This NMRC report features six telecom policy experts discussing problems with publicly funded Wi-Fi broadband networks. Numerous cities are debating whether to commit taxpayer funds to deploy Wi-Fi networks. Experts examine recent developments and find city-funded networks will likely cost more than anticipated, fail to deliver hoped-for economic development, and hurt broadband competition.

February 28, 2005

Wi-Fi Wars

Computerworld
Matt Hamblen

The political fallout from the implementation of wireless broadband by dozens of city governments nationwide has grown dramatically in recent months.

Philadelphia CIO Dianah Neff ran into forceful lobbying by service providers in the Pennsylvania statehouse last November. And in early February, a Washington-based research group backed by telecommunications providers launched a media assault on wireless broadband plans. The New Millennium Research Council (NMRC) condemns the use of public funds for wireless broadband access to homes and businesses.

Saying there are "grave flaws" in the wireless rollouts and trials now under way in more than 125 cities, the NMRC alleges that "municipal Wi-Fi networks present a number of serious problems that are being overlooked as cities rush into committing millions in taxpayer dollars to pay for network development and expansion." The rollouts will have "a detrimental effect on city budgets and on competitions in the telecommunications industry," the NMRC says.

Critics of the report claim that it's biased toward the telecommunications industry. NMRC is funded by Issue Dynamics Inc., a well-known Washington-based lobbying firm for U.S. telecommunications companies, including those that fought metropolitan wireless efforts in the Pennsylvania legislature.

NMRC denies any bias in its report, which was written by U.S. Internet Industry Association President David McClure and Heartland Institute Senior Fellow Steven Titch, among others. (Computerworld's Robert L. Mitchell is among those who believe that it's a bad idea for cities to get into the business of providing wireless broadband access.)

On another front in the Wi-Fi wars, Strategy Analytics Inc., a research and consulting firm in Newton, Mass., released a study that tallies the financial impact of all free Wi-Fi hot spots and zones -- from those in Starbucks coffee houses to municipal wireless projects -- on traditional cellular providers such as Verizon Wireless and Cingular Wireless LLC.

It reports that free Wi-Fi, as well as aggressive pricing of Wi-Fi capabilities from other traditional service providers, will place as much as $12 billion of the projected profits of U.S. wireless operators at risk through 2008. That will happen as U.S. operators invest $100 billion in advanced wireless networks.

February 25, 2005

Indiana Bill to Limit Local Government Wireless Died in Committee

Government Technology

A bill that would impede the development of Indiana's technical infrastructure by effectively prohibiting municipalities from providing broadband Internet service died in the House Local Government committee last week.

The state's municipal officials strongly opposed the bill because it would have hindered economic development.

Opponents of municipalities providing wireless broadband access include the New Millennium Research Council. The NMRC recently published a report titled "Not in the Public Interest: The Myth of Municipal Wi-Fi" in which the authors cite a number of technical issues and several failed projects in an effort to dissuade policy makers from buying into municipal wireless projects. The problems outlined in the NMRC report include the possibility for cost overruns and the lack of government accountability, and the presentation of unfair competition to private phone companies and wireless service providers.

In a discussion of the report at a teleconference, Steven Titch, Heartland Institute Senior Fellow for IT and Telecom Policy and one of the authors of the report, claimed the real beneficiaries of municipal Wi-Fi projects would be traveling executives and college students.

The authors of the report cited a number of alternatives (such as tax incentives) cities could use to entice companies to provide wireless Internet access in their communities.

HB 1148 would have prohibited a city or town from controlling, owning, or operating facilities for providing cable, telecommunications, and information services unless the city or town conducts an inquiry into the availability of services from other providers in the area, holds a public hearing on the proposal and determines the costs and benefits of the proposed facilities.

The bill would have also prevented cities or towns in Indiana from entering into partnerships such as the one that has made the wireless network in Rio Rancho, N.M., possible.

The Indiana Association of Cities and Towns contends that private sector investment in broadband infrastructure in Indiana is not sufficient. "Mayors across the state have begged service providers for broadband for years, only to be told that the market is not there," IACT claimed in a position paper.

In addition, current laws that guide municipal utilities already provide sufficient oversight, the association claims.

The association understands that businesses are in business to make money and does not fault them for that. However, local government is in the business of helping citizens achieve a high quality of life and providing infrastructure that meets the demands to support that, and part of achieving that mission is promoting economic development through broadband deployment.

"By enabling municipalities to provide this valuable infrastructure to communities, business opportunities will increase, education and access to information by citizens will become more available and our state can move up from scoring in the middle of the nation in online access and in the bottom 10 in terms of technology-related jobs,*" the IACT position paper said.

"One of the first questions a municipal official is asked when discussing location with a prospective new member of the business community is about technology infrastructure, and broadband service in particular," Matthew Greller, IACT executive director, said.

Many Indiana municipalities have already implemented broadband programs to help attract businesses and keep jobs in the state. The city of Marion is among them.

Marion Mayor Wayne Seybold took action to get wireless broadband into his city to attract and keep business, and provide jobs for the hundreds of workers who were displaced when Thompson closed its doors last year. His efforts have proven fruitful, as business investment is greater now than it was before Thompson closed. Mayor Seybold credits his municipal wireless broadband initiative for that

Seybold is not the only mayor in Indiana who has taken matters into his own hands. Cities and towns of all sizes have initiated municipal broadband programs.

*This according to the latest New Economy Index.

February 21, 2005

Municipal Wireless Madness

Computerworld
By Robert Mitchell

What would your boss say if you proposed providing low-cost wireless broadband access to the public in your local industrial park? You'd probably be sent packing - unless you're an IT manager for a municipality. In that case, providing Wi-Fi- or WiMax-based broadband access to your neighbors downtown is a hot topic.

As an increasing number of municipalities consider going into the wireless broadband business, the New Millennium Research Council issued a report this month concluding that municipal wireless services aren't necessarily a good thing. Supporters of the idea fired back, stating that the NMRC research was commissioned by Issue Dynamics Inc., a lobbying firm for the major telecommunications companies. But whether the report is biased is really beside the point; you don't need a study to know that turning the IT organizations of municipalities or any other government entity into vendors of wireless services is a bad idea.

The NMRC report -- and legislative efforts by the telecom industry to block municipalities from pursuing such projects -- have changed the focus from whether it's a good idea for municipalities to provide such services to whether they should have the right to provide those services at all.

In cities with municipal wireless initiatives, the IT organization will have a major distraction from its core mission. Even large, well-run companies that stray from their core business models by diversifying into new markets often fail -- a phenomenon that stock market guru Peter Lynch calls "diworsification."

A municipal IT department that moves from supporting its internal client base to selling low-cost broadband services to the public is clearly changing its mission. It's moving from an IT support role to selling a service and building and maintaining a wireless broadband infrastructure. It's moving from a bureaucratic model to a business model. And it's creating a quasi-monopoly by using tax dollars to fund a low-cost access scheme.

Even if a municipality succeeds, creating a price structure with a zero or below-market margin is likely to hamper a transition to competitive alternatives, leaving customers with a government utility that's likely to be less responsive than a private business. Would anyone really rather talk to city hall when his broadband connection fails? And those low prices won't help the city continually upgrade and rebuild its wireless infrastructure as technology leaps forward. If municipalities had done this five years ago, I'd wager that they'd still be using 2Mbit/sec. 802.11 technology.

Municipalities are jumping in now because offering wireless access on the cheap to the public is politically popular and looks easy. But surely there are reasons why private business hasn't developed such networks. The barriers to entry appear to be low, but what are they over the long term? Can a government utility justify a massive investment in wireless infrastructure at a time when the technology is changing rapidly? The fast pace of those advances and market shifts going on in telecommunications today are swallowing up companies like AT&T whole. Can municipalities really do better? If you think the protected, regulated monopolies of the Baby Bells were slow to offer DSL in the late 1990s, what will municipalities do when it's time to change everything out?

Given local governments' desire to get involved, one would assume that there is some pressing social need that private enterprise has not met that justifies such an investment. In that case, governments traditionally offer market incentives such as tax breaks or regulations that encourage private companies to provide desired services.

For example, the Bell operating companies were given monopolies in exchange for providing universal access to telephone service, even for customers in the most remote areas. But some municipalities are forming public wireless broadband utilities compete with private service providers in an effort to offer wireless access in city centers and urban neighborhoods where wired broadband access is already available.

City-funded wireless broadband networks continue to pop up with great fanfare precisely because they will serve large concentrations of voters. Such political moves sell well today, but when the full bill comes due, the budget ax will fall. These networks, if they survive, will spin off into private hands, where they should have started in the first place. In the end, the only sure winners in this whole affair will be the vendors that sell wireless networking equipment.

Crossing Wires Over Wireless

Crain's Detroit Business
By Andrew Dietderich

Oakland County, Washtenaw County, Royal Oak, Waterford Township and the Village of Milford are just four local governments looking to set up wireless networks, creating a potential boon for vendors, lure for tech-savvy residents and employers and competition for Internet service providers.

Government officials tout the networks as a quality-of-life issue essential to attracting and retaining today's - and tomorrow's - tech-centric residents, consumers and employers.

But fee-based wireless Internet services already are in many places and offered at stores and restaurants operated by Starbucks Corp., FedEx Kinko's Office and Print Services Inc. and Ann Arbor-based Borders Group Inc., leaving some wondering how the networks would co-exist. Others say government shouldn't be in the business of setting up Internet networks with so many other pressing needs.

"Networks are being proposed in areas where they're oftentimes duplicating same services already being offered, which are not all that expensive, and don't address the social goals that they're allegedly supposed to address," said Steven Titch, senior fellow of information-technology and telecom policy at The Heartland Institute in Chicago.

Titch is one author of a study called "Not in the Public Interest - The Myth of Municipal Wi-Fi Networks." The New Millennium Research Council, which conducted the study, is a Washington-based lobby and policy group.

"When there's private business already doing these types of projects, it doesn't make a great deal of sense as a businessman or taxpayer to have government involved," said Bob McCann, Detroit division president of East Syracuse, N.Y.-based Bright House Networks. The company provides cable TV and Internet services in the Farmington Hills-Novi area.

Bright House Networks plans to begin offering wireless access at Twelve Oaks Mall next week to computer users who pay a fee or are Bright House customers, McCann said.

He doesn't like the idea of competing with a free network offering by Oakland County.

"It just doesn't appear that a level playing field would be in place," McCann said.

Phil Bertolini, chief information officer for Oakland County, said he disagrees with the opposition to government wireless initiatives.

"Is there a wireless network where you can go anywhere in Oakland County and access the Internet? The answer is no," he said. "And as far as meeting the social goals, I can't think of a better reason than to prepare our county for the workforce of tomorrow."

Vendors said they are excited about the public sector's involvement in setting up the massive networks.

"It's absolutely huge," said Caston Thomas, president of Auburn Hills-based Interworks Technology L.L.C. "It legitimizes the usefulness of the technology and what's already been happening in the private sector.

"They really need to work out how networks that already exist would function with the new networks, though," Thomas said.

Debbie Schiller, president of Waterford Township-based Troy Tech Services Inc., also said opportunities will be plentiful.

To access the Internet without wires, a user needs a laptop equipped with a card that communicates with the network. Most new laptops have the cards built in, or they can be purchased for less than $100.

There are two ways to get online.

One is free; open your laptop, find a network, and log on.

