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The city of Philadelphia has reached an agreement with Verizon Communications that will let the municipal government deploy a citywide Wi-Fi network, but a carrier-backed bill that would let incumbent carriers block such projects has been signed into law by Pennsylvania's governor.

Philadelphia announced earlier this year that it plans to deploy a wireless broadband network beginning in June 2005 and charge subscribers to use it. Pennsylvania House Bill 30, a broad telecommunications act signed into law this week by Governor Edward Rendell, gives incumbent local carriers such as Verizon the right to keep local governments from setting up paid services like Philadelphia's after January 1, 2006. On Tuesday, Verizon waived this right of first refusal on the Philadelphia project, according to representatives of Verizon and of the city's mayor, John Street.

Broadband Access

At issue is the availability of broadband Internet access to residents of Philadelphia, where city CIO Dianah Neff says about 60 percent of the neighborhoods don't yet have high-speed data service. The city aims to fill in gaps in broadband availability, such as in low-income neighborhoods, at an estimated price of $15 to $25 per month, according to Neff.

The new law re-enacts and expands a part of Pennsylvania's Public Utility Code that, among other things, mandates broadband access for every resident by 2015.

Earlier versions of the bill banned local governments from offering broadband services for pay. The version signed into law this week allows existing services to continue and gives governments a one-year window to develop them. After that point, it requires governments to offer the incumbent carrier the right to provide the service. Free services are not affected by the law.

Verizon believes the Philadelphia project is protected by the one-year window but the city sought greater assurance that Verizon would not fight it, says company spokesperson Sharon Shaffer.

Philadelphia's agreement with Verizon will allow the city to roll out the network as planned, according to Barbara Grant, the mayor's director of communications. The city intends to finish the estimated $7 million to $10 million deployment by June 2006.

"We think that what we did today provides a good model for how business and government can work together to assure that a public good is provided," Grant says. The network, which will use a wireless mesh to link Wi-Fi access points, will promote economic development as well as providing high-speed data for schools and low-income residents and others, she says.

Opposing Point of View

However, the chief counsel of a state senator who represents part of Philadelphia takes a dim view of the new law.

"This leaves all the rest of the municipalities in the state pretty much on their own," says Christopher Craig, chief counsel for state Senator Vincent Fumo. If those cities want to roll out their own paid services, the local incumbent will be able to dictate terms. Governments should be able to choose service partners based on cost and quality just as private companies do, he says.

"This is all about Verizon being able to do this where they want, when they want and how they want," Craig says.

Verizon opposes paid services offered by cities and municipalities on the grounds that governments have unfair advantages, such as being able to tap into public funds and not having to pay taxes, Shaffer says.

"With so many competitors entering the marketplace and other companies' businesses, we simply believe the same rules should apply to all the players," Shaffer says. Though Verizon is the largest incumbent carrier in Pennsylvania, there are 37 carriers of all sizes in the state's carrier organization, the Pennsylvania Telephone Association, she says.