4 companies to vie for right to provide low-cost, high-speed Internet to Chicago

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Four technology companies will vie for the right to provide low-cost, “ultra-high speed” Internet service to seven Chicago industrial corridors, Mayor Rahm Emanuel disclosed Thursday, dangling “no or low cost” access to city assets to cut costs.

City streetlights and traffic poles, CTA and Office of Emergency Management and Communications fiber, underground freight tunnels, sewers and government building rooftops are among the assets that could be made available to potential bidders at “no or low cost,” City Hall said.

Respondents were also invited to bid on providing broadband service to the city of Chicago, with an annual price range of between $500,000 and $2.3 million.

The high-stakes competition has been narrowed to four companies after a “request for qualifications” aimed at demonstrating technological expertise and financial strength to forge a high-speed Internet partnership with the city: Lightower, Sunesys, Tilson and Zayo.

Emanuel hopes to succeed where former Mayor Richard M. Daley failed by leveraging city assets and Emanuel’s plan to rebuild Chicago’s crumbling water and sewer system and by dividing the city into seven commercial corridors instead of his original plan for 15.

Three of the zones are in the Central Business District: Loop, West Loop and River North. The four neighborhood zones are University of Chicago and Medical Center, IIT; Bronzeville, Pullman Industrial Corridor; and the Ravenswood Industrial Corridor.

Respondents are required to bid on at least one of the three zones in the Central Business District. They may also bid on “any combination” of the neighborhood zones. The company bidding on the most zones will get a leg up on the competition.

Each company must also devise a “community plan to provide an additional free or discounted broadband service” to a community or to several neighborhoods, City Hall said.

That may include “free wireless service to a park or public space, reduced pricing for residential broadband service in an underserved community or some other type of free or discounted service,” the city said.

In a press release announcing the next stage of the so-called “Broadband Challenge,” Emanuel noted that “gigabit-speed” service can cost up to $5,000 a month.

That’s out of reach for many small businesses and start-ups. So is the cost of “last-mile buildings connections” that can add another $300,000 to the overall tab.

Not only does the city hope to slash the cost of commercial, ultra-high speed service by anywhere between 50 percent to 80 percent. Lump-sum fees for last-mile building connections will be prohibited.

In 2007, Daley unveiled a similarly ambitious plan to build a wireless Internet system attached to streetlights and lamp poles.

The city’s initial goal was to create an alternative broadband service that could compete with cable, DSL and cellphone-based wireless service and drive down costs.

In exchange for paying Chicago a sizeable monthly fee and possibly a share of revenues, a technology company or group would have installed, maintained and upgraded roughly 7,500 small antennas on streetlight poles every one or two blocks at a cost of roughly $18.5 million.

That system would have given Chicago a sorely needed revenue stream and carried benefits far beyond the tens of millions it would have raised.

Instead of racing over to Starbucks to get wireless access from your laptop or paying a monthly fee to the phone company to get it at home, the Internet would have been available almost anywhere.

Rising costs, declining demand and increased competition from private Internet providers killed that plan, prompting Daley to settle for a far less ambitious plan to bridge the “digital divide.”

Daley declared four impoverished neighborhoods — Englewood, Auburn Gresham, Chicago Lawn and Pilsen — “digital excellence demonstration communities” to be flooded with technology to demonstrate the Internet’s “transformative power.”

Earlier this year, four of the City Council’s most powerful aldermen tried to re-open the debate with three major goals: provide “cheaper high-speed Internet service to consumers,” make Chicago’s business community “more competitive,” and generate sorely needed revenue.

They called for City Council hearings on the use of city buildings, light poles and high-speed fiber-optic lines to support a wireless network, citing the potential to raise millions to help solve Chicago’s $30 billion pension crisis.

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