The second is fee-based; a user pays either an hourly or monthly fee to access a specific network, such as the service offered by T-Mobile USA Inc. at Border's.

Several local governments are planning systems.

Oakland County plans to host a meeting March 14 with potential private-sector partners. Washtenaw County plans to hold an invite-only stakeholders meeting with about 120 people, including upper level executives from within the county, March 28.

Though details still are being worked out, Oakland, Washtenaw, and Royal Oak officials said networks most likely would be some kind of public-private partnership and no tax dollars would be used.

L. Brooks Patterson, Oakland County executive, introduced the idea of "Wireless Oakland" at his State of the County address Feb. 10.

The plan calls for "a wireless Internet cloud throughout Oakland County (that) will provide seamless access to the Internet, e-mail and other Internet services anywhere in the county."

On Jan. 20, the Washtenaw County Board of Commissioners authorized the county's information-technology staff to develop a business plan for a similar countywide system called Wireless Washtenaw.

David Behen, information-technology director for Washtenaw County, said he plans to present the business plan in June.

Royal Oak plans to launch a free wireless service in the central business district, possibly by the end of the year, said Andrey Tomkiw, partner at Royal Oak-based law firm Tomkiw Dalton plc and Royal Oak Downtown Development Authority board member.

The goal, he said, is eventually to offer the service to the entire city.

Tomkiw said the DDA plans to move forward with putting the service in place downtown, once it gets financing and decides which technology to use.

Tomkiw said financing could come from business owners who voluntarily sponsor the service, from a state grant, or a combination of both and stressed no tax dollars would be used.

He expects the system to cost between $20,000 and $50,000.

"We don't envision this as government providing free services," Tomkiw said. "This is not government trying to provide a service that takes away from the cable industry or (Internet service providers). We want to work with them so everybody benefits."

Similar plans in Milford and Waterford Township are in the early development stage with officials from each researching other municipal networks.

While some service providers oppose the plans, others said they don't view government-led initiatives as competition.

"We welcome these types of networks as a way to spread the popularity of wireless Internet access," said David Rodewald, a spokesman for Santa Monica, Calif.-based Boingo Wireless Inc., which operates 15,000 hotspots in the country and charges customers $21.95 a month for access.

Anne Roman, corporate affairs counsel for Borders, said she doesn't expect the free networks to have much effect on its customer base that already pays to access the Internet in Borders stores through T-Mobile.

"I'm sure some would use a free network and others would prefer to stick with T-Mobile," she said. "Either way, it helps build up a base of more loyal customers who stay longer."

February 20, 2005

Visions of Technical Hot Spot Project imagines creating a public-private partnership to boost technological investment in the central San Joaquin Valley

The Fresno Bee
By E.J. Schultz

Jim Michael wants Fresno to do for the Internet what it does for the hamburger.

For years, fast-food chains have found the region an appealing place to test their latest creations. But while residents here are typically among the first in the nation to try a Double Pastrami Burger or a McRib, when it comes to the latest in Internet, cable TV or telephone services, "We're kind of isolated," says Michael, associate director of operating systems services at California State University, Fresno.

Michael is leading a controversial effort aimed at increasing technological investment in the region. Backed by the Regional Jobs Initiative, the project envisions forming a public-private partnership to sell voice, data and video services to businesses and consumers in the central San Joaquin Valley.

Under the plan, technology firms would contract with a new nonprofit called Central California Broadband. The companies would be in charge of operations and delivery, while the nonprofit would handle billing and sales.

Under one scenario, cities would offer publicly owned assets such as fiber-optic cable lines along traffic-light systems to companies willing to build and sell the latest technology here at reasonable prices. Goals include connecting more homes to fiber-optic cables, creating free wireless Internet zones in public spaces and offering high-speed Internet services to rural areas.

The hope is that the partnership would bring more competition to the Valley, driving down prices. In response, companies would invest more, and ultimately, create more jobs.

"We want to give our community an advantage over other communities similar to ours," Michael says. Come to Fresno and pilot new technology, he implores corporate America, "just the way you come to Fresno and market-test your new hamburger."

Project organizers recently sent inquiries to more than 200 technology firms. Included were giants IBM Global Services and Cisco Systems, as well as smaller start-up firms and existing providers. The companies were asked to detail what services they could offer to help Central California Broadband achieve its mission. Bids are due April 25. An information session will be held Thursday in Fresno. Organizers hope to bring the service on line by the end of the year.

Critics

But as the project gains momentum, it is drawing criticism as well.

Fresno City Council Member Jerry Duncan says the proposal would interfere with free-market forces, creating unfair competition for SBC Communications, the region's dominant phone and Internet service provider, and Comcast, the only cable TV company with a franchise agreement with the city of Fresno.

"Their clear intent is to compete directly with the private sector that is doing a fine job right now," he says. Using public assets to "blatantly and admittedly compete and try to hurt two well-respected companies that are doing a good job, I have real problems with that."

Duncan plans to ask the City Council March 1 to vote to remove the city of Fresno as a supporter of the initiative. Going further, he will seek approval on a formal request asking the Regional Jobs Initiative to abandon the project.

Instead of spurring technology investment, Duncan believes that the public-private partnership would be so detrimental to existing providers that they would reduce spending in the Valley. "This thing is taking the city down a path that will actually be destructive to job creation," he says.

Central California Broadband supporters disagree.

"Overall, investment in telecommunications would only increase," says Ashley Swearengin, chief operating officer of the Regional Jobs Initiative. The RJI is a mostly volunteer effort seeking to create 30,000 good-paying jobs in the region by 2009. Other supporters of the project include the Central Valley Internet Project at Fresno State and the Fresno Business Council.

No specific job goals are tied to the partnership proposal. RJI leaders are supporting the proposal on the grounds that it would give the region a competitive edge. They point to cities such as Sacramento, where Roseville-based SureWest Communications, in direct competition with SBC, is connecting fiber-optic cable lines to more than 62,000 homes.

"The Fresno region needs to make a press to get more activity happening here because Sacramento's already doing it," Swearengin says.

Current providers

SBC and Comcast oppose the partnership, saying it is not needed. "The market there is well-served, it's healthy, it's competitive and it allows competition," says Vanessa Smith, SBC spokeswoman for the Central Valley.

The price for SBC's standard DSL Internet service has dropped $10 in the last year to $19.95 a month, Smith says. Also, she says, Fresno will be part of SBC's "Project Lightspeed," a plan to deliver residential and small-business customers the latest in digital television, super-high-speed broadband and telephone service over the Internet.

The company plans in the next five years to spend $4 billion to $6 billion in its 13-state service area to install the network. Smith declined to say when Fresno would be wired for the service or how much would be spent here, calling it proprietary information.

As SBC moves into the video market, Comcast is making a push for telephone customers. The company next year plans to introduce voice services over the Internet, says Scott Barbee, Comcast area vice president in Fresno. "I think you're going to see all the primary companies get into other people's business in the years ahead," he says.

Central California Broadband supporters say they are just trying to further the convergence, making it easier for outside firms to enter the local market.

One of the biggest obstacles is branding, says Tim King. His Illinois-based firm Public Benefit Broadband is consulting for Central California Broadband.

Many companies have infrastructure in Fresno but do not use it because the costs of selling the services are too high, King says. Pointing to miles of fiber optics stretching along Highway 99, he says, "there is a whole bunch of capacity going right through Fresno and there is only a small exit ramp."

Through selling services under the name Central California Broadband, the companies would have a "quicker path for market entrance," King says. The community would benefit because sales and marketing revenue would stay in the region, he says. "Consumers will rally around the community entity."

The Fresno Area Collaborative Regional Initiative, a predecessor to the RJI, paid Public Benefit Broadband $50,000 to examine a business case for the initiative, King said. Now in phase two, the firm, which is working on a similar proposal in Allegheny, Pa., will only be paid more money if the project goes live, he said.

Organizers do not have projections on the costs or potential revenue of the project. Current voice, video and data businesses generate more than $423 million annually in the region, according to the Central California Broadband proposal. Project estimates, organizers say, will be developed after the bids are submitted. Some funding could come from venture capitalists, federal grants, or private bond issues, Michael says.

Public assets

One of the most controversial aspects of the initiative is the proposed use of publicly owned assets. Fresno and Clovis use fiber-optic cable lines as part of intelligent traffic systems that control traffic lights from afar. Excess capacity on the lines could be used by companies contracting with the partnership, according to plans. Other possibilities include using the city of Fresno's traffic-operations center as a network-operations center and mounting wireless antennas on public structures. The cities could get lease revenue in return.

The requests for the proposal sent to the 200 technology firms included letters from officials with the cities of Fresno and Clovis and Fresno County, stating that the governments are "interested" in making assets available. King stresses that no commitments have been made.

SBC and Comcast officials say the governments should be kept out of the project. "We still see this proposal as promoting municipalization," said Smith of SBC. "We just don't think that public funds should be used for a network."

The proposal is not unprecedented. Cities such as Philadelphia, Chicago and Las Vegas have or are considering rolling out municipal wireless networks. Critics say cities often underestimate long-term costs of ongoing maintenance, billing and upgrades, while overestimating the economic benefits.

"Without a highly skilled work force and the many other factors that contribute to a high per-capita income, free, universal Internet access alone will not make a municipality more competitive," writes David Tuerck of the Beacon Hill Institute at Suffolk University in Boston in a recent report published by the New Millennium Research Council, an independent research project of Internet consulting company Research Dynamics Inc.

Those working on the California Broadband effort say the project would not be run or owned by municipalities. They refer to the proposal as a "metropolitan-area network" that would include wireless and wired components. It would be neither purely public or private, says King. "We think there is room for a third choice -- a public-private path."

Comcast, which is in the midst of negotiating its nonexclusive franchise agreement with the city of Fresno, has problems with the public aspect of the partnership. "We would be competing with someone who basically oversees our franchise and our ability to operate in that community, and that's a conflict of interest in our eyes," Barbee says.

Swearengin, of the RJI, dismisses the unfair-competition argument, saying that any company has the ability to partner with the cities and county. "Through this RFP [request for proposal], any company has access to those assets."

Says King: "It's only an unfair advantage to those private-sector entities who choose not to use it." The project, he says, will move forward with or without the support of the city and county. He said the public assets are not critical. "The brand is the value, not the assets of the city."

Council Member Duncan does not have a problem with the proposal as long as the city is kept out of it. "If they want to do it all on their own -- fine, great."

As part of his March 1 request to drop the city as a supporter, Duncan said he will present alternative plans to boost technology in the region.

For instance, he said, getting computers to low-income residents should be "a more urgent goal." He sees no problem with the current marketplace, noting that he "has not yet heard from one business owner who says they can't get high-speed access."

Economic-development officials Fred Burkhardt of the city of Fresno and Dave Spaur of the Economic Development Corp. serving Fresno County say they have never lost a relocation client because of technology. "I have not had a company call up and complain about it," Burkhardt says.

But partnership supporters, such as Michael of Fresno State, say the status quo is not good enough.

"If we let the market forces drive the situation in our town, we're always going to be a market follower."

FEBRUARY 14, 2005

Despite Opposition, Might the Web Need New Government Jolt?

The Wall Street Journal

THE BIRTH of the Internet resulted from a famous example of government involvement in the economy a generation ago, when the Defense Department funded college researchers interested in computer networking. Since then, the Web has been an epic success, and the number of U.S. households connected to it continues to grow. But the speeds at which these houses can link up has plateaued at current DSL and cable rates, badly lagging behind the speeds available in many other countries, notably in Asia. Might it require another bit of government involvement to prod things along?

