Phone Giants Try to Block Towns' Wireless Internet
from
http://www.rednova.c...towns_wireless/GRANBURY, Texas -- After years of waiting for a local phone company to roll out high-speed Internet access in this growing lakeside town of about 6,400 people, municipal information- technology director Tony Tull took matters into his own hands. The city last year invited a start-up telecom firm to hang wireless equipment from a water tower and connect the town.
The network now provides high-speed wireless Web access to most of Granbury, and the town is negotiating to buy some of the equipment. But Granbury's foray into the wireless business has propelled it into a battle between cities and technology companies on one side and big telephone companies on the other.
SBC Communications Inc., the dominant phone company in Texas, and other big phone companies say cities should not be allowed to subsidize high-speed Internet connections - even in areas where the companies don't yet offer the service. Since January, lawmakers in at least 14 states and the U.S. Congress have introduced bills to restrict local governments' ability to fill the gap.
On the other side of the fight, along with Granbury and dozens of towns like it, are Intel Corp., Dell Inc., Texas Instruments Inc. and other tech companies. They stand to gain from the sale of chips, wireless-enabled laptops and other products that use fast Internet networks.
Around the country, governments are contracting with providers other than the local telephone or cable companies to build or run the networks using Wi-Fi technology or fiber-optic cables. Wi-Fi, short for wireless fidelity, provides high-speed access to the Web.
Traditional telecom providers view such projects as a threat and are pushing for laws to curtail them. While the phone and cable companies control the valuable "last mile" wired connections into homes and offices, the wireless networks use antennas to bypass those lines and can connect directly to the networks of long- distance companies or fiber-optic providers. Plans for such government-coordinated networks are spreading from rural America to larger cities including Philadelphia and San Francisco, and big phone companies have stepped up their efforts to stop them.
The battle is increasingly significant as telephone companies like SBC count on their high-speed Web access businesses - which generated roughly $5 billion in revenue last year, nearly double the amount two years earlier - to offset declines in their traditional telephone operations.
The telecom providers' main tool in fighting competition from new wireless technologies is an old-fashioned one: lobbying muscle. The nation's phone companies, which themselves received more than $5 billion last year in federal subsidies, argue that government partnerships with telecom providers represent unfair competition.
The industry effort is meeting with some success. Earlier this month, the governors of Colorado and Nebraska signed into law bills that restrict government telecom initiatives. Late last year, Pennsylvania enacted a law that requires cities to seek permission from local phone companies before offering any paid telecom services. Verizon Communications Inc., the dominant carrier in Pennsylvania, had pushed hard for the measure, arguing that government plans would discourage it from further investing in its network. Philadelphia's plan for a citywide wireless network has been grandfathered under the law.
The high-speed networks, sometimes referred to as broadband, offer an always-on connection to the Internet at speeds several times faster than dial-up. They are used for more than surfing the Web. High-speed Internet connections facilitate home health-care monitoring and video conferencing. And customers increasingly are using their fast connections to make phone calls, bypassing telephone companies altogether.
The legislative fights come as the U.S. remains behind many other countries in per capita broadband usage, ranking 12th, according to a recent study by the Organization for Economic Cooperation and Development. In part, that's a result of the country's size and its early lead in dial-up connections. Unlike many other countries, the U.S. has mostly left broadband rollout to private industry.
Granbury is only about 35 miles southwest of Fort Worth, and people who move into town often are surprised to find they can't get cheap, high-speed Web access. In 2001, San Antonio-based SBC installed some high-speed connections, but the company still hasn't rolled out its network to the entire town. According to SBC, only about 20 percent of the town is wired with digital subscriber lines, or DSL, the technology SBC uses for high-speed Internet service. In Texas, lines serving 25 percent of SBC customers haven't been upgraded.
DSL technology works only within a certain distance from the hub for a telephone company's network equipment, usually about 14,000 feet, SBC says. Because hubs are expensive to build, SBC and other telecom companies often initially limit the rollout of DSL to neighborhoods close to existing hubs.
Granbury has other providers, including Internet Texas, a local service provider, and Charter Communications Inc., a cable operator. But they don't provide complete or affordable coverage to the entire city, according to Mr. Tull.
In late 2002, when Mr. Tull arrived as the city's first technology director, he found that the municipal government had only six email accounts, and some of its 70 computers didn't even have dial-up Web access. Government employees couldn't easily share documents because there was no network connecting the buildings and the speed of Internet service was painfully slow.
Seeking alternatives, he talked with Charter about equipping the municipal buildings with high-speed Web access using fiber-optic cable. Charter's price tag, $875,000, was too expensive, he says. Charter confirmed the talks but declined to discuss the price.
Mr. Tull eventually contracted with a tiny start-up, Frontier Broadband LLC, one of hundreds of rural wireless Internet service providers that have sprung up across the country. The company installed antennas using equipment from Motorola Inc. on a water tower and on a city-owned radio tower in the local cemetery, providing high-speed access to city hall, two firehouses, a wastewater treatment plant and the local airport.
