Pa. Turnpike set to profit by selling excess broadband space
After years of planning, the Pennsylvania Turnpike is ready to make money — potentially tens of millions — by selling space on a new broadband system along the toll road in eastern Pennsylvania.
The agency has nearly completed two projects totaling $95 million to install fiber-optic cable under the berm of about 220 miles of the highway, split almost evenly between the main line from Harrisburg to the New Jersey border and the Northeast Extension. It purposely built the system with extra capacity and last week announced that a private company has begun marketing the excess space and will share 50% of the revenue.
The turnpike has been planning to upgrade its communication system for more than five years because the microwave towers it has been using have nearly reached capacity. The system provides a variety of internal services to the agency, including telephone service, radio communications among offices and maintenance workers, financial information such as electronic toll collections from E-ZPass users and Toll By Plate customers, traffic cameras, electronic road signs and the turnpike computer network.
The need to upgrade the system became more acute in May 2020, when due to the pandemic the agency quickly switched to a cashless, electronic tolling system to eliminate contact between drivers and toll collectors. That greatly increased the number of tolls recorded by the system as well as photographs of the license plates of motorists who don’t use E-ZPass and receive a bill in the mail for their tolls.
Before the pandemic, the agency already had approved contracts to install the new fiber-optic system, $45 million for the main line and $50 million for the Northeast Extension. Now, with installation scheduled to be done by early next year, the turnpike and its contract partner, Plenary Broadband Infrastructure, are ready to market space to operate broadband service to underserved areas along the turnpike corridor.
The agency approved a 25-year contract with Plenary last year for the company to maintain the turnpike’s portion of the system and market excess space to other operators. Plenary has partnered with broadband marketing experts Tilson and Tilson Infrastructure.
Wally Wimer, senior engineer project manager at the turnpike, said the fiber-optic cable will have eight separate channels to provide service. The agency initially will use three and have the option for a fourth, and Plenary will market the other four channels to outside providers, which could serve dozens of customers.
Wimer said the partners believe that many areas along the turnpike are not served or are underserved by broadband. The turnpike system either will fill a need or create competition in those areas, he said.
The agreement with Plenary will include a minimum guaranteed payment for the turnpike that is still being negotiated and the agency will receive 50% of the revenue from marketing. The agency and its consultant, Michael Baker, estimate that could amount to more than $100 million over the life of the contract.
Kat Chittenden, a spokeswoman for Tilson, said in an email that the partnership already has started marketing broadband space to internet service providers, wireless and wireline providers, municipalities, educational and health care networks, and large enterprises. Tilson will negotiate master agreements with customers who want to use the broadband space.
The cable will have access points every 2,400 feet. Tilson will create new ones if customers need them in other locations, Chittenden said.
With cable installation almost finished in the eastern part of the state, Wimer said the turnpike has started designing a similar system from Harrisburg to the Ohio border. That should be completed by 2026.
Initially, the turnpike wanted to enter a public-private partnership for the fiber-optic system in which a private company would have built the system, maintained it and marketed the excess space. When the agency wasn’t able to reach a deal that it thought was beneficial, it decided to build the system itself and then bring in a private company for marketing.
Plenary was one of the firms that submitted an initial proposal and continued to show interest in the marketing end after the agency decided to install the cable system itself.