That's one of the questions being raised in connection with the plans of a growing number of American cities to sponsor municipal wireless networks to provide Internet access to residents. Philadelphia, the biggest and best-known of these examples, is in the middle of unveiling such a plan; it hopes to blanket the metropolitan area with a wireless network that will provide speeds of at least one megabit for both uploading and downloading. That's not as fast as what residents of Hong Kong and South Korea enjoy, but it is faster than what many Americans have, especially for uploading data from PCs back to the Internet. Many home connections going in this direction are now just a tenth as fast.

There is, however, much less consensus about these sorts of government projects today than there was during the heyday of federal support for high-technology research back in the 1970s and 1980s. The Philadelphia proposal, like other municipal plans, has become controversial -- in large part simply because of the considerable role being played by the city government. LAST MONTH, the latest in a series of harshly critical reports about these municipal network proposals was published by the New Millennium Research Council, a Washington, D.C., lobby and policy group. The council has ties to both local phone companies, which view these networks as competition and have lobbied in state legislatures to outlaw them, and conservative Washington think tanks, which tend to oppose activist-government initiatives.

These sorts of ideological political tussles over the Web are increasingly common. For example, conservative groups, along with many members of Congress, are working hard to keep the Internet a tax-free zone, whether that involves taxation of Internet telephony or a sales tax for merchants like Amazon. On the opposite side of these disputes one usually finds state and county elected officials -- many of them Republican -- who are trying to provide traditional government services in a new era.

When it comes to municipal networks, critics contend that cities will be using scarce tax money to build networks that compete with systems already offered by telephone and cable companies. What's more, they say, any network a city would build will quickly grow outdated because of rapidly changing technology. Philadelphia city officials respond that their network won't require taxpayer funds at all; instead, they say, it will be built and operated by for-profit private companies under a business plan developed by the city and its consultants. The goal, says Dianah Neff, the city's chief information officer, is to offer wireless-based connectivity throughout the city that will be free in some areas and cost roughly $20 a month in others.

Ms. Neff says that her city would defer to private enterprise if it could, but that existing cable and phone providers either won't bring connectivity to the city's poorer neighbors at all, or won't do it for the city's $20 target price. The biggest contribution the city will make to the network will be in providing access to city infrastructure, such as utility poles, to house the wireless transmitters needed to bring the network to life. A private company will operate the network once it starts running, Ms. Neff says, and taxpayers won't be on the hook if business doesn't live up to expectations. AS ENVISIONED by city planners, the Philadelphia network won't have anything close to the blazing speeds common in Asia, where the Internet is so fast that residents can get their television signals through it. Its main goal, says Ms. Neff, is making a basic level of Web connectivity available to everyone.

But because Philadelphia will be able to take advantage of new kinds of wireless technologies like WiMax, it may end up offering faster bandwidth than is enjoyed by many regular cable and DSL subscribers. Because of new technology, these networks can be installed with relatively small capital investments; the estimate for Philadelphia is roughly $10 million. Incumbent players don't usually have an incentive to build these faster new networks because they are tied to their wired networks, which also deliver telephone and television services. And that's one reason that networking speeds in the U.S. are stuck in the rut they are in.

It's easy to bash city governments as being full of maladroit bureaucrats eager to manhandle a new technology, and even economists who support municipal networks say cities shouldn't rush into them. But well-thought-out city plans could help everyone by acting as a catalyst and shaking up the status quo. Some might even call that competition.

Wireless users work to connect
By Trevor Hughes The Daily Times-Call

Longmont The Daily Times-Call (Northern Colorado)

http://www.longmontfyi.com/Local-Story.asp?id=461

LONGMONT - Dennis Taylor hunched over his laptop computer in the lobby outside the city council chambers, tapping away as he checked his e-mail between teaching engagements.

The computer consultant was recently at the Longmont Civic Center to teach a class in spreadsheets and was taking advantage of the building's high-speed wireless Internet access to check his e-mail.

"It's great," said Taylor, looking away from his computer. "I heard there was a (wireless) connection, and I thought I'd try it out."

Taylor often finds wireless Internet access near coffee shops, which often offer the service free as an enticement to customers. That strategy has worked on customers such as Gary Beene, a real estate agent who altered his morning commute to include a stop at Gizzi's Coffee Bar on Main Street in Longmont.

Beene and Taylor are enthusiastic users of wireless Internet and say they'd welcome more access "hotspots." Now, a group of Longmont residents is hoping to unwire the whole city by installing small transmitters on antennae and connecting those transmitters to their own high-speed Internet connections.

The vision of the Longmont Community Wireless Project is to provide wireless Internet access anywhere in the area. The cost would be several thousands dollars to establish the network, using low-cost equipment and software for a few server computers. It would cost nothing to users, the organizers hope.

"Longmont would be in the buzz. People would be talking about it. People would be e-mailing about it," said Beene, who is not affiliated with the effort but excited about the idea.

"Many Realtors are doing this so they are not bound by a geographic spot and they can be anywhere to do business," Beene said.

Armed with a digital camera, Beene said he can snap pictures of homes for sale, then e-mail them to clients for their review, a method that's far superior than faxing.

"In time, the world will be disconnected and wi-fied. It gives you freedom - freedom to do more than one thing at a time," Beene said. "What's your most valuable resource? Your time."

Higher productivity is just one of the reasons that Joey Stanford and Jason Vallery say they're willing to donate space on their private high-speed connections to the rest of the city. Vallery and Stanford are the organizers of the community wireless project.

"Nobody's paying us to do this," said Stanford, a computer expert who works for IBM from his home and from the Dazbog Coffee shop at 17th Avenue and Pace Street. "And everybody gets to play with cool technology."

Specifically, the type of technology is called a mesh network, and it works much like a mobile phone network. Where once phones had to be physically connected to a jack, they are now able to work around the world.

A city survey this summer found that while 77 percent of residents have a computer, 11 percent of those people lacked Internet access at home.

Beene and others have previously asked the city to provide a similar service using a high-capacity fiber-optic network buried beneath Longmont's streets. The city has been reluctant to take on such a task, saying it has other priorities. Other cities think differently.

Chaska, Minn., for instance offers wireless Internet access to all households for $15.99 a month.

And Lafayette, just down U.S. Highway 287, offered wireless access to its residents in 2001. That service was provided by a private company that went belly up, said Lafayette public works director Doug Short. The company received permission from Lafayette to operate like a cable TV company. The company, Metricom, went dark in 2002, Short said.

"It worked beautifully, but for whatever reason, it all failed," Short said.

That's one of the main reasons Longmont city officials have been reluctant to provide access using the city's network.

A national report issued by the New Millennium Research Council this week said the government should keep away from providing wireless service at the expense of private businesses.

Said Ron Rizzuto of the University of Denver in the report: "If the city is allowed to price its services below cost and use its taxing authority to subsidize the municipal operation, the private sector will have no incentive to reinvest in its network. The absence of a level playing field will eventually lead to a situation where the incumbent telecom players will exit the local market."

A company called Ricochet sells wireless access in the Denver-Aurora area for about $25 a month. That service, based on a cell phone-like system, stops a little south of Boulder.

Stanford said the lack of readily available citywide wireless access in Longmont is precisely why he and his friends are trying to create their own. He said he's happy to just give it a try and see how many people want to participate. Stanford said the system would benefit a variety of Longmont residents. The group will accept donations but a meeting at 1 p.m. Sunday - at Dazbog, not coincidentally - is intended to gauge the level of community support for both the project and for raising the money to make it happen.

"We really don't want anybody to pay us for it," Stanford said.

Report rips WiFi Tempe proposes

East Valley Tribune (Tempe, Arizona)

http://www.eastvalleytribune.com/index.php?sty=36357

By Dennis Welch, Tribune

A report issued this month by a Washington, D.C.-based policy institute could have far reaching implications for Tempe as it seeks to become the first city in the Valley to provide wireless Internet service.

Citywide wireless broadband networks are being hyped on the strength of questionable claims that could stifle competition and drain city budgets, according to New Millennium Research Council.

The report warns that WiFi systems like the ones also proposed in New York, Chicago, Philadelphia, and other major metropolitan areas throughout the country often fail to meet expectations.

Tempe Mayor Hugh Hallman said he supports installing a citywide system because the Internet has become essential for education, communication and entertainment.

He added that he plans to have further discussions with the City Council about the planned system to ensure that Tempe is offering a fair and competitive business environment.

WiFi is a technology that offers high-speed Internet access via wireless computers. Currently, the networks are mainly confined to coffee houses and other businesses where users are within a few feet of the access point. But improvements are making it possible to expand the coverage area.

Many cities, including Tempe, have said building citywide WiFi networks would attract high-tech firms and spur investment in the community. But the authors of the report dispute that claim, saying there is not enough data available to reach any conclusions.

"Though this is often cited as a benefit, (economic) data shows no specific link between broadband availability and economic development," the report states.

The city is taking bids from wireless providers to build a network using its existing infrastructure, according to city records.

This would give the winning firm the ability to hang transponders and other equipment necessary for the service on city-owned street lights and telephone poles.

David McClure, one of the authors of the council report, said that offers an unfair subsidy that could keep other businesses away from Tempe and create a local monopoly.

Barry Aarons, a senior research fellow with the Lewisville, Texas-based Institute for Policy Innovation, said cities should offer incentives to companies to build their own infrastructure.

"Ultimately," Aarons said, "The taxpayer is vulnerable to funding outdated and outmoded technology."

But city officials said taxpayers would not be asked to pay for the installation or the operating costs. Dave Heck, deputy manager of information technology, said the company that wins the city contract would pay its own operating costs out of its expected profits.

The wireless system already in place downtown has run into problems, including dead spots where users are unable to log onto the Internet, officials said.

In the Valley, Phoenix and Scottsdale are planning to expand wireless Internet connections in their central cores. But Tempe, with its links to ASU, is the furthest along.

FEBRUARY 8, 2005

Hermosa to go next round in Wi-Fi fight tonight

Daily Breeze (Los Angeles)
By Deepa Bharath

Fighting a lonely battle to give free wireless Internet access to residents, Hermosa Beach City Councilman Michael Keegan said he will ask the City Council tonight to consider approving the citywide free Wi-Fi program as long as money can be raised to support it.

But Councilman Sam Edgerton said he will approve nothing without the money.

The issue has been hopelessly deadlocked in council chambers twice with Councilman Art Yoon, an employee of Cox Communications, abstaining from the vote. Councilman Pete Tucker took Edgerton's side while Mayor J.R. Reviczky supported Keegan. Hermosa Beach began Wi-Fi service covering about 30 percent of the city in August, making it the first South Bay city to offer the service free to residents.

City Manager Steve Burrell said a fund-raising effort by Edgerton and Tucker has brought in $2,400. The two councilmen held an event at Mermaid Restaurant on Pier Avenue a month ago to raise seed money for the project, but Edgerton said last week that he is pessimistic about the effort.

"It's almost like the contributions have frozen after the initial response," he said. "I asked people to put their money where their mouth is, but that hasn't happened. Everybody wants free Wi-Fi, but someone's got to pay for it." Keegan says the city has enough advertising revenue right now to pay for the program, but Edgerton calculated that the city falls $2,000 short, based on equipment replacement costs. Keegan says it is not necessary to factor in those costs because "the equipment is good for 20 years."

