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Can Governments Create Universal
Internet Access? The Philadelphia
Municipal Wireless Network Story
About the IBM Center for The Business of Government
The Center is one of the ways that IBM seeks to advance
knowledge on how to improve public sector effectiveness.
The IBM Center focuses on the future of the operation and
management of the public sector.
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For additional information, contact:
Jonathan D. Breul
Executive Director
IBM Center for The Business of Government
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E- Government Series
Through research stipends and events, the IBM Center for
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Abhijit Jain
Assistant Professor
Cisler College of Business
Northern Michigan University
Munir Mandviwalla
Executive Director
Irwin L. Gross Institute for Business
and Information Technology
Fox School of Business
Temple University
Rajiv D. Banker
Merves Chair and
Director of the Center
for Accounting and
Information Technology
Fox School of Business
Temple University
e-mail: businessofgovernment@us.ibm.com
website: www.businessofgovernment.org
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2007
E - G ov e r nment se r ies
Can Governments Create Universal
Internet Access? The Philadelphia
Municipal Wireless Network Story
Abhijit Jain
Assistant Professor
Cisler College of Business
Northern Michigan University
Munir Mandviwalla
Executive Director, Irwin L. Gross Institute
for Business and Information Technology
Fox School of Business, Temple University
Rajiv D. Banker
Merves Chair and Director of the Center
for Accounting and Information Technology
Fox School of Business, Temple University
T A B L E
O F
C O N T E N T S
Foreword...............................................................................................4
Introduction..........................................................................................6
Overview........................................................................................6
Why MWNs in Philadelphia? ........................................................6
The Catalyzing Role of Government.....................................................9
Role of Governments....................................................................10
Pitfalls of Government Intervention..............................................11
The Emergence of Municipal Wireless Networks (MWNs)..................13
Drivers of MWNs.........................................................................13
Inhibitors of MWNs......................................................................16
The Development of Philadelphia’s Municipal Wireless Network.........19
How It All Started.........................................................................20
Initial Steps...................................................................................20
Stage 1: Goals, Stakeholders, and Policy......................................22
Stage 2: Applications, Technology, and
Management and Funding......................................................24
Stage 3: Implementation...............................................................27
Lessons Learned and Recommendations.............................................31
Short-Term Planning and Implementation Recommendations.........31
Long-Term Sustainability Considerations......................................33
Final Reflections...........................................................................34
References..........................................................................................35
About the Authors...............................................................................37
Key Contact Information.....................................................................39
Can Governments create Universal Internet Access?
F o r ew o r d
On behalf of the IBM Center for The Business of Government, we are
pleased to present this report, “Can Governments Create Universal
Internet Access? The Philadelphia Municipal Wireless Network Story,”
by Professors Abhijit Jain, Munir Mandviwalla, and Rajiv D. Banker.
In the global information society, the importance of the Internet cannot
be overemphasized. Certain geographical areas and populations, however, lag behind others in terms of Internet access. To remedy this situation, communities and governments are actively seeking alternative
approaches to accelerate the availability of universal broadband Internet
to citizens.
Albert Morales
A confluence of factors has recently made municipal wireless networks
(MWNs) an increasingly feasible and attractive option for municipal
governments seeking to promote more equitable and universal access
to the Internet within their communities. Given its evolving nature, the
successful application of the MWN concept rests on a number of key
drivers. To provide a better understanding of this approach, this report
describes the drivers and inhibitors to MWNs. These insights are based
on a case study of the development of the Philadelphia municipal wireless network, illustrating the practical application of the MWN concept
and specific lessons learned from the Philadelphia experience.
In 2004, the city government of Philadelphia announced that it would
seek to build an MWN to address the digital divide in the city. Despite
some initial opposition and doubts about the project, Philadelphia now
has completed a 15-square-mile proof of concept. The authors describe
the project and provide a case study of how municipal government can
be a catalyst for the adoption of technology, with the goal of promoting
social and economic change as well.
IBM Center for The Business of Government
Curtis Clark
Can Governments create Universal Internet Access?
The Philadelphia story offers important lessons and insights for other
municipalities and governments considering similar initiatives. In the
short term, MWN projects require a strong champion who can respond
to different stakeholders and is able to balance private and public
demands. To sustain the MWN, municipalities should understand the
potential and the danger of focusing only on the digital divide, and
have a plan in place to respond to the public interest and concerns
about MWNs.
We hope that the lessons and recommendations outlined in this report
will be informative and useful to public executives across the nation as
local governments continue to expand their understanding of the potential use of municipal wireless networks.
Albert Morales
Managing Partner
IBM Center for The Business of Government
albert.morales@us.ibm.com
Curtis Clark
Director, Global e-Government Solutions
IBM Public Sector
cclark1@us.ibm.com
www.businessofgovernment.org
Can Governments create Universal Internet Access?
Introduction
Telecom is the central nervous system for nontelecom business.
—John Rutledge, economist
Overview
As the Internet becomes an increasingly indispensable component of the global economy, Internet
access is an increasingly important arbiter of which
societies and peoples will have access to the tools
and information necessary to adequately exploit
social, economic, and educational opportunities.
However, due to various reasons, around the world
certain geographical areas and populations lag
behind others in terms of Internet access.
A number of communities and governments around
the world are actively seeking solutions to speed up
the process of universal broadband Internet availability.
One potential solution that is currently receiving extensive attention is the concept of municipal wireless networks (MWNs), which are defined as wireless Internet
access networks created with active local leadership
and involvement. However, MWNs are still an evolving
concept, and there are a number of drivers and inhibitors that may accelerate or reduce their impact.
In this report we describe the development of the
Philadelphia MWN. In 2004, the city government
of Philadelphia announced that it would seek to
build an MWN to address the digital divide in the
city. Despite considerable opposition and doubts
about the project, by March 2007 a 15-squaremile proof of concept was completed and is available to use, and full implementation is expected
in late 2007. The report describes how the project
was organized around sequential stages that
include goals, stakeholder expectations, policy,
IBM Center for The Business of Government
Municipal Wireless Network (MWN)
Municipal wireless networks, or MWNs, are wireless Internet access networks created with active
local leadership and involvement. They are based
on a point to multi-point link between a base station and subscriber equipment. A base station is
an outdoor antenna connected to the Internet that
sends data wirelessly to subscriber equipment such
as laptops. Typical usage of an MWN involves using
the built-in wireless card included in most laptops
to connect to the Internet.
applications, technology, management, funding,
and implementation.
The case provides an example of government acting
as a catalyst for the introduction of technology—
with the intention of promoting social and economic
change. The case also provides important lessons for
municipalities and governments contemplating similar roles in developing MWNs.
In the short term, MWN projects require a strong
champion who can respond to different stakeholders and balance private and public demands, and
identify the main application of the MWN. To sustain the MWN, municipalities should also understand the potential and danger of focusing only
on the digital divide, and have a plan in place to
respond to the many issues surrounding MWNs
and the underlying technology.
Why MWNs in Philadelphia?
In the global information society, the centrality and
importance of the Internet cannot be overemphasized. The Internet has rapidly become a significant
Can Governments create Universal Internet Access?
resource and tool for many aspects of life. For individuals and institutions alike, it is a critically important platform for communication and interaction.
It has the potential to be the leveling agent for the
existing economic system and the inspiration for
the development of new systems. Evolving concepts
such as e-government have significant implications
for how individuals interact with governments and
for how government can be reorganized to better
serve citizens.
In the city of Philadelphia, 40 percent of the
population identify themselves as non-users of the
Internet. If 40 percent of the population of a large
American city cannot participate in the Internet
revolution—no matter what the reason—there can
be serious repercussions for the economic, political, educational, and social future of that city. In
the face of considerable opposition from political
and commercial entities, the city government of
Philadelphia decided to address the access problem
and create a municipal wireless network (MWN)
to provide affordable, reliable, and high-speed
Internet access in every part of Philadelphia. It began
the process by convening various constituents and
stakeholders to set in motion a discussion on innovative ways to translate this vision into reality.
The city government acted as a catalyst to accelerate a process that may have taken several more
years to complete if left to its own devices.
The city’s initial plan was to subcontract the construction of the network but to retain ownership. However,
this required a significant funding commitment to a
private contractor. To accomplish zero net-cost to
taxpayers, a plan and business model were created
that would allow the city to recoup its investments
over the next few years. Eventually the city was able
to close a deal with a private contractor who would
fund the entire cost of building the network, own it,
maintain it, and also provide sustainable funding
and tools to address the city’s digital divide.
In this report, we examine the city government of
Philadelphia’s quest to enable ubiquitous wireless
Internet access. This report is directed toward managers and leaders who are contemplating similar
projects. It is organized as follows. The next section
discusses the catalyzing role of government in general and in the telecommunications industry. This
section provides a historical and political context
to MWNs and will be useful to readers who are
unfamiliar with the context in which MWNs operate
and the legal and political controversies that exist
Temple University’s Fox School of Business and Wireless Philadelphia
The Fox School’s Irwin L. Gross Institute for Business and Information Technology (IBIT) in 2004 had a strong
relationship with the Philadelphia Mayor’s Office of Information Services (MOIS). Along with several other
universities, we were asked by Dianah Neff, the Chief Information Officer of Philadelphia, in the summer of
2004 to assist the city in the wireless Philadelphia initiative. As the project evolved, our role kept expanding and
eventually included:
• Analyzing the needs of key stakeholders including managing and analyzing the results of 13 focus group sessions.
