Free Net access from the mayor?

For all their high-tech prowess, America's communications companies aren't exactly racing to offer people high-speed Internet access. The United States ranks 10th in the world - far behind countries including No. 1 South Korea - in providing such access. This year both major presidential candidates promised to help America catch up.

But dozens of cities and towns across the country - from Chaska, Minn., to Corpus Christi, Texas - can't wait. If companies won't wire them up, they're doing it themselves. Using wi-fi, a wireless broadband technology, they're blanketing their neighborhoods with free or low-cost access to the Internet. In these "mesh" networks, short-range transmitters are quickly installed on lampposts and other locations, creating an inexpensive system.

Such civic activism, however, has upset telephone and cable companies, who view the wi-fi networks as unfair competition. They have spent billions of dollars digging up streets and laying cables to provide landline broadband connections. Now, local governments are using public access - and cheaper technology - to cut into their business. The battle could determine who will provide your Internet access and how much you'll pay.

Pennsylvania Gov. Ed Rendell, for example, recently signed into law a bill that bars municipalities from operating and charging for telecommunications services unless it first offers the opportunity to the local phone company. That law threatened to scuttle a plan by Philadelphia to become the largest US city to provide wi-fi service free or for a modest charge to all residents by blanketing the city with transmitters. In the end, Verizon Communications agreed to give up its right to build the system, and the plan appears to be back on track.

Pennsylvania's new law is a "model for how to go into a state legislature, spend a lot of money lobbying, and restrict a city's right to provide broadband service for its citizens, to promote economic development, and bridge the digital divide," says Matt Stone of Civitium LLC, a telecommunications consulting firm that is advising the city of Philadelphia on its wi-fi system. At least 15 states now regulate a city's right to be a telecommunications provider, and efforts are under way to introduce similar bills in other states, he says.

Established Internet providers say they're all for hooking up more Americans to the Web. But cities and towns have unfair advantages, such as free access to public spaces to install transmitters.

"The issue becomes a level playing field so that you don't discourage investment," says Jack Hoey, a Verizon spokesman. "Good public policy is encouraging private investment, not discouraging it."

Cities can expect more pressure from established providers in 2005, says Jim Baller, a lawyer who represents cities undertaking telecommunications projects.

Very few cities and towns actually run the wi-fi service themselves, but contract it out to private firms, adds Esme Vos, an intellectual property lawyer and founder of muniwireless.com, an online blog that tracks how cities and towns use wireless technologies.

Cities are eager to set up wireless systems, Ms. Vos says, regardless of whether the public gains access. Wireless communication can be used for automated gas-meter reading, traffic monitoring, and police and fire department communications. There's no reason for governments to wait because they can quickly save money and increase productivity just in these areas, she says.

Wi-fi is not just Internet access but "a grid that you can plug into to run a lot of different applications," points out John Yunker, an analyst who closely tracks emerging wireless technologies in his newsletter, The Great Unwired.

One hospital, which put wi-fi connections on its wheelchairs, found that it could pay for the entire wi-fi system through money saved because the expensive chairs were no longer being stolen, he says. "Internet access is just gravy" for the hospital.

By "taking the litigation route instead of the innovation route," existing providers "create the impression they're standing in the way ... of rapid deployment," Mr. Yunker says. "Most cities don't want to be in this business," but private companies just aren't moving fast enough, he says.

Hermosa Beach, Calif., is offering free citywide wi-fi networking by allowing merchants to advertise on it, Vos says. Atlanta is moving ahead with a citywide rollout that involves a partnership with a private company, Biltmore Communications Inc. Residents are expected to pay less than $10 per month for the service. Telephone and cable TV companies often charge $35 to $60 per month for a broadband Internet connection, which works at a speed similar to wi-fi.

Cellphone companies such as Sprint or T-Mobile may also face competition from the widespread availability of wi-fi. New handsets now coming on the market can place phone calls over the Internet using wi-fi signals, potentially cutting the use of cellphone minutes.

Though the Pennsylvania law, and those in other states, may slow installation of wi-fi systems in cities, the trend looks unstoppable, some observers say.

"What has to be worked out," says Roberta Wiggins, a research fellow at the Yankee Group in Boston, "is who manages and provides the service."

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