Perspective: Philadelphia's Big Dig

To any city administrator, the seductive allure of a new public works project can be blinding. Take for instance Boston's notorious "Big Dig," which has become synonymous with public-sector projects run amok.

More than a decade ago, city officials promised to relieve traffic congestion with a new tunnel and street infrastructure, for a $2 billion tab. But today, with a running bill of more than $15 billion, the project is six years overdue and counting, while cracks in the tunnel's infrastructure are being discovered.

As the most expensive public works project in U.S. history, it has become a boondoggle. The Big Dig, it turns out, became a black hole for taxpayer dollars because city administrators and contractors weren't candid with state and local legislators about project costs, instead selling them on unrealistically low estimates.

Today, many city administrators seem similarly romanced by the apparent luster of municipal wireless or "Wi-Fi" networks. To be sure, these local city government officials, like those in the case of Boston's Big Dig, are well intentioned. They argue, in essence, that new advances in wireless technology enable municipal governments to construct low-cost Wi-Fi "hot spots" enabling those with expensive laptops to get wireless broadband signals in a radius of 300 feet from a municipal router. Admirably, they see themselves as pioneers, building the bridge over the digital divide.

For just less than $11 million dollars, says Philadelphia Chief Information Officer Dianah Neff, the residents of the 135-square-mile city of Philadelphia could receive broadband anywhere. But on closer look, it may be that Ms. Neff--and hundreds of other municipal officials throughout the country--are creating the potential for their own Big Dig.

The history of municipally owned telecom networks is not often a pretty one.

The history of municipally owned telecommunications networks is not often a pretty one. Take for example the much vaunted Iowa Communications Network--once touted as a leading municipal telecom network. Recently, it has foundered in red ink, and it's now being hawked at fire-sale prices largely because local officials underestimated the costs of building a truly first-rate competitive network.

Similarly, in Marietta, Ga., local officials spent $34 million of taxpayer funds on a network they now want to unload for $11 million--a loss of $23 million. In Ashland, Ore., city officials also experienced buyers' remorse with their municipal network, having to starve other budget line items to subsidize their network beset with excessive cost overruns. California's CALNET was $20 million in debt when it was sold in 1998.

With municipal Wi-Fi networks, however, these budgetary pressures get even more challenging. Up-front costs for these networks are deceptively low, making it easy to get a municipal government on the budgetary hook at first. But once so hooked, the costs mount. Sheer maintenance will cost annually a minimum of 10 percent of the initial up-front costs, according to most experts. Further, many engineers estimate that an astounding 60 percent of the equipment requires replacement or upgrading every three to five years.

Information technology professionals experienced in deploying large-scale Wi-Fi networks all tell us that significantly higher build-out costs, involving literally thousands of access points, will be required to deliver secure, scalable and reliable

Biography
Phil Rizzo is a councilman for the City of Philadelphia.

More Perspectives

[nealda]

Valid Points

These are mostly valid points that should be on one side of the debate for the people of Philadelphia, but Rizzo avoids the elephant in the room. That elephant is the influence telecom corporations are playing in the debate.
Pennsylvania has passed a law, at the behest of these corporations, that takes this decision out of the hands of the people. (Philadelphia was able to obtain an exemption for themselves, however.)
How is this still a free country and a democracy when corporations can block the people from building their own infrastructure? If the people of any municipality (through the debate that councilman Rizzo is participating in, here) choose to build a telecom infrastructure because they believe it will better their lives, how can we allow a corporation to step in and veto those peoples' wishes??!! That's undemocratic and un-American!
Philadelphia, being the birthplace of our democracy, should stand as the living embodiment of the phrase "We, the people", and we, the people, should be allowed to make our own decisions without the meddling of corporations in the democratic process.

Who's opinion is this?

I don't imagine for one second that Frank Rizzo actually wrote this opinion piece, so I think it's a pretty safe bet that the major telecomm corporations' role in this debate isn't mentioned in the piece because...well, they wrote it for him.

[dsherr1]

Why Phi?

As a former Philadelphian who worked on health, education and law enforcement social issues, Concilman Rizzo is "On the Money!" His argument does smack of Comcast and Verizon origins and he does speak with great knowledge in public projects gone amok as his former Philly mayor father Frank Sr (may he RIP) had his own Big Dig in the Commuter Tunnel in the 70's. There was also the case of the phantom 1-mile road at the Phila Airport, the cost of which was never recovered. And then the famous neighborhood bombing by the Goode Administration, the rebuilding which cost over $250K per home (market value of about $70K each) in the 80's and which began to fall apart in less than five years. And can we forget the Abscam caper that brought down a Phila City Council President and a US House of Representatives member, Ozzie Meyers who on the FBI tape said "Money talks, bulls--t walks."