• Analyzing the potential demand for broadband services using available secondary economic and
demographic data.
• Analyzing the state of the art of wireless technologies and providing recommendations.
• Analyzing the current state of wireless projects in the U.S. and worldwide.
• Developing business models to fund, implement, and manage broadband wireless services.
• Creating a scorecard to compare the impact of requirements on the opportunities and constraints afforded by
different business models.
The project team included two of the authors of this report. We did not charge the city for our services and,
though we worked closely with key personnel in the city, the team remained independent. Our primary motivation was the opportunity to participate in an exciting community development project. We were not involved
with the negotiations with vendors or with any of the implementation-related work that is currently under way.
www.businessofgovernment.org
Can Governments create Universal Internet Access?
today. In the subsequent section, we discuss the
emergence of MWNs as a prominent new information technology infrastructure concept, and the
drivers and inhibitors of MWNs. This section will
be useful to readers who are unfamiliar with the
technical and competitive forces that are driving
MWNs. The first two sections provide the historical, political, economic, and technical context
for the following section, in which we provide a
detailed description and analysis of the Philadelphia
wireless project using a stage-based framework to
delineate key milestones. Next, we present a list
of lessons learned, and conclude with a summary
of key issues relevant for managers and leaders of
similar projects.
IBM Center for The Business of Government
Can Governments create Universal Internet Access?
The Catalyzing Role of Government
Throughout history, there has been an ongoing
debate about the appropriate role and scope of government. In the past, governments have often acted
as catalysts to usher in new innovations and networks
for society. For example, in most nations, the railways, highways, public education, electricity, and
telecommunication systems have been developed
with key support from respective governments. Many
high-technology and medical advances are derived
from government-funded basic research. For example,
the demonstration of the first telegraph was funded by
the U.S. government, and the Internet was created
under a U.S. government program. In each of these
cases, government intervention led to significant economic and human capital growth, and resulted in
large-scale transformations in society.
However, such interventions are increasingly being
questioned because of renewed interest in the
potential of purely market-based mechanisms, the
failure of some government-originated initiatives,
and the existing burden of substantial government
fiscal debt. It is becoming increasingly problematic,
therefore, for governments to play the role of catalyst in achieving technological and social objectives.
According to economic theory, it is appropriate for
governments to intervene in the provision of goods
and services that are considered public goods or
that utilize public goods (Cornes and Sandler, 1986).
Public goods are defined as follows: First, they are
non-excludable. That is, it is excessively difficult or
costly to differentiate between paying and non-paying consumers of the goods or services. Thus, public
goods have positive externalities—they have the
potential to be consumed by individuals regardless
of whether they are paying consumers or not, and
they benefit society in a telescopic manner; that is,
as more individuals consume them, correspondingly
more individuals are indirectly benefited by them.
Examples include lighthouses, streetlights, a standing national defense force, contagious disease prevention, and law enforcement. Second, it may be
problematic or unethical to assign private ownership
to them—e.g., air and ocean water—and they are
thus naturally regarded as publicly owned resources.
As a result of such properties, from a producer
perspective, it can be difficult for private producers
of public goods to be adequately compensated
because of the existence of non-paying consumers.
From a consumer perspective, allowing private
businesses to exploit publicly owned resources can
lead to abuse of both the resources and the public’s
rights. Such a situation is believed to be ripe for
market failure, and thus considered appropriate for
government intervention to apply corrective measures. Moreover, the existence of positive externalities ensures that a rapid growth in the consumption
of such goods and services can potentially have an
accelerating impact on society, which is another
rationale for government intervention.
Based on such justifications, it has been argued that
wireless Internet access fulfills the requirements for
government intervention because it utilizes the publicly owned radio frequency (RF) spectrum, and it
can increase the potential for new innovations and
societal benefits as more and more individuals have
access to the Internet and become Internet literate.
Government intervention does not necessarily imply
that the government itself has to produce such goods
and services. It could opt instead for a regulatory role
wherein it regulates how the private sector produces
such goods and services. In different societies, the
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Can Governments create Universal Internet Access?
decision on whether a government should play a
producer role, a regulatory role, or avoid intervening—in relation to a good or service—is usually
borne out of a number of factors that include the
society’s historical and socio-political context, its
government’s overall philosophical and economic
postures, and the nature of the good or service. For
instance, in capitalist societies, governments are
likely to have a more hands-off approach than in
socialist societies. National defense is typically
never outsourced to the private sector because that
could create security problems. And law enforcement is rarely supplied by the private sector because
it can lead to ethical problems (e.g., in some U.S.
states, some prisons have been privatized, leading to
a situation where owners of lucrative prison businesses have, at least hypothetically, a strong interest
in seeing increases in crime).
U.S. government intervention in the area of telecommunications provision is not a new concept.
However, it is a highly controversial one. Until
the early 1980s, the telecommunications sector in
the U.S. was quasi-monopolistic and dominated
by AT&T Corporation and its subsidiaries, which
were closely regulated by the U.S. government.
However, this quasi-monopolistic situation was to
the detriment of several categories of customers,
especially those in rural areas and in lower-income
groups, for whom access to telecommunications
services was often unavailable or unaffordable.
Since then, the U.S. government has undertaken a
series of legislative measures over several years to open
up the U.S. telecommunications market to greater
competition. The last such major legislative measure
was the Telecommunications Act of 1996. That act
included various incentive schemes and mandated
provisions intended to ensure more universal availability of telecommunications services and infrastructure
in the U.S. The necessity of government intervention to
ensure universal availability becomes manifest in findings such as a 2001 study that found several inhabited
areas in the U.S. where even simple telephone service
was not available (Choura et al., 2003).
Another reason why the U.S. government sought to
change the quasi-monopolistic structure of the telecommunications industry was that monopolies are
often slow to respond to change. Although AT&T
may be credited in many ways for its role in ushering
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IBM Center for The Business of Government
in the modern telecommunications era and for many
great innovations, its monopolistic status caused it
over the years to become increasingly protective of its
turf and sunk investments, and thus less interested in
adopting new technologies that could threaten its
existing businesses. For example, when the Internet
was being commercialized in the mid-1980s, AT&T
was reluctant to invest in building the infrastructure
necessary to provide Internet access to the general
public. It was overtaken in that business by AOL, an
unknown start-up that quickly became an Internet
access giant with a dominant market share.
More recently, the U.S. government has intervened
to encourage growth in Internet penetration via
schemes such as E-rate and the No Child Left Behind
Act. E-rate is a mechanism by which the U.S. government requires Internet service providers (ISPs) to subsidize the cost of Internet access to certain classes of
consumers such as schools, libraries, and certain
kinds of rural communities. The No Child Left Behind
Act includes provisions that encourage schools to
adopt Internet technology in the classroom by offering them additional funding based on various levels
of adoption of such technology.
In recent times, an issue that has commanded attention and galvanized governments to action around the
world is the issue of Internet access, or, more precisely,
lack of Internet access. As the Internet becomes an
increasingly indispensable component of the global
economy, Internet access becomes an increasingly
important arbiter of which societies and peoples will
have access to the tools and information necessary to
adequately exploit social, economic, and educational
opportunities. Consequently, governments around the
world are making the availability of Internet access a
high priority. In the U.S., it took 100 years for telephone penetration to reach about 75 percent of the
population (King, 2005). However, with heightened
government interest and priority, Internet access penetration may reach near universal levels in another 15
years. For example, the state of Pennsylvania has officially declared its intention to achieve universal broadband Internet penetration by 2015 (Pennsylvania State
Government Press Release, 2004).
Role of Governments
According to Gillett et al. (2004), there are four nonexclusive ways in which government can intervene
to act as a catalyst to encourage growth in Internet
Can Governments create Universal Internet Access?
penetration and adoption. It can act as (1) a consumer of Internet services, (2) a rule maker or regulator, (3) a financier, and (4) an infrastructure
developer (see Figure 1).
As a consumer, governments can Internet-enable the
processes of interacting with citizenry, thereby providing an incentive to citizens to adopt the Internet.
As a rule maker or regulator, the government can
enforce legislation designed to encourage private
sector participation in the provision of Internet access
and services. For instance, the government can reduce
or remove restrictions on the use of rights-of-way
assets by private companies, who need such assets
to install Internet access infrastructure. Also, the
government can require certain kinds of constituents
to adopt the Internet—for example, it can require
government-funded schools to offer Internet access
and training to students, or it can require government-funded libraries and community centers to
offer the same to the general public.
As a financier, the government can offer tax breaks,
subsidies, or cheap credit for the creation of Internet
access infrastructure and services, or for buying
equipment (such as computers) required for accessing
the Internet.
As an infrastructure developer, the government can
directly take up the role of creating the infrastructure
(or parts of it), or it could become an ISP. Table 1 on
page 12 lists the elements of this framework and
provides relevant examples.
Pitfalls of Government Intervention
There are also pitfalls involved in government acting as a catalyst, especially in the high-tech area.
Although such interventions are usually prompted
by lofty goals such as a desire to promote social
change or reduce disparity, government espousal
of a particular technology, or of a particular course
of action in relation to a technology, usually tends
to be accompanied by an attendant set of problems.
Government interventions intended to promote
penetration and adoption of certain technologies
can skew the playing field for entities involved in
the development and deployment of technology,
and can thus result in unintended consequences.
Government support for a particular technology may
create monopolistic conditions for the technology,
Figure 1: Catalyzing Roles for Government
Consumer of Internet Services
Rule maker or regulator
Growth in Internet
penetration and
adoption
Financier
Infrastructure developer
Source: Gillett et al., 2004.
www.businessofgovernment.org
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Can Governments create Universal Internet Access?
