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Telecoms Winning the WiFi War

By Cynthia L. Webb
washingtonpost.com Staff Writer
Wednesday, December 1, 2004; 10:30 AM

The signal is clear: In the tug of war betweeen Big Telecom and little governments, the powerful telecommunications lobby is winning, which could have major implications for how wireless Internet and other high-speed Internet service is doled out countrywide.

Yesterday the city of Philadelphia won a reprieve in its battle to continue rolling out wireless Internet access to its residents, thanks to a special deal brokered with Verizon Communications. But Verizon is giving only Philadelphia a pass, leaving other Pennsylvania municipalities to fend for themselves, while the governor embraced a telecom bill that could leave the rest of the state's municipal Internet service plans at the mercy of telephone companies.

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The Philadelphia Inquirer noted the "high-profile battle between Philadelphia and Verizon reinvigorated debate on whether governments should provide telecom services that could potentially take business away from private enterprise." The paper said the agreement between Verizon and city officials "rendered moot Philadelphia's concerns over a telecommunications bill that still awaited final action by Gov. [Edward G.] Rendell early last night. [Rendell did in fact end up signing the legislation.] House Bill 30 had generated controversy because of a provision giving incumbent telephone companies such as Verizon the ability to block Pennsylvania cities from building and charging for high-speed Internet systems. Verizon had announced last week that it would not oppose Philadelphia's WiFi rollout, which garnered worldwide attention when city officials introduced the plan in September. Yesterday's agreement simply put that vow in writing," the paper said.
The Philadelphia Inquirer: Verizon's Pledge Now in Writing

The Associated Press said the deal allows "the city to provide wireless Internet access as a municipal service even though ... Rendell (D) signed legislation giving Verizon the power to scuttle the project. ... The agreement relieves pressure on Rendell, a former Philadelphia mayor whose political base is in the city, to veto the bill, which lobbyists for the telecommunications industry helped draft. Rendell had until midnight Tuesday to veto the bill, or it would have become law without his signature. Even with a deal between Philadelphia and Verizon, the legislation will leave every other Pennsylvania city and town subject to a provision that gives the local phone company right of first refusal before they can move forward with any plans to provide municipal Internet."
The Associated Press via The Washington Post: Philadelphia, Verizon Strike Deal on WiFi (Registration required)

Philadelphia's plan aims to provide inexpensive or even free wireless Internet access throughout the city. This proposal, however, has the telecom industry up in arms, with Verizon and other players seeing the city as competition. AP's Marc Levy explained last week more about what's at stake: "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. 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," the article said.

The Levy article also essayed a few predictions: "If [Rendell] 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, said the city's chief information officer, Dianah Neff. Now, they may have to move more quickly."
The Associated Press via the (Memphis, Tenn.) Commercial Appeal: Bill Threatens Philadelphia Wireless Plan (Registration required)

As for the deal in Philadelphia, Verizon has made it clear that it still plans to play judge for any other cities that want to roll out a similar service. "Verizon said it would address other Pennsylvania towns' broadband aspirations case by case," the Inquirer reported. "Verizon, which is Pennsylvania's dominant local-phone provider, sells DSL, a type of fast Internet technology. Verizon and Pennsylvania's other incumbent providers have argued that cities enjoy unfair advantages, such as taxpayer subsidies and the ability to issue bonds, in competing with private companies to offer phone and Internet service. Under the bill, incumbent telephone providers would also have the authority to squash municipal broadband initiatives that charge a fee, if the companies themselves agree to provide broadband services to those municipalities within 14 months. Nearly a dozen states already have similar laws on the books."

In its coverage of the battle yesterday, the Wall Street Journal noted that a special deal for Philadelphia does not bode well for other cities looking to offer a similar service. "Some watchdog groups question such a deal, given that the legislation could still handcuff other cities and towns in Pennsylvania. 'While it may be good news for Philadelphians, it doesn't bode well for the rest of the country,' said Jeffrey Chester, executive director of the Center for Digital Democracy. 'This is just an exception for Philadelphia, placing the rest of Pennsylvania, and indeed the other 49 states, off limits to municipal networks.'"
The Wall Street Journal: Verizon, Philadelphia Discuss Deal On City's Wi-Fi Proposal (Subscription required)

Other states might want to take a cue from Philadelphia officials. The Philadelphia Daily News today applauded the deal the city's mayor, John Street, helped broker with Verizon and explained what's behind the brouhaha with Internet providers.

"Who needs Verizon, Comcast or AOL when you have Phila.gov? With the prospect of their market share shrinking, the telecoms quickly swung their lobbyist into action. And it didn't take long for the backbone-challenged General Assembly to put profit before people. Hidden in a 30-page bill that was passed is a provision that requires any city or town to get the permission of the local phone company before it can offer cheap Internet service of its own. It's eminent domain, but for the private sector. Philadelphia, rightfully, wasn't too pleased with this proposed law and lobbied Gov. Rendell to veto the bill, which he had to do last night or it would become law. As of late last night, it wasn't clear what the governor was doing. But thankfully, the Street administration wasn't taking any chances," the paper said. "After some lengthy negotiations, the city and Verizon Communications yesterday came to an agreement that would allow the city to offer Internet access to residents even if the bill became a law. While details were still sketchy, this is welcome news. ... This is progress that shouldn't be stopped by someone's corporate agenda. Everyone should get a piece of cyber space."
Philadelphia Daily News: A Piece of Cyberspace

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