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Fed-Up Cities Seek to Provide Net Access

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Of all the monopolies, oligopolies and other arrangements that subvert progress merely to benefit the few, perhaps the most pernicious is the conspiracy by telephone and cable companies to exercise control over high-speed Internet access.

DSL and cable modem connections provided by these companies account for roughly 98% of all high-speed, or broadband, service in the country. But their success at discouraging competition has left them gorging on a pitifully small pie: In recent years, the U.S. has fallen from third place to 16th globally in the penetration rate of broadband service. (Chauvinists can take pride that we’re still ahead of Portugal.)

It’s unsurprising, therefore, that many local communities have taken matters into their own hands by building or contracting for their own municipal Internet systems. Generally these blanket an area with transmitters based on Wi-Fi wireless technology to bring Web access to residents and small businesses.

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The latest experimenter is San Francisco, which is mulling over 26 proposals it has received to lay a wireless mesh over its 49 square miles of hills and valleys. Among the bidders is Google Inc., which has offered to provide free, advertiser-supported service citywide. (The service would be a relatively slow 300-kilobit connection, however.)

San Francisco’s venture was launched last year by Mayor Gavin Newsom, whose goal was free municipal wireless access for every resident. His rationale was that “broadband and the Internet had become fundamental tools for everyday life,” Chris Vein, the city’s director of telecommunications and information services, told me. Internet access was no longer a privilege or a luxury, but a necessity. The city judged that SBC Communications Inc. and Comcast Corp., its phone and cable franchisees, hadn’t met the challenge, so it asked for alternatives.

In this, San Francisco is a laggard. Philadelphia, which is hoping to use universal access as an economic development tool, is contracting with the Internet service provider EarthLink to build a citywide net by the end of next year. EarthLink will pay for and own the network. The city’s specifications mandate free wireless hot spots at locations such as parks and libraries, but allow the company to charge a monthly fee of about $20 ($10 for the economically underprivileged) for home service.

Los Angeles, by the way, is even further behind -- it hasn’t moved beyond a free pilot wireless system at a community center in Van Nuys.

Big cities aren’t the only communities in the market. In Southern California, Cerritos (pop. 53,000) leased its municipal light poles to Woodland Hills-based Aiirmesh Communications as wireless towers in 2003. Long Beach and Anaheim are considering similar deals.

These communities have acted because they were fed up with the underachieving phone and cable companies, which have always displayed the usual characteristics of entrenched monopolies: They’re slow to innovate, expensive and arrogant.

Their sluggish rollout of broadband, especially in poor communities, is a national disgrace. Our Stone Age connection speeds are embarrassing -- even the heartiest DSL connection in the U.S. is less than a tenth as fast as what’s available to subscribers in Japan or France. The standard $40-$50 monthly cost of broadband in the U.S. is double or more what those users pay too.

Despite this sorry record, the Federal Communications Commission has supported the incumbents’ quest to emasculate all competition, chiefly by allowing them to stonewall rival Internet providers seeking wholesale access to their high-speed lines.

The harvest is a widening gap between the technological haves and have-nots. Philadelphia’s local carriers claim their broadband lines reach 80% of all residents, but “that means 90% coverage in the affluent neighborhoods and 10% to 25% in the poor sections,” says Dianah Neff, the city’s chief information officer.

The phone and cable lobbies have put up a savage fight against the municipal ventures. The most notorious case was in Pennsylvania, where Verizon Communications Inc. got a law passed barring any city from offering telecommunications services for a fee without obtaining permission from its local phone company. (Philadelphia was exempted, however.)

In Congress, a bill forbidding localities from offering such services in competition with private companies has been introduced by Rep. Pete Sessions

(R-Texas). Sessions, a former employee of SBC Communications, a leading DSL provider, is sitting on pants full of SBC stock options worth more than $500,000, according to his 2004 financial disclosure.

Despite burgeoning municipal interest in Wi-Fi, the best model for financing -- city-owned, private franchise or a combination -- is still up in the air. Budget constraints have taken the glow off the old dream of building public networks with city funds. Philadelphia gratefully abandoned its plan to use its own capital when EarthLink offered to build the system itself.

“We didn’t believe that a municipality should spend taxpayer money to invest in a private network,” says Don Berryman, head of municipal networks at EarthLink. The company believes that building its own systems as a franchisee will give it more flexibility to compete with local carriers, he adds.

But private firms may not be able to give cities the service they expect. Aiirmesh has signed up fewer than 1,000 residential customers in Cerritos, possibly because it charges a steep $49.99 a month for service and can’t afford to cut rates.

Technical challenges also loom. San Francisco has stepped back a bit from Newsom’s original vision of universal free service, in part because the city’s topography will add costs to its system. The city’s near-term standard, Vein says, is for the service to be “affordable.”

But local governments plainly see that Internet access is too important to be left to market forces. “This is about bringing economic vitality to underserved communities,” Neff says. “We’re changing the face of the city.”

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Golden State appears every Monday and Thursday. You can reach Michael Hiltzik at golden.state@latimes.com.


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