Table 1: Examples of Government Roles
Government Role
Example of Government Action
Consumer
Introduce e-government, use e-mail for internal communications.
Rule maker or regulator
Introduce laws to regulate subscription fees charged by ISPs or to encourage
competition among ISPs. Provide access to government-owned assets and
properties, such as rights-of-way assets, that may be needed for installation of
network components. Require government-funded libraries to offer Internet
access to the public.
Financier
Offer tax incentives or subsidies for developing Internet access infrastructure
in neglected areas. Support fundamental research into new Internet access
technologies via research grants.
Infrastructure developer
Act directly to create access infrastructure by laying down a network and offering
services, as happens in the case of government-owned utility companies.
Source: Based on Gillett et al., 2004.
and thus create resistance to new technologies that
threaten incumbent technologies. Thus, what may
seem like a success for a while may eventually lead
to problems. For example, in France, the governmentbacked Minitel system for information dissemination
achieved widespread use before the Internet became
popular, and for many years was internationally
acknowledged to be a government-intervention
success story. However, the same Minitel system
caused delays in the adoption of the Internet in
France because the Internet was perceived as a
threat to Minitel, and because for some time there
were unsuccessful attempts to make the Internet
accessible via the Minitel system (instead, today
the Minitel system is accessible via the Internet).
There are also examples of municipalities that have
made inadvisable high-tech infrastructure investments.
For example, over the last three decades, 217 municipalities in 37 states have built fiber-optic networks to
service their jurisdictions (Barthold, 2005). Ostensibly,
these networks were built because the private sector
was not taking the initiative to do so. However, many
municipalities were also attracted to build these networks because they saw in them the potential to
diversify their revenues and reduce internal local
government communication costs. As of today, not a
single one of these networks is profitable, and municipalities have begun the process of selling them off to
the private sector at a loss (Rockwell, 2006).
Government interventions are advisable mainly
under conditions of unacceptable degrees of market
failure; i.e., when free-market entities are uninterested in or incapable of providing desirable levels
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IBM Center for The Business of Government
of infrastructure or services in free-market conditions. There is broad consensus that monopolistic
and quasi-monopolistic conditions can be problematic, and that governments should try to create market conditions where monopolies are discouraged
and competition is encouraged. If government interventions result in certain technologies or entities
achieving monopolistic stature, governments may
again need to intervene to ensure that such monopolistic conditions do not stifle the adoption of new
and risky technology, and that service offerings
continue to grow in the future.
The above scenarios are ideal cases; the reality in
today’s interconnected markets and complex partnerships between government and industry is that even
when conditions are perfect for intervention, many
challenges face government in taking on the role of
catalyst. The next section discusses why municipal
wireless networks have attracted so much grassroots
and governmental attention.
Can Governments create Universal Internet Access?
The Emergence of Municipal
Wireless Networks (MWNs)
Although the growth in the number of people
accessing the Internet over the past decade has
been impressive, this growth has not been uniform.
Around the world, certain geographical areas and
populations lag behind others in terms of Internet
access. To address such digital divides, a number
of communities and governments around the world
are actively seeking solutions to speed up the process of universal broadband Internet availability.
A confluence of factors has recently made municipal wireless networks, or MWNs, an increasingly
feasible and attractive option for municipal governments that seek to act as catalysts in promoting
more equitable and universal access to the Internet
within their communities.
A municipal wireless network is defined as a wireless
Internet access network that is created with active
local government leadership and involvement
(Mandviwalla et al., forthcoming). MWNs are currently among the most talked about innovations
involving Internet access, and are receiving extensive
attention in communities around the world. In the
U.S., sales of wireless Internet access related hardware are expected to grow from under $100 million
in 2004 to around $1 billion by 2009 (Lawinski,
2005), driven in substantial part by investments
related to MWNs. Apart from the estimated 300-plus
MWN projects currently under way in the U.S., at
least another 100 are under development in the rest
of the world (see the sidebar “Silicon Valley Metro
Connect” for an example). MWNs have also received
substantial encouragement from the private sector.
For instance, to further encourage such projects, a
group of large technology companies led by Intel has
formed a consortium called the Digital Communities
Initiative to develop technology, best practices, and
financing options for MWNs. To better understand the
Silicon Valley Metro Connect
One of the largest MWN projects under development will cover the region known as Silicon Valley
in California (Richtel, 2006). This multi-municipal
network will cover 42 municipalities, and serve
2.4 million people over 1,500 square miles. Named
“Silicon Valley Metro Connect,” the network is
being developed by a consortium of firms comprising IBM and Cisco Systems, among others.
This multi-use network will be built using the latest
available mesh technologies, will be privately owned
and operated, and will offer wholesale bandwidth
access to other ISPs. The plan is to offer a basic
service for free and a premium service for a fee.
The basic service will offer speeds up to 1 megabit
per second, while the premium service will offer
much higher speeds and additional features such as
value-added services and technical support. IBM’s
roles in this project will include helping to design
and integrate services, and developing innovative
applications for public utilities and agencies—such
as vehicular traffic management solutions and
remote metering of utility services.
nature of the interest and debate, we discuss the
drivers and inhibitors of MWNs (summarized in
Figure 2 on page 14).
Drivers of MWNs
Technology Availability
Recent developments in broadband wireless
standards and technology, coupled with steep
declines in prices of such technology, have made
the deployment of broadband MWNs more convenient and cost-effective than ever before, and
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Can Governments create Universal Internet Access?
Figure 2: Drivers and Inhibitors of MWNs
Drivers
Inhibitors
Technology Availability
Technology Risks
Market Opportunity
Role of Government
Historical Precedent and
Policy Imperative
Development
of MWNs
Potential Government
Incompetence
Reuse of Available Assets
Legislative Environment
Legislative Approval
Socioeconomic Potential
a viable alternative to cable, DSL, and other
wired technologies.
The technology that makes MWNs feasible did not
follow the traditional path traversed by most telecommunications technologies. Instead of being
driven in a top-down manner by telecommunications companies, the concept of MWNs emerged in
a bottom-up manner through the efforts of discrete
end users of wireless Internet technology and of
communities that stand to benefit from MWNs.
In the U.S., certain bands in the radio frequency
spectrum such as the 900 MHz, 2.4 GHz, and 5.8
GHz bands are available for unlicensed usage by
the general public. These RF bands are typically used
for applications such as cordless telephones, wireless
headphones, off-the-shelf short-range walkie-talkies,
remote-controlled car keys, remote-controlled model
airplanes, and remote-controlled toys. In the late
1990s, technology was developed and marketed that
allowed home and office Internet users to create
wireless local area networks (WLAN) very easily
using such unlicensed RF bands. The coverage area
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IBM Center for The Business of Government
Response from
Incumbent Players
of such a WLAN typically extended up to a few
hundred feet, and was called a “hotspot.” Over a
few years, the cost of installing WLANs decreased
substantially and they became much simpler to use,
thus their popularity increased dramatically. There
are now estimated to be over 10 million WLANs in
homes across the U.S., and at least an equal number
in offices and other commercial establishments
around the country (Fleishman, 2006).
As such networks continued to proliferate, the
beginnings of a new idea in networking began to
take shape. Users realized that it was technically
possible to tie up proximate hotspots to create large
wireless networks that seamlessly spanned the areas
covered by the individual hotspots. Such networks
are called “mesh” networks, and to build them,
certain devices called “meshing” devices are
needed to link the hotspots together. Because the
technology needed to build such networks is low
cost and available off-the-shelf, such networks can
be built very easily and with relatively low investment. And because no license fees are needed to
use such networks, they cost very little to operate.
Can Governments create Universal Internet Access?
Further, because there is no need to install fiber or
wires, mesh networks can be deployed quickly to
provide large areas with wireless Internet access. To
cater to the potential demand for mesh networking,
there is currently an ongoing industry-wide effort by
hardware vendors to develop standards so that mesh
networks can offer rich features, and robust and
secure performance.
A major attraction of such wireless technology is
that it offers not just a replacement or substitute for
existing forms of Internet access, but in fact has the
potential to offer a radical departure from existing
capabilities. Such Internet access has the potential
to give rise to a new generation of mobile Internetenabled devices and applications to support personal and business goals. For example, wireless,
ubiquitous broadband Internet access could lead to
a new form of telecommunications convergence to
inexpensively support advanced forms of interactive
television broadcasts and voice-over-Internet-protocol (VOIP) cellular telephony. Entrepreneurs are also
working on new kinds of applications to exploit
such networks—for example, handheld wireless
devices that provide tourists in a city with rich and
interactive information about structures such as
buildings and tourist attractions.
Market Opportunity
Private sector Internet service providers tend to focus
their services toward more financially attractive
markets and consumers, and thus invariably tend to
neglect certain constituencies. In the U.S., private
firms often end up ignoring or under serving poorer
urban and rural communities. Therefore, a potential
market opportunity exists that several firms are trying
to exploit. For example, several Internet service providers (e.g., Earthlink) are creating business units to
service municipalities interested in creating wireless
networks. Several major hardware vendors have created units to promote and support wireless networks
(e.g., Intel and Cisco). More recently, Internet aggregators such as Google have announced plans to
create such networks for their local constituencies.
