US: Lobbyists Try to Kill Philidelphia Inexpensive Wireless Plan

Publisher Name: 
Associated Press

HARRISBURG, Pa. -
Philadelphia's plan to offer inexpensive wireless Internet as a
municipal service - the most ambitious yet by a major U.S. city - has
collided with commercial interests including the local phone company,
Verizon Communications Inc.

In
fact, a bill on Gov. Ed Rendell's desk that could humble Philadelphia's
ambitions began 19 months ago as a proposal drafted by lobbyists for
telecommunications companies.

Regional
and long-distance phone companies, who sell broadband Internet to
consumers and businesses, have in recent months intensified a national
campaign to quash municipal wireless initiatives like Philadelphia's as
dozens of cities and towns have either begun or announced such plans -
from San Francisco to Chaska, Minn., to St. Cloud, Fla.

Telecommunications
companies are doubly worried because hundreds of other municipalities
provide broadband service over cable or telephone lines.

The idea of cheap, municipally provided Internet as social leveler is particularly appealing to big city politicians.

"We
looked at it as a way to be a city, literally, of the 21st century,"
said Barbara Grant, a spokeswoman for Philadelphia Mayor John F.
Street. "We wanted to bridge the digital divide for residents who
wouldn't have access to the Internet, particularly schoolchildren."

Plus, the service could help make Philadelphia "hip" enough to stem the outward flow of college graduates, she said.

But
the telecoms industry, its business in turmoil as such disruptive
technologies as Voice over Internet calling turn traditional revenue
models on end, calls such public-sector projects unfair competition.

In
the past year, companies including Qwest Communications International
Inc., Sprint Corp., BellSouth Corp., and Verizon Communications Inc.
have pressed for legislation in Pennsylvania, Florida, Utah, and
Louisiana that would extract concessions from public-sector
telecommunications ventures.

A
chief complaint: a city can draw on taxpayer dollars, while a private
company has to pay interest on borrowed capital. Also, the telecoms
complain, public-sector projects are subject to far less regulation.

"Verizon
has always been pro-competition if all of the competitors that are
providing the same kind of service are governed by the same
regulations," said spokeswoman Sharon Shaffer of Verizon, the state's
largest phone company and Philadelphia's dominant provider.

The
bill that reached Rendell's desk over the weekend originally included a
provision that would bar "political subdivisions" in Pennsylvania from
providing telecommunications services for a fee.

It
was tucked into a larger, 30-page bill drafted by industry lobbyists to
give telephone companies financial incentives to quicken the rollout of
broadband networks - a carrot worth as much as $3 billion to Verizon.

As
the bill evolved, House lawmakers softened the provision to allow the
public-sector projects if the traditional local telephone company first
declined to provide the service.

In
the days before the Senate approved the bill early Friday morning,
Philadelphia's wireless advocates discovered the provision and cried
foul. In response, senators changed it to allow services operating
before Jan. 1, 2006, to continue, giving Philadelphia some time to get
going.

Consumer advocates say cheap Wi-Fi fills a need the private sector has no intention of meeting.

"They're
saying, 'You provide it to any place we can't or won't, but you can't
charge a fee,'" said Edward Schwartz, a consumer advocate and member of
Philadelphia's wireless task force. "How does that work?"

Rendell, a former Philadelphia mayor, has until Nov. 30 to veto the bill, and hasn't yet said what he plans to do.

If he
signs the bill, it would add Pennsylvania to the dozen or so states
that regulate public-sector telecommunications projects or ban it
outright. Such laws have been upheld by the U.S. Supreme Court.

Philadelphia
city officials had said they planned to introduce the service in the
summer of 2006, offering it for free or at costs far lower than the $35
to $60 a month charged by commercial providers, said the city's chief
information officer, Dianah Neff.

Now, they may have to move more quickly.

"It would be difficult, but not impossible to have it by January 2006," Neff said.

Neff
and others are now studying options for business models that could
comply with the legislation. The city could award a franchise to a
private company or nonprofit to operate the service. Or it could raise
money through advertising or private donations instead of charging a
subscriber fee.

The
projected cost for installing antennas across the city's 135 square
miles would be $10 million and another $1.5 million annually to
maintain it, Neff said.

The
industry's aggressive lobbying notwithstanding, at least one wireless
advocate predicts public-sector wireless access will be impossible to
squelch.

"Once
the genie is out of the bottle," said Greg Richardson, a consultant on
the Philadelphia wireless project, "it's very difficult, if not
impossible, to put it back in."

AMP Section Name:Money & Politics
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