Boston 's 'Disruptive' Path to Wireless

— August 16, 2006

As city-spanning wireless Internet services sprout nationwide, officials in Boston are planning a novel approach intended to spur innovation and provide some of the country's cheapest broadband.

Communities typically choose to build networks with public funds or pass the job to an Internet service provider such as Atlanta-based EarthLink Inc., which is making the emerging world of municipal Wi-Fi a major part of its business.

Boston officials say their "highly disruptive business model," which puts a nonprofit group in charge, is a strong alternative.

"A lot of cities are looking at us now," Mayor Thomas Menino said in an interview. "The nonprofit approach gives us the ability to have a lower cost for the user. A commercial approach is more likely to allow for a situation where the goals of the city and the corporation diverge."

Menino said the plan is more difficult than handing the job over to a company like EarthLink, but the city wants the network for the public good, while "a corporation is primarily focused on making money."

EarthLink, an early industry leader whose major projects include the construction, management and ownership of Philadelphia 's upcoming wireless system, declined requests for comment.

Boston 's plan began a new phase this month with a search for a nonprofit to raise $16 million to $20 million in private money to build the network, which will use radio transmitters on city light poles and buildings to blanket Boston 's nearly 50 square miles with Internet access.

The city's wireless task force, which studied other community wireless plans and issued a report July 31, predicts Boston's network will be running within two years, using Wi-Fi technology like that found in many homes, airports and coffee shops.

As envisioned, the nonprofit would own the network, likely hiring companies to build and manage the system.

The nonprofit would also act as a wholesaler, selling access to Internet providers and entrepreneurs who could offer a range of service plans, from free ad-based access to subscription plans costing as little as $10 a month, officials said. Those providers could include national ISPs such as EarthLink and Comcast Corp., local companies and nonprofit groups.

Another goal is to improve city services, such as transmitting blueprints of burning buildings to rushing fire trucks. The city would pay as a wholesale customer.

Boston officials acknowledge their approach has risks, including finding a nonprofit with the right expertise and resources and the possibility of legal challenges from area providers. Two of the largest are Comcast and Verizon Communications Inc.

Industry experts also are mixed on Boston 's plan.

"I'm not sure it is a good assumption that just because they don't need profits that they can or will sell wholesale access for less," said Jupiter Research analyst Julie Ask. "Typically those who are motivated to make money innovate and drive costs down."

But Esme Vos, founder of Muniwireless.com, a news portal for municipal wireless projects, said companies like EarthLink that spend millions to build city networks need to recover their investment.

"They have to squeeze as much money out of the subscribers as possible, and that means they have to price the broadband at a certain level that may not make it as easily affordable for low-income families," she said.

While Boston 's plan will function in much the same way as Philadelphia 's does under EarthLink, Boston will have more control through its nonprofit, Vos said.

Many cities pursuing wireless with private companies have used contracts and other oversight to ensure low access costs and competition.

Philadelphia 's contract with EarthLink requires technology upgrades and allows a city nonprofit to act as an ISP with cheaper rates if market prices escalate, said Dianah Neff, Philadelphia 's chief information officer.

Philadelphia plans for its network to be running citywide by the fall of 2007. On Thursday, the city switched on the first Wi-Fi antenna in a 15-square-mile test area, a key milestone meant to prove EarthLink's ability to deliver.

"We think they'll do just fine," Neff said. She said that from the start, "EarthLink demonstrated that they understood what our passion and goal was for digital inclusion and economic stimulus in our underserved neighborhoods."

Philadelphia abandoned early plans to use a nonprofit as a network owner.

"When we went out to finance that, that wasn't so easy," Neff said.

Jupiter's Ask also said companies such as EarthLink and Google Inc., which are partnering to build a San Francisco wireless network, have expertise and an operational scale that is hard for cities to match on their own.

The success of city wireless efforts will not be known for years, Vos said, but if Boston 's "very bold and very brave" approach succeeds, it could become a model for other cities. She said the "EarthLinks of the world would love it if cities and nonprofits were the ones to make the first investment."

Others in the industry disagreed.

"EarthLink wants to build and own the networks. That's where the value is for them," said Jonathan Baltuch, president of Atlanta-based Marketing Resources Inc., which advises communities on Wi-Fi projects. He said that as EarthLink winds down its dial-up access business, municipal wireless is "very important to their future business."

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