Philadelphia to offer cheap broadband for whole city

The US city of Philadelphia has unveiled a controversial plan to transform its streets and neighborhoods into a gigantic wireless internet hotspot.

If approved, the project will offer low-cost wireless broadband access throughout the city's 135-square-mile area. The city will build out the infrastructure and then sell wholesale access to internet service providers, telecommunications companies and nonprofit organizations. ISPs and other providers will handle all billing, marketing, customer service and the at-home equipment needed to pick up the signals.

Philadelphia will become a customer of the network by allowing city departments to buy broadband access to communicate with one another. As part of this new technology plan, the city will also establish a nonprofit organization that will provide computers and technical training to low-income residents.

The project highlights the growing trend among cities big and small to build out their own broadband access networks. Claiming their cable and local phone companies were dragging their heels over deploying broadband or charging rates too high for lower-income residents, many municipalities have turned to building high-speed internet networks themselves.

Some of these projects plan to string streets with wireless internet access ports using Wi-Fi technology. Other projects in smaller or rural municipalities are digging up streets to install speedy fiber-optic lines into homes and businesses.

Not surprisingly, the local Baby Bell phone companies have spoken out against these plans. Verizon Communications supported a Pennsylvania bill barring communities from building their own network but struck a deal with Philadelphia to allow the city's plans to go forward.

Eric Rabe, vice president of communications at Verizon, said: "I reject the idea that this network has to be built because service is not available. Verizon and Comcast today cover all of Philadelphia. Broadband may not be available the way the city wants it, so they have a right to try something different."

Consumer groups are applauding the plan.

Kenneth DeGraff, a policy advocate at Consumers Union, the publisher of Consumer Reports, said: "Combining low-cost access with computers and training, Philadelphia is taking a great leap in bridging the digital divide."

City planners maintain that their wireless project will not compete with the Bells and cable. Rather, the operation will not be for profit and will sell access in bulk at low rates to providers, including Verizon. In the end, residential consumers could get 1Mbps of download and upload speeds at prices ranging from $16 to $20 a month.

In contrast, Verizon just introduced a new 3Mbps downstream digital subscriber line tier that costs $30 a month and plans to lace houses with fiber-optic lines that are many times faster than DSL. Cable companies have increased speeds to about 4Mbps to 5Mbps, depending on service provider, for $45 a month.

The report said the plan will cost $10m to deploy in its first year, with further spending planned down the road for maintenance. The plan set a timetable for breaking even at the fourth year, with all free cash flow at that point reinvested into communities by offering PCs to lower-income residents.

Dianah Neff, CIO for the city of Philadelphia, said in a conference call with reporters: "Initially, we will talk to equipment manufacturers about refurbishing older gear to make [it] available for low-income residents and businesses."

City planners said they will raise funds through bank loans, grants and other "noncity sources".

The service will be up and running by summer 2006, Neff said.

Jim Hu and Marguerite Reardon write for CNET News.com.