"His calculations have no basis in facts," he said. "It's Edgerton math."

On Monday, Edgerton said he now believes it could cost the city more money.

"The city manager's report says it costs the city $54,000 a year," he said. "But it doesn't appear that the $30,000 from advertisers is guaranteed because they haven't all signed a six-month commitment yet. I'm not making these numbers up. They're on a document prepared by the city manager."

Even as feuding council members continue to argue the issue, a Washington D.C.-based nonprofit organization called the New Millennium Research Council released a report last week, "Not in the Public Interest -- The Myth of Municipal Wi-Fi Networks."

The report concludes that Wi-Fi is not a worthy investment for cities because it puts taxpayers' money at risk by committing them to one technology when there are other faster and better technologies, such as WiMAX, on the horizon. It questions the realism of long-term free service and equity of access issues.

The report also cites previous attempts by cities to deploy broadband, not wireless, networks that have failed.

The New Millennium Research Council is a subsidiary of Issue Dynamics Inc., a firm that plans public relations campaigns for a number of clients, including companies such as Ameritech, Bell South, Comcast, Pacific Bell, Qwest, SBC Communications, Sprint, U.S. West, Verizon and Verizon Wireless.

Edgerton said the report mirrors his major concern -- the detrimental effect it could have on the city's budget, which is already teetering on the edge of inadequacy.

"Wi-Fi is very risky and a bad idea," he said. "That's been my point from the beginning. I'm upset with the city for not doing more research even before we started looking at it. Cities tend to make the mistake of underestimating costs of projects and I think we've done that with the Wi-Fi project."

But Keegan says the infrastructure the city builds will come in handy even if it wants to switch to another new technology down the line and would not compromise taxpayer money.

"Do we put taxpayer money at risk when we build a storm drain?" Keegan said. "What if it leaks? Do we take a risk when we buy a police car or spend money on radio equipment? What if it doesn't work? Sam just doesn't want to make a decision. He wants to be on both sides."

Keegan said he added the issue to the agenda because he wants to formalize the fund-raising efforts.

"Any matter involving the community should be on the agenda," he said. "Not on a cocktail napkin at the Mermaid."

http://www.dailybreeze.com/news/articles/1240127.html

IT World Canada

To Wi-Fi or not to Wi-Fi - that is the question
By Michael Martin

To some it's the best thing since sliced bread. Others dismiss it as a waste of taxpayers money. The subject of this controversy is Wi-Fi - or more specifically, municipally funded Wi-Fi broadband.

Among those that sing its paeans are officials at the city of Fredericton in New Brunswick.

A recent release from the city begins with this enigmatic question: "How do you turn a city in eastern Canada into a true hot spot through even the coldest winter?" The answer provided: "Blanket it with Wi-Fi."

The release goes on to catalogue the benefits Fredericton experienced ever since it launched its Wi-Fi network (based on Cisco technology) a little over a year ago. These include: free broadband in public places, easy information access, high availability, saved jobs and the creation of new jobs.

Barely days after the Fredericton release, a U.S.-based research group released a report that debunked municipally funded Wi-Fi broadband networks as an utter waste of tax payers money. Of course, the group's ties to a Washington, D.C.-based campaign management firm raise questions about the objectivity of its findings.

The U.S. report, which states that municipal Wi-Fi projects cost taxpayers money and hinder private-sector Wi-Fi rollouts, was authored by an outfit called the New Millenium Research Council. The report's authors stated during a teleconference that neither they, nor the NMRC, receive direct funding from the telecommunications industry. But NMRC is a subsidiary of a firm called Issue Dynamics Inc., which specializes in producing campaigns for corporate clients. Issue Dynamics' client list is not publicly available.

Authored by a variety of think tank experts, the report states there are "grave flaws" in city-run Wi-Fi networks. It concludes that: Wi-Fi networks would likely cost more than cities anticipate; public funds used for Wi-Fi could be better used elsewhere; municipal Wi-FI networks would liely reduce Wi-Fi investment by private providers; there is no proof that Wi-Fi networks lead to greater economic development.

"The thinking is this [municipal Wi-Fi networks] is going to bridge the digital divide [between rish and poor] and provide wireless Internet at little or no cost," said David McClure, president of the U.S. Internet Industry Association, during a teleconference.

The reality though is likely to be much different, McClure noted.

"If you wipe away the thin veneer of hope and hype and overblown rhetoric, the idea of a government-run Internet operated at taxpayer expense is a really bad idea."

Rather than aiding the poor, municipally subsidized Wi-Fi access will benefit relatveily wealthy mobile workers with expensive laptops, who could afford to pay for Internet access, said Steve Titch, senior fellow at the Heartland Institute.

"We're being told government has to fund these projects, because service providers aren't building out fast enough, they're not building at all, or it's too expensive for people with limited access to afford," he said.

In fact, Titch said, the number of wireless access points available in the U.S. continues to grow, even when public access points aren't included.

Officials at Fredericton, of course, sing a very different tune. City officials believe the Wi-Fi network will help attract business to the city, while improving the quality of life of citizens. Currently the Wi-Fi network reaches about 50 per cent of computer users in Fredericton, but the city ultimately plans to extend the network's reach to 95 per cent of the computer population. Fredericton officials say the ongoing costs of the Wi-Fi network are low. The broadband fibre network connecting the Wi-Fi points was already in place and serves the Wi-Fi network using surplus capacity.

A variety of U.S. cities are considering, or in the process of deploying, public Wi-Fi networks offering free, or low-cost, Ineternet access. They include Chicago, Philadelphia, New York City and San Francisco.

http://www.itworldcanada.com/

Library Journal

Report Skeptical on Municipal Wi-Fi Plans, Supports Library Projects

A report issued Feb. 3 by a Washington-based think tank offers much skepticism about the plans by several American cities and towns, most notably Philadelphia, to offer citywide Wireless Fidelity (Wi-Fi) broadband Internet access. The report cited three key concerns, including unanticipated cost overruns, a negative impact on broadband competition because of the public project, and doubts about such projects' contribution to economic development. The New Millennium Research Council has worked with both liberal and free-market research groups.

The report warned that such projects won't close the digital divide--which could be caused by the inability to buy a computer--and that free access to the Internet at schools and libraries has not closed the divisions. Still, the researchers recommend library Wi-Fi projects as a more modest alternative to citywide service. "Even as the city of Chicago debates a major wireless network initiative, its library system is setting up hot spots in all its branches, funded and paid for out of the city's IT budget. Moreover, wireless access expands the library's current mission to provide free Internet service to the community, for which it also provides free use of PCs and wired broadband connections," the study said. Also, the study cited the possibility that government-sponsored Wi-Fi could usher in filtering requirements, as in the Children's Internet Protection Act (CIPA) ties receipt of E-rate telecomm discounts to filtering.

http://www.libraryjournal.com/

FEBRUARY 7, 2005

Seattle Times

Look who's talking
By Times Technology Staff

Efforts by Philadelphia and other cities to develop public wireless networks got blasted this week by -- surprise -- telecom industry-sponsored studies.

A report by the New Millennium Research Council (NMRC) warned of "grave flaws" in such "dubious" government schemes that could leave taxpayers stuck with a heavy burden.

The report found that the proposed municipal wireless networks are likely to be more expensive than cities expect, deplete funds needed elsewhere and unfairly compete with the private sector. But the report didn't mention the benefits of providing Internet access to residents who wouldn't otherwise have it or couldn't easily afford it.

The report was also less than transparent about the biases of its sponsor. Turns out that NMRC is part of Issue Dynamics, a telecom lobbying company, the magazine eWeek reported.

Download , a column of news bits, observations and miscellany, is gathered by the Seattle Times technology staff. The staff can be reached at 206-464-2265 or biztech@seattletimes.com.

http://archives.seattletimes.nwsource.com/

FEBRUARY 6, 2005

TechWorthy.com

Not So Fast. New Report Questions Municipal Wi-Fi

We've been singing the praises of late of plans for city-wide municipal Wi-Fi hotspots in large cities like Philadelphia, and we continue to think it's a great idea. But a new report from the New Millennium Research Council, consisting of the opinions of six leading experts in the fields of telecommunications policy, has expressed some serious doubts on the feasibility of these kinds of municipal hotspot projects. The report's authors, who include David McClure, CEO and President of the U.S Internet Industry Association, and Dr. Ron Rizzuto, an academic from the University of Denver, warned that "beneath the positive media coverage and glowing press pronouncements are troubling signs that these publicly held networks can result in less than anticipated outcomes" that will leave taxpayers to fund outdated technology from an already strained city budget.

We can only assume that the reference to "positive media coverage and glowing press pronouncements" somehow involves us. The report's primary beef is with cities' willingness to rush into these considerable projects without weighing the detrimental effects that the development of these networks could have on city budgets. And you know who funds those budgets, right? Joe six-packs like you and me. These authors maintain that, by eliminating local competition in the telecommunications industry, cities will be stunting economic growth. When you think about the City of Brotherly Love's (that's Philadelphia, by the way) agreeing to pay local Internet provider Verizon $3 billion, that is a lot of money for a giant hotspot; especially when you consider that it's money spent before the ground has even been broken on the project.

It doesn't appear that these scholars and authorities have any significant problem with the prospects of a municipal hotspot. If anything, they're probably encouraged by large municipal areas' willingness to embrace technology to that extent. Their concerns are mostly financial. Among them the potential cost overruns that would require more tax dollars to subsidize the project, damage to the local commercial broadband market, and a complete lack of evidence that this publicly funded Wi-Fi will ever lead to economic growth and more jobs for the city. McClure in particular cites an example of cities' eyes being bigger than their budgets. "The projected budgets seldom cover the administrative costs of billing and contracts," he says, as well as the costs of a fully staffed network operations center and maintenance and replacement. This whole report reeks of buzzkill, but it sounds like properly identifying the potential pitfalls of these plans isn't a bad idea. We still love the idea, though. Show us the Wi-Fi.

http://www.techworthy.com/Blog/New-Report-Questions-Municipal-Wi-Fi.htm

FEBRUARY 4, 2005

Philadelphia Daily News

Study urges caution on 'Wi-Fi' plan; Think-tankers cite problems with costs
By Michael Hinkelman

Just days before the city plans to announce details of a network that would provide wireless Internet service across the city, a study released yesterday by a Washington think tank concluded that the proposed network's benefits were based on "dubious claims" and could be a boondoggle for taxpayers.

The study, by the New Millennium Research Council, examined the so-called "Wi-Fi" networks proposed in Philadelphia and other cities, and said they were fraught with potential problems that are being glossed over by the cities.

The council was created by a consulting firm with clients in the telecommunications industry, but the firm said it had not paid any of the study's authors for their work.

Philadelphia officials claim their network, dubbed "Wireless Philadelphia," will spur economic development, cultivate neighborhoods and overcome the digital divide.

The city has said it would cost $10 million to roll out the network. Officials said there would be free access to the network in parks, low fees for residents and businesses, and discounts for the poor, for schools and for businesses with fewer than 20 workers.

But the study found that the proposed municipal Wi-Fi networks will likely cost more than cities anticipate, divert public funds from other critical needs and unfairly compete with the private sector.

The study said network proponents fail to include costs for ongoing maintenance and upgrades, as well as administrative costs for billing and collection, in their projections.