From my experience during 1962-96 of living, working and trying to improve the community life, Lincoln Steffens had it right when, in the early 20th Century, he described Philadelphia as "corrupt and contented."

The network will be built with the expected outcome. Comcast and Verizon do not have much to worry about competition. It will not work well enough for serious business and residential use.

municipal broadband ill-conceived

Councilman Rizzo's correctly opposes entry into broadband by municipalities funded with taxpayer monies, including exactions imposed on private broadband competitors. The characteristic reason for entry--to offer broadband at discount prices--dampens private innovations and technological marvels. What businessmen will take risks if success could be nullified by a taxpayer supported competitor indifferent to profits? Moreover, broadband offerings by municipalities invites corruption and partisanship in the award of contracts and in employment. Seldom does a say pass without a new corruption scandal, whether in Pennsylvania, Connecticut, New York, or otherwise. The potential for corruption is compounded with broadband because of a constant need for new purchasing and operating contracts to accommodate technological advances. The superior way to achieve universal access to broadband is through the distribution of "broadband vouchers" akin to food stamps or private school vouchers enabling low-income households to connect to the Internet at modest out-of-pocket costs. "Broadband vouchers" do not distort consumer-friendly free market incentives, while insuring equal opportunity to prosper and to learn.

[bobanavrin]

Pipe Dream

Who came up with the $11 million price tag ? Will the broadband connection back to the ILEC's Central Office be provided for free ? Government's job is to protect and regulate ,not compete with business

True Competition

Councilman Rizzo makes a number of valid points about what could go wrong. Having said that, there are a number of examples across the country where things have gone right. The one thing that does hold true is that times always change, as does technology. The unfortunate thing is that government never seems to change. Councilman Rizzo talks about competition, but it was the state legislature that stifled competition when it yielded to the pressure of the telecomm lobby. Honestly, the best solution would have been a partnership between the City and Verizon, unfortunately Verizon's focus on the bottom line got in the way. The real issue, is not private versus public competition, it is the cost of providing access to all members of the community. The profit motive prevents Verizon from providing access to its poorer customers until it has serviced the needs of its wealthier customers. Councilman Rizzo and the Philadelphia City Council could have worked with the state legislation to craft language that would have mandated total access within a reasonable timeframe.

[jrubin60195]

A compromise is in order

I'm a veteran of varied technology industries, including telecom as well as a former Philadelphian. I see both sides having some valid points.

Let's start by asking two questions:

1) What are the value propositions?
2) Who do we want this to benefit?

If the answer to #1 is to make a statement to the world that Philadelphia is tech friendly, that's fine. Considering how badly the City needs to attract business, particularly those willing to headquarter in Philly, it is pretty sound. If it's also that Philadelphia is serious about bridging the Digital Divide that seems like a wonderful cause.

If the answer to #2 is to make it easier for students and business people to access the Internet, that appears to be a good rationale. Imagine sitting on the steps of the Art Museum and VPN into your corporate intranet. If the answer is also to bridge the Digital Divide, that's a noble quest. However, my first question would be what percentage of the people on the far side of the divide own computers?

Believe me, if Verizon or Comcast thought the answer to that would be enough to pay for all the added hardware and engineering to install broadband access, they'd be there in a second. The problem is that DSLAMs are expensive and customer support of DSL is extremely expensive - what do you think put all those DSL providers & resellers out of business? There needs to be a ROI for the companies. $11 million is enough to provide DSL to @36,000 homes for a year under standard rates. Perhaps it would make better sense to offer the $11 million as an incentive for broadband providers to provide complete coverage in impoverished areas of the city and to provide free access in certain areas that are in the public interest.

I suggest areas of public interest because if the study determined most of the people on the far side of the Digital Divide don't own PCs and/or can't afford Broadband, even if they had access to it in their homes, what good would that be? Unless we could get second hand PCs donated to the cause (no problem there)? This would also be good for the environment.

My suggestion is to place, at least initially, the WiFi in areas of public access; Train stations, Airports, Libraries, Community Centers, large gathering places, indoor or out and perhaps could we even do it... houses of worship, (which play a particularly important part of life in economically distressed areas). While it?s unlikely there?s going to be a prevalence of laptop owners in that community, it would be much more cost effective than running network wiring through a church.

The fact is, telecommunications is a complex and sophisticated business and I don?t think it?s an ideal fit for government. However, there certainly appear to be ways to engage the existing technology providers so that everybody wins.

