Tacoma, Wash., the city-controlled electric utility uses its own fiber network to offer cable TV as well as Internet service through other firms.
Tacoma Power began to construct its own fiber network because of problems with the local phone company in the 1990s and extended the service to businesses and residents.
Today, the utility uses the fiber to provide cable TV to 20,000 homes and, through other firms, links 3,200 homes to high-speed Internet service. Tacoma residents pay less for cable TV and Internet service because of the increased competition.
Diane Lachel, a Tacoma Power spokeswoman, said the competition lowered prices for residents. For cable TV service, she said, "they pay 20 to 30 percent less than people across the street in the county." The telecom network also contributed to 100 new companies coming to Tacoma, Lachel said.
Comparisons with Tacoma
The approach Chicago is taking is similar in some ways to Tacoma, particularly since CivicNet started by addressing the city's needs. Yet one big difference is that at the end of the project, the city will not own the network.
Instead, the city will seek as part of the contract to keep the network open to competitors. Yet as the deregulation of the telecom industry in 1996 has shown, opening networks controlled by one company to others is easier said than done.
"The Bells have been masterful in making it very difficult to get that last mile, and I don't see that changing," said John Eger, a professor at San Diego State University and chief executive of the California Institute for Smart Communities. "That's the kind of thing that could happen in Chicago. It's better if you create an infrastructure that is truly more publicly owned," he said.
O'Brien and other city officials are in the midst of a lengthy process to determine if the project is feasible and to select a lead contractor.
The city issued a list of 22 companies eligible to bid on the contract in December, following a qualification process. Bids from those firms are due March 29, though the number of actual bids will likely be lower than the number of eligible bidders.
Two bidders dwarf others
O'Brien said he expects between five and seven firms will make bids, though some people familiar with the bidding said that number could be as low as two: SBC/Ameritech and AT&T.
A two-horse race between these telecom giants could create a particularly tricky selection process for the city, and not just because Mayor Richard Daley's brother William became president of the SBC parent company in November.
SBC/Ameritech currently supplies the bulk of Chicago's telecommunications services, and with the city essentially asking the winning bidder to do more work for the same amount of money, some say the company will try to draw out the building of the network.
An SBC/Ameritech official denied that her company would seek to slow the project.
"We believe it is a good business decision to make high-speed Internet access available as broadly as possible," said Carrie Hightman, president of SBC/Ameritech in Illinois.
The city has stated it wants the network installed within 10 years, but AT&T will roll out the network on a faster timeline if it wins the project, said Steve Simmons, the AT&T executive in charge of its CivicNet bid.
Bidders are expected to pull together subcontractors, including construction firms and telecom equipment-makers.
After the bids are submitted in March, city officials will review them and issue a list of still eligible bidders, which will then submit more complete bids with financial details.
Eger said a particularly relevant precedent exists for government launching a technological infrastructure and private business widely disbursing it.
"In a way," he said, "that's what happened to the Internet." |
