More cities offering wireless Internet access

Bells call it unfair competition*

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As a resident of tech-savvy Austin, Texas, Adina Levin enjoys the benefits of widespread wireless Internet access.

Austin is one of a number of cities in the nation that has built a system that allows residents to log on to the Internet without worrying about plugging into a phone or cable outlet. Levin wants the rest of the state to have the same advantage.

"People really care about it," Levin said of wireless Internet access. "There's a constituency for it."

That's why she spent much of the spring battling a bill in the state legislature that would have made it nearly impossible for other cities to emulate Austin. A provision in a lengthy telecommunications bill would have made it illegal for local governments to offer residents high-speed Internet access.

The legislation was by no means unusual—this spring, lawmakers in 14 states debated banning or restricting municipalities' ability to provide wireless access—and neither was Levin's decision to fight it. Along with citizens throughout Texas, Levin launched Save Texas Muni Wireless, a group devoted to defeating the bill and promoting the spread of wireless technology across the state.

Similar battle lines were drawn across the country, in fact, pitting telecommunications giants against community activists like Levin.

It's not exactly an unfair fight—coordinating with Levin, and other pro-wireless campaigners is chip maker Intel and other technology giants that profit from the technology. In fact, Intel is helping cities around the world set up wireless networks.

Telecom companies argue that municipalities that provide wireless access violate the principles of free enterprise. Public competition puts private companies at an unfair disadvantage, they claim, and what's bad for business is bad for citizens.

"No business should have to compete with public tax dollars," Texas state Rep. Phil King, a Republican from Weatherford and sponsor of the anti-municipal broadband measure, told the Fort-Worth Star Telegram in early April.

But municipal wireless advocates counter that competition helps, not harms, local citizens and businesses by encouraging innovation, better service and lower prices. They contend that the telecom industry is simply worried about losing clients.

Municipal wireless advocates also note that local governments regularly provide other public services that compete with private industries.

"Their ideological argument that government shouldn't do anything the private sector does makes about as much sense as saying there should be no public transportation because we have taxis," Levin said. "It's a community decision."

Wireless fidelity spreading across nation

High-speed Internet access, also known as broadband, was once considered a luxury or a special service for technology buffs. Today, it is an economic and educational necessity. Those who lack broadband access find themselves at a competitive disadvantage. The gap is greatest in the nation's rural and low-income areas.

Large Internet service providers such as SBC Communications Inc., AT&T Corp. and Verizon Communications Inc., generally charge customers $30 or more per month for DSL—digital subscriber line—or cable high-speed access. And for many rural Americans, even high-cost access is not an option because the dominant ISPs have not invested the time and money to extend the necessary wires into areas with low population density.

As a result, the United States ranks surprisingly low in per capita broadband availability. A December 2004 study by the Organization for Economic Cooperation and Development ranked the country 12th in the world for broadband penetration, finding that only 13 percent of Americans have broadband access. The statistical count the International Telecommunications Union released a month later found that just 11.4 percent of Americans have broadband access, ranking the nation 16th. By comparison, both studies found that nearly 25 percent of all citizens in top-ranked South Korea have some form of broadband access.

The increased availability and affordability of Wi-Fi (wireless fidelity) technology appears to be the best chance to improve U.S. broadband penetration, some argue.

Unlike cable or DSL, no physical connection is required. Instead, antennas broadcast a signal that can be picked up by any computer equipped with a wireless card. Nearly any laptop sold in the last two years was shipped "Wi-Fi ready," and older computers can easily be retrofitted.

For municipalities that wish to provide citizens with high-speed access, Wi-Fi is the easiest and most cost-effective approach. An initial investment is required for hardware and antenna installation, but maintenance and upkeep costs are fairly low. And municipalities have the flexibility to create a system that fits their needs, allowing small towns and big cities alike to install networks.

Many large cities have chosen to blanket downtown areas and leave the wireless signal open and free to all. In San Jose, Calif., for example, anyone can sign up for a free account to access the network, which covers most of the city's downtown area.

Smaller towns, however, can choose to recoup costs by restricting access to those who pay a monthly fee. In Chaska, Minn., the city invested $750,000 to install a network to serve its 20,000 residents in July 2004. Residents pay $15.99 per month—which is less than what incumbent providers Time Warner Inc. and Sprint Corp. charge for traditional broadband access. With more than 2,000 subscribers by April 2005, the city expects to recover its investment by next year.

Meanwhile, in August 2004, Philadelphia officials announced the most extensive pay-for-access network to date: a plan to blanket 135 square miles of downtown with wireless coverage. Residents would be expected to pay about $20 a month for access, with the proceeds used to recoup the city's $15 million initial investment. However, potential logistical problems and a new estimated price tag ranging up to $20 million are now drawing concern of the City Council.

In Texas, numerous municipalities and civic groups have encouraged the spread of wireless access. Austin's wireless capabilities are due in large part to the Austin Wireless Alliance, a group that helps private businesses become "hotspots" — a location that broadcasts a wireless signal. Registration for the network, which covers much of the city, is free.

Fifty miles to the north, the Belton Wireless Project is trying to replicate Austin's strategy. Until this year, broadband access was unavailable to the town's 15,000 residents. Beginning in February, however, using equipment donated by the local University of Mary Hardin-Baylor, town businesses—which do have broadband connection—began broadcasting wireless signals. The entire project is free to both the city and residents, and downtown businesses are already reaping the benefits.

"There are over 800 university students, and they all have wireless notebooks," says Marion Graydon, a Belton City Council member and co-founder of the Belton Wireless Project. "This brings them off campus and into the community — it really filled a niche."

