'Wireless Philadelphia' Sparks Concern

By Michael Singer

December 02, 2004

Philadelphia's controversial plan to create low-cost wireless Internet service is fueling a debate among Wi-Fi technology firms over business models.

SAN JOSE, Calif. -- Philadelphia's controversial plan to create low-cost wireless Internet service is fueling a debate among technology firms at the Wi-Fi Planet trade show here.

Pennsylvania governor Edward Rendell signed a telecommunications bill late Tuesday allowing the sixth-largest U.S. city to continue its "Wireless Philadelphia" project, which includes building a mesh network that makes the city one live hot spot.

The bill was divisive because it revised a state public utility code that prevents cities from owning and operating telecommunications systems. State PUC rules outlined the circumstances under which a competing telephone company like a Verizon Wireless could use the network of the local carrier. A separate agreement signed hours earlier between city leaders and Verizon merely served as a hedge against a possible veto.

Verizon agreed to waive its right of first refusal regarding Philadelphia's proposed municipal Wi-Fi network, which guaranteed the project would proceed. Now, other cities in Pennsylvania have until Jan. 1, 2006 to give their local phone company first dibs on supplying access for any municipal Internet in the works.

"We will work with other municipalities on projects that they have established or propose to establish in order to ensure that, to the extent that they are now viable, they will also have the opportunity to succeed," Governor Rendell said in the text of the bill.

Verizon also said it would make additional contributions between 2006 and 2011 of up to $3 million to ensure every school has access to broadband service.

"Last night's action caps more than two years of discussion, debate and negotiation among many parties," said James O'Rourke, president and CEO of Verizon Pennsylvania, in a statement. House Bill 30 builds on the solid telecom foundation laid over the past decade to deliver broadband services throughout the commonwealth."

But Philadelphia-type plans have ramifications beyond just the digital divide debate. Vendors queried at the Jupitermedia Wi-Fi Planet Fall Conference & Expo here were quick to respond to how Philly's actions to spread broadband access could impact the wireless LAN industry.

"As soon as you standardize the technology, the only differentiators will be level of service and price. If you are working with free, that is hard to compete with, said Chris Couper, Chief CTO for IBM, during a keynote address.

But Couper and others suggested a free citywide Wi-Fi service may not be the pariah it once was. Certainly Verizon would not have lobbied the way it did unless it felt it would give it a competitive advantage or a bigger bottom line.

Other metro areas are monitoring Philadelphia's movement. Implementation is on a fast track, with requests for proposals to vendors to be released early in 2005. The goal is similar in many other localities in Florida, the Caribbean, Latin America and in Europe.

Couper said even in the consumer market Wi-Fi partnerships like the one between McDonalds and Wayport are putting pressure on T-Mobile to allow free access at its Starbucks locations. T-Mobile's service is now paid.

Fellow IBM exec James Keegan mirrored Couper, saying that public service providers are now focusing on growth, new services and customer retention after years of focus on cost control.

"We're seeing a lot of push in the public sectors, said Keegan, a vice president with IBM's wireless e-Business division. "They want us to buy camera phones, but that is just a scratch on the surface."

Kevin Jaskolka, a senior channel marketing manager with Nomadix, said the Philadelphia story was actually expected in early 2005 and that signing a deal now only helps companies develop strategies to augment municipal Wi-Fi.

"The operative question to ask is that is this detrimental to mesh or adding to it?" Jaskolka told internetnews.com.

Jaskolka said Nomadix is working on software that allows users to maintain access no matter where they travel under the municipal Wi-Fi umbrella. The platform -- Dynamic Address Translation -- would work under any configuration without any client side fixes or a reboot.

The company currently is rolling out the service in Hermosa Beach, Calif., and New York.

The Wi-Fi Planet show is produced by Jupitermedia, the parent company of this site.



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