Pennsylvania Turnpike Commission Considers Leasing Broadband System Along Toll Road

The commission is in the early stages of creating a public-private partnership that will result in a private company installing a broadband system along the 550-mile turnpike at no cost to the agency.

by Ed Blazina, Pittsburgh Post-Gazette / August 23, 2016
Experts applaud New York's new broadband expansion plan. Shutterstock

(TNS) -- The Pennsylvania Turnpike Commission wants to turn its internal communication system into a profit center.

The commission is in the early stages of creating a public-private partnership that will result in a private company installing a broadband system along the 550-mile turnpike at no cost to the agency. In exchange, the private operator would be able to lease excess space on the system to other private companies with communications needs and split a share of the profits with the commission.

“Our objective is to lower our operating costs and generate some revenue that can be used to improve the roadway,” said Scott Fairholm, the turnpike’s chief information officer. “We did some early market analysis. The level of interest is such that we think there will be a substantial interest to lease space.

“We can get our needs met for little or no cost and generate some revenue. We sort of get the best of both worlds.”

Other states such as Utah and agencies such as the Illinois Tollway Authority have leased part of their communications capacity, but experts say Pennsylvania’s approach to use it as a financial generator may be unique. Mr. Fairholm said it’s too early to guess how much revenue leasing could generate.

Right now, the turnpike uses a microwave system that uses a series of relay towers for all of its internal communications needs. That includes telephone service, radio communications among offices and maintenance workers, financial information such as toll collections, traffic cameras, electronic road signs, and the turnpike computer network.

But that system, which is in the middle of a $5 million upgrade, has nearly reached its capacity and has no opportunity to lease space to outside companies.

As a result, the commission received proposals last week from legal and financial consultants interested in advising the agency on how to get the best deal on a broadband system. The turnpike expects to choose consultants by the end of October and advertise for proposals from broadband operators by the end of the year with a goal of beginning a three-year phased construction in 2018.

A broadband system won’t have unlimited capacity, Mr. Fairholm said, but it “will have more capacity than we need for a long time.” In addition to a free communications system with the potential to generate revenue, the system also will allow the turnpike to prepare for future innovations such as vehicles that can interact with each other and receive information such as road conditions, Mr. Fairholm said.

There also could be an economic boost for businesses along the turnpike that take advantage of the opportunity to improve their communications with employees and customers.

“The transportation sector is rapidly evolving from bricks and mortar to a digital world,” he said. “There are plans for vehicles to talk to our roadway, learn the conditions ahead of them. There’s huge potential to improve safety and our customers’ experience riding on the highway.”

If the Illinois Tollway’s experience is any indication, leasing can be profitable. That agency generated $2.9 million last year from 33 leases it has with private companies and government agencies for cell tower or broadband space along its 292-mile system, spokesman Dan Rozek said.

Will Rinehart, director of technology policy for the nonprofit known as the American Action Forum that studies government operations, said the turnpike’s public-private partnership to use broadband for profit is “unique.” Potential lease customers include major providers such as Verizon and small businesses such as a vehicle towing company or a plumber with a dozen employees, he said.

Others questioned whether an exclusive contract with a broadband provider is the best idea.

Brent Skorup, a research fellow in broadband at the Mercatus Center at George Mason University in Virginia, called the leasing concept “pretty novel” but said the lack of continuous competition “makes me a little bit nervous.”

In Utah, the Department of Transportation uses its communications system — which links all municipalities — to trade for services, said Lynne Yocom, the department’s fiber optic manager.

For example, when the agency needed a communications link with a traffic light in Bryce Canyon, it gave a firm access to its system in exchange for a link to the signal.

“It’s important that they leverage their right of way,” she said. “They are at least being forward thinking. [An exclusive contract] just ties your hands for a very long time so I would be careful with that.”

Mr. Fairholm said the turnpike is confident with its approach but will rely on advice from the consultants it selects.

©2016 the Pittsburgh Post-Gazette. Distributed by Tribune Content Agency, LLC.