Heartland Statement on Philadelphia WiFi Agreement with EarthLink

Published February 1, 2006

On Monday, January 30, the city of Philadelphia announced it had finalized a deal with EarthLink to provide a citywide wireless (WiFi) network that would cover 135 square miles. Philadelphia is the first large city in the U.S. to create such a system. The plan now goes to the Philadelphia City Council.

As Philadelphia finalizes its contract with EarthLink for a citywide wireless broadband system, Chicago is scheduled to announce its own municipal wireless plan next week.

Based on news reports, Chicago, like Philadelphia, has abandoned the idea of asking taxpayers to fund the construction of a city-owned network and instead plans to seek bids from vendors and commercial service providers. This is a welcome development and continues a pattern where cities and towns across America have considered, but rejected as too costly and too risky, the government-owned broadband utility model.

Still, we must make sure there is transparency and fairness in the process, especially in cities like Chicago, where there is no shortage of wired and wireless broadband service providers. Cities should be wary of simply substituting a city-owned utility with a city-approved franchise that benefits from special favors.

The EarthLink contract for Wireless Philadelphia must be approved by the Philadelphia City Council, which has raised questions about pole attachment fees and other right-of-way concessions EarthLink is receiving. There is legitimate concern that if any of these fees have been discounted, the city may be legally obliged to offer all other utilities the same discount. And while some details of the Philadelphia deal emerged this week, there still is no information about retail pricing, technical specifications and requirements, or what penalties, if any, EarthLink will face if it fails to complete build-out by the proposed completion date of spring 2007.

In a January 31 Chicago Sun-Times column, Ted Pincus correctly reminds us that, for all the hype about municipal wireless, there has not yet been a large-scale citywide system deployed anywhere in the world. Meanwhile, the concept continues to change as city leaders try to outdo each other to make headlines as the “next wireless city.” In the rush, “municipal wireless” has every chance of ending up as nothing but a grant of special status to a politically favored provider in an otherwise competitive market.

While the granting of exclusive franchises is not as egregious as a municipality using taxpayer dollars to compete head-to-head with the private enterprises they tax and regulate, it is still a questionable role for local government.

Steven Titch ([email protected]) is senior fellow – IT and telecom policy for The Heartland Institute.