Historical Precedent and Policy Imperative
Historically, municipalities have often been involved
in providing various services and utilities for citizens
and local businesses, especially when the private
sector was unable or uninterested in providing
them. In many jurisdictions in the U.S. even today,
certain essential services such as electricity, water,
health clinics, and education are provided by municipal local governments. Moreover, beyond the historical precedent, according to economic theory, it is
appropriate for government to intervene in the provision of a service if the service utilizes public
goods and has the potential to result in significant
positive externalities (Cornes and Sandler, 1986).
It has been argued by proponents that wireless
Internet service provision fulfills these requirements
because it utilizes the publicly owned radio frequency spectrum, and can accelerate the potential
for new innovations and societal benefits as more
citizens get connected. Therefore, for many locales,
a municipality-owned MWN seems like no more
than a high-tech extension of an already existing
portfolio of services owned or provided by the
municipality’s local government.
Reuse of Available Assets
A major strategic advantage that municipalities have
with regard to wireless infrastructure deployment is
that they usually own or control public facilities such
as traffic lights and streetlights. Wireless Internet
networks need the installation of antennae and nodes
that are geographically dispersed and proximate to
points from where the network will be accessed.
Assets such as traffic lights and streetlights are
considered highly appropriate for installing such
network components because they are usually
spread out across most communities. There is thus
an expectancy that municipalities will find it especially easy to set up the underlying network infrastructure because they have ready and free access
to properties needed for such installations.
Legislative Approval
In the U.S., the concept of MWNs received
a significant boost in March 2004 when the U.S.
Supreme Court reached a decision in Nixon v.
Missouri Municipal League which confirmed that
municipalities could set up municipal wireless
networks and sell access to the public. This case
involved a group of municipalities in Missouri that
had set up or were planning to set up MWNs. This
group was sued by a number of entities including
the state government of Missouri and various telecommunications companies, who argued that
municipal governments should not be allowed to
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Can Governments create Universal Internet Access?
behave like telecommunications companies by
selling access to such networks. According to the
Supreme Court decision, under existing telecommunications laws municipalities could indeed set up
and sell access to these networks, but state governments could bar them from doing so. At that time,
there were already approximately 100 MWN projects
in various stages of progress around the country.
However, all of these were in small municipalities.
This Supreme Court judgment encouraged much
larger municipalities to consider MWN projects,
as long as their state governments did not have a
problem with these projects.
mesh network conditions. So far, only small-sized
mesh networks have been deployed, and they have
not always performed as well as promised by equipment manufacturers and vendors. Various network
reliability and throughput speed issues have been
encountered. Therefore, it is not known what kinds
of issues may emerge when such networks are
deployed in citywide dimensions in large cities.
Nor is mesh technology yet standardized. Standards
are currently under development, but until they are
accepted, municipalities have to use proprietary
technologies, which can make them overly dependent on particular vendors.
Socioeconomic Potential
Another challenge is that MWNs could interfere
with other devices that use the unlicensed radio
frequency bands such as home WLANs, cordless
phones, keyless automobile entry systems, remotecontrolled toys, and walkie-talkies. When used
for municipality-wide deployment, wireless Internet
access points need to broadcast RF signals at relatively high power. The high-power signal could
drown out other signals on similar frequencies.
As it stands today, this matter is still unresolved,
and it is simply not certain what will happen in
terms of channel interference when MWNs compete for limited unlicensed bandwidth with all
these other technologies.
For municipalities, a major attraction of wireless
networks is their potential to improve the socioeconomic condition of individuals and institutions.
Increasing anecdotal and research evidence supports the idea that broadband Internet access has
a non-trivial, positive impact on socioeconomic
growth in local communities (Gillett et al., 2006).
Therefore, civic leaders and politicians see such
networks as catalysts to (1) address the digital divide
in their communities, (2) improve the image of the
community, and (3) attract new businesses to the
area. In addition, by embracing such networks for
their own administrative processes, municipalities
could save on internal communications costs and
improve the capabilities and efficiency of their staff
and operations.
Inhibitors of MWNs
Technology Risks
There are several reasons why it can be an
extremely risky prospect for municipalities to get
involved with high-tech ventures such as MWNs.
If such investments turn out to be unfruitful—as
happened with municipal investments in fiber
networks—it could result in a costly burden for
taxpayers to shoulder.
A major concern is that in its current stage of
development, MWN technology may not be ready
for sustained large-scale usage. The technology was
originally developed for independent hotspots,
and at that time the idea of meshing such hotspots
together was not considered. Therefore, it is not certain how well the technology will perform in large
16
IBM Center for The Business of Government
Rapid obsolescence is also a concern. Wireless
technology is a hotbed of research and development
activity, and a flurry of new innovations and standards is expected every few years. In high-tech
areas, the private sector is used to managing cycles
of creative destruction so that new technologies and
systems periodically emerge to supplant status quo
arrangements. However, governments are not usually used to handling such cycles.
Role of Government
Perhaps the most conspicuous policy level and philosophical criticism against MWNs is that they are a
form of government entry into the competitive arena
of Internet service provision. Incumbent Internet
service providers and their supporters argue that
MWNs will result in the formation of governmentowned quasi-monopolies that will compete unfairly
against commercial ISPs. Incumbent commercial
ISPs argue that local governments pay no taxes,
have access to tax-exempt bonds, and lack clear
Can Governments create Universal Internet Access?
accounting practices. Thus, not only would MWNs
be indirectly subsidized by taxpayers, but also it
would be difficult to accurately gauge MWN costs
and expenses within overall municipal government
budgets, making it possible for municipalities to crosssubsidize one activity with another. Further, they argue
that MWNs would result in re-appropriation of a freely
available public asset—the unlicensed RF bands—
by the government. They contend that all of this
would distort the market for wireless Internet service
provision and would be unfair to existing commercial
ISPs, especially those telecommunications companies that have invested in RF spectrum licenses in
order to be able to provide wireless services. Finally,
they argue that there are significant potential longterm economic consequences if the government
interest in MWNs results in the formation of a quasimonopolistic or monopolistic economic environment for wireless Internet service provision. The
potential consequences include long-term damage
to competitive practices, a slowdown in the development of new innovations, and the possibility of
commercial ISPs going out of business.
Supporters of MWNs argue that government health
clinics and public libraries did not put private hospitals or book publishers out of business. But critics
warn that if MWNs offer low-cost, high-speed, and
wireless access to the Internet, they could seriously
undermine commercial telecommunications and
broadcast businesses as they are currently recognized. Thus, it is contended that instead of trying to
get into the business of building MWNs, municipalities should make it easier for commercial ISPs to
build and operate such networks. Municipalities
could do this by reducing or eliminating barriers to
entry such as licensing fees, and by giving easier
access to rights-of-way assets such as city-owned
lampposts that are needed for installing the network
infrastructure. Further, telecommunications is one of
the most heavily taxed industries (King, 2005), and
it is claimed that municipalities can easily create
strong incentives by providing corporations tax relief
for building wireless infrastructure.
Potential Government Incompetence
Other critics are less concerned with the policy and
philosophical objections of government intervention
and instead point to a long history of failures that
have resulted from governmental involvement.
Whereas in the short run MWNs may accelerate
penetration of wireless Internet access, over the
long term the potential economic negatives associated with monopolistic practices may outweigh
the short-term gains. In the European nation of
Macedonia, for instance, a state-run monopoly has
been given rights to provide Internet access across
the entire nation. Although this ISP was initially
appreciated because it built Internet access infrastructure in all areas of the nation, including parts
where commercial ISPs would not typically have
cared to provide Internet access, it is quickly losing
support from consumers because the quality of
service is poor and because it is reacting slowly to
upgrade service levels. Thus, although this ISP provided wide coverage, the quality of service is poor.
And there are now calls for opening up the market
to competition from other ISPs because the state-run
ISP’s services could be disastrous for the long-term
economic future of the nation (Wood, 2006).
Legislative Environment
All of this interest and activity at the state level has
prompted the U.S. federal government to initiate an
overhaul of the Telecommunications Act of 1996 to
address MWNs and other similar local-level broadband Internet access efforts. Among federal legislators, there are proponents on both sides of the
fence. Whereas Senator John Ensign (R-NV) and
Representative Pete Sessions (R-TX), backed by lobbying from telecommunications companies, have
introduced legislation to altogether ban municipalities from building MWNs, there is a bipartisan
effort by Senators John McCain (R-AZ) and Frank
Lautenberg (D-NJ) to introduce a bill that would
grant all municipalities the right to build MWNs
whether their state government allows them to or
not. Such legislative wrangling adds to uncertainty
surrounding MWNs.
Response from Incumbent Players
For incumbent telecommunications and broadcast
corporations, MWNs are a disruptive technology
and a significant threat to their existing lines of business. The Internet has multi-application, multi-purpose
capabilities, and can support all traditional communication needs such as text, voice, and video. A wireless, high-speed, and high-performance Internet has
the potential to replace traditional channels of cellular
telephony, television, and radio broadcast delivery.
Based on various advantages of Internet-based
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Can Governments create Universal Internet Access?
communications, it is highly likely that at some point
in the future, traditional forms of communication that
are currently considered distinct from the Internet
(e.g., telephone, cellular phones, and television) will
eventually be delivered via the Internet. For instance,
it is expected that traditional cellular telephony
systems will be replaced by wireless Internet-based
telephones using VOIP. Thus, incumbent telecommunications and broadcast corporations have compelling reasons to be concerned about tax-exempt
and taxpayer-subsidized competition emanating
from the government. As a result, some firms have
come out strongly to reduce the potential threat via
actions such as lobbying, legal challenges, funding
of studies that dispute the potential advantages of
MWNs, and, more recently, pricing incentives to
gain market share.