"We aren't naive enough to build this and not put upkeep costs into our business plan," said Dianah Neff, the city's chief information officer, noting that none of the study's authors contacted her.

In a conference call with reporters yesterday, Steven Titch, a telecom-policy analyst and co-author of the study, said Philadelphia already had 97 Wi-Fi "hotspots," including eight that are free. The others charge a small daily or monthly fee.

"If I were a Philadelphia taxpayer, I'd be questioning the wisdom of this whole idea," Titch said.

Neff said that 58 percent of Philadelphia households don't have access to the Net and that the main barrier is cost.

As for taxpayers, she said the city plans to build its network without using city funds or tax-exempt bonds.

Titch also said the municipal networks won't enable the poor to access the Net if they can't afford the devices that allow them to connect in the first place.

http://www.philly.com/mld/dailynews/10813588.htm?1c

Buffalo News

Urban Wi-Fi 'hot spots' criticized in report
By Fred O. Williams/News Business Reporter

Most Internet users pay at least $10 a month for their connection. But in five public "hot spots" around Buffalo, computer users can surf for free over a high-speed wireless link.

Similar urban initiatives to provide free wireless Internet came under fire Thursday by a policy study group. The trend to municipal "Wi-Fi" underestimates costs and threatens to burden taxpayers with hard-to-maintain systems, according to a report by the New Millennium Research Council.

But backers of Buffalo's public Internet say the local initiative bypasses the costs and competitive pitfalls faced by other cities.

"The Buffalo Wi-Fi model has great potential to be successful," said Les Hoffman, director of technology and training at the Erie County Industrial Development Agency, a leader of the initiative.

Buffalo's piecemeal, low-cost approach avoids reliance on taxpayers' wallets and doesn't duplicate private networks built by telecommunications companies, he said.

BuffaloWiFi.org, a public-private partnership, is the backer of the free zones, funded with help from Verizon. Verizon's foundation has recently approved an additional $20,000 grant to support the project this year, matching last year's support. The city's limited Wi-Fi zones whet people's appetite for Verizon's services instead of competing with them, the company said.

"It makes people more aware of the benefits of broadband," said Maureen Rasp-Glose, Verizon community affairs director for Western New York. The company sells Internet links for homes and businesses.

The surf-for-free zones started with one in Lafayette Square in 2003, and grew to include City Hall and Niagara Square; the Ellicott Square building and Cathedral Park; the Erie Basin Marina, and the Apollo Media Center on Jefferson Avenue. Users need a Wi-Fi modem, short for "wireless fidelity," to access the connection.

So far, Buffalo's zones have been designed as an accessory mostly in outdoor areas, for tourists and other occasional users. Access is limited to an hour at a time.

A Wi-Fi transmitter costing under $1,000 can blanket a radius of about 300 feet. Each of Buffalo's zones have a capacity of 11 million bits-per-second, about 200 times as much as a dial-up line.

Eventually, the patches of coverage could grow into a quilt that covers many public spaces, backers of the idea say. That would give have-not areas a lift and provide a new amenity for residents - one that low-density suburbs can hardly match.

"We're kind of hoping we can incrementally get to that point," said Thomas M. Tarapacki, director of the city's Office of Telecommunications. While the city provides space on its network to support some zones, its financial crisis has headed off ideas for a more ambitious network.

Nevertheless, Buffalo Common Council Member Richard Fontana said he hopes to see Wi-Fi zones begin expanding into city neighborhoods in about three years, from their current base in parks and downtown buildings.

"Technology moves fast," he said.

Encouraged by the relatively low cost of setting up Wi-Fi transmitters, urban hot zones are becoming a hot topic. Ideas for widespread coverage are generating excitement and controversy - in cities like Chicago, Las Vegas and New York.

In Philadelphia, Mayor John F. Street is backing a high-profile plan to blanket the city's 175 square miles with Wi-Fi for an initial cost of $7 million to $10 million.

That was one of the initiatives criticized by Thursday's report by the New Millennium Research Council, a group that includes the U.S. Internet Industry Association.

While low initial costs are spurring interest, "the real costs may well accrue with ongoing maintenance, upgrades, and . . . billing and collection of payment," said Braden Cox, technology counsel of the Competitive Enterprise Institute, a contributor to the report.

Some cities view Internet service as an amentity that should be universal, like water or electricity. But the free market-oriented group said that municipal investment would compete with privately funded networks. Municipal initiatives also assume traffic will justify the launch of widespread zones, but users may be no-shows, the report said.

In Buffalo, Hoffman envisions expanding Wi-Fi zones step by step, tying into existing wired connections with help from private donors. New zones could be launched in tandem with efforts to provide hardware, perhaps through groups like Computers for Children, he said.

Beaming access to places like community centers and business incubators can lift disadvantaged areas - and spur economic development - without duplicating private networks.

"It doesn't have to come into people's dining rooms" to benefit neighborhoods, Hoffman said.

http://www.buffalonews.com/editorial/20050204/1037818.asp

Telecom Reports

TR's State NewsWire

City-run wireless broadband networks such as the one currently proposed in Philadelphia are usually planned with little insight into their feasibility or usefulness, and place taxpayers at risk of paying undisclosed costs if they fail meet subscriber projections or need technology upgrades, a report released by the New Millennium Research Council yesterday said.

Attempting to buck the conventional wisdom that such systems can bridge the digital divide while also creating economic development opportunities, several authors of the report insisted there is no proof that publicly built Wi-Fi networks expand the use of broadband technology by disadvantaged populations or bring new jobs to the jurisdictions that construct them.

Instead, several said such networks raise troubling questions of their own, including whether they impede competition for broadband Internet services by private providers and create the possibility of censorship if religious organizations set up Web sites touting their beliefs on a public system.

"It has become popular . to think of citywide Wi-Fi as a good idea. It is thought it will heal the digital divide," said David McClure, president and chief executive officer of the U.S. Internet Industry Association. But it reality, he said, it is a "really bad idea . that won't stand up to the most cursory look at it."

Mr. McClure noted that most of the expense estimates released before such a network is built are never met, and that when they are, it is only through the use of tax breaks the government gives itself and without certain features, such as network redundancy and round-the-clock support, that would be expected if provided by a commercial carrier.

He also questioned the popular notion that there are companies in existence that can't get high-speed Internet access. "The truth is there is no company in the United States that can't get broadband," Mr. McClure insisted.

That runs against the views of many public officials across the country, who say they are being left behind because they have no or limited access to the technology. In Philadelphia, which is scheduled to release full details of its planned Wi-Fi network next week, authorities said they looked into building such a network because in today's technical age, broadband needs to be available to all homes and businesses. They insist that small businesses and poor residents are at a disadvantage.

But the authors of "Not In The Public Interest -- The Myth of Municipal Wi-Fi Network," cast a much different light on those issues. They said potential cost overruns could draw taxpayer dollars away from other priorities, and that "if you build it, they will come" assumptions pushed by localities are just not accurate.

Several noted that Wi-Fi access points are growing by leaps and bounds. In Philadelphia alone, there are 97 "hot spots," eight of which are free, said Steven Titch, a senior fellow for IT and telecom at The Heartland Institute.

Meanwhile, San Francisco has 399 hot spots, 42 of which are free, and Atlanta has 243, 54 of which are free. And more would become available if cities took the money they plan to spend on their own networks and instead use it to provide tax incentives for private companies to invest.

"Wireless networks are spreading," said Mr. Titch. "So I fail to see why Philadelphia needs to spend $10 million" to build its own network.

Others stated it is unrealistic to think that broadband technology should be available everywhere, especially when it is a relatively new technology.

"This is basically a five-year-old technology," Mr. McClure said. "We expect it to be everywhere?" - Ted Gotsch, tgotsch@tr.com

The Register

Municipal Wi-Fi access schemes unjust - report
By Thomas C. Greene

Government run, city-wide hotspots will unfairly tax residents for a service that only a handful will use, according to Steven Titch, co-author of a recent report denouncing the ambitions of Philadelphia, Las Vegas, New York, and others to become Wi-Fi Meccas.

"Whose internet does muni[cipal] wireless subsidize?" Titch asked rhetorically during a press conference commemorating the report's release. "The high-end professional's," he insisted.

Traveling business people and their college-aged children will enjoy the benefits of free or heavily-discounted service, while the majority of citizens, who are not equipped to take advantage of it, will be stuck paying the bills, he warned.

The negative, and in places alarmist, report comes from the New Millennium Research Council (NMRC), a telecoms industry research outfit and offshoot of Washington lobbying outfit Issue Dynamics Inc (IDI). It cites numerous conceptual flaws that the group, or its clients in the telecomms industry, believe have received too little attention.

Among these is the fact that such schemes might leave local governments in the twin roles of regulator and competitor, which the industry sees as patently unfair and ripe for abuse.

Another is the tendency of governments to underestimate the costs involved. For example, Philadelphia reckons its rollout cost, perhaps optimistically, at $60,000 per square mile, or a mere $10m to cover the city's 135 square miles. The NMRC notes that these estimates typically fail to take maintenance and administrative costs into account. And there may be something to that. "Once the Wi-Fi units have been installed, they create a self-organizing and self-healing wireless mesh," the City of Philadelphia cheerfully explains, in chirpy anticipation of a system that's cheap and easy to maintain. Another objection is that government controlled access might mean government content filtering. "I think we need to determine whether it is in the best interests of a free society to allow governments to control data transmission and distribution," Barry Aarons, from the Institute for Policy Innovation (IPI), observed during the press conference.

In all, the report worries much about problems that may never materialize. It's more a catalogue of worst-case scenarios than disinterested analysis. For example, while it cites a few disasters in municipal broadband schemes, it should be noted that these involved laying a lot of fiber optic cable. While there may be a tendency for bureaucrats and politicians to understate the full costs of any project, it's still worth noting that Wi-Fi is less expensive to deploy.

As for whether these schemes represent an equitable use of public funds, fairness is in the eye of the beholder. If a city-wide hotspot is something that most residents want and are willing to pay for, then it can't possibly be called unfair. How it's perceived will vary city to city, but it's alarmist to say that it's automatically inequitable.

The filtering issue is perhaps more tangible, since Congress has passed legislation requiring libraries to filter Internet access in order to qualify for federal funds. This illustrates the everlasting American urge to regulate the freedoms and pleasures of others, and a willingness to use child-protective hype to accomplish it. It is a real and persistent problem. But the analogy is unclear: cities that lean towards providing a sanitized, child-friendly internet will be taking on quite a bit of hassle from myriad sources, such as civil liberties crusaders, outraged users, and snippy journos. It's hard to imagine a city doing this to itself. More likely, Congressional prudes and Jesus bullies will step in at some point and demand it, applying the usual tactic of tax-revenue extortion.

The NMRC appeal to pity, that municipal Wi-Fi is unfair to the telecoms industry, is the weakest argument of all. If telcos don't want governments competing with them, they are at liberty to invest their capital and build out their own systems. But, by and large, they haven't so far, and cities are taking up the slack in response to their conspicuous lack of ambition. In a free market, there's always a price to be paid for dithering. At this point, it's a bit late to start whining about it.

http://www.theregister.co.uk/2005/02/04/city_wifi_access_schemes/

Computerworld

Study: City-Run Wi-Fi Plans May Be Flawed
By Linda Rosencrance

City-run wireless broadband networks such as those now under discussion in a number of places, including Chicago, Philadelphia, Las Vegas, New York and San Francisco, haven't been fully studied and are being touted with dubious claims about their benefits, according to a report issued by the New Millennium Research Council.

