In November 2004, Philadelphia CIO Dianah Neff got a surprise telephone call from a city attorney. While watching a government-access TV channel the night before, that attorney saw that House Bill 30, a rewrite of the state telecommunications act, had a new provision attached to it—one that could derail Neff’s plan to provide low-cost wireless Internet access for all Philly residents. Pennsylvania Gov. Edward Rendell ultimately signed the legislation, which gave telecom companies doing business in the state the right to block any municipality from offering a paid Wi-Fi service.
Neff fought the move. With help from Philadelphia Mayor John Street, she was able to negotiate a waiver with Verizon Communications—the city’s dominant phone carrier—that allowed Philadelphia to move forward with its municipal Wi-Fi plans. Other Pennsylvania towns may not be so lucky.
More than 200 cities and towns across the United States are planning, testing or building out municipal broadband networks. Many are using Wi-Fi technology to build networks for public safety, government and residential use, saying telecom and cable providers aren’t moving fast enough to provide their services at an affordable rate. But these municipalities face some formidable opponents. The country’s largest telecom and cable providers argue that the government shouldn’t provide services the private sector already offers. And even as those providers say publicly that they won’t work to stop the projects, their representatives are busy behind the scenes at the state and national level lobbying for legislation that could prevent municipal broadband and Wi-Fi projects from moving forward.
Opponents of municipal Wi-Fi see such projects as a threat that could cut into their profits. “It costs a lot of money for [telecom] companies to put their networks in place,” says Michael Balhoff, a former telecom equities analyst with Legg Mason and a municipal broadband critic. “If they have to go up against cities offering free and subsidized services, this will undercut their return on investment.” Some states have passed legislation that limits or bans such projects, and two legislators—Rep. Pete Sessions (R-Texas) and Sen. John Ensign (R-Nev.)—have introduced bills that would hamper municipal Wi-Fi plans. Some cities, such as Lafayette, La., have been hit by telecom companies with expensive and time-consuming lawsuits aimed at thwarting their municipal Wi-Fi projects.
The debate over municipal Wi-Fi hinges on a central question: Should broadband Internet access be a public service provided at a regulated price like water and electricity, or should it be an exclusively private-sector offering? Some municipal Wi-Fi advocates point to statistics showing that the United States is dropping behind in broadband usage because of the slow pace of the private sector. They say government CIOs should take a lead in offering Wi-Fi coverage in order to keep up with the rest of the world’s leading countries and boost economic development in their own states and municipalities. (The International Telecommunication Union announced this year that the United States has fallen from 13th place to 16th place in broadband usage as of December 2004. South Korea, Hong Kong and the Netherlands now lead the list.) In addition to helping bridge the so-called digital divide between wealthier and low-income residents, advocates say the service will also boost economic development by attracting conventions and other business to a community. Wi-Fi can also help communities upgrade aging public safety and government communications infrastructure.
This issue is of major significance to any government CIO who wants to gain experience with a quickly changing technology and improve government services. And those interested in implementing municipal Wi-Fi should be up to speed on the local and federal roadblocks to such projects. “If a CIO wants to take Wi-Fi to residents, they will need a legal strategy,” says Neff. And while some may be reticent to battle with giant phone and cable companies, an increasing number of cities and towns are partnering with the private sector to move ahead with wireless broadband. At this point, experts say, waiting could be costly.
“This debate has been a waste of everyone’s time and money,” says James Baller, a communications lawyer at Baller & Herbst Law Group in Washington, D.C., and a vocal advocate of Neff’s project. “The U.S. has fallen behind others in developing broadband infrastructure. We don’t have the luxury of continuing to bicker.”
Call of the Wi-Fi
In February of 2004, 12 of Philadelphia’s top appointed officials met for their annual retreat with Mayor John Street. For Neff, the meeting at the Horticultural Society in Fairmount Park was the perfect opportunity to bring up a technology she had been following for months: Wi-Fi. Short for “Wireless Fidelity,” Wi-Fi is another name for IEEE 802.11b, a trade term coined by the Wireless Ethernet Compatibility Alliance (WECA).