Overall, although the last three years have seen tremendous developments and advances in the concept
of MWNs, these are still early days for MWNs. A
large number of claims have been made in favor of
creating MWNs, but there are also a large number of
caveats and threats. It may take a few years before
there is clarity on issues such as whether and to what
extent municipalities should own or build MWNs, as
well as the question of who should be responsible for
addressing issues such as service pricing, reliability,
flexibility, security, coverage, user-training, and customer service. The case of Philadelphia, discussed in
the next section, provides a detailed illustration of the
challenges and opportunities presented by MWNs.
18
IBM Center for The Business of Government
Can Governments create Universal Internet Access?
The Development of Philadelphia’s
Municipal Wireless Network
The city of Philadelphia is the fifth largest city in the
U.S. and prides itself as a city of firsts. It was the site
of the Declaration of Independence and the drafting of
the U.S. Constitution. The U.S. flag is believed to have
been designed there, and the Liberty Bell resides
there alongside Independence Hall. For much of U.S.
history, Philadelphia has been one of the nation’s
leading cities in terms of economic, political, and cultural influence. In the industrial era Philadelphia has
experienced a reversal of fortunes. The economy has
performed poorly and the population has declined.
Various indicators related to socioeconomic factors
such as education, crime, and quality of life measure
well below the U.S. average (see Table 2 for statistics).
Over the years, the city government has attempted
various measures to try to stem the decline, but results
have been mixed. However, there has been some
improvement relative to previous years. For example,
during the 1990s Mayor Ed Rendell led various initiatives to improve tourism including the construction of
a convention center. Several neighborhoods in the
downtown area were revitalized, leading to a mini
housing boom, new restaurants, and cultural attractions. Philadelphia covers an area of about 135 square
Table 2: About Philadelphia
Population
Philadelphia 2000
Philadelphia 2005
1,517,550
1,406,415
Socioeconomic Performance
Individuals below
poverty level
Per capita
income
Population over
25 with college
degree or higher
Philadelphia 2000
Philadelphia 2005
U.S. 2005
23%
25%
13%
$16,509
$19,140
$25,035
18%
22%
27%
Crime Level
Per 100,000 People in 2004
Philadelphia
U.S.
1408.3
465.5
Murders
22.2
5.5
Robberies
657.4
136.7
Violent crimes
Sources: Population and socioeconomic performance statistics from U.S. Census; crime statistics from the FBI.
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19
Can Governments create Universal Internet Access?
miles and currently contains about 660,000 households. The city government has a budget of about
$3.5 billion, 52 departments and agencies, and
25,000 employees.
How It All Started
In January of 2000, the city elected a new mayor—
John Street. At that time, the city was going through
a positive period with new residents moving in and
several new visible construction projects under way
such as the new Constitution Center. In May of 2000,
the mayor appointed a new Chief Information Officer
(CIO)—Dianah Neff—to the Mayor’s Office of
Information Technology (MOIS). MOIS was an important department of the city with a budget of about
$80 million and approximately 450 employees.
Neff had prior senior-level information technology
experience in the city governments of San Diego,
California; Bellevue, Washington; and Palo Alto,
California; and had become well-known for steering
innovative information technology projects in those
cities. For example, while she was in Palo Alto, the
city became the first in the U.S. to have an official
city government website. The new CIO was given a
strong mandate to use information technology to
bring favorable changes to the city government’s
workings and to the city of Philadelphia. By the
middle of 2002, Philadelphia began to gain national
attention for its efforts to make local government
services accessible via the Internet. For instance,
Philadelphians could apply for permits online, and
could pay various taxes and fines online.
However, in the beginning of 2003, internal analyses
conducted by the city government showed that across
the city’s population, there was uneven awareness
and appreciation of the e-government efforts. Also,
a significant proportion of the population could not
benefit from e-government because of lack of access
to or knowledge of computers and the Internet. The
city government realized that in order to continue
making strides in e-government, they had to better
understand and address this digital divide.
A study conducted by the city government in 2003
found that approximately 40 percent of the city’s
population identified themselves as non-users of the
Internet. Moreover, only 45 percent of the population
had Internet access at home, compared with a national
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IBM Center for The Business of Government
rate of over 70 percent. Of these, 72 percent were
slow dial-up connections, compared with a national
rate of less than 50 percent (Fleishman, 2006). The city
was seriously lacking in Internet usage, particularly in
broadband Internet usage, and something drastic had
to be done to ameliorate the situation.
About that time, a few small communities around
the country had begun to draw attention to setting
up community-wide wireless networks for Internet
access. For the city government of Philadelphia, this
was an increasingly attractive option. The technology was cheap and available off the shelf. And for
municipal governments, there was a great advantage
in that such wireless networks could be created by
installing wireless equipment on geographically dispersed municipality-owned rights-of-way assets such
as lampposts and traffic lights.
Initial Steps
Figure 3 presents a timeline of the key milestones of
the Philadelphia wireless initiative that are discussed
further below. In January 2004, the city government
installed free wireless hotspots in a few test locations in the city. There was considerable favorable
media coverage of this development, and there ensued
intense media speculation and interest in the city’s
future plans vis-à-vis such hotspots.
The plan was called the Philadelphia Wireless
Initiative, and in August 2004 the mayor announced
that a nonprofit organization, Wireless Philadelphia,
had been created to oversee the plan (Philadelphia
City Press Release, 2004). Wireless Philadelphia
had an Executive Committee that was composed of
a number of eminent and influential Philadelphians
who had achieved a high degree of prior success
in various community, entrepreneurial, and technology-related activities. As CIO of Philadelphia,
Neff was appointed an ex-officio member of that
committee. Wireless Philadelphia began working
on a project plan to bring the Philadelphia Wireless
Initiative to fruition. The project planning process
and eventual implementation is described below
using the framework in Figure 4 on page 22.
The overall project plan would be carried out in
three stages. In Stage 1 of the MWN planning
process, Wireless Philadelphia identified its goals,
explored the needs and expectations of diverse
stakeholders, and addressed key policy issues. In
Can Governments create Universal Internet Access?
Figure 3: Timeline of the Wireless Philadelphia Initiative
Jan 2004
City installs free pilot Wi-Fi hotspots in a few test locations in Philadelphia.
Mar 2004
U.S. Supreme court decides in Nixon v. Missouri Municipal League that under existing
telecommunications laws, municipalities have the right to sell telecommunications
services to the public, but also says that state governments can bar them from doing so.
Jun 2004
City establishes a working group to help create an MWN for Philadelphia.
Jul 2004
City commissions three local universities (Temple, Drexel, and La Salle) and a consulting firm to work on the business plan.
Aug 2004
Philadelphia mayor announces the Wireless Philadelphia Initiative, an intention to
create a citywide Internet-capable municipal wireless network. He also announces
the incorporation of a nonprofit organization, Wireless Philadelphia, and commissions
an executive committee to help create the network.
Sep 2004
Focus groups commence with different stakeholder groups.
Nov 2004
City government begins technical tests using a square-mile test location in the
Norris Square area. Also conducts citywide spectral analyses.
Nov 2004
Area universities submit interim business plans and reports.
Nov 2004
In the Pennsylvania legislature, House Bill 30 becomes Act 183 (dubbed the “Verizon
Law”). The state requires local governments to submit proposals for building MWNs
before Jan. 1, 2005. If they submit a proposal after that, they must obtain a waiver from
the major telecommunications provider in their jurisdiction. In a pre-arranged deal,
Philadelphia obtains a waiver from Verizon to build an MWN whenever it wants.
Jan 2005
Wireless Philadelphia presents the Wireless Philadelphia Initiative business plan
to the mayor of Philadelphia. The plan envisions the city funding and owning the
network, and recouping its investments in five years. The network is expected to
cost $15–$18 million to build.
Apr 2005
The mayor approves the business plan, and the city announces an RFP (request for
proposals) soliciting proposals to build the MWN.
Oct 2005
City awards the contract to build the network to Earthlink. Earthlink will fund the
entire cost of building the network, pay $2 million to use the city’s lampposts, and
will give 5 percent of its revenues to the city. The city will use these monies to
address the digital divide.
May 2006
Philadelphia’s City Council approves the Earthlink deal and work begins on building
and testing the first phase.
May 2007
The 15-square-mile proof of concept is completed and currently available to
subscribers. Full implementation is expected by Oct 2007.
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Can Governments create Universal Internet Access?
Figure 4: MWN Development Framework
Goals
Applications
Stakeholders
Wireless Technology
Policy
Management and
Funding
Stage 1
Stage 2
Implement
Municipal
Wireless
Network
Stage 3
Source: Mandviwalla et al., forthcoming.
Stage 2, Wireless Philadelphia decided on the kinds
of applications that the MWN would support, what
technologies would be used to build the network
and support these applications, and what sort of
management and funding arrangement would be
used to build and operate the network. In the final
stage, the actual network would be built. The stages
are rough milestones and serve to retrospectively
illustrate activities that were often carried out in parallel and with considerable overlap.
Stage 1: Goals, Stakeholders,
and Policy
Goals
In August 2004, Wireless Philadelphia announced
its mission and objectives:
Mission
Wireless Philadelphia aims to strengthen
the economy and transform Philadelphia’s
neighborhoods by providing wireless
Internet access throughout the city. Wireless
Philadelphia will create a digital infrastructure to help citizens, businesses, schools
and community organizations make effective use of this technology to achieve their
goals while providing a greater experience
for visitors to the City.