Last November, Frontier started equipping the entire city with Wi- Fi equipment from Tropos Networks Inc., an equipment maker that specializes in citywide wireless networks. Intel was an early Tropos investor. Among Mr. Tull's goals was providing Web access to police cars so officers could check records on the road. He and Frontier later expanded the plans to offer paid, high-speed wireless Web access to residents and businesses, with customers paying Frontier.
So far, roughly 60 percent of the city is covered, according to Mike Timmins, a co-owner of Frontier. Frontier paid for the equipment and its installation, but the city now is talking with Frontier about purchasing the entire Tropos network - as well as additional equipment to cover the rest of town - at a total cost of about $300,000.
Frontier will continue to manage the network and provide technical support. Out of the regular monthly charges of about $19.95 that subscribers pay to Frontier, the city will collect $3 per subscriber each month to recoup the cost of the equipment. "The entire capital outlay is shared," Mr. Tull says.
Craig DeWitt moved his five-person insurance agency to Granbury from Fort Worth in October 2003 but was surprised to learn DSL service wasn't available from SBC. He pays $87.45 a month for Frontier's service for the five computers in his office.
In February, Rep. Phil King, a Republican who chairs the regulated-industries committee of the Texas House of Representatives, introduced a 332-page bill aimed at overhauling the state's telecom regulations. Buried on page 87 was a provision to extend an existing ban on municipalities offering telephone service to also include other telecom offerings, like Wi-Fi.
When Mr. Tull learned about SBC's efforts to persuade legislators to restrict municipal wireless projects, he says, "I figured our project was dead." Mr. Tull twice traveled to the state's capitol in Austin to argue against the proposed legislation. Representatives of many other Texas towns did the same.
SBC is a huge political player in Texas. Last year, the company spent more on state lobbying than any other company or organization, laying out at least $3.9 million, according to Texas Ethics Commission records compiled by the nonprofit group Texans for Public Justice.
"It's not government's role to become a provider," says Jim Epperson, senior vice president for state legislative affairs at SBC. He points to towns that have run into costly failures offering telecom services, and says such spending could force towns to "lay off police officers or shut down libraries."
Mr. Epperson says towns without broadband should consider offering tax incentives to companies like SBC to encourage them to upgrade their networks.
The anti-Wi-Fi legislation moved the tech-equipment industry to action. Dell's founder and chairman, Michael S. Dell, telephoned members of the Texas House, including the speaker, Tom Craddick.
For companies like Dell, Intel and Texas Instruments, the spread of broadband is crucial. Dallas-based Texas Instruments, for example, makes chips for cable and DSL modems and for Wi-Fi routers. The company also makes chips for digital cameras and music players, which increasingly can be used with high-speed Web connections to share photos and songs. Dell, based in Round Rock, Texas, now includes Wi-Fi in most of its new laptops.
And Intel, of Santa Clara, Calif., has made Wi-Fi a centerpiece of its strategy, bundling Wi-Fi and other chips as part of its Centrino technology, which has been heavily advertised during the past two years. Intel has provided funding for several cities to help set up neighborhood-wide wireless networks.
"We believe that with Texas and the U.S. continuing to lag behind in broadband penetration, now is not the time to limit choices," says Michael Young, who oversees Dell's state-level lobbying.
On May 30, the Texas bill containing the anti-Wi-Fi provision died after cable companies lobbied against the bill. The cable operators objected because the legislation would have made it easier for telephone companies to offer competing television services.
The fight now has moved on to the national stage. Late last month, U.S. Rep. Pete Sessions, a Texas Republican, introduced the "Preserving Innovation in Telecom Act of 2005," which seeks to prohibit local governments or "any entity affiliated with such a government" from providing telecommunications service in any area where a corporation offers "a substantially similar service."
"I don't think governments should be in these businesses," Mr. Sessions says in an interview. "That's not their core business."
Mr. Sessions worked at Southwestern Bell, SBC's predecessor, for 16 years. His wife still works for SBC. During his eight years in Congress, SBC's political-action committee, its employees and their families collectively have been his second-largest source of campaign contributions, donating a total of $75,346, according to the Center for Responsive Politics, a Washington research group. Guy Harrison, Mr. Sessions's chief of staff, says the congressman's ties to SBC do not present a conflict of interest.
The telephone industry is fighting the battle on other fronts as well. The New Millennium Research Council, a think tank in Washington, issued a report in February condemning publicly funded Wi-Fi projects, arguing, among other things, that they stymie competition. The council is a project of Issue Dynamics Inc., a public-affairs and consulting firm that has done work for several of the country's major telephone and cable companies, including SBC, Verizon, BellSouth Corp. and Comcast Corp.
Some powerful federal lawmakers are rallying to the side of the cities. Sen. John McCain, an Arizona Republican, and Sen. Frank Lautenberg, a New Jersey Democrat, plan to introduce Thursday the "Community Broadband Act of 2005," stipulating that no state can prohibit a municipality from offering high-speed Internet access to its citizens.
Meanwhile, Granbury is continuing its rollout of municipal Wi- Fi. All eight of the city's police cars now have the service. Building inspectors are accessing the Web via wireless laptops. Frontier will start rolling out the network to the entire city next week and plans to finish it in about a month.
Source: Sunday Gazette - Mail; Charleston, W.V. Tuesday, 28 June 2005