“I told everyone there this technology could help the city complete its goals,” Neff says. In Philadelphia, where 25 percent to 30 percent of the population falls under the “disadvantaged” classification, Mayor Street had embarked on an ambitious economic development plan to help poverty-stricken neighborhoods revitalize themselves. Neff felt that a program to provide computers and to train people to use them, combined with low-cost broadband access, could play an important role. Neff estimated at the time that Verizon covered 60 percent of the city’s population. Verizon countered that it covered 80 percent and now says that more than 90 percent of their lines in Philadelphia are equipped for DSL service. Still, Neff and her team surveyed residents and found that those with dial-up service or no Internet said DSL or cable broadband was too expensive. (Verizon offers DSL for as low as $14.95, but only when it’s bundled with phone service. Faster services cost $29.95 a month. (Comcast also offers higher-cost services that include bundled TV, cable access to the Internet and digital phone service.)
In June 2004, the city set up free Wi-Fi access in central Love Park, using wireless “mesh” technology. Wireless mesh essentially consists of network nodes placed on city streetlights and poles or other access points and allows wireless connectivity beyond a single “hot spot.” Before wireless mesh came along, some kind of “backhaul,” or Internet access fiber, was necessary at each hot spot, meaning Internet users could get access at the coffee shop or airline terminal but not beyond a small area. After residents responded enthusiastically to the pilot, the city created a nonprofit organization to oversee its expansion.
Philadelphia now has about seven square miles covered with a wireless “mesh” network that provides free service during a pilot period. The nonprofit group “Wireless Philadelphia” is expected to get final approval from the City Council this spring that will allow EarthLink to use city-owned telephone poles to build out the network. Neff expects to blanket the city’s 135 square miles with high-speed Wi-Fi service by spring 2007. Then, multiple ISPs will be able to pay EarthLink to use the infrastructure and charge residents and small businesses roughly $20 a month to use it. Originally, the city planned to issue taxable bonds to pay for the network. Then, after issuing an RFP last April, EarthLink—looking to expand its business from dial-up service—came forward with an offer to build the roughly $15 million network at its own expense. Neff says the city has already invested roughly $750,000 in negotiating the deal.
Verizon and other telecom companies argue that public initiatives for broadband are generally unnecessary because most residents of larger cities and towns have alternatives from the private sector. “There’s no real argument that broadband isn’t available,” says Verizon spokesman Eric Rabe, who adds that broadband prices have been falling. “For a city like Philadelphia to say this is just nonsense.”
However, Neff feels strongly that “Wireless Philadelphia” will help bridge the “digital divide” in her city. Already, she adds, community groups in the poorest neighborhoods have started connecting to the network, which now runs at speeds of 1Mbps, slightly faster than DSL. Small businesses in the city have expressed enthusiasm for the project, although midsize and large businesses are not likely to use the network because they often require higher speeds and more security. Neff expects that the entire city will be covered by summer 2006.
With Philadelphia out of the starting gate, other cities and towns have rapidly been coming up with their own plans. (For more on this, see “Wi-Fi America,” this page.) In San Francisco, city officials issued a formal RFP in December for a citywide network, although 26 vendors have already expressed interest in building the wireless system. Most notably, Google has garnered headlines with its offer to build the network at its own expense and provide Wi-Fi service for free in the city. Chris Vein, San Francisco’s executive director of telecommunication and information services, said the Wi-Fi project is part of an overall plan to bring technology to all San Franciscans. The plan includes providing computer equipment to those who need it along with education and training.
Smaller cities, such as Dayton, Ohio, and Tempe, Ariz., are also joining the Wi-Fi bandwagon. In Dayton, CIO Bill Hill decided in April 2004 that the technology was ready for a wireless mesh deployment in his city. But he, along with two city commissioners, wanted to make sure the network wouldn’t cost the city or taxpayers a cent. So he took his idea to local companies to see if there was an interest in helping the city out. There was. A Dayton ISP called DoNet is now working with P&R Communications, a local radio shop that installs radio gear, to build the mesh network. “My argument to the telcos is, Had you offered these services locally, there would have been no need to go forward,” Hill says. “We had to do something because our needs were not being met by the telcos. They want to charge $59 to $79 a month. What poor person can afford that?”
The Legal Battle
Despite the clear-cut benefits, the road to municipal Wi-Fi or broadband is strewn with land mines. Just ask the rural town of Lafayette, La. Phone company BellSouth filed a lawsuit last year against Lafayette and its utility systems, alleging that the municipality used incorrect procedures to issue bonds to pay for a plan to wire the city with fiber-optic cable. Lafayette voters have since voted to approve the plan, but the legal battle cost the city hundreds of thousands of dollars.