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IBM Center for The Business of Government
Objectives
• To spur economic development
•
To enhance community neighborhoods
•
To help overcome the digital divide
•
To reduce the cost of government
It was assumed and hoped that the MWN would
lead to improvement in the overall socioeconomic
scenario in a locale, leading to urban renewal where
needed. This would lead to improvement in citizens’
quality of life and, subsequently, economic competitiveness of the community. The intent of the costsavings goal was that the municipality could save
on internal communication costs by using its own
network to enable Internet access for its employees,
instead of relying on an ISP. Several secondary goals
were also discussed by the city in its interaction
with citizens and the media:
Secondary Goals
• Providing business and government
users with ubiquitous Internet to
supplement their internal networks,
so that field staff could access the
Internet while in the field.
•
E xpanding the potential market for
e-government services.
•
Improving the attractiveness of the community for business visitors and tourists.
Can Governments create Universal Internet Access?
•
iving local entrepreneurs a chance
G
to participate in building the network,
lowering barriers to entry for them to
enter such a market.
•
E mpowering citizens to participate electronically in the political process.
Stakeholders
Members of the Executive Committee of Wireless
Philadelphia indicated four main areas of interest
and concern with regard to the MWN: innovation,
adequate leadership, a reliable network, and structures that are responsive to user needs. The Executive
Committee was also concerned with sustainability.
Sustainability involved issues such as organizational
and governing modes, performance measurement,
funding, financial viability, end-user training, and
customer support. The Executive Committee identified the key stakeholders of the project as follows:
•
City residents with access to and knowledge of
the Internet and computers
•
City residents without access to and knowledge
of the Internet and computers
•
City government of Philadelphia
•
Business community (large and small)
•
Nongovernmental organizations (NGOs) and
nonprofit organizations
•
Healthcare community
•
Academic community (higher education and
public schools)
•
Business visitors and tourists
More than a dozen focus groups were conducted
with over 120 participants from the above list (see
Table 3 on page 24 for sample stakeholder comments). It became evident that stakeholders had
contrary expectations and interests. For instance,
some stakeholders believed that the city government
should own the MWN, while others believed that it
should be owned by the private sector. Similarly,
some stakeholders believed that lower-income users
should be allowed to use the service for free,
whereas others believed that everyone should be
made to pay for it. In addition to the focus groups,
a town-hall-type public forum was held that involved
a discussion of issues similar to those explored in
the focus groups. We believe that the focus on
understanding the needs of stakeholders was very
helpful. It elicited important issues and requirements
from many different local groups, and helped create
a positive and inclusive atmosphere about the project in the city. We strongly recommend that newer
projects follow a similar strategy.
Policy
In parallel with goal setting and stakeholder analysis, Wireless Philadelphia was also grappling with
state policy. In March of 2004, the Supreme Court
reached its decision in Nixon v. Missouri Municipal
League supporting municipal involvement in MWNs
and allowing states to decide whether municipalities
in their jurisdiction could offer MWNs. Bolstered by
this decision, a number of municipalities seriously
began to look into MWNs. However, a fairly wellaccepted viewpoint was that the business of Internet
access should be left to the private sector ISPs, and
that municipalities should not get involved with
offering access to network services. A strong lobbying effort from telecommunications companies led
to a number of states banning all municipalities
within their jurisdictions from building MWNs. In
the state of Pennsylvania, Verizon was the predominant telecommunications company. According to
media reports, Verizon exerted heavy lobbying pressure on the state government to bar MWNs in the
state. Meanwhile, Neff, with help from the mayor,
championed the cause of Philadelphia’s MWN to
state legislators and to the governor. In parallel, it
was also reported that Neff negotiated with Verizon
to change the terms of their demands.
During this time, Wireless Philadelphia also grappled with other policy challenges related to the legal
implications of building and operating an MWN,
such as responsibility for data security and related
liabilities. During the stage 1 period, the CIO was
very visible in the community and the media as a
strong champion of the MWN. At that time, there
had been considerable concern about various city
government budget shortfalls, and there was a view
that instead of focusing on a risky new project, the
city should focus on restoring funds to various programs. The CIO assuaged those fears by asserting that
the city government was not interested in acquiring
monopoly rights over the project, and was instead
interested in private sector participation and eventual
complete ownership and management by the private
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Can Governments create Universal Internet Access?
Table 3: Examples of Stakeholder Comments from Focus Groups
Positive Comments from Stakeholders
It would be a matter of pride for Philadelphia to be the first major city with a citywide MWN.
It would help address the digital divide and improve the socioeconomic potential for residents of the city.
It would help businesses become more connected and competitive.
Government field workers (e.g., police, parking authority, meter readers) would be able to access
records and information while out in the field.
More city government workers would use the Internet, thereby giving the city an e-government edge.
Case workers of NGOs and nonprofit organizations would be able to access records and files while out
in the field.
Healthcare workers would be able to implement e-health initiatives and be able to access information
while out in the field.
It would enhance the telecommuting possibilities in the city.
Universities and colleges would benefit by expanding connectivity beyond on-campus wireless networks.
Also, the attraction of the MWN could help colleges increase enrollment from students outside the city.
Schools could make study materials available online and thereby benefit students at home. Students
could benefit from participating in virtual field trips. Parents could develop closer contact with teachers
and school administrators via the Internet.
Negative Comments from Stakeholders
If skills training was not managed adequately, individuals with non-existent or minimal computer literacy
skills could fall further behind others, thereby exacerbating the digital divide.
The MWN should be a win-win deal for all concerned. Private sector ISPs should not suffer
economically because of the network; that could mean a loss of jobs in the city.
The system must stay up-to-date with evolving technical standards and technology. It should not be
allowed to become obsolete. It should be made future proof.
The privacy and security of users of the network must be guaranteed.
The network should not only be accessible from outdoors, but also should be available indoors.
Whereas it was OK for the government to build it, the government must eventually divest itself of day-today operations of the network, and hand that responsibility to the private sector.
The MWN should be cost neutral to the city, and should not cost too much to subscribe to. It should
cost less to subscribe to than other competitive options offered by private ISPs. Also, there should be a
sliding-scale cost structure so that lower-income users can subscribe for less.
Quality and reliability should be given a strong priority. Customer support should be adequate.
Publicity and promotion programs must be used to raise awareness among potential users.
Local community leaders must play an active role in communicating the potential of the MWN.
24
sector. Secondly, she avowed that the MWN would
be built at a neutral zero cost to the city.
Stage 2: Applications, Technology,
and Management and Funding
Despite the initial success in Philadelphia and other
similar projects around the world, we believe that
newer projects will continue to face significant policy
challenges. It will remain critical for new projects to
have strong, vocal, media-savvy, and politically and
legally connected champions.
Applications
IBM Center for The Business of Government
At the time of the project, a number of communities
around the country were experimenting with new
kinds of applications to run on MWNs, such as
providing police squad cars with Internet-connected
laptops, and installing utility meters with wireless
technology so they could be read remotely. However,
Can Governments create Universal Internet Access?
it was decided that the initial focus of Philadelphia’s
MWN would be to provide reliable, quality Internet
access to the city’s population, with particular
emphasis on underserved low-income residents.
Further, the city government would become an
anchor tenant. That is, the MWN would be assured
support and usage from the city government. It
was decided that radical applications, if any, would
be considered at a later stage. Given the timeframe
of the project, and the unique demographics and
politics of Philadelphia, focusing initially on lowcost Internet access was a good decision. It allowed
the project to focus on a concept that was relatively
easy to explain, defend, promote, and implement.
However, as the technology matures, and the
cost of Internet service continues to decline, it
may be progressively harder to focus only on
“digital inclusion.”
Wireless Technology
Given the available options, the most suitable technical infrastructure for the city was Wi-Fi mesh
technology, with WiMAX backhaul. Problems with
this technology included: (1) it had not been tested
in such a large-sized network, (2) it was likely to be
outdated soon, and (3) mesh technology was available only in proprietary form, with many different
vendors offering incompatible solutions. However,
the technology was low cost enough that it could
be replaced if it became outdated, and industrywide activity was under way that would soon create
open standards for mesh technology.
Given the uncertainty surrounding the use of the
technology on a large scale, between November
2004 and January 2005 the city conducted extensive technical feasibility tests. RF Spectral Analysis
was conducted to assess the extent of current
unlicensed band usage and to predict the likelihood
of future interference. The city used handheld
spectrum analyzers to analyze the RF band usage in
50 locations spread across the city. The results of this
analysis showed that it was feasible to use the 2.4
and 5.8 GHz unlicensed RF for the MWN. This was
an important step in ensuring the technical feasibility of the project because the unlicensed RF spectrum is subject to interference from many different
devices including cordless phones and microwaves.
Additional analysis and simulations indicated that
to achieve adequate MWN availability, Philadelphia
would need a mesh network that consisted of 18
mesh nodes per square mile, transmitting at 1 watt
per node, with nodes installed at a height of 45 feet
from ground level. A test network was created with
these specifications over a square mile area. The
tests revealed that signal strength parameters were
within acceptable ranges and Internet access speeds
ranged from 1 to 11 Mbps. As expected, the factors
that most affected signal strength were proximity of
the client device to a mesh network node, and the
amount of obstruction in the path between the
client device and the closest mesh network node.
The overall pattern of RF propagation matched the
pattern predicted by the simulation.
Such extensive testing will likely continue to be
required by new projects in the conceivable future.
