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The fence is built around Chicago. The purpose of the fence is to keep everyone inside of the Chicago Experiment inside Chicago. The Bureau of Genetic Welfare doesn't want people to wander out of the city and discover them. The fence keeps the people inside of Chicago inside, and it keep the people outside of Chicago outside. In the movie, The Fence is modeled exactly after the Duga-1 soviet missile warning antenna array, a present-day abandoned transmission station.