Slugging it out over muni Wi-Fi

Two views on the heated debate over city-sponsored Wi-Fi networks

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Second, in most cities, the financial risk is being assumed by third parties, Vos said. For example, EarthLink Inc. is paying the cost of installing the wireless network in Philadelphia. EarthLink gains access to city-owned utility poles but is getting no direct subsidies from the city, Vos said.

"There's relatively little risk [to taxpayers], because in that model, the city doesn't spend any money," Vos said. "They put out public tender and ask somebody to bear the cost." Providing access to city-owned assets like utility poles is necessary to keep the price down, Vos said.

In addition to selling access, EarthLink also must keep the network open so that other providers can sell access. That makes EarthLink both a wholesaler and retailer of access services. That helps EarthLink, and it helps ensure a competitive atmosphere for connectivity, Vos noted.

Balhoff says that despite appearances, there is risk to taxpayers.

"If it's so attractive for EarthLink to absorb the entire risk, why wouldn't they go in there without the headache of aligning themselves with the city of Philadelphia?" he asked. "Instead, it gets a partial endorsement from the city, and there are financial advantages that will accrue to EarthLink that, in effect, use taxpayer dollars and potentially create conflict of interest."

One concern should be what will happen if entities like EarthLink don't make enough money, Balhoff said. He stressed that the subscriber projections he has heard for Philadelphia are overly aggressive, and if subscription numbers aren't met, EarthLink's commitment could waver.

"They'll back away or cut their investment," Balhoff predicted. "The city believes it has gained an agreement with EarthLink to achieve certain public policies for effectively no financial risk. That's what's been presented to the press, but the reality is that EarthLink would not do something like this unless the risk was mitigated."

Is the technology up to the task?

The two sides in this debate also disagree about whether current technology is up to the task. For the foreseeable future, these projects will use Wi-Fi mesh technology, which creates a single large network using a series of special Wi-Fi access points placed strategically around the city, mostly on utility poles.

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