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Politics and Economy:
The Digital Divide
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Debating High-Speed Internet Access

The information revolution is making high-speed Internet access an essential element of success in America, but there's a growing divide between the techno-haves and have-nots that's keeping some poorer neighborhoods, schools, and businesses in the digital dark. In "The Philadelphia Experiment," NOW goes inside the battle for high-speed Internet in two communities — Philadelphia, Pennsylvania and Scottsburg, Indiana — where local governments want to build their own systems to provide affordable access to underserved neighborhoods, but are being challenged by the telecom giants that want to maintain their dominance in local markets.

Philadelphia Mayor John F. Street's plan to bring his city into the wireless business has engendered the most debate. In part, this is because previous municipal experiments in providing broadband service have been on a much smaller scale. The plan includes the installation of 4,000 wireless antennas on city lampposts to create an extensive broadband network. The mayor says that his plan will provide an essential service to the citizens of Philadelphia at a more affordable price than now offered by Telecommunications and cable companies — with prices ranging from $15 to $25 a month and lower prices for low-income residents.

Critics of the plan also doubt that the system will stay within it's projected $10 million start-up budget and won't be able to be self-sustaining. They also worry that the responsibilities and costs of maintaining such a system will soon prove too much for the city and quality of service to the public will decline. But a major point of debate is of a more philosophical nature. Telecom and cable companies counter that the government should not be allowed to have an advantage over private enterprise, especially one funded by tax dollars. Proponents counter that the digital airwaves are in essence a public entity and access to them should be a matter of public responsibility.

In several states telecommunications and cable companies have begun lobbying efforts in favor of restricting local governments from starting networks like that proposed in Philadelphia. Last year Pennsylvania Governor Ed Rendell signed a measure which gave partial victory to the industry. The new legislation requires that cities give the local phone company first dibs on creating a broadband network. If they companies act within 14 months of a proposed municipal plan, the cities must give way to private industry. The new measure does not affect Philadelphia where the debate continues.

Below are some voices from the debate and links for more information. Head to the message boards to discuss your thoughts on the topic.

Against Municipal High-Speed Network OwnershipFor Municipal High-Speed Network Ownership
"The history of municipally owned telecom networks is not often a pretty one...With municipal Wi-Fi networks, however, these budgetary pressures get even more challenging. Up-front costs for these networks are deceptively low, making it easy to get a municipal government on the budgetary hook at first. But once so hooked, the costs mount. Sheer maintenance will cost annually a minimum of 10 percent of the initial up-front costs, according to most experts. Further, many engineers estimate that an astounding 60 percent of the equipment requires replacement or upgrading every three to five years."

- Frank Rizzo, Philadelphia's Big Dig, CNET, February 17, 2005, Frank Rizzo is a Philadelphia city councilman

"The solution is not to fire private enterprise; it is instead to encourage more competition. Communities across the country are experimenting with ways to supplement private service. And these experiments are producing unexpected economic returns. Some are discovering that free wireless access increases the value of public spaces just as, well, street lamps do. And just as street lamps don't make other types of lighting obsolete, free wireless access in public spaces won't kill demand for access in private spaces. In economoid-speak, these public services may well provide positive externalities. Yet we will never recognize these externalities unless municipalities are free to experiment."

- Lawrence Lessig, "Why your broadband sucks," WIRED, March 2005

*Wi-Fi networks will likely cost more than the cities anticipate, thus straining already tight budgets and negatively impact taxpayers.

*Public funds used for a Wi-Fi network are diverted away from other important areas, such as education, police and fire services, and public works, that are already being cut in many cities today.

*Wi-Fi technology could quickly become outdated, leaving the city and its residents with a less-than-optimal network that offers no opportunity to recover the city's investment.

*There is no market failure in broadband, and entry by municipal Wi-Fi providers will not create greater competition in fact, the Wi-Fi market is already very competitive, with service offerings from large and small providers alike.

*City-managed networks operate under different rules than private providers, offering the city regulatory and economic advantages. Municipal entry into the broadband market will likely reduce investment by current providers and threaten the business of small, local ISPs.

*There is no evidence that economic development will directly result from publicly funded citywide Wi-Fi deployment."

- "Not in the Public Interest, The Myth of Municipal Wi-Fi Networks," The New Millennium Research Council, February, 2005, summary findings

"Broadband access has become increasingly essential to economic growth, healthcare, and education. What electric power and telephones were to the 20th Century, broadband access will be to the 21st. Towns that don't have affordable broadband lose jobs. Their children suffer a serious disadvantage in college or in the workforce, where fluency with computers and the internet is increasingly assumed as a matter of course. Rural towns without broadband cannot take advantage of new breakthroughs in tele-medicine or the economic opportunities created by telecommuting. Even in crowded urban areas, the availability of broadband can vary from one neighborhood to another, stranding one neighborhood on the wrong side of the "digital divide" while two, three or even four broadband providers serve their neighbors.

Municipalities have a valuable role to play in filing this gap. Municipalities have a long history of providing necessary services for citizens and stimulating local businesses. In the 20th century, municipalities built power plants and telephone lines when private services did not move fast enough. Our competitive power and telecom industries today demonstrate that these services by municipalities complement private industry rather than compete with it. In addition, municipalities have a long history of spending money to benefit their citizens and encourage business development. They should have the same opportunity to offer public hotspots and broadband access.

- Free, Community Internet

"Consumers and voters aren't stupid. They've seen the growth in broadband options and know what kinds of content they are willing to pay for. Voters have learned that many early municipal broadband systems haven't delivered on their promises...If universal high-speed Internet access is the goal, as municipal proponents say, voters also know there are cheaper alternatives from commercial service providers such as wireless and DSL. By looking at their monthly phone bills, voters also know other government programs, such as state and federal universal service funds and the e-rate program for schools and libraries, already pay for broadband access in underserved areas."

- "Why Voters Are Rejecting Municipal Broadband," Steven Titch, Heartland Institute, November 16, 2004

"A critical issue is whether the public spaces made possible by the Internet will be re-regulated to maximize the commercial interests of dominant intellectual property owners or whether they will protect and expand the vital "information commons" that enables individual citizens to freely communicate, create, and control content. Current attempts to privatize the nation's public communications infrastructure and its content include the removal of common carrier obligations for Internet access and encroachments upon traditional copyright principles of fair use."

- New American Foundation, Spectrum Policy Program

Additional sources: "Philadelphia Hopes to Lead the Charge to Wireless Future," James Dao, THE NEW YORK TIMES February 17, 2005; US Internet Industry Association;; Wireless Politics May Determine Future of Digital Democracy,Michelle Chen; "Free Expression Policy Project", Beacon Hill Study, January 18th, 2005; Progress and Freedom Foundation, Oct 03 "A Survey of Government Provided Telecoms:Disturbing Growth Trend Continues Unabated," Progress and Freedom Foundation; "Accelerating Broadband Deployment And Demand,"; "MuniToons: The Folly of Municipal Ownership of Broadband Facilities," Stern and Bly, Sept 9, 2002.

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