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Municipal Wireless, Innovation, and Politics
Jon Lebkowsky, 20 Feb 05

At WorldChanging we talk a lot about leapfrogging, where developing regions or nations can "leap" to higher levels of development bypassing intermediate stages. Leapfrogging can occur where you don't have legacy infrastructures that impose constraints on innovation. For an idea how these constraints can work, check out the battles in states across the U.S. where telcos seek to prevent municipalities from providing broadband services to citizens. These bills are supported by large telecom corporations like SBC and Verizon. They seek protection from government- (therefore citizen-) funded alternatives that they perceive as unfair competition. However they tend to offer services only in urban markets, whereas underserved rural areas often have little expectation of broadband service delivery in the near future, because delivery of rural broadband services just ain't as profitable as urban broadband. If the BigCos don't care to provide the service, who will, especially if legislation targeting cities also prevents small towns from offering services.

Larger cities also have a rationale for offering broadband, though: economic development. Wireless Philadelphia is an ambitious effort "to strengthen the City's economy and transform Philadelphia's neighborhoods by providing wireless internet access throughout the city....to create a digital infrastructure for open-air internet access and to help citizens, businesses, schools, and community organizations make effective use of this technology to achieve their goals while providing a greater experience for visitors to the City." Philadelphia's plan was ambitious, innovative, and quickly challenged by Verizon as unfair competition:

A chief complaint: a city can draw on taxpayer dollars, while a private company has to pay interest on borrowed capital. Also, the telecoms complain, public-sector projects are subject to far less regulation.

"Verizon has always been pro-competition if all of the competitors that are providing the same kind of service are governed by the same regulations," said spokeswoman Sharon Shaffer of Verizon, the state's largest phone company and Philadelphia's dominant provider.

My question, though, is that if a significant percentage of the population lacks access to information services that could provide a significant foundation for other forms of innovation, who is going to bridge the gap, and how? If the delivery of information services is strictly the business of private companies, incumbent providers, that provide service only where a clear market opportunity exists, and only to a market that will pay top dollar for service, how will services be delivered to underserved populations. (As Clay Shirky once said to David Isenberg, "I distrust people who call for less regulation unlessthey also call for less scarcity.")

And if services are provided by subscription only, and different providers offer services in different areas, to what extent will that constrain economic development and innovation, compared to free and open wireless access in public places?

Those are two questions - one is about "digital divide," another is about economic development. Neither is well-addressed by the kind of protective legislation we've seen proposed in states like Pennsylvania, Indiana, and Texas.

On the economic development side, there are other options for offering service that's free and convenient for the end user. One option is exemplified by the Austin Wireless City Project (disclosure: I'm vice-president of the Board of Directors for Austin Wireless), a nonprofit that helps venues in Austin add broadband wi-fi as an amenity. The large and growing list of hotspots are on a network that includes a system for monitoring so that the sites can be supported by volunteer caretakers. The City of Austin partners with Austin Wireless City to provide free wireless in libraries, parks, and city buildings - a program that might go away if currently-proposed legislation is successful.

The controversy over municipal wireless is just one example of telecom constraints in the U.S. based on the legacy telecommunications system, which was a monopoly (remember "Ma Bell"?) until an antitrust lawsuit, settled in 1982, broke it up into seven regional "Baby Bells." The Telecommunications Act of 1996 attemtpted to foster competition by creating a Competitive Local Exchange Carrier (CLECs) industry to compete with the Baby Bells, identified as Incumbent Local Exchange Carriers (ILECs). Much wrangling ensued. In 2002, a group of interested and knowledgeable citizens sent a letter to FCC Chairman Michael Powell urging that the telcos be allowed to "fail fast," removing legacy constraints and making room for innovation:

We hold that the primary cause of current telecom troubles is that Internet-based end-to-end data networking has subsumed (and will subsume) the value that was formerly embodied in other communications networks. This, in turn, is causing the immediate obsolescence of the vertically integrated, circuit-based telephony industry of 127 years vintage. CLEC, IXC and ILEC bonds used to purchase now-obsolete infrastructure assets have become (or inexorably are becoming) bad debt. Weak last-mile competition prevents the most powerful technological advances from reaching all but a few customers; this is the largest cause of long-haul over-capacity.

One En Banc participant, NYU Professor Larry White, had views that seem consistent with ours. He recommends that we let firms that are failing fail as quickly as possible. We believe that it would be harmful if government actions prevent, delay or interrupt this evolution. It must proceed if the United States is to continue to be a leading contributor to communications progress, and if its citizens are to benefit from the technologies that are now available and the applications that they enable.

The telecom debacle is not a cyclical phenomenon. The telephone network's technological base, and the business model under which this old technology thrived, are obsolete. Recovery is not an option. We can only move forward; how far and how fast will be determined by our continued freedom to innovate.

David Isenberg, an author of that letter, is organizing a conference (March 30-31 in Washington, DC) called Freedom to Connect:

The future of telecommunications starts now; there's a new U.S. Telecom Act in the works, there's unbundling in Europe, fast fiber in Asia, wireless across Africa and networks a-building in cities and villages around the world. Lead the discussion. Shape the debate. Assert your Freedom to Connect.

The need to communicate is primary, like the need to breathe, eat, sleep, reproduce, socialize and learn. Better connections make for better communication. Better connections drive economic growth through better access to suppliers, customers and ideas. Better connections provide for development and testing of ideas in science and the arts. Better connections improve the quality of everyday life. Better connections build stronger democracies. Strong democracies build strong networks.

Freedom to Connect belongs with Freedom of Speech, Press, Religion and Assembly. Each of these freedoms is related to the others and depends on the others, but stands distinct. Freedom to Connect, too, depends on the other four but carries its own meaning. Unlike the others, it does not yet have a body of law and practice surrounding it. There is no Digital Bill of Rights. Freedom to Connect is the place to start.

