Communities upgrading their fiber optic connections and communication technologies to aid in economic development.
by Laurie Wink
In today’s world of high-speed communications, a fiber optic infrastructure is an essential tool for economic development in communities throughout our region. Cities that already have fiber optic systems, such as South Bend, are expanding their networks. Others, including Michigan City and Valparaiso, are earlier in the process.
Optical fiber, made of flexible strands of glass about the size of a human hair, sends pulses of light that transmit telephone, Internet and cable TV signals. It’s a reliable vehicle for relaying large amounts of data at high speeds over long distances at reasonable cost. For that reason, optical fiber is replacing copper wire as the communications material of choice, says Tom Carroll, senior vice president of sales and marketing for Nitco in Hebron.
“Fiber optics is a magic process,” he says. “It’s really driving the (telecommunications) industry. Copper lines have a limited capacity to carry information.”
Nitco, established in the 1890s, has grown along with the telecommunication revolution that has led to what is commonly called the “Information Age.” Carroll says a turning point came in 1965 with passage of the federal Telecommunications Act, which broke up telephone company monopolies and made affordable phone service widely available. Nitco, a small phone company at the time, received government funding to install telephone lines in previously unserved rural areas. Today, Nitco is among the companies installing and managing fiber optic systems to deliver phone, Internet, TV and security services. Nitco competes with large providers such as AT&T, Comcast and Frontier by delivering quality, personalized customer service and technical support to customers in Lake, Porter, Jasper and Newton Counties, Carroll says.
Nitco works with city officials to plan and install fiber optic infrastructures and manage customer service. In many cases, the city pays to create the underground fiber optic infrastructure and Nitco, or other companies, contract to manage customer service. Economies of scale allow municipalities to offer high-speed broadband service at lower rates than the major telecommunications companies, Carroll notes. “A lot of economic agencies are pushing data transfer as a key driver for economic development competitiveness.”
Fiber optic cable systems can be installed in the easements running along highways and toll roads–creating a literal information superhighway. Because cities own many of the easements, they’re key players in forming integrated networks that link to existing telecommunication service providers. Clarence Hulse, executive director of the Michigan City Economic Development Corp., says the city is taking advantage of fiber optic lines already running through the area from major hubs like Chicago and Detroit.
Steps are being taken to create a tax increment financing (TIF) district to fund a fiber optic pilot project along State Road 212 that Hulse estimates will take two years to become fully operational. Fiber optic broadband networks are an essential tool for all kinds of businesses, including those in the medical, customer service, financial, manufacturing and technical services fields, Hulse says.
“That’s the key to attracting more companies, if they know you have fiber in the ground,” he says. “Cities have sanitation and water districts to serve residents and now data districts are being seen as similar utilities,” he says.
Patrick Lyp became economic development director for the city of Valparaiso in January 2014. One of his first tasks was to figure out the fiber optic needs of existing businesses.
“It became abundantly clear there was a need for fiber connectivity at a cost-effective price,” Lyp says. “Some (businesses) have a greater need than others, but having reliable, cost-effective connectivity is now a requirement.”
For example, he says health care providers need fiber optics for videoconferencing and transmitting health records, x-ray and MRI images. When talking to companies thinking about locating in the Valparaiso area, Lyp says, “One question they ask is, ‘What is the fiber availability and what are the cost estimates?'”
Lyp says the highest cost in a fiber optic system is creating links from an area that isn’t already connected to one that is–known as providing the “last mile,” even though distances covered are usually more than one mile. Valparaiso is actually about 14 miles from main trunk lines that can link companies to large fiber data hubs, such as the one at 350 E. Cermak in Chicago–billed as the world’s largest data hub.
For the past year, Lyp has worked with a consulting company and an engineering firm to determine the capital investment, construction, operation and maintenance costs of constructing a fiber optic system in Valparaiso. Lyp told Northwest Indiana Business Quarterly he anticipates announcing the city’s fiber optic infrastructure plan sometime this summer.
“We have a stakeholders group that’s been engaged in the planning process to make sure what we’re doing is something they will buy into,” Lyp says. “Simply putting fiber into the ground doesn’t get you anywhere unless businesses utilize it.”
