What We Have Here Is a Failure to Communicate

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: October 29, 2005 10:40:21 PM EDT
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] What We Have Here Is a Failure to Communicate
Reply-To: dewayne () warpspeed com


October 30, 2005
Media Frenzy
What We Have Here Is a Failure to Communicate

By RICHARD SIKLOS
<http://www.nytimes.com/2005/10/30/business/yourmoney/30frenzy.html? 
ex=1288324800&en=7c9723f865b38715&ei=5090&partner=rssuserland&emc=rss>
JOHN F. STREET, the mayor of Philadelphia, perhaps put it best at the  
announcement of a new corporate headquarters for the Comcast  
Corporation early this year: "As Microsoft is to Seattle and Coca- 
Cola is to Atlanta, Comcast is a symbol of Philadelphia's growth and  
innovation." So imagine if the city of Seattle decided to make Linux  
a cornerstone of its civic software strategy, or Atlanta sponsored a  
program that made Snapple the official beverage of its school system.

That's basically what has happened with a plan by Mr. Street to put  
Philadelphia on the map with Wireless Philadelphia, a new municipal  
wireless Internet service that, if all goes as planned, would be a  
City Hall-sanctioned competitor to Comcast. (Although Comcast would  
probably prefer the analogy of Atlanta making something less  
palatable - like carrot juice, the official school drink - it doesn't  
think Philadelphia's plan is going to fly.)

Municipal wireless programs have become a hotly debated subject,  
thanks to the recent news that Philadelphia has selected EarthLink  
Inc. to build and run its new network and that mighty Google has  
proposed to play a similar role in San Francisco. The general idea -  
one that itself is subject to much expostulation - is that broadband  
Internet access is too expensive in the United States, which risks  
falling behind countries like South Korea and Japan in this area.

Wireless Philadelphia is intended to put the city on the map, both in  
proving its technological chops and in bridging the digital divide  
with poorer residents who don't tend to have high-speed Internet  
services if they have Internet service at all. On the face of it, the  
fact that the city is moving ahead without Comcast's involvement -  
indeed, over Comcast's open derision - raises a lot of intriguing  
questions not only about wireless Internet services but also about  
how much brotherly love has been lost between the nation's largest  
cable operator and Philadelphia, the fifth-largest city.

It also illustrates the frustration that Brian L. Roberts, the chief  
executive of Comcast, must feel: his company has signed up more high- 
speed Internet customers than any other and churns out buckets of  
cash, yet it has a sagging stock price because the market perceives  
that any number of unproven new businesses are going to usurp its  
position. Add Wireless Philadelphia - brought to you by the people  
who regulate aspects of his business - to the list.

Dianah L. Neff, the city's chief information officer and architect of  
Wireless Philadelphia, said that there was no animosity but certainly  
a chilly distance between the city and its most famous corporate  
citizen. For instance, Comcast officials have repeatedly disputed her  
contention that the private sector (read EarthLink) will foot the  
entire $10 million to $15 million bill to introduce the service and  
that the project will cost taxpayers nothing.

Comcast is wrong, she maintains. "It's not like the $30 million  
subsidy they got to build their corporate headquarters," she said.  
"This crying about subsidies is a little disingenuous."

David L. Cohen, the executive vice president of Comcast, said the  
core issue was whether the city ought to be involved in any way in a  
competitive, private-sector marketplace. And, he said, Wireless  
Philadelphia "has vast technical complexities that the city has not  
yet grasped," adding that the business plan has mathematical errors  
and "assumptions that are just ludicrous."

Comcast, like Verizon, the other big broadband provider in the city,  
was not even among the 12 companies that bid for the Philadelphia  
project. Neither was T-Mobile, which already operates wireless  
Internet "hot spots" in the city as it does elsewhere.

Generally, Mr. Cohen said that he and Mr. Roberts were taking the  
city's venture in stride. "I don't think corporately or personally we  
feel betrayed or insulted or victimized in any way by what the city  
has done," Mr. Cohen said.

It is a tangled tale, and Mr. Cohen plays a central role. He has been  
something of a corporate, civic and philanthropic rainmaker since  
joining the company three years ago. A lawyer, he was previously the  
chief of staff for a former mayor, Edward G. Rendell, for six years.  
(Mr. Rendell is now governor of Pennsylvania.) Mr. Cohen has also  
been a personal friend and self-described close adviser to Mr. Street  
for more than a decade. For a nonscientific idea of his standing in  
the community, Philadelphia Magazine just named Mr. Cohen the fifth- 
most-powerful person in town. The mayor came in 10th. Mr. Roberts  
didn't crack the top 10.

Wireless Philadelphia grew out of Mr. Street's neighborhood revival  
efforts. Along with such projects as ridding city streets of  
abandoned cars and cleaning up drug corners, he wanted to give  
Philadelphia, as the initiative's business plan put it, "a digital  
infrastructure for open-air Internet access and to help citizens,  
businesses, schools and community organizations make effective use of  
wireless technology to achieve their goals while providing a greater  
experience for visitors to the city."

That sounds fine, and the city says the project won't cost taxpayers  
a cent. Instead, the benefit of partnership with the city for the  
private sector - in this case, EarthLink - comes in the form of the  
marketing muscle the city will put behind the effort and the direct  
links it will have to various community programs, including one that  
will put thousands of refurbished computers into low-income  
households. Residents will be able to subscribe to the service for  
$20 a month, and those with the lowest incomes will pay $10.

As far as speeds go, Donald B. Berryman, EarthLink's president for  
municipal networks, said Wireless Philadelphia's Wi-Fi service would  
be nearly 20 times faster than many dial-up connections, though still  
a third to a sixth of the speeds that Comcast provides via cable  
modem for $42.95 a month. In other words, it would be positioned as a  
lower-cost high-speed alternative - perhaps most similar to a DSL  
service that Verizon is offering at an introductory price of $14.95 a  
month.

But the attraction of Wireless Philadelphia to its proponents is that  
it is a stand-alone, affordable network - not part a broader effort  
to sell video, voice and data services, the way companies like  
Comcast and Verizon have approached broadband.

"We're going into this with the support and the marketing backing of  
the city," Mr. Berryman said. "We see a tremendous value in the  
equity of the relationship."

EarthLink's business plan also involves selling à la carte access to  
city visitors and providing a wireless add-on for the more than 400  
dial-up Internet service providers in the city - for which they would  
pay EarthLink a wholesale rate. Ms. Neff says the city can save $2  
million a year by using the network for some of its own data needs.

[snip]
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