Excellent point here: as long as policymakers and others see networks as a business, not a public good, we will be struggling for what should be fundamental and universal access to information services.

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Comments

thanks for that article, it was great.


Posted by: Eno on 20 Feb 05

The Verizon comment: "Verizon has always been pro-competition if all of the competitors that are providing the same kind of service are governed by the same regulations."

This all comes back to universal service. Verizon and incumbents are constrained by offering dial tone to everyone, for which they receive huge amounts of subsidies from taxes that we all pay. I don't hear anyone ever complain in this context that we all pay a tax so that everyone can have a dial tone at a subsidized price if necessary.

Same is true in most cable areas: there are some basic cable options that are required that are partly subsidized by the rate structure so that people can receive just a few channels. The cable company recoups that through higher prices to everyone.

But municipal networks are apparently a special case: everyone complains about the "tax" they will pay even if they don't use it, even though the municipal networks that I've heard about (dozens of them) are built as cost-recovery or cash-flow-positive enterprises.

The Verizon comment implies that Verizon is subject to regulation over data services as well as telecom. Data services are barely regulated and not tariffed in much of the country. Telecom is increasingly unregulated, and regulations have been ineffectively enforced. Verizon has the gall to state that position after failing to meet obligations in Pennsylvania and then sponsoring legislation that lets them keep the money from those failed obligations and receive incentives in the form of the ability to raise rates if they meet certain targets over a 10-year period that they probably should already have met if they're going to play this game this way.

None of this means that Philly's network is necessarily the best idea in the world. But Verizon is full of contradictions.

I also love the fact that taxpayer money and tax-free bonds are "free." That somehow money collecting in this fashion and spent on projects comes at a lower cost than private capital. When firms are sitting on billions in profit and have used the corporate tax structure to give hundreds of millions to executives while paying little or no corporate tax, this just makes me laugh.


Posted by: Glenn Fleishman on 20 Feb 05

One addition to the comments. With recent merger actions of SBC in swallowing up the "Baby Bells" the U.S. telecom market is rapidly becoming a monopoly situation again (if the industry ever really competed after 1982).

As we all know, most U.S. capitalists were absent the day the that competition theory was discussed in economics class.


Posted by: Toes on 20 Feb 05

Broadband is infrastructure. It's been confused with a utility service, like electricity, because it traditionally arrived on wires. Wireless broadband changes that. Soon, the bandwidth itself will be like a road; ISP's will be like car companies, selling you various features to take on the road. ISP's will sell features and conveniences, not the connection itself. Verizon is fighting to maintain its buggy-whip business.


Posted by: David Foley on 20 Feb 05

There are some arguments mentioning the same situation in Taiwan, which came up by 'SCSTW', a group of students studying in Communications.

:)

Though published in Chinese, the texts stand for a serious local/global concern toward digital-devide just as this artical does.

For ur reference.

http://nccu.edu.tw/92451001/line.html
http://twmedia.org/scstw/


Posted by: 作業排排長 on 20 Feb 05

In response to David Foley, I'd like to make a note that ISPs will be made obsolete since the cities will become the ISPs. I agree that wireless internet is infrastructure, but what will become our cars for the information highway will simply be our computers. Plug in a wireless network card and off you go.

As for the article itself, it was well done. The only problem I have with municipal wireless is the quality of the service. Competition increases quality, but since there will only be one service in the city, there will be no competition.

The best solution here is to have cities hire companies to build and maintain the networks, but if they are doing a bad job (equipment failure, shoddy connections, etc) for one straight month, the city should have the authority to kick the company out and hire a new one to replace the first. Everything remains the same, it's only the companies that change--of course if the new company thinks the equipment needs to change, they can do so. So long as the network works flawlessly, the company can continue to keep the premium. Yes, this means citizens will pay slightly more than they have to if all they covered was simply the network itself--however, exchanging the service for a little profit is good incentive for the company to remain as the city's wireless provider.


Posted by: cold wolf on 20 Feb 05

I've worked on community and municipal networking issues for over twelve years now and I must say I'm really feeling some positive energy.

As a former ISP, I must say their is a better approach than simply saying that (1)wireless networks is the "be all, end all" solution and that (2)service providers are a thing of the past.

(1) Communities should be designing networks that are "open access and carrier neutral" and capable of delivering at least 100 megs to the home. Now, without some serious changes to spectrum policy in the sub-Gigahertz range that goal is not achievable thru wireless alone. Wireless is a critical component and an important first step but not the endgame in and of itself.

(2) In an open access networking ecosystem there are many new roles to be played. Its a much more diverse system than our current monoculture/monopoly approach presented by our current carriers. These new roles are being played out in the European Community which is underwriting open access networks. What are some of those new roles (a) network owner (a city, utility, developer,or coop that funds an open access network infrastructure) (b) network operator (an entity that operates multiple open access networks but provides no services) (c) service provider (an entity that sells services to end users to include multiple internet services, iptv, voice, gaming, security, and many other things yet to be invented) (d) end user (people and businesses seeking to purchase IP services from service providers). Remember in this model anyone may be (c) or (d) or both (c) and (d).

In this model, (which is the norm in the Nordic countries) the network owner (ie city) does nothing other than take a % of the revenue generated by service providers. The network owner takes the revenue split to pay the bond debt and the network operator (no municipal broadband staff necessary). All other interactions are directly between the end users and the service providers.

This puts municipalities into a space they play well in which is maintaining inanimate objects (road/bridges/pipes) and NOT delivering services.


Posted by: Jeffrey Sterling on 21 Feb 05



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