Impatient Cities Supply Their Own Broadband

More than 85 years ago, Lompoc women had a hard time using electric irons because the Lompoc Light and & Power Co. supplied their tiny Central Coast town with electricity only a few hours a week.

At the same time, rumpled city leaders didn’t like being left in the dark, so they bought the private utility and ran it themselves.

Today, Lompoc is doing the same with high-speed Internet access: The city created a broadband utility to build and operate fast wireless and fiber-optic networks that deliver telephone and video service in addition to Internet access.

“It’s something the city has to pursue,” said Lompoc Mayor Dick DeWees, who believes that reliable high-speed Internet access will be as economically vital in the 21st century as electricity was in the 20th. “We’ve been on the wrong side of the digital divide for too long.”

Frustrated by the expensive and slow commercial rollout of high-speed information services, several hundred cities and towns, including San Francisco and Philadelphia, are sponsoring broadband networks of their own, typically providing free or low-cost basic service.

Most use relatively cheap wireless technologies such as Wi-Fi and WiMax, giving rise to a new shorthand for the trend: muni wireless. Public officials say such systems will spur local economies, create competition, help public safety agencies and bring broader Internet access to the poor.

“They can be healthy and something ultimately good for the communities,” said Matt Davis, an analyst at research firm Yankee Group.

But the trend rankles the phone and cable companies that supply the vast majority of high-speed Internet connections. They resent competing against some of the same cities and counties that regulate them and say municipal bureaucracies are ill-equipped to manage rapidly changing technologies.

“Broadband is a challenging and risky business and requires a lot of investment to stay at the cutting edge of technology and to provide customer service,” said Cristina Villanueva, Comcast Corp.’s general manager for Santa Barbara County, which includes Lompoc.

To blunt that sort of criticism, cities increasingly are partnering with companies to build and maintain the networks. Philadelphia, for instance, chose EarthLink Inc. to build a citywide wireless network. EarthLink will fund, build and operate the system with the city as its biggest customer.

Anaheim picked EarthLink to do the same, and the company has offered a similar deal to Long Beach. In San Francisco, which is looking for ways to provide free or low-cost citywide broadband, search engine Google Inc. turned in a bid last month to pick up the tab for a system that would provide free service for lower broadband speeds.

“What’s happening is significantly beneficial for the cities and gets them away from some of the legal debates,” Yankee Group analyst Lindsay Schroth said. “We have said from the beginning that municipalities should not think they are the best contender to build and offer services. It’s not their strength.”

Few states have embraced municipal Internet services as heartily as Michigan. The economically battered state has established comprehensive policies and a lending agency to promote construction of broadband systems, earning Michigan the top spot in a ranking of broadband-friendly states by Silicon Valley’s TechNet association.

With chronically high unemployment, Michigan has targeted broadband as a crucial tool in retraining workers, educating children and attracting high-tech and other industries.

“There’s no question about it. This is a necessity,” said David C. Hollister, director of the Michigan Broadband Development Authority. “We’ve made a commitment that we would have statewide broadband coverage and make it as affordable as possible by 2007.”

Grand Haven on Lake Michigan boasts that it was the first in the nation to be covered citywide by wireless broadband. Native son Tyler van Houwelingen put in a network that now supports mobile wireless phone calls as well as data services for 11,000 residents and about 2 million visitors a year. There are some dead zones, but new equipment is being installed, he said. As in Grand Haven, his company -- now called Azulstar Networks Inc. -- is funding and installing a network for Rio Rancho, N.M.

Michigan’s Muskegon County and the Upper Peninsula’s Marquette County were named this year as pilot wireless projects that would receive federal funding for construction of county-owned systems. Alpena, a city almost isolated on the Lower Peninsula’s northeast Lake Huron shore, has five wireless broadband carriers, though most aren’t actively marketing yet to the 13,000 residents.

“We seem to be over-served, but there are still a lot of people who don’t have access,” said Chad L. Repke, the city’s director of information systems. “And there’s still a lot of dead spots.”

