Despite Opposition, Might the Web Need New Government Jolt?

[R.A. Hettinga]

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<http://online.wsj.com/article_print/0,,SB110833554526853450,00.html>

The Wall Street Journal

      February 14, 2005

 PORTALS
 By LEE GOMES



Despite Opposition,
 Might the Web Need
 New Government Jolt?
February 14, 2005

The birth of the Internet resulted from a famous example of government
involvement in the economy a generation ago, when the Defense Department
funded college researchers interested in computer networking. Since then,
the Web has been an epic success, and the number of U.S. households
connected to it continues to grow.

But the speeds at which these houses can link up has plateaued at current
DSL and cable rates, badly lagging behind the speeds available in many
other countries, notably in Asia. Might it require another bit of
government involvement to prod things along?

That's one of the questions being raised in connection with the plans of a
growing number of American cities to sponsor municipal wireless networks to
provide Internet access to residents. Philadelphia, the biggest and
best-known of these examples, is in the middle of unveiling such a plan; it
hopes to blanket the metropolitan area with a wireless network that will
provide speeds of at least one megabit for both uploading and downloading.

That's not as fast as what residents of Hong Kong and South Korea enjoy,
but it is faster than what many Americans have, especially for uploading
data from PCs back to the Internet. Many home connections going in this
direction are now just a tenth as fast.

There is, however, much less consensus about these sorts of government
projects today than there was during the heyday of federal support for
high-technology research back in the 1970s and 1980s. The Philadelphia
proposal, like other municipal plans, has become controversial -- in large
part simply because of the considerable role being played by the city
government.

Last month, the latest in a series of harshly critical reports about these
municipal network proposals was published by the New Millennium Research
Council, a Washington, D.C., lobby and policy group. The council has ties
to both local phone companies, which view these networks as competition and
have lobbied in state legislatures to outlaw them, and conservative
Washington think tanks, which tend to oppose activist-government
initiatives.

These sorts of ideological political tussles over the Web are increasingly
common. For example, conservative groups, along with many members of
Congress, are working hard to keep the Internet a tax-free zone, whether
that involves taxation of Internet telephony or a sales tax for merchants
like Amazon. On the opposite side of these disputes one usually finds state
and county elected officials -- many of them Republican -- who are trying
to provide traditional government services in a new era.

When it comes to municipal networks, critics contend that cities will be
using scarce tax money to build networks that compete with systems already
offered by telephone and cable companies. What's more, they say, any
network a city would build will quickly grow outdated because of rapidly
changing technology.

Philadelphia city officials respond that their network won't require
taxpayer funds at all; instead, they say, it will be built and operated by
for-profit private companies under a business plan developed by the city
and its consultants. The goal, says Dianah Neff, the city's chief
information officer, is to offer wireless-based connectivity throughout the
city that will be free in some areas and cost roughly $20 a month in others.

Ms. Neff says that her city would defer to private enterprise if it could,
but that existing cable and phone providers either won't bring connectivity
to the city's poorer neighbors at all, or won't do it for the city's $20
target price. The biggest contribution the city will make to the network
will be in providing access to city infrastructure, such as utility poles,
to house the wireless transmitters needed to bring the network to life. A
private company will operate the network once it starts running, Ms. Neff
says, and taxpayers won't be on the hook if business doesn't live up to
expectations.

As envisioned by city planners, the Philadelphia network won't have
anything close to the blazing speeds common in Asia, where the Internet is
so fast that residents can get their television signals through it. Its
main goal, says Ms. Neff, is making a basic level of Web connectivity
available to everyone.

But because Philadelphia will be able to take advantage of new kinds of
wireless technologies like WiMax, it may end up offering faster bandwidth
than is enjoyed by many regular cable and DSL subscribers. Because of new
technology, these networks can be installed with relatively small capital
investments; the estimate for Philadelphia is roughly $10 million.

Incumbent players don't usually have an incentive to build these faster new
networks because they are tied to their wired networks, which also deliver
telephone and television services. And that's one reason that networking
speeds in the U.S. are stuck in the rut they are in.

It's easy to bash city governments as being full of maladroit bureaucrats
eager to manhandle a new technology, and even economists who support
municipal networks say cities shouldn't rush into them. But
well-thought-out city plans could help everyone by acting as a catalyst and
shaking up the status quo. Some might even call that competition.

-- 
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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'