Checking In on OnLight Aurora (IL)
Key Takeaways
- Since 2013, the City of Aurora, IL, has operated a middle-mile network utilized for institutional purposes and made available to third-party business and ISPs. However, the non-profit OnLight Aurora, tasked with leasing the city’s fiber to end-users, has consistently lost money, despite sizeable contributions from the city.
- Consistent losses are surprising since much of the fiber system’s debt was paid off using a Federal Highway Administration grant for a traffic signal upgrade that was unrelated to broadband service provision.
- The city, which is responsible for all operations and maintenance of the physical network, has been consistently propping up the system via millions of dollars in regular contributions, while receiving only token lease revenue from OnLight.
- The separation and limited accounting requirements of the non-profit OnLight entity, coupled with opaque accounting by the city of costs related to its fiber network, have obfuscated the fact that the network has struggled.
- Despite announcing its intent to expand the network and offer residential service, the city has been tight-lipped regarding its plans, timelines, and projected costs.
Background
The City of Aurora began discussing plans to build a broadband network in the early 2000s. The project was proposed as a “cost-saving measure,” to counteract high “leased line expenses” to private providers. Officials planned a $7.5 million fiber deployment project to be paid back in a “minimum” of ten years. After construction was completed in 2011, the city was awarded $1 million from the Illinois Gigabit Communities Challenge program as seed money to help connect customers and expand the network. The city also received a $13 million grant for a traffic signal upgrade under the Federal Highway Administration’s Congestion Mitigation and Air Quality Improvement Program. This grant paid off the remaining debt from the fiber buildout and enabled the network to be paid off ahead of schedule. This is notable since the FHA grant was unrelated to the network’s use for broadband service provision.
Performance
While network assets are owned by the City of Aurora, third-party access to the network is managed by OnLight Aurora, a “not-for-profit organization that was formed out of a technology task force organized by Aurora Mayor Tom Weisner in 2011.” Except for a few years where it received sizeable “contributions” (i.e., funding from the city or grants), OnLight has consistently reported negative net income, with its expenses higher than revenues from “program services.” In 2023, the system lost about $270,000. The system’s full financial history is captured in the table below.
It is difficult to know the extent to which the performance of the network has impacted the city’s finances because OnLight and the fiber network are rarely mentioned in city financial materials (e.g., annual audits; budget documents). However, per OnLight’s agreement with the city, all “maintenance and restoration” of the network are the responsibility of the City of Aurora, and reporting on some of these costs reveals the city has spent millions to expand, relocate, and maintain portions of the fiber network.1
The network’s only revenues to the city are a small cut of Onlight’s lease payment revenues (10% of recurring payments, and 20% of any one-time fees). For example, in 2023, the system received roughly $300,000 in “program services revenue,” meaning the city likely received around $30,000. Since these costs are in no way offset by payments from OnLight, which are probably in the low five-figure range, Aurora’s fiber network appears to be struggling.
| Year | Contributions | Program Services | Other Revenue | Expenses | Net Income | Net Income, Less Contributions |
|---|---|---|---|---|---|---|
| 2023 | $0 | $298,765 | -$247,555 | $324,563 | -$273,353 | -$273,353 |
| 2022 | $28,662 | $383,729 | -$97,985 | $355,372 | -$40,966 | -$69,628 |
| 2021 | $0 | $332,972 | -$8,083 | $428,579 | -$103,690 | -$103,690 |
| 2020 | $251,685 | $334,425 | -$9,765 | $533,547 | $42,798 | -$208,887 |
| 2019 | $260,712 | $389,819 | -$84,953 | $584,933 | -$19,355 | -$280,067 |
| 2018 | $34,609 | $399,523 | -$62,597 | $542,675 | -$171,140 | -$205,749 |
| 2017 | $63,200 | $339,372 | -$101,915 | $486,741 | -$186,084 | -$249,284 |
| 2016 | $0 | $299,943 | -$18,074 | $424,834 | -$142,965 | -$142,965 |
| 2015 | $0 | $299,291 | $3,685 | $552,880 | -$249,904 | -$249,904 |
| 2014 | $0 | $237,477 | $5,135 | $167,410 | $75,202 | $75,202 |
| 2013 | $1,000,000 | $76,615 | $433 | $101,375 | $975,673 | -$24,327 |
Looking Ahead
Even so, in late 2023, the City of Aurora indicated it was seeking to “expand its existing middle- mile network to connect an additional 700 fiber-optic miles throughout the city.” At the time, the city intended to “fund the work through a capital revenue bond, which will be paid back based on forecasted revenues over a 30-year period.”
The city has been relatively tight-lipped following that announcement, with little mention of the project publicly or within city materials. However, the city’s mayor and CIO recently participated in a podcast where they restated plans to expand the network to serve residential and business customers, including a promise to deploy to “disenfranchised” neighborhoods first.