Each city or area has unique electromagnetic, topographical, and geographical properties that can
dramatically influence the number of nodes
required, reliability, and the speed of access. The
results of such testing will significantly impact the
actual cost of implementation and the feasibility of
certain applications. For example, on the cost issue,
a different topography of buildings and natural structures may require significantly more or less nodes.
Another example related to applications is that if the
MWN will provide the backbone for handheld wireless devices that will read city utility meters, then
how will that application deal with “dead” (high
interference/low signal) zones?
By March 2007, the Philadelphia project had
completed a pilot proof of concept implementation
covering 15 square miles of the city. The eventual
goal is 135 square miles. Still, even 15 square miles
is a very large area for a densely populated northeast
city. The results of the pilot will likely be very useful
to other cities that are interested in creating an
MWN. The early indications are that the pilot will
be successful and that the technology is sufficiently
mature to continue scaling upward.
Management and Funding
This part of the planning process included determining
responsibility for funding the network and managing
the implementation and operations. This process is
inherently controversial. For example, the project
included a social consciousness dimension to
address the city’s digital divide. It is difficult to
gauge how and to what extent such social aims can
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Can Governments create Universal Internet Access?
be adequately addressed by the private sector and,
therefore, to estimate how much government sector
involvement is desirable or necessary. Many different kinds of funding and management models are
possible for MWNs. For instance, Lehr et al. (2006,
p. 7) have identified five distinct models, as follows:
Retail service model: “the municipality offers retail
services to consumers over infrastructure that it
owns and operates.”
Wholesale service model: “the municipality owns
and operates a local access network which provides
a wholesale access platform for retail ISPs and other
communication service providers to use.”
Franchisee model: “the municipality contracts with
a private firm to build and operate the facilities.”
Real estate model: “the municipality provides access
to conduit or public rights-of-way. In the wired
world, this includes access for stringing or burying
cables; while in the wireless world, it includes locations for siting antennas. In this model, the municipality partners with private providers to deliver
end-to-end services to consumers.”
Coordination model: “the municipality can provide
a nexus for demand aggregation (e.g., buyer groups)
or for coordinating efforts of community networking
(Wi-Fi cooperatives).”
Each of the funding models listed above has differing
levels of government and private sector participation,
resulting in various advantages and disadvantages
depending on one’s point of view. For instance,
increased municipality participation is likely to lead to
increased emphasis on the social consciousness aspects
of the project, but may crowd out private sector participation. Wireless Philadelphia explored the following
related but different funding and management models:
Public community: The city would fund the deployment and operation of the MWN and provide free
access to all subscribers.
Private consortium: Private telecommunications
companies would fund the deployment and operation of the MWN. The city would provide access to
assets such as lampposts for a fee and would act as
an anchor tenant. However, the city would also
26
IBM Center for The Business of Government
regulate the service in favor of economically disadvantaged subscribers.
Wholesale cooperative: The city would fund the
deployment and operation of the MWN. Further,
the city would sell network capacity to private ISPs
to resell on a value-added basis.
Public utility: A public utility would fund the
deployment and operation of the MWN and sell
access like any utility.
Nonprofit: Nonprofit organizations would fund the
deployment and operation of the MWN via grants
and donations. Access to the network would be sold
on a nonprofit basis.
The above discussion of models is generic and
applicable to other contexts (see Table 4). The
debate over the most appropriate model was constrained and contextualized by issues that were
specific to Philadelphia. First, the concept of public
access TV in Philadelphia had been disastrously
executed during the 1980s and 1990s, and for the
most part this was blamed on city government interference in policy and infrastructure creation. There
was considerable concern that Philadelphia could
have a similar management failure with the MWN.
Second, the city government had been running
budgetary deficits for a while, and Philadelphia was
already considered one of the most highly taxed cities
in the nation. There was concern that if there were
unanticipated cost overruns in building the MWN, this
could further break the city’s budget and raise taxes.
Third, most of Philadelphia already had potential
broadband Internet access. Comcast had the capability to supply cable Internet to 75 percent of the
city’s population, and Verizon had the capability to
supply DSL over telephone lines to 95 percent of
the city’s population. There was already pre-existing
underutilized capacity. What if the MWN were built
and nobody came to use it?
In response to the specific concerns above, it was
argued that beyond simple availability of broadband
Internet, the issue was that of future potential. The
city was simply trying to lay a foundation for basic
wireless infrastructure that could be as important to
the city as paved roads were a century earlier. The
Can Governments create Universal Internet Access?
Table 4: Sample MWN Business Models Worldwide
Business Model
City
Description
Public
community
St. Cloud, Florida;
Hermosa Beach,
California
City owned and operated. Free access to all. Taxpayer-funded access.
Public utility
Chaska, Minnesota; City owned and operated. Low-cost, fee-based access.
Lompoc, California
Wholesaling
cooperative
Corpus Christi,
Texas
City owned and operated network primarily built to support local
government applications and functions. Excess network capacity
sold on wholesale basis to ISPs, who resell network access on
retail basis.
Wholesaling
cooperative
Västerås, Sweden
Network’s main artery provided by city. Groups such as tenant and
housing associations build their own capillary networks, tap into
the main artery, choose the services they want, and pay for usage.
Private
consortium
Silicon Valley,
California
Privately owned and operated. Network capacity sold on
wholesale basis to other ISPs. Basic, lower-grade service offered
free. Premium, higher-quality service offered for a fee.
Private
consortium
Tempe, Arizona
Privately owned and operated. Access offered for a fee. Access
available free for a couple of hours each day.
Private
consortium
Mountain View,
California
Privately owned and operated (by Google). Access is free and
supported via advertising revenue.
Private
consortium
Taipei, Taiwan
Privately owned and operated. Access available for a fee via an
ISP. No particular focus on digital inclusion.
MWN was not an end in itself but a means to an
end, in which the end was a universally Internet-literate population that could take advantage of the digital economy and contribute to the city’s future. The
technology and installation costs were low enough
that it would be negligent of the city government not
to invest in the network. Moreover, current broadband Internet access was expensive and there were
no associated services or products offered by commercial providers to help people use the Internet.
Wireless Philadelphia contended that the city government was not interested in the business of providing
Internet access, and was more interested in acting as
a catalyst to build capacity in a way that was managed by the private sector. Finally, Pennsylvania had a
goal to ensure universal broadband access by 2015,
and Wireless Philadelphia and its champions argued
that this would be impossible to achieve unless radical and drastic new techniques were attempted to
increase Internet access.
In November 2004, interim business plans were
submitted by partner universities, and Wireless Philadelphia started the process of finalizing the business
plan. At the end of November, in the Pennsylvania
legislature, House Bill No. 30 became Act 183.
The bill gave state government authority to require
all municipalities in the state to submit proposals for
MWNs for approval before January 1, 2005. If they
submitted proposals on or after that date, the municipalities would first have to get a waiver from the
major local telecommunications provider. In Philadelphia (and in most of Pennsylvania), the major
provider was Verizon. However, because the CIO
and the mayor had negotiated with state legislators
as well as with Verizon, there was an understanding
that Philadelphia would be exempt from this act.
Soon after Act 183 was passed, Verizon officially
granted Philadelphia a waiver. This allowed Philadelphia to submit a proposal for the MWN whenever it
wanted, even after January 1, 2005.
Stage 3: Implementation
In February 2005, Wireless Philadelphia submitted
its final business plan to the mayor. A hybrid business model was proposed after evaluating the candidate business models on their ability to support the
following criteria:
•
Free service in parks and public spaces
•
Low cost or free for disadvantaged
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Can Governments create Universal Internet Access?
•
Cost neutral for city
•
Generate return/profit for city
•
Universal access/coverage
•
Revitalize communities
•
Respond to technology change
•
Wide range of service offerings
The hybrid model was a cross between the nonprofit model and the wholesale cooperative model.
Accordingly, Wireless Philadelphia proposed a plan
whereby the city government would invest $10
million toward building the network. The network
would be built by a private sector entity and owned
by a nonprofit organization, namely Wireless
Philadelphia. The city would guarantee a line of
cheap credit to Wireless Philadelphia toward operational costs, and network capacity would be sold
on a wholesale basis to private sector ISPs.
The ISPs would resell network access on a retail
basis to end consumers. The city would be an
anchor tenant, i.e., it would be an assured customer
of the network. Based on what it considered conservative subscription estimates, the business plan
predicted that the city government would recover
its investments in less than five years; therefore, the
network would, in effect, be cost-neutral to the city
after five years. The network would be available
throughout the 135-square-mile area of the city.
In April 2005, the mayor approved the business
plan for the Philadelphia Wireless Initiative and
announced an RFP (request for proposals) to solicit
proposals to build the MWN. The “fixed price
required” RFP included detailed technical, coverage
area, service level, and network management specifications. The network was to support a diverse set of
users including low-income residents (see Tables 5
and 6), and it was to be built so that other service
providers could easily resell the capacity. The RFP
was a watershed event in that it clearly established
that (1) the network would be built by a professional
private contractor; (2) by requiring discounted service
for low-income subscribers and coverage in specific
low-income areas, the city was staying true to its
original vision of digital inclusion; and (3) by requiring support for different types of users, the city was
creating room to realize the economic development
aspects of its vision. The RFP also provided respon28
IBM Center for The Business of Government
dents with the opportunity to propose their own funding, ownership, and management models. An open
process was created to make the RFP easily available
to all potential respondents, and eventually Wireless
Philadelphia evaluated 12 complete proposals.