Telecoms break out their wallets

As municipal wireless networks become more common, the telecommunications industry has increasingly focused on stopping their spread.

In a few cases, companies have launched campaigns to sway public opinion in communities considering wireless projects. In Illinois, SBC and Comcast Corp. spent more than $300,000 to defeat a 2004 municipal wireless ballot referendum in the Tri-Cities, a community about 50 miles west of Chicago. Residents were flooded with anti-wireless literature, TV commercials and telephone push polls.

A story in Mother Jones magazine described the experience of one Tri-Cities resident who was subjected to the marketing blitz. Mike Simon got a phone call from a pollster who asked several questions about the broadband network plan. "The questions became increasingly annoying," he told the magazine, until the kicker came: "Should tax money be allowed to provide pornographic movies for residents?" the caller asked.

Simon described it as a blatant push poll. "When I asked, 'Who are you representing?' they just hung up."

"They don't like competition, no matter how much they say they do," says Annie Collins, a local housewife who ran the pro-wireless campaign from her dining room on a $4,000 budget. "I don't think they should have been in my town campaigning at all."

Mostly, though, the telecom industry has focused on getting anti-wireless legislation at the state level. Including bills passed in 2005, 16 states now restrict municipal wireless to some degree.

This past spring in Texas, SBC led the effort to pass H.B. 789, the telecom bill containing an anti-municipal wireless provision. In addition to television commercials and letter-writing campaigns designed to sway public opinion, SBC unleashed its significant clout — more than 150 lobbyists list SBC as a client for 2005 on registration forms they filed with the Texas Ethics Commission — on the statehouse in Austin. With Verizon lobbyists also supporting H.B. 789, "there were enough lobbyists to have one in every single legislator's office at the same time," says Levin of Save Texas Muni Wireless.

SBC's lobbying firepower came as no surprise to those familiar with state politics.

The San Antonio-based company is the most prolific spender on both lobbying and campaign contributions at the state level among telecommunications companies, according to an analysis by the Center for Public Integrity.

SBC employees and political action committees spent $10.2 million on campaign contributions on state races from 1999 to 2004. The company also spent a minimum of $16.3 million to lobby state governments across the nation in 2003 and 2004.

In Texas, SBC spent $2.3 million on contributions and between $7.9 million and $14.4 million on lobbying over the two years. (Texas law requires lobbyists to report a range, rather than a specific dollar amount.)

Many of those dollars have gone to those lawmakers supporting wireless restrictions, leading municipal wireless supporters to deride the bills as special interest legislation crafted by legislators with egregious conflicts of interest.

King, the sponsor of H.B. 789 in Texas, has been a prime target for such criticism. According to contribution data provided by the Institute on Money in State Politics and analyzed by the Center, he has received $31,500 in contributions from the telecommunications industry since 1999. That figure includes $8,350 from SBC employees and $8,250 from Verizon employees.

Additionally, government watchdog group Common Cause criticized King for accepting gifts from telecommunications lobbyists, the Fort-Worth Star Telegram reported. The group spoke out after King attended a May 10 dinner paid for by SBC and Grande Communications and hosted by powerful lobbyist Neal "Buddy" Jones — whose clients include AT&T — at his $4 million home.

In Nebraska, Speaker of the Legislature Kermit Brashear — who saw his anti-municipal wireless L.B. 645 finally pass on June 3 after a long battle — was criticized when it was revealed that Cox Communications is among his legal clients. Cox, which is expected to benefit financially from the L.B. 645, lobbied heavily in support of the bill.

Brashear disclosed the relationship in a February letter to the state Accountability and Disclosure Commission, though he did not say whether he was offering counsel to Cox on L.B. 645 specifically, the Lincoln Journal Star reported on May 1. Still, the possibility of a conflict of interest was enough to provoke Nebraska Common Cause spokesman Jack Gould to call for Brashear to withdraw the bill.

A similar controversy also developed at the national level. Shortly after Rep. Pete Sessions, R-Texas, introduced anti-municipal wireless legislation on May 26, outraged wireless supporters noted Sessions' significant ties to SBC, where he served as an executive for 16 years (his wife is still an employee). Financial disclosure forms from 2004 showed that Sessions owns at least $500,000 in SBC stock options.

Additionally, SBC has given $44,000 in campaign contributions to Sessions, according to federal contribution records gathered by the Center.

The bill is currently in limbo.

Tide turning?

Despite SBC's efforts, H.B. 789 ultimately failed to pass the Texas Senate. Adina Levin credits "effective community organization," along with the help of technology companies like Dell, Intel and Texas Instruments, for the wireless advocates' victory.

"Municipal wireless is something that affects people's livelihoods, something that affects people's communities," she says. "People who are affected care."

Levin is also quick to point out that this spring, for the first time, the "legislative score" favored pro-wireless groups. In addition to Texas, anti-wireless measures failed in Illinois, Indiana, Iowa, Oregon, Texas, Virginia and West Virginia, and activists consider the significantly watered-down bill that passed in Florida a victory as well.

At the national level, Senators John McCain, R-Ariz., and Frank Lautenberg, D-N.J., offered a bill opposing Sessions' on June 22. The proposed "Community Broadband Act of 2005" would explicitly allow local governments to offer municipal wireless service, giving supporters hope that they will ultimately win the war.

"Constituents have been galvanized," Levin says. "We're starting to turn the tide."

Well Connected Project Manager John Dunbar contributed to this report.


* "Since this report was first released, the Center received some additional information from the Institute on Money and State Politics and the New Jersey Secretary of State's office that resulted in a upward adjustment of some contribution and lobbying figures."