Lyp and other community leaders have looked to South Bend, an early adopter of fiber optics, as a potential model. In 2005, South Bend became the first city to install optical fiber in an underground network when it launched the St. Joe Valley Metronet system. Metronet now provides telecommunications connectivity to the cities of South Bend, Mishawaka and Elkhart as well as St. Joseph, Plymouth and Marshall counties.
The impetus for Metronet came in part from the University of Notre Dame’s need for high-speed communication. Businesses, medical providers and governmental offices also felt they were paying too much for the limited bandwidth available at the time, according to Mary Jan Hedman, executive director of St. Joe Valley Metronet.
“The city of South Bend was already a big player (in fiber optics) and absolutely saw the benefit of having local businesses have access to last mile service and for the city to provide better service to taxpayers,” Hedman says.
Because of South Bend’s proximity to Chicago, it already had a high concentration of optical fiber running through it. Hedman says, “A map of the carriers looked like many different colors of yarn running next to each other. The different strands were owned by different companies.”
Metronet provided connections to the Union Station Technology Center, a former train station that is described as a “carrier hotel” that connects local users to the major telecommunications providers at a central location. Optical fiber running along railroad easements is now transporting data instead of people, Hedman notes.
The Union Station Technology Center is operated by a private company owned by entrepreneur Kevin Smith. It’s one of four data centers operating in South Bend. Metronet is a nonprofit organization that leases its underground fiber optic infrastructure to users who pay subscriber fees that cover Metronet’s operating costs and network expansion.
“My job is to make sure the fiber optic infrastructure gets to the businesses that need it,” Hedman says. “We provide a robust carrier grade system that’s well-protected with built in redundancy so (subscribers) don’t have service interruptions.”
Leaders in Lake County are also looking to fiber optic connectivity to boost economic development. The Lake County Economic Alliance, in Merrillville, is the main point of contact for economic development opportunities. Karen Lauerman, president and CEO, and Don Koliboski, vice president of economic development, are in charge of the Lake County Economic Alliance efforts to develop a large, fiber-rich data center for Northwest Indiana. Such a center would provide low-cost access to major telecommunications carriers for 20 communities across the county, including Crown Point, East Chicago, Hammond, Merrillville and Gary.
Lauerman says communities were losing business prospects when they were operating independently.
“When consultants were looking for locations on behalf of a company, they had to do 20 different searches,” she notes. “Not all of the communities had their own economic development corporation, so [consultants]might call the mayor’s office then get bounced around to different city offices.”
Lauerman and Koliboski are former staffers of the Northwest Indiana Forum, an alliance of 130 member organizations that promotes economic development and job growth for the seven-county region. They understand that locating a business is a multi-million dollar decision that requires a detailed analysis of many variables. Today, one of the important variables is the existence of high-speed fiber optic connectivity, according to Lauerman.
“Fiber is the electronic highway,” Lauerman says. “If you think about fiber as roads, it’s a similar kind of thing to get data moving rapidly and efficiently at a cost savings. Northwest Indiana is at a great advantage because the convergence of fiber in this area is pretty amazing.”
Koliboski says the Northwest Indiana Forum created a fiber asset map for Lake, Porter and LaPorte counties that shows where telecommunications carriers connect to power substations. The information will be useful in pinpointing a suitable location for a fiber optic data center to serve the Northwest Indiana region, similar to the St. Joe Valley Metronet model.
Koliboski says, “We’re fortunate to be on the right side of Chicago, the fifth-largest economy in the world. Every major carrier goes through here.”
The Lake County Economic Alliance has been working with the city of Gary and the Gary Economic Development Commission to create a fiber optic data center called the South Shore Technology Center. The data center will be housed in the Gary State Bank, a century-old structure being renovated to attract businesses to downtown Gary.
By investing in fiber optic infrastructures, cities are attempting to boost their economic development prospects. They believe that the lighting fast, low-cost, high capacity information superhighways can ensure their ability to compete in today’s data driven marketplace. The advantages of optical fiber call to mind the iconic fictional character Superman, described in the ’50s TV series as “faster than a speeding bullet, more powerful than a locomotive and able to leap tall buildings in a single bound.” Optical fiber appears to be all that–and more.