In October of 2005, Philadelphia announced an
agreement with Earthlink to build the MWN. The
final agreement, effective February 21, 2006,
included the following key elements:
•
Earthlink would undertake the entire cost of
building and operating the network over the 135square-mile radius of the city. Upon completion
in about two years, the network was expected to
require more than 4,000 nodes and 24 towers to
cover the city, and provide access using industry
standard 802.11b and 802.11g technologies.
•
The network would be owned by Earthlink, and
the agreement allowed Earthlink to directly sell
retail access to end consumers, as well as sell
capacity on a wholesale basis to other potential
service providers.
•
A key element of the final network would be
the provision of full-service Internet access
accounts subsidized by Earthlink. These accounts
would be made available to qualified lowincome and disadvantaged persons in the city
for $9.95 per month.
•
Earthlink would also provide a complete set of
network management, maintenance, support,
and upgrade services. In parallel, the city
empowered Wireless Philadelphia to manage
the agreement with Earthlink, oversee the buildout of the network, and assume responsibility
for championing the digital divide goal.
•
Earthlink would initially pay $2 million over two
years for the right to build the network and use
the city light poles to install its equipment. The
$2 million would be paid in installments tied to
the proof of concept, with the largest payment
to be made in the second year. After the second
year, Earthlink would pay 5 percent of its revenues
to Wireless Philadelphia and also pay a per
pole usage fee.
•
Wireless Philadelphia would use the above
funds to serve the needs of low-income residents
by providing personal computers to low-income
residents as well as nonprofit organizations,
Can Governments create Universal Internet Access?
Table 5: Different Types of Proposed Services and Subscribers
Service Types
Definition
Examples
Residential and LowIncome Fixed and
Nomadic Service
Access for a single device, provisioned
for primary use at a residence, with
access throughout the city. Service
features include basic Internet access
to support service provider applications
such as e-mail and web access.
Residential user with single desktop or
single laptop, with support for roaming
throughout the city; discounted service
for low-income subscribers.
Standard Business
Fixed Service
Access for multiple devices, provisioned
for primary use at a business location.
Service features include basic Internet
access to support service provider
applications such as e-mail, web
access, VPN, etc.
Businesses with less than 20 employees
are target customers
Educational Institution
Fixed & Nomadic
Service
Same as Residential Fixed and Nomadic Bulk purchase resident and non-resident
service
student access, with comparable features
as Residential Fixed & Nomadic
Premium Business
Service
Same as Standard Business service plus
optional service provider services such
as VPN, firewall, etc.
Businesses with more than 20
employees are target customers
Occasional Use
Nomadic Service
Basic Internet access for a daily or
weekly fee
Tourists, business travelers
Secure Private Business Roaming access across city with service Business customer employees, field
Portable
features such as VPN & firewall
workers
Secure Government
Portable
Mobile access by city agency users
using mobile computing devices
Inspectors, public safety officers, meter
readers, surveyors, etc.
Secure Government
Fixed
Fixed access for city agency locations
(T-1 like service alternative)
Municipal office locations
Source: Wireless Philadelphia Request for Proposal (2005).
Table 6: Subscriber Projections
Subscriber Analysis
Anticipated Subscribers (thousands)
Year 1
Year 2
Year 3
Year 4
Year 5
77.9
108.0
117.3
124.3
129.6
Standard Business
0.8
2.1
3.4
4.8
5.3
Premium Business
0.1
0.2
0.3
0.3
0.3
16.6
18.1
20.0
21.9
22.8
Occasional Use—Nomadic
3.6
3.6
3.6
3.6
3.6
Secure Government Portable
0.3
1.0
1.7
2.4
3.0
Secure Government Fixed
0.1
0.1
0.2
0.2
0.3
99.4
132.9
146.5
157.5
162.2
Residential & Low-Income
University & Distance Learning Fixed
Total Subscribers
Source: Wireless Philadelphia Request for Proposal (2005).
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Can Governments create Universal Internet Access?
conducting training programs, providing website development and online marketing assistance to small businesses, and raising awareness.
The above arrangement required no investment
from the city, and on the surface seems like a
win-win for all. The city created an entity, Wireless
Philadelphia, to lead the social consciousness
elements of its vision and, with the Earthlink agreement, provided Wireless Philadelphia with the
continuing funding and authority to have a chance
at realizing this vision. By outsourcing all the key
technical, service, and management elements of the
project, the city stayed away from activities that are
typically outside its scope of expertise. Essentially,
what the city government did was to monetize its
passive assets such as lampposts and other rightsof-way properties. It had created a new source of
income without investing anything.
The agreement generated considerable goodwill in
various quarters, including the media. Nevertheless,
the agreement still needed to be approved by the
Philadelphia City Council. During this time, a
couple of high-profile incidents brought attention
to MWNs. Hurricane Katrina had laid waste to telecommunications networks in New Orleans, and a
makeshift MWN had been created to help workers
involved in the relief and rebuilding efforts. This
received considerable attention, particularly because
the state of Louisiana had banned MWNs, and the
local telecommunications providers petitioned to
shut down this new MWN. However, relief agencies
spoke out strongly in favor of the network because
of how much it was helping them do their work.
For instance, because of this network, New Orleans
city inspectors were able to increase inspections
from less than 40 a day to over 500 a day (Jackson,
2006). Private sector telecommunications companies eventually backed down from protesting against
the MWN to allow relief work to continue uninterrupted. This incident had a positive effect on public
opinion regarding MWNs.
Another incident had a negative impact. The city
of Taipei, the capital of Taiwan, had built what was
then the largest MWN in the world. However, it was
deemed to have failed because of lack of subscriptions. Built with an expectation of hundreds of
thousands of potential subscribers, it acquired
barely a few thousand in the first few months of
30
IBM Center for The Business of Government
operation. The principal reason for its perceived failure was that there were a plethora of Internet access
options available before it was built, and over 80
percent of the city already had Internet access connections and was not interested in switching to the
MWN. This raised many questions about when and
under what conditions it was prudent for a city to
build MWNs.
After considerable debate and, according to media
reports, pressure from both sides of the fence, the
Philadelphia City Council eventually approved the
Earthlink deal in March 2006. Work on building the
network started immediately afterward. Wireless
Philadelphia hired key staff during the spring and
summer of 2006, including Greg Goldman as the first
permanent CEO. Goldman’s background included
experience with both the private and nonprofit sectors. His initial focus was to oversee the deployment
of the 15-square-mile proof of concept, which was
completed by March 2007.
In summer and fall 2006, Goldman worked on creating the relationships and infrastructure needed to
market the $9.95 “digital inclusion” accounts. One
key element was establishing relationships with
existing community and nonprofit groups who could
both market the accounts and handle payments. The
current status of the project in May 2007 is that the
proof of concept deployment was completed and
rolled out to subscribers. Citywide implementation
is expected by October 2007.
Can Governments create Universal Internet Access?
Lessons Learned
and Recommendations
The Philadelphia initiative is one of the largest and
most ambitious wireless projects in the world, and
the city was one of the first to announce and start
working on an MWN. Governments have great
power to act as catalysts for introducing changes in
society. The city government of Philadelphia intervened to accelerate the availability of low-cost, reliable wireless Internet access throughout the city.
This may be considered a low-level goal, a means to
an end, but there was also a much higher-level goal.
The city government’s intervention can be framed as
the use of technology by government to promote
social change and reduce disparity. When any organization attempts to introduce change among its stakeholders, it faces a number of challenges that need to
be managed. However, when governments attempt to
introduce change, they face more complex challenges
related to the socio-politico-economic context.
When the city government of Philadelphia
announced its wireless initiative, it faced strong
opposition from stakeholders who objected on the
grounds that the city was in poor financial condition
and that such projects were better addressed by the
private sector. Nevertheless, the city was undeterred;
it succeeded in acting as a catalyst among various
stakeholders and in engaging citizen support to help
solve a major public challenge. The city government
acted as a catalyst by taking on various roles, such
as champion, facilitator, steering committee, policy
maker, partner, coordinator, consultant, project
manager, referee, regulator, and capacity builder.
It removed barriers to resources and provided incentives and a legislative framework to give stability to
the new infrastructure. In summary, the Philadelphia
case demonstrates that government’s role as catalyst
can indeed work. However, municipalities will continue to face challenges and barriers similar to the
ones faced by Philadelphia. The following discussion of short-term recommendations and longer-term
sustainability considerations should prove helpful to
municipalities contemplating an MWN.
Short-Term Planning and
Implementation Recommendations
1. A strong champion is required.
From 2004 to about the middle of 2006, the
original champion of the project was Dianah
Neff, CIO of Philadelphia. Since the summer
of 2006, Greg Goldman, CEO of Wireless
Philadelphia, has taken on a leadership role.
Both Neff and Goldman championed the MWN
Short-Term Planning and
Implementation Recommendations
1. A strong champion is required.
2. Diverse stakeholder interests must be managed.
rivate and public interests will need to be
. P
balanced.
he “application” of the municipal wireless
4. T
network must be identified.
Long-Term Sustainability
Considerations
1. T
he digital divide is a tenable justification over
the short term but faces long-term challenges.
unicipal wireless networks need insulation
2. M
from unpredictable, large-scale external forces.
he technology of municipal wireless networks
. T
will change.
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31
Can Governments create Universal Internet Access?
in the media and in the community, and when it
was needed they mounted a vigorous defense of
the project. They had to work extremely hard to
rationalize competing visions and maintain public interest, while simultaneously staying current
with technological developments. The champion
of a project of this nature is subjec...
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