Regional and national cable and phone carriers have spent billions of dollars to build broadband networks across the United States, and they have worked publicly and behind the scenes to block efforts that would create new competitors for their services, whether wired or wireless, experts say. Already, 14 states have enacted laws that would prevent or make it difficult for cities and towns to go forward with plans like those in Philadelphia and San Francisco. In San Francisco, Mayor Gavin Newsom says he fully expects lawsuits against the city’s Wi-Fi plans.
The debate is also being played out on a national level. Congressman Sessions, a former SBC executive, introduced a bill last year in the House of Representatives that would prohibit state and local governments from offering telecommunications services unless the area wasn’t being served by a private company. According to Sessions’ House financial disclosure statement for 2003, he held SBC stock options worth at that time from $500,000 to $1 million. Gina Vaughn, a spokeswoman for Sessions, says his position on this issue “is consistent with the position he’s held in the past—if you can find a service in your local yellow pages, the government shouldn’t be providing it.” Vaughn says Session’s previous employment at SBC had no influence on the bill.
In July of last year, Sen. Ensign, who is a member of the Republican High Tech Task Force, introduced the “Broadband Investment and Consumer Choice Act,” which, if passed, would also make it more difficult for cities to build wireless networks. (For more, see “The Federal Picture” on Page 52.) And who is behind these state and federal legislative efforts? The telecom and cable giants, according to a report from the American Public Power Association (APPA), a national trade group for the country’s community-owned electric power utilities.
“At the state level, there are telecom and cable companies lobbying for bills that would create barriers to community Wi-Fi or broadband services,” says Desmarie Waterhouse, government relations representative for the APPA. “In other cases, these types of restrictions are being pushed by third parties with close ties to these companies.” BellSouth, for example, has been fighting hard against Lafayette’s plan, she says.
Some analysts say that the big providers needn’t worry about losing business from consumers who now rely on high-speed broadband from a telecom or cable company. These more affluent consumers won’t be tempted to switch to a city-sponsored service that would most likely be slower. “The fact is that cities going after Wi-Fi shouldn’t be threatening to the telcos,” says Ellen Daley, Forrester Research analyst.
Some high-powered legislators agree. In response to the anti-Wi-Fi bills, Sens. John McCain (R-Ariz.) and Frank Lautenberg (D-N.J.), have recently introduced legislation that would allow cities and towns to offer broadband if they decide to. Those involved in the fight think there will be some sort of compromise between the two sides, but some, acknowledge that municipalities face a stiff challenge. “Chances are that business interests will be heard,” says San Francisco’s Vein.
Municipal Wi-Fi critics also argue that cities and towns won’t be prepared to deal with the technological challenges they might face as they move forward with Wi-Fi. These challenges include maintaining the networks, dealing with crowded networks and monitoring an evolving technology that may soon be replaced by other types of wireless broadband. “Wireless infrastructure is changing rapidly,” Balhoff says. “Cities will have a hard time keeping up with capacity requirements.”
Daley agrees that mesh technology, in particular, has yet to be tested in high-capacity Wi-Fi networks. “Cities are playing with an unknown,” she says. “If a lot of people jump on an unlicensed band at once, the service will get pretty slow.” In San Francisco, Vein says the biggest challenges he faces on a technical level are whether to go with existing Wi-Fi (802.11) technology or wait for WiMax, a newer technology that has yet to be proven on a large scale but has certain technical advantages over Wi-Fi and should permit usage over greater distances. San Francisco also has a “topography problem,” Vein says, which means that the city’s hills and peaks could make it difficult to cover all 49 square miles.
As the city of Philadelphia readies its own Wi-Fi network, Neff has been in demand on the public broadband circuit. She says she’s talked with and given advice to close to 100 cities in 15 countries. In five years, Neff hopes to increase broadband connectivity in Philadelphia from 58 percent to 80 percent and place 10,000 computers in lower-income neighborhoods with training for its residents. “In the end, we’re trying to give people new skills,” Neff says. “Wi-Fi is just one tool to help us do this.”
It’s too early to determine whether the various municipal Wi-Fi efforts will succeed or fail, but those interested in the evolution of the technology and the debate will be watching closely. Already, predictions are all over the map. “I’ll bet you two years from now, Philadelphia’s network won’t be worth anything,” says analyst Balhoff. “I think it’s probable that subscribers won’t be there.”
On the other side of the argument, San Francisco’s Vein proclaims, “I think Dianah Neff will have the last laugh. Her model is changing and evolving and, in the end, she will be successful.”