Wireless Philadelphia chooses three finalists

"Philadelphia is the first major city to announce the deployment of a city-wide wireless Internet, covering 135 square miles..."

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The Daily Item | Business News | July 21, 2005
Wireless Philadelphia chooses three finalists

PHILADELPHIA (AP) — Wireless Philadelphia has chosen three finalists to design, deploy and maintain high-speed wireless Internet access in the city: consortiums led by AT&T, Hewlett-Packard and Earthlink.

AT&T has partnered with Lucent and BelAir Networks while Hewlett-Packard’s group encompasses Aptilo Networks, Alvarion, Business Information Group and Tropos. Earthlink linked with Motorola Canopy and Tropos.

Wireless Philadelphia, a nonprofit organization overseeing the deployment of a wireless network covering the entire city, gave preference to proposals offering a complete system instead of partial services, said Dianah Neff, the city’s chief information officer who is overseeing the effort.

The nonprofit weighed the merits of 12 proposals — eight of which offered "turnkey" solutions.

Neff said the group considered not only cost but coverage, performance and the technology’s "ability to scale," or expand to accommodate more users.

Wireless Philadelphia will choose the winning proposal July 29 and another one as a backup, Neff said. At that time, negotiations over contract details will begin. Once the seven-year contract is awarded, the chosen group’s performance will be reviewed yearly.

"This is a great opportunity for HP," said Enrique Barkey, worldwide director of the company’s Civilian Agency Solutions unit. The concept of "digital cities is really getting a lot of traction and we want to be a key player in this market."

According to its proposal, HP would act as a sort of project manager, overseeing the creation, integration and maintenance of the system, he said.

Philadelphia is the first major city to announce the deployment of a city-wide wireless Internet, covering 135 square miles. The goal is to give low-income residents access to affordable high-speed Internet services, since the project expects to price services at $16 to $20 a month. The service will be open to all income levels.

"We’re the best deal in town," Neff said.

The cost to deploy, maintain and support the project is estimated between $15 million and $18 million, Neff said. It will be financed by bonds, foundation grants and low-interest bank loans. The initiative, which should go live by next summer, expects to see positive cash flow in its second year of operations.

Wireless Internet speeds are expected to range from 1 to 3 megabits-per-second, Neff said. That’s comparable to digital subscriber line, or DSL, speeds.

The city will own the network and sell space to Internet Service Providers, or ISPs, such as Earthlink. In turn, the ISP will deal directly with the customer. Consumers who want wireless Internet access inside buildings or homes will likely need to get a bridge or a router, which Neff estimates as costing anywhere from under $85 to as much as $130.

But ISPs vying for customers might offer discounted or free equipment with one-year contracts.

Neff also said she’s talking with DirecTV and Echostar, which owns DISH Network. The two satellite TV giants offer high-speed Internet access through partner ISPs.

Ron Sege, president and chief executive of Tropos, a maker of Wi-Fi mesh equipment that’s a partner in two proposal finalists, estimates that more than 300 U.S. cities and towns will be involved in municipal Wi-Fi projects by the end of the year.

"This is a very rapidly growing phenomenon," he said.

His company’s products are used in about 200 cities nationwide, where customers pay $20 or less a month for wireless Internet access, Sege said. In Chaska, Minn., consumers pay $16 a month.

The wholesale cost to operate and maintain the network runs about $8 to $10 per subscriber and the ISPs charge about double the rate, Sege said.

Municipal Wi-Fi’s pose a threat of varying degrees to phone and cable companies. Verizon has been more vocal about municipal Wi-Fi cutting into its high-speed Internet business, but Comcast Corp. also is getting a bit worried.

The nation’s biggest cable company has approached the mayor and members of the City Council "one on one" to express its concerns, Neff said.

The cable operator said it sees flaws with Philadelphia’s wireless undertaking.

"Based upon our understanding of the current Wireless Philadelphia approach, we are skeptical of the plan’s feasibility," said David Cohen, Comcast’s executive vice president and a former top city official, in a statement. "Investment in a competitive, challenging and risky business like broadband is something better left to private companies, not taxpayers or quasi-governmental entities. We do not believe that it is appropriate public policy for the government to subsidize our competitors."

Neff counters that phone and cable companies were subsidized for building telecommunications infrastructures — not only in terms of tax breaks, but cable companies were given a monopoly over the areas they service.

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