The Washington-based NMRC is an independent subsidiary of Issue Dynamics Inc., a "consulting firm specializing in public affairs and relationship-management services." Its clients include SBC and Verizon, companies that municipalities would be competing with if their plans to provide Wi-Fi service are realized.

The six authors who worked on the report, which was released yesterday, warn that if the proposals aren't studied fully, taxpayers could be left to pay for what could soon be outdated technology.

"Municipal Wi-Fi networks present a number of serious problems that are being overlooked as cities rush into committing millions in taxpayer dollars to pay for network development and expansion," the report said.

"[While] the intentions of city officials and administrators are admirable, the rollout of municipally held Wi-Fi networks will likely have a detrimental effect on city budgets and on competition in the telecommunications industry, and fail to produce the economic growth and jobs promised by municipal leaders," the authors said in the report.

"[City] ownership of Wi-Fi networks is not the solution for bridging the Digital Divide or encouraging competition in the broadband market," the report says.

The authors cited what they called "grave flaws" in city-run Wi-Fi plans, including potential cost overruns that would draw more taxpayer dollars away from other city priorities; damage to legitimate commercial broadband competition resulting from taxpayer-subsidized municipal entry; a lack of evidence that economic development and jobs will result from the new Wi-Fi systems; the fact that previous municipal attempts to deploy broadband networks have failed; and a disturbing reliance by proponents on unsubstantiated "if you build it, they will come" assumptions that are at the heart of most city-run Wi-Fi scenarios.

Despite those cautionary words, others said it's too soon to know whether the Wi-Fi networks will be a boon or bust for cities. That's because they haven't yet been built to any large extent, said Frank Hanzlik, managing director of the Austin-based Wi-Fi Alliance.

"What has been done is hot-spot kinds of applications and perhaps campus types of applications," he said. "And because Wi-Fi technology is a maturing technology, some of the uncertainty is taken out of the equation. Wi-Fi is showing up in all sorts of applications -- it works, and it's cost effective.

"The technology bugs have been worked out over the past several years," Hanzlik added, "so the challenge that cities like Philadelphia appear to be embarking on is how can they take that hot-spot concept and really put it on steroids."

This story also ran in PC World.

http://www.computerworld.com/mobiletopics/mobile/story/0,10801,99523,00.html

Federal Computer Week

Report warns against muni broadband
By Brian Robinson

Cities and municipalities who want to run their own WiFi wireless broadband networks are basing their plans on claims of benefits that have dubious merit and few facts to back them up and could be headed for "less than anticipated outcomes," according to a new report.

The New Millennium Research Council report warned that these networks present a number of serious problems that are being overlooked "as cities rush into committing millions in taxpayer dollars to pay for network development and expansion."

The research council is a project of Issue Dynamics, a Washington, D.C. firm whose clients include Baby Bells, Internet service providers and trade groups related to the communications industry. Contributors to the report include the U.S. Internet Industry Association, The Heartland Institute, the Competitive Enterprise Institute, the Beacon Hill Institute at Suffolk University, the Institute for Policy Innovation and Ron Rizzuto, a professor at the University of Denver.

Even if there are places where commercial broadband service is hard to come by, such as rural areas, there are incentives that states and cities can offer to get commercial companies to provide that service, said Barry Aarons, a research fellow for Institute for Policy Innovation's Center for Technology Freedom. Municipalities say running their own networks is the only alternative for providing cost-effective broadband access for businesses and citizens where commercial providers won't, as in some rural areas, or in some inner city areas where commercial service is still hard to come by.

Cities such as Philadelphia and Chicago have made this argument to back their plans for building city-run wireless broadband networks. But libraries and schools, which get their funding from current programs, can be better sources of broadband access for low-income areas, said Steven Titch, senior fellow for IT and telecom policy at The Heartland Institute.

City ownership of WiFi networks "is not the solution for bridging the digital divide or encouraging competition in the broadband market," the report concludes.

Also this week, Oregon lawmakers have introduced a bill that would strictly limit the situations in which local governments in the state could offer their own broadband service. It requires governments to file three year cost projections and cost/benefit analyses, hold public hearings and receive elector approval of the financing before building their own network.

If the bill becomes law, Oregon would join at least 17 other states who have similar legislation in the books, or who are contemplating it.

Meanwhile, Sens. Ted Stevens (R-Alaska) and Daniel Inouye (D-Hawaii) introduced legislation in the Senate to ensure the Universal Service Fund (USF), which subsidizes rural internet and phone service providers, continues.

The bill exempts the USF from requirements of the Anti-Deficiency Act to have cash on hand to cover its funding obligations, versus relying on collections that will be generated in the future.

Robinson is a freelance journalist based in Portland, Ore. He can be reached at hullite@mindspring.com.

http://www.fcw.com/geb/articles/2005/0131/web-wifi-02-04-05.asp

TelecomPaper (Netherlands)

City-run Wi-Fi networks are hyped, need feasibility studies

City-run wireless broadband networks (Wi-Fi) -- such as those now under discussion in Chicago, Philadelphia, Las Vegas, New York, and San Francisco -- are being hyped on the strength of dubious claims about benefits and have faced almost no hard-nosed feasibility studies, according to a major New Millennium Research Council (NMRC) report compiled by six leading scholars and telecommunications policy experts. The NMRC report authors warn that "beneath the positive media coverage and glowing press pronouncements are troubling signs that these publicly held networks can result in less than anticipated outcomes," leaving taxpayers to fund outdated technology from already strained city budgets.

The NMRC report authors conclude: " ... municipal Wi-Fi networks present a number of serious problems that are being overlooked as cities rush into committing millions in taxpayer dollars to pay for network development and expansion ... [W]hile the intentions of city officials and administrators are admirable, the roll-out of municipally held Wi-Fi networks will likely have a detrimental affect on city budgets and on competition in the telecommunications industry, and fail to produce the economic growth and jobs promised by municipal leaders. ... [C]ity ownership of Wi-Fi networks is not the solution for bridging the Digital Divide or encouraging competition in the broadband market."

Among the identified "grave flaws" in city-run Wi-Fi schemes are the following: potential major cost overruns that would draw more taxpayer dollars away from other city priorities; damage to legitimate commercial broadband competition resulting from taxpayer-subsidized municipal entry; a lack of evidence that economic development and jobs will result from publicly funded citywide Wi-Fi systems; the fact that nearly all previous municipal attempts to deploy broadband networks have failed; and a disturbing reliance by proponents on unsubstantiated "if you build it, they will come" assumptions that are at the heart of most city-run Wi-Fi scenarios.

In his contribution, U.S. Internet Industry Association President and CEO David P. McClure details the numerous expenses that cities will face to operate a Wi-Fi network, expenses not often discussed in the media. He states: "Municipal broadband networks are most frequently described in terms of the cost to build the network, and a cost to operate the networks if all economic conditions come to pass. But such accounting overlooks major elements of the cost of operations as well as the hidden cost of lost opportunities. For example, the projected budgets seldom cover the administrative costs of billing and contracts ... the cost of compliance with the myriad of state and federal laws visited upon broadband networks; or the cost of maintenance and replacement."

The Heartland Institute Senior Fellow for IT and Telecom Policy Steven Titch challenges the assertions by some cities that competition is lacking, there are an insufficient numbers of providers, and consequently that the city must deliver the service to its constituents. He notes: "While city officials often present the commercial side of the [broadband] business as concentrated in the hands a handful of large corporations, commercial Wi-Fi service providers actually run the gamut from nationwide telecom companies such as T-Mobile and SBC to specialists such as Boingo Wireless, Clearwire, Airpath, and iPass."

Dr. Ron Rizzuto, professor of finance at the University of Denver, states: "If the city is allowed to price its service below cost and use its taxing authority to subsidize the municipal operation, the private sector will have no incentive to reinvest in its network."

http://www.telecom.paper.nl/

Communications Daily

City-run Wi-Fi networks present "serious problems that are being overlooked as cities rush into committing millions in taxpayer dollars to pay for network development and expansion," said a study by the New Millennium Research Council. It said the intentions of city officials were "admirable," but the rollout of municipal Wi-Fi networks would likely have "a detrimental effect" on city budgets and competition in the telecom industry and "fail to produce the economic growth and jobs promised by municipal leaders... City ownership of Wi-Fi networks is not the solution for bridging the digital divide or encouraging competition in the broadband market." The study said "grave flaws" in city-run Wi-Fi projects include: (1) Possible major cost overruns that would draw taxpayer dollars away from other city priorities.

Cities focus on start-up costs of network deployment only, ignoring long-term financial commitments, said Competitive Enterprise Institute Technology Counsel Braden Cox, one of 6 authors of the study. But he said "the real costs may well accrue with ongoing maintenance, upgrades and for billing and collection of payment from users in those localities that charge a fee for access." (2) Damage to legitimate commercial broadband competition resulting from taxpayer-subsidized municipal entry. (3) Lack of evidence that publicly funded Wi-Fi systems will bring economic development and jobs.

"Economic data shows no specific link between broadband availability and economic development," said another author, U.S. Internet Industry Assn.

Pres. David McClure: "This may be because any business in the United States that needs or wants broadband connectivity can already have it via existing telephony, cable, satellite or wireless providers. But it is also related to the fact that connectivity alone does not create a significant impact on the core determinations of economic growth: an increase in employment or an increase in the personal incomes of residents." (4) Nearly all previous municipal attempts to deploy broadband networks have failed. (5) Reliance by proponents on "if you build it, they will come" assumptions. The study came as several major cities, such as Chicago, Philadelphia, Las Vegas, N.Y. and San Francisco, are considering municipal Wi-Fi deployment.

This article also appeared in Washington Internet Daily.

Telecom A.M.

City-Run Wi-Fi Nets Fraught with Unforseen Problems, Says Study

Even as cities fight obstacles to new municipal broadband networks, a study by the New Millennium Research Council sheds doubt on whether their plans make sense. City-run Wi-Fi networks present "serious problems that are being overlooked as cities rush into committing millions in taxpayer dollars to pay for network development and expansion," the report said. While the intentions of city officials are "admirable," grave flaws in city-run Wi-Fi projects include: (1) Possible major cost overruns that would draw taxpayer dollars away from other city priorities. (2) Damage to legitimate commercial broadband competition resulting from taxpayer-subsidized municipal entry. (3) Lack of evidence that publicly funded Wi-Fi systems will bring economic development and jobs.

Wireless Fidelity

Report: Municipalities Operating Wireless Networks Hurt Private Sector
By Josh Long Municipalities operating wireless broadband networks will not close the digital divide and they threaten to hurt the private sector, according to a report a policy group released Thursday.

The study issued by the New Millennium Research Council also claims municipalities are draining taxpayer dollars while there is no proof that wireless high-speed, or Wi-Fi, networks operated by big U.S. cities will drive investment and create jobs.

"This is not going to close the digital divide," said US Internet Industry Association President and CEO David McClure, who contributed to the report.

McClure also said municipal-controlled networks will not increase jobs in the private sector nor boost income levels.

"There is no company in America today that can't get broadband," he told reporters Thursday on a conference call hosted by the New Millennium Research Council.

In a report released in October 2004, The Heartland Institute said only about 200, or .5 percent, of the 55,000 towns and municipalities in the country were operating municipal broadband networks.