Folks, the telecommunications companies are not the enemy. Yes, they?re trying to protect their interests and perhaps they?ve been a little heavy handed. However, it?s always easy to look at the 800lbs gorilla as the bad guy. But the fact is that bandwidth is going through them, whether through somebody?s home or the City or the Commonwealth, they get a win in their column for their shareholders. I think the solution lies in compromise and negotiation to get the technology community to buy into the idea of ubiquitous broadband access and then to use that buy in to leverage the solution. Imagine, request that the Gates Foundation support an ASP software project for those on the far side of the DD so they can have access to standard business software.

The concept is a good concept; the complexity is in the execution of it. An idea such as this is not ordinary and to succeed, I think the solution is going to make some very interesting, if not incongruous partnerships.

wirelessphiladelphia.com

Wireless Philadelphia: While we like the public purpose and the ability to get seamless internet access, we share Rizzo's concerns.

Government does a horrible job when they try to provide business serivces. They don't have the fire in the belly, desire or know-how about making money.

If they build the system, T-mobile or a firm with proven expertise should run it. All the city should be concerned about is a license fee that covers at least the build-out and maintenance costs. Do an RFP and invite major company's teamed with a great local or track record entreprenuers to run the system.

Look, the city is out promoting Wireless Philadelphia, but they never had the business sense to call Smarter Agent and ask to use the wirelessphiladelphia.com domain name we own and use for our patented wireless location-aware services. A basic marketing step.

Wireless Philadelphia: Great idea, great public purpose, but I get the feeling they will tank in the execution phase if they don't have great corporate partners.

Did Verizon or Comcast write This column for You Or What??

Normally I'd have read this article and thought it was well written and made a few important points to think about, but......after seeing who the author is, I have to question whether in fact, he wrote it or not, and just how factually based it really is.

After all, this is the same councilman from Phila. who was spoon-fed his knowledge a short time back(2002-03)about the dire need for red-light cameras at certain Philadelphia intersections(Only 3 of 9 locations he used in "his" studies were actually troublesome). Any knowledge he had of the need for cameras was fed to him by state politicos with connections to the camera industry(read $$ Contributors)and industry lobbyists disguised as the "National Campaign to Stop Red Light Running" which was funded by camera makers/sellers as well.

After reading this article I'm totally amazed at how he knows "SO MUCH" about so many subjects. How does he find the time to study all these subjects with his heavy legislative schedule and handle constituents concerns at the same time??

Sounds more like the PR departments of Verizon and Comcast got together for this one..........

cop out

It?s easier to vilify motives than analyze the points made.

typical political fud

Frank: These tiny projects are nothing like the 15 billion big dig. You never mention all the hot spot companies making money, the millions served every day using wifi or how much Philly will save using services over this system. How about $2 million saved every year? Or how about the firemen connected to wifi so they can get maps, drawings and hazmat data on the scene using the GIS system that is citywide? Nope, all you have done is add to Fear Uncertainty Doubt

money?

Most hotspot companies are not making much money at all; many are used as a loss leader to attract customers. And the ones that do target only high value customers such as business travelers in airports (Wayport). Cometa shut down because they didn?t really see a viable market.

I?ve been involved in Wi-Fi market trails from an engineering perspective and there are many obstacles. It?s a line-of-sight, low power technology operating in shared spectrum. Wi-Fi is simply not made for a project of this scale.

Remember its called wireless *LAN* not wireless MAN. There is NO WAY you can adequately cover every home in the city of Philadelphia with this technology. Please tell me how a technology with an EIRP of 1 Watt in the 2.4GHz band will travel through concrete, steel, brick, trees etc to get to every home in every room. Hell, I get low signal within my apartment 1 room away. If this was viable, companies would be begging Philly to put in their own system and take the risk up front.

Right about the time they finish their network, WiMAX equipment will start entering the market and Philly will be left stranded with outdating gear and face an upgrade immediately to stay relevant.

In reality, the network will be a boon for hackers setting up rogue AP?s and the lucky few with line-of-sight to their utility poles that will hog bandwidth downloading porn at a below market rate. (much closer to the truth than ?learning ancient history and the topics of the day? as the Philadelphia wireless web site proclaims)

Another thing, how does this bridge this ?digital divide? when poor folk don?t have computers in the first place? Cheap dialup has been available for years and the poor still don?t use that.

Even before heaps of fiber was buried in the late 90?s, every telco has faced the ?last mile? dilemma. You?re telling me the Philly city council has the insight and wisdom to solve this riddle that eluded every telco VP, marketing exec, scientist, engineer, entrepreneur type for the last 15 years. Get real.