One of those providers is Glenn Wilson’s M-33 Access Inc., which has built the nation’s biggest high-speed wireless network, going through 15 northeast Michigan counties, or about 10,000 square miles.

Oakland County, an affluent enclave for Detroit’s auto industry executives and home to the Detroit Pistons basketball team, boasts that it is developing the latest urban model with construction of a high-speed wireless network that would give all 1.2 million residents in the county free Internet access.

Under the plan, private companies would install, own and operate the network, putting antennas on city and county buildings. But the county would set the rules, including one to provide free service at lower broadband speeds.

For County Executive L. Brooks Patterson, who surprised residents in February with his wireless plan, it was important to build the first countywide broadband system in a major metropolitan area, not only to reach rural and poorer people but also to boost the economy.

“When you’re the first wireless county, you can parlay that into some economic development,” he said.

That’s what Lompoc officials hope too. California cities are part of one of the world’s biggest economic engines and have some of the nation’s most tech-savvy citizens. But small towns such as Lompoc, with 43,000 residents, often get bypassed by private companies, which can make more money by rolling out services to richer, more urban areas.

“Lompoc has a history of being marginalized across the board,” said Kathleen A. Griffith, the city’s economic development chief. “So broadband was just one more technology that was not making its way off Highway 101.”

Lompoc launched its efforts with a feasibility study and public hearings over three years. The study included surveys showing that about 61% of the residents would buy some level of high-speed Internet service from the city and that 94% of the local business community wanted a broadband system built.

City officials said they didn’t get good or reliable service from their cable and phone providers -- Comcast and Verizon Communications Inc.

Comcast’s Villanueva faulted Lompoc’s feasibility study for what she said were overly optimistic views on how many residents would buy service and for underestimating Comcast’s commitment to upgrade its network. Early this year, she said, Comcast completed an $18-million upgrade and now provides Internet connections as fast as 8 megabits per second, or 16 times faster than standard dial-up.

But John Greenly, Lompoc’s wireless service chief, said Comcast had been promising upgrades for 10 years and didn’t start replacing old coaxial cable until after the city committed to its broadband plan.

Mayor Pro Tem DeWayne Holmdahl, who broached the broadband idea in 2002, said residents were fed up with poor cable modem and digital subscriber line, or DSL,service. “The equipment wasn’t working satisfactorily; there often was down time; customer relations was poor,” he said.

Verizon spokesman Jonathan Davies acknowledged that Lompoc was low on the list of cities to get DSL, but he said the company was still upgrading its service in Lompoc.

The city has spent $1.7 million on the wireless phase, which is expected to be launched in December. The City Council will review the system sometime next year before authorizing construction of the fiber optic network. The total project cost is estimated at $26.5 million.

The city is not using any taxpayer money. Lompoc borrowed $2.6 million from its city-owned -- but independent -- electric utility to put up the wireless system and operate it for two years, at which time the cash generated from sales is expected to support the system.

The city plans to sell bonds to raise money for building the fiber optic network, paying off the entire project from revenue generated by the broadband utility.

Cable firms have the most to lose with municipal high-speed systems, Yankee Group analyst Davis said. But he said phone companies, which are laying out fiber optic networks to offer video and compete with cable companies, should think about joining forces with the city.

“We’d encourage the phone companies to take a hard look and ask, ‘Are they ever really going to build fiber into places like Lompoc anyway?’ ” Davis said. “Video may be difficult for cities to secure, so if I’m Verizon, I’d want to become their partner.”

Both Greenly and Verizon’s Davies hold out the possibility of a partnership, though no discussions have taken place. A partnership could help the city defray some of the costs of building a fiber optic network.

Businessman Martin Van Enoo, upset with how often and how long his Verizon DSL Internet connection goes down, wants Lompoc involved, even if it means the city would compete against private companies.

“I’m a firm believer of competition,” he said. “People like Comcast and Verizon have too much power in the market. They need a kick in the pants.”