Steven Titch, a senior fellow for IT and telecom policy with The Heartland Institute, said the municipal networks are subsidizing wireless Internet service for traveling professionals, upper income executives and perhaps college-age children.

Those people contributing to the report also said municipalities potentially have an unfair advantage over Wi-Fi providers like T-Mobile USA and Wayport Inc., since they can raise money by issuing bonds, potentially stranding private investment.

Some municipalities are building wireless networks to boost economic development and expand broadband access to the public. One rationale for a municipal-owned network may be a dearth of widespread and affordable broadband access in a particular area.

Barry Aarons, research fellow with the Institute for Policy Innovation, which contributed to the report, said local governments have a number of tools at their disposal to lure private investment, such as providing tax credits.

Titch of The Heartland Institute said there are plenty of Wi-Fi hotspots in big U.S. cities. The city of Atlanta has 243 wireless Internet hotspots and 54 of those are free, he said.

"Wireless networks are spreading and they're providing economical connectivity," he said.

The researchers also said numerous cities operating wireless networks, including Marietta, Ga., have been unsuccessful projects that have lost millions of dollars.

Some reporters on the conference call questioned whether the study was impartial. Allen Hepner, executive director of the New Millennium Research Council, said the six experts and scholars contributing to the report were not compensated for their work.

The New Millennium Research Council is an independent project of Issue Dynamics Inc., a consumer and public affairs consulting firm whose clients include BellSouth Corp., SBC Communications Inc. and Verizon Communications Inc., among others, according to http://www.idi.net.

http://www.wirelessfidelitymag.com/hotnews/52h485612.html

FEBRUARY 3, 2005

EWeek

Philadelphia to Announce Wi-Fi Expansion Plans
By Wayne Rash

The city of Philadelphia will release details of its wireless expansion plan next week. The plan, according to city CIO Dianah Neff, is to cover the entire city from downtown to local neighborhoods with low-cost, wireless broadband access.

"We're getting ready to announce how we're moving forward with Wireless Philadelphia," Neff said. She added that it will include "the nuts and bolts of how we're going to move forward."

"It will include the business model and how we're using public/private partnerships to construct services, how it will be financed and time frames."

Neff said Philadelphia Mayor John F. Street will announce the wireless business plan Feb. 9 at the city's Independence Center. The plan will call for construction of the citywide network to begin midyear 2005 and finish by the end of summer 2006, Neff said. When completed, the network will cover about 135 square miles, she said.

"Our goal is to cover the entire city of Philadelphia with wireless broadband access at low rates so every person, business and visitor will have an opportunity have access to wireless broadband anywhere in the city," Neff said. She added that Philadelphia is on track to become what she called a "digital city," and that ubiquitous wireless broadband would enhance the city's economy.

Neff also said part of the city's effort is to help overcome the digital divide by providing affordable, last-mile coverage so that schools can reach out to families and to children in their homes. She indicated that low-income families would be able to receive subsidized access.

In addition to providing its citizens with access, Neff said the city would be making use of the network itself to provide access to city workers including inspectors, social workers and others who now must return to their offices from the field to file reports. She said that being able to work remotely could save as much as two hours per day per employee.

One concern for Neff and for Philadelphia has been the recent entry into the broadband fray with legislation by the Commonwealth of Pennsylvania that restricts municipal networks. The city has received a waiver for its network, but she said the public/private partnership would have kept it from being a problem anyway.

The city's business plan and subsequent RFP (request for proposal) are based on an interim wireless network in downtown Philadelphia that used equipment from Tropos Networks Inc.

The test network covered four square miles. While it's by no means certain that Tropos will get the nod to build the new network, company president and CEO Ron Sege said he thinks his company stands a pretty good chance. He said Tropos has already built similar mesh networks in 135 cities in the United States.

"Everybody is very interested in the details of who's going to use the [Philadelphia] network," Sege said, adding that it will be a private network. "It will be very similar to a cable franchise model. The city will confer certain rights and obligations."

Sege said that in order for the proposed network to operate properly, it would have to be a mesh network, which is what Tropos is providing to municipalities elsewhere. He predicted that costs would be lower to consumers than for current, public Wi-Fi networks from T-Mobile and Boingo, among others.

The mesh network "is emerging as a very promising technology that already works," said Michael Howard, principal analyst at Infonetics Research Inc. in San Jose, Calif. "It allows a wide coverage area without a lot of expensive towers."

Howard said he thinks Tropos has an edge in getting the hardware contract in Philadelphia. "They were the first one to really take mesh networking to revenue," he said. He also said he thinks Philadelphia is acting as a model for other cities. "A lot of cities will be watching that deployment to see if it makes sense for their cities and their populations."

According to Charles Golvin, principal analyst at Forrester Research Inc., the addition of city-sponsored broadband wireless will likely be very good for consumers and for the city. He said that while there's competition in the broadband market, it's a lot different from the highly competitive cellular market.

There are usually no more than two broadband providers available to most potential users, and that doesn't necessarily promote competition, he said. Instead, they form duopolies that lead to stable prices-but little else. "Duopolies don't lead to competition," Golvin said.

"The addition of a third type of broadband provider is good for consumers and the competitive environment," Golvin said, adding that competition will be improved with Philadelphia's approach because it offers something the others don't. "They have mobility, and cable and DSL do not," he said. He added that existing hot spots provide portability, but not mobility.

Colvin and Howard weren't the only analysts expressing their views on municipal wireless efforts. Today in Washington, the New Millennium Research Council presented a report claiming that municipal networks are frequently impractical, and have what the organization calls "grave flaws."

The NMRC put forth a group of handpicked experts, including Steven Titch from the Heartland Institute, who suggested that a better alternative would be to use existing wireless technology already in cities, such as what is available at existing hot spots in Starbucks and other public locations.

The presentation used Philadelphia as an example of misguided attempts at public Wi-Fi networks, but did not address the private partnership approach that the city is actually using.

Click here for a column on the municipal wireless report.

While preparing this story, eWEEK.com learned that the NMRC is actually owned and sponsored by Washington lobbying firm Issue Dynamics Inc., whose clients include most of the major telecommunications companies in the United States. Those companies have been active in opposing municipal wireless and broadband efforts. The company claimed that its reports were nevertheless completely independent.

http://www.eweek.com/article2/0,1759,1759948,00.asp

National Journal's Tech Daily

Group Warns Cities Against Providing Broadband
By Drew Clark

Municipalities should not get into the business of providing high-speed, wireless Internet connections because doing so will drain cities coffers and blunt private-sector competition, a group of experts said Thursday.

In a report and a conference call hosted by the New Millennium Research Council (NMRC), six telecommunications analysts and scholars slammed the growing move by cities, including Chicago, Philadelphia, Las Vegas, San Francisco and New York, to consider municipal Wi-Fi networks. Philadelphia plans to start its network in 2006.

"When it comes to municipal broadband networks, it is important to say that emperor is not wearing any clothes," said David McClure, CEO of the U.S. Internet Industry Association and a contributor to the report. "A government-controlled Internet, operated at government expense, is a really bad idea." In the past four years, Wi-Fi has flourished even as the telecom sector was in a deep depression. Heavily promoted by equipment manufacturers like Cisco Systems and Intel, the technology has found a particular niche on corporate and university campuses and has spread to "hot spots" run by retailers like Starbucks.

But Braden Cox, technology counsel at the Competitive Enterprise Institute, said he believes cities are focusing on the low start up costs of Wi-Fi networks to the exclusion of any long-term commitments. "Indeed, it is the low initial costs that are attractive to municipalities," he said. "The real costs may well accrue with ongoing maintenance, upgrades, and for billing and collection of payment from users in those localities that charge a fee for access."

Steven Tisch, senior fellow at the Heartland Institute in Chicago, said the economic case has not been made for cities' investment in networks when broadband is already supplied by cable, telecommunications and other providers. "This will simply subsidize Internet service for traveling professions and maybe their college-age children," said Tisch, who has written a separate report critical of Chicago's plans.

"The introduction of government ownership in a competitive market poses an enormous threat to this process that is not posed by the entry of a private provider," said David Tuerck, executive director of the Beacon Hill Institute. "If a private provider gets into financial trouble because another provider offers a superior product or lower prices, the trouble is borne mainly by the stockholders and employees of the losing provider," he said. "If a government provider gets into the same trouble, however, it is the taxpayer or, in the case of municipal electric utilities, the ratepayer who is at risk."

Barry Aarons, research fellow of the Institute for Policy Innovation, raised another concern. "How many newspapers of general circulation or television and radio stations are owned by the government? If we start [municipal networks], we have the very real possibility of government censorship" of digital content flowing over the airwaves, he said.

NMRC is a project of Issue Dynamics, a public-affairs consulting firm that has worked for Verizon Communications, SBC Communications, Sprint and other telecom companies. Allen Hepner, NRMC's executive director, said his group works independently of Issue Dynamics, adding that none of the experts contributing to the report or the call were paid.

Information Week Muni Nets Based On 'Dubious Claims,' Report Claims
By Mobile Pipeline Staff

Wireless broadband networks run by cities are based on "dubious claims" and are unlikely to succeed, a research group claimed Thursday.

"Municipal Wi-Fi networks present a number of serious problems that are being overlooked as cities rush into committing millions in taxpayer dollars to pay for network development and expansion," a report issued by the New Millennium Research Council claimed.

The report made the claim even though many municipalities, including Philadelphia, say they will use no taxpayer dollars to create their networks. Currently, more than 100 cities in the U.S. are either considering or have started deploying wireless networks and a variety of business models have been proposed, many of which involve municipalities contracting with private vendors who will charge for the service and assume the primary risk.

Still, the report focused both on the potential impact on taxpayers and what claimed were goals for the networks that can't be met.

"While the intentions of city officials and administrators are admirable, the roll-out of municipally held Wi-Fi networks will likely have a detrimental affect on city budgets and on competition in the telecommunications industry, and fail to produce the economic growth and jobs promised by municipal leaders," the report said.

Some municipalities have said that the municipal networks are needed to help the disadvantaged compete and thrive in the digital economy. However, the report also took exception to that claim

"City ownership of Wi-Fi networks is not the solution for bridging the Digital Divide or encouraging competition in the broadband market," the report said.

Individual authors of the report focused on how the municipal networks will hurt competition.

"If the city is allowed to price its service below cost and use its taxing authority to subsidize the municipal operation, the private sector will have no incentive to reinvest in its network," said Dr. Ron Rizzuto, a professor of finance at the University of Denver.

The NMRC described itself as an independent project of Issue Dynamics, Inc., a public affairs consulting firm.

This story also appeared in CMP TechWeb, InternetWeek, MobilizedSoftware, and Mobile Pipeline. http://www.informationweek.com/story/showArticle.jhtml?articleID=59300910

Dallas Morning News

Making a Connection; Town Square looks to add wireless Internet access
By Marice Richter/The Dallas Morning News

Southlake Town Square may soon go wireless.

City Council members recently gave an enthusiastic nod to pursuing wireless technology for the area and eventually other parts of Southlake.

"This is a very exciting opportunity," Mayor Andy Wambsganss said. "It would make our downtown very unique."

If the city goes ahead with the plan, Town Square visitors would be able to access the Internet or check e-mails on their laptops from a park bench, restaurant table or while waiting to renew their vehicle registration in Town Hall. City officials don't know how much the technology would cost.

Wireless users would need a wireless card in their computers.

