Most internet service providers, or ISPs, build the infrastructure they use to provide- and profit from- internet access to individual homes. This can result in companies selectively laying fiber in high-income or dense areas.
The City of Bloomington is solving the problem by making high-speed internet accessible and affordable to at least 85 percent of the city through an open-access model. This means a third-party company will lay fiber-optic cable throughout most of the city, and local internet service providers will lease the space.
Last month, the city announced a letter of intent to build the network with global investor, Meridiam. While no final contract has been signed, Meridiam agreed to invest $40 million in the project.
“One of the difficulties of internet service providers, at the same time being the infrastructure providers, is that there is a conflict of interest between the content you provide and the interest you have in the infrastructure,” said Nicolas Rubio, North America CEO for Meridiam.
Meridiam is a global infrastructure company with more than 100 investments around the world. It has a 15-year presence in America, with 14 projects and a headquarters in New York. All Meridiam’s projects are powered by 25-year funds and still owned by the company.
Rubio said the company’s experience in the financial and industrial industries combine to make a unique business strategy.
“The strategy of investing in projects that make sense, that show factual, social progress, that are helping society,” he said. “It’s difficult to be successful when you are long-term investor if you are not solving true problems.”
Rubio said this will be Meridiam’s second broadband project in North America, but the first in the United States. Columbus Mayor Jim Lienhoop said his city is looking to piggy-back on Bloomington’s agreement with Meridiam as well.
The company plans to continue investing in similar projects given the impact of COVID-19.
“Learning from home and working from home requires good internet access,” Rubio said. “Not having that good internet access creates an inequality between individuals, and most of all between municipalities.”
Nicolas Rubio (Courtesy: Meridiam)
While the ultimate goal is to open the network to multiple ISPs such as AT&T and Comcast, Meridiam will enter into a contract with only one initial provider for an undisclosed period of time. This agreement will help establish the network before opening it to other providers.
“In the future, it’s certainly possible that business like Smithville will be able to utilize that network to expand their reach further,” said Rick Deitz, Information and Technology Services director for the City of Bloomington.
He said an open-access model will help address local inequalities in ways ISPs are not.
“The first thing it will bring is modern, high-speed internet to everywhere in Bloomington,” Deitz said. “Not just the places that incumbent providers have invested in, where they think they can make the most money. “
Dietz said digital equity has been a priority of Mayor John Hamilton’s administration since he was elected in 2016. However, the city could not quite land a good partner until Meridiam.
He compared the process to corporate recruitment. In some ways, the city had to convince a company to invest in not only its land, but also all its people.
“They are actively putting those areas of our community that need help the most first, and that’s very much appreciated,” Deitz said.
An open-access model is not a typical method of receiving internet in the United States; it’s more common in Europe. However, cities such as Chattanooga, Tennessee, have succeeded with a similar model since 2010.
Last month, Hamilton said the project will provide a noticeable, yet affordable difference for Bloomington residents as soon as next year.
“Many of us have AT&T, Comcast- home speeds which may be 25 megabits up and down,” Hamilton said. “Digital fiber lets you gets 1,000 megabits up and down…and at that speed, it’s a very different kind of experience.”
Bloomington originally announced it would enter into a final agreement by the end of the year. However, Meridiam said it extended the date until Jan. 31 to better develop outreach to low-income areas.