Starbucks and Sandella's cafe in Town Square are among Southlake businesses that provide wireless service at their sites.

Southlake would be following the lead of several other local communities, including Grand Prairie, which has introduced the wireless technology - known as Wi-Fi - in some areas and municipal facilities.

Philadelphia, Corpus Christi and San Francisco are among cities working on installing citywide Wi-Fi networks.

A research organization, however, was expected to release a report raising concerns about municipal Wi-Fi systems on Thursday. The report by the New Millennium Research Council highlights failures of city-run systems, cost overruns and burdens to taxpayers, and unfair competition for commercial broadband companies.

"I'm not sure what that report will talk about, but the model we are looking at is not a citywide system," Mr. Wambsganss said Wednesday. "We're looking to create some technology hot spots but not something that is expensive or competes with private industry."

While Southlake is just starting to explore the technology, city officials intend to move quickly. "Other states have already put restrictions on municipal wireless access, and we think our Legislature could consider doing the same," Mr. Wambsganss said. "We need to get ahead of that so we could be grandfathered in."

Town Square developer Brian Stebbins said Wi-Fi would be a wonderful addition to Town Square.

"This is the future for technology," Mr. Stebbins said. "Having it in Town Square is another way for us to connect with people's lives."

http://www.dallasnews.com/

EWeek

Municipal Wi-Fi: Let's Keep It Local
By Carol Ellison

Advocates of Big Broadband took their case against municipal Wi-Fi public on Thursday with a new report from the New Millenium Research Council.

Six researchers and spokespeople from outside research organizations, all of whom contributed to the 40-page report, outlined why they think municipal Wi-Fi is a sorry idea in an hourlong conference call with journalists.

Their conclusion: "The rollout of municipally held Wi-Fi networks will likely have a detrimental effect on city budgets and on competition."

The session with journalists following that conclusion was long on rhetoric and short on data, and it was characterized by too many political commonplaces-that muni wireless is anti-competitive, that it will result in high costs to taxpayers, etc.-and just enough absurdities not to be convincing.

The best proof that Steve Titch, senior fellow for IT and telecom at the Heartland Institute, could offer for why we don't need muni Wi-Fi was JiWire. That's right, folks, the national hot-spot directory that will show you where to go in your town for high-speed Internet access when you can't get it at home or in the office.

Evidently, the point behind that "analysis" was that Wi-Fi is indeed everywhere, and you don't need your municipality delivering it to your home or business if you can get it at Starbucks.

I'm sure all of you business owners out there look forward to packing up your employees with their laptops, paper clips and cell phones each day and staking out tables at Panera Bread to conduct business over the Web.

Panera Bread may not care for the loitering but, hey, if you got booted, you could always take the office out to the car and, if the signal were strong enough, do business from the front seat. Your only worry then would be having your corporate credit account victimized by a phishing scam such as "Evil Twin." But, hey, cheer up, pal-your loss would be the free market's gain.

Titch went on to suggest that small business owners don't really need the Web to do anything other than maybe maintain their Web page, which their service provider could do for them anyway.

Hello, Mr. Senior Fellow for IT and Telecom, have you never heard the word "extranet"? How about the phrase "supply chain?" Supplies and parts are being ordered, orders are being taken, and deliveries are being scheduled every day via the Web. It's called B2B (business-to-business) e-commerce, and it's not exactly new.

In fairness to the NMRC (New Millenium Research Council), other arguments presented at the session were not quite so naive. But while the session promised to fill the gap on the dearth of in-depth analysis on the subject, it and the report that accompanied it offered many more sweeping statements about failed projects than information about why they failed.

When I asked for examples of failed projects, participants were initially hard-pressed to come up with them. They got together to offer a short list that included Marietta, Georgia; Tryon, Georgia; Ashland, Oregon; Lebanon, Ohio; and a public utility district in the state of Washington whose name no one seemed to remember (Tacoma, someone suggested).

But beyond the list, we weren't given any information about the failures. And on looking more deeply into the NMRC's report online, I learned that most of those were municipal broadband projects and that the NMRC, like the rest of us, had little in the way of detail on Wi-Fi.

That's not to say that municipal projects don't have their problems. I'm reminded of stadium-building frenzy in my hometown of Cincinnati, where the city funded separate stadiums for its football and baseball teams with cost overruns that will keep taxpayers digging into their pockets for years to come.

But I'm also reminded of stadium projects (Baltimore and Indianapolis come to mind) where the results were not abysmal. So, you do have to wonder if the NMRC's report is really serious analysis, or just a case of selective examples that support a conclusion someone might have wanted to put forth.

Who might that someone be? NMRC is a subsidiary of Issue Dynamics Inc. (IDI), which the Center for Media and Democracy describes as "a Washington-based consulting firm that organizes PR campaigns on behalf of clients."

"A number of NGOs [nongovernmental organizations] have been partnered with corporations by IDI to advocate in support of causes that the companies support," the Center for Media and Democracy goes on. "IDI characterizes these arrangements as 'win-win solutions' that bring together broad coalitions in support of the shared agendas of each of the organizations.

"However, its work has angered some consumer activists, who say IDI often does not disclose whom it is working for. They argue that IDI's work amounts to astroturf PR."

The NMRC made a point to say that none of the researchers who participated received any money from NMRC. But in case you're wondering who's paying the bills at IDI, take a look at its client list. If you don't want to read the whole huge thing, let me summarize those of interest in this issue: Ameritech, Bell South, Comcast, Pacific Bell, Qwest, SBC Communications, Sprint, U.S. West, Verizon and Verizon Wireless.

These companies favor state legislation prohibiting municipal broadband (including Wi-Fi) projects or giving incumbent carriers veto power over them, such as Pennsylvania did.

The NMRC did not call for similar legislation, although the various organizations whose experts participated in the report have done so.

Joseph Bast, president of the Heartland Institute, urged state legislators in an article that appeared on the institute's Web site last month to get behind model legislation being circulated by ALEC (the American Legislative Exchange Council).

That model served as the underpinnings of the Pennsylvania law and appears to be guiding similar proposals that have been introduced before the Illinois and Ohio state legislatures.

Bast should take a cue from his own writing. He tells us at the top of his article: "On Nov. 2, 2004, voters in Illinois' Tri-Cities (Batavia, Geneva and St. Charles) voted down referenda to approve a municipal broadband plan. It was the second time in as many years voters rejected the proposal."

Note, it was the voters in Batavia, Geneva and St. Charles who voted it down. And they're the ones to do it, not a bunch of legislators sitting in the state Capitol. The NMRC does have a number of good points to make about the efficiencies that private enterprise can achieve. There is a good argument that the telcos-with a depth of capital far greater than in a municipality's coffers-are in a better position to build, maintain and upgrade local Internet access.

But beyond the nitty-gritty of technology, if we're really talking the American tradition (which those at the NMRC session were wont to do), shouldn't it be the voters in the municipality-the people who will have to pay for these things-to decide? Not ALEC, the Heartland Institute, the New Millenium Research Council, its parent IDI, or any of the many telcos on IDI's substantial client list pushing their own agendas through state legislatures.

http://www.eweek.com/article2/0,1759,1759677,00.asp

Wi-Fi Planet

Think Tank Trashes Municipal-Run Wireless
By Eric Griffith

A report out today from the Washington D.C.-based New Millenium Research Council (NMRC), called "Not in the Public Interest-The Myth of Municipal W-Fi Networks," calls into question the necessity, the anti-competitiveness, and the overall viability of towns, cities, or counties installing wireless broadband and treating it like a public utility. However, Wi-Fi-supporting pundits point out potential issues with not only the arguments made in the report but also the objectivity of the authors, who the pundits brand as "sock puppets of industry." The NRMC was created in 1999 to "develop workable, real-world solutions to the issues and challenges confronting policy makers, primarily in the fields of telecommunications and technology." The group is an "independent project" of Issue Dynamics, Inc. (IDI), a group that has the support of such incumbent telcos as Bell South, Comcast, SBC, Sprint, Verizon and Verizon Wireless to name just a few (according to reports at eWeek.) In a phone briefing held today with journalists, the authors of various sections of the report gave a summary of their analysis, all of which uniformly question the need for any kind of government-run and funded wireless broadband system. Arguments against include:

• Anti-competitiveness: Municipal wireless networks will be funded by taxpayers. "When a private sector company fails, it must respond. But government [programs] can be propped up with additional tax dollars," according to Technology Counsel Braden Cox, counsel for the Competitive Enterprise Institute.
• Past failures: "Nearly every municipal network of the last decade has failed badly," says David P. McClure, president and CEO of U.S. Internet Industry Association. When asked directly what municipal networks had failed, speakers mentioned Marietta, Georgia, a utility district in Washington state, and others-though not all are necessarily wireless.
• Not addressing the "Digital Divide:" McClure's section of the report states that the phrase is a catchall, and can't be limited just to a lack of free broadband. He also says "econometric data shows no specific link between broadband availability and economic development." And, he says, it won't increase tourism either, since it won't offer more than the Wi-Fi already available in public access hotspots run by private companies.
• It's already covered: Steven Titch, a senior fellow with the Heartland Institute, said that major cities proposing municipal broadband (like Philadelphia and San Francisco) are already well served by existing hotspots. Citing numbers from JiWire.com, Titch says San Francisco, for example, has 399 hotspot locations, 42 of which are free. He says that most municipal networks would only cover areas like downtowns and airports anyway-areas that are usually well-covered with Wi-Fi connections already.
• Government Censorship: "If broadband ownership is by municipalities or county governments, you have the potential for government censorship that most of the journalists on this call would bristle against vehemently," said Barry Aarons, analyst with the Institute for Policy Innovation.

Glenn Fleishman, editor of the popular blog Wi-Fi Networking News, took the group to task before the report was even out in a post on February 1, after BusinessWeek's blog took the group's findings at face value. While he says he doesn't wholeheartedly oppose the NMRC's point of view, he was put off by the lack of "transparency" of the groups the authors represent. Most are seen as being possibly funded by telecom organizations, such as Verizon, which stand to lose out to municipalities doing their own wireless. (Verizon, however, gave a right of refusal to Philadelphia after first trying to block that city's network plans even after the Pennsylvania anti-muni-network law passed.)

Esme Vos has been writing exclusively about municipal wireless networks on her blog MuniWireless for two years. She's previously written about the Heartland Institute when it stated in October 2004 that that "virtually everyone who wants broadband services can get DSL from their telephone company or cable modem service from their cable company"-a sentiment they echoed in today's call. Vos said at the time, "Where is this paradise? Maybe in Seoul, Korea."

Today on her site, referring to an early article Heartland placed on its own site as a preview to today's NMRC report, she said "For some reason, it does not cite the successful municipal Wi-Fi (and wired) deployments we all know about: Chaska (MN), Scottsburg (IN), Auburn (IN), among others. No, in the world of Heartland, they do not exist."

She counters that, contrary to what the NRMC report says, the false hopes don't lay with the municipal broadband deployments, but in the "false hopes propagated for so long by the cable and DSL incumbents, the one that promises to bring fast, cheap broadband to YOUR neighborhood. Only now people are very impatient and the equipment is becoming very cheap."

Fleishman says in his rebuttal against the same Heartland article, "Municipal broadband is almost the last resort of cities and towns that can no longer wait on the promises or lack of promises from incumbents." In a perfect world, he says, municipalities wouldn't have to build networks: the private companies would already have done so "without sock puppets making their arguments for them."