Optical/IP Networks

Wireless Philly Loses Head

Even as the new municipal wireless network in Mountain View, Calif. lights up, the leader of one of the most scrutinized muni-WiFi projects in the country is leaving to join the private sector. (See Mountain View Gets Free Access.)

Dianah Neff, the CIO of Philadelphia and the head of Wireless Philadelphia, will leave her current post Sept. 8 to join Civitium, a consulting firm created in 2004 to help cities, counties, and foreign governments plan and build wireless networks.

Neff, who helped shepherd the Philadelphia project through political and business opposition, describes her departure as "the right opportunity at the right time." Neff was appointed by Philadelphia Mayor John F. Street in 2001.

"We are building the [Philadelphia] network at this time, Mayor Steet is getting toward the end of his term, and this is a good opportunity to take what we've learned here and be able to do it on a global scale."

Many observers, however, remain skeptical about the viability of the Philadelphia network -- and to them, Neff's departure may be seen as a convenient exit before reality sets in.

Philadelphia was among the earliest major cities to announce a plan for a citywide wireless network, and the deal it signed with EarthLink Inc. (Nasdaq: ELNK), which is building the network, contains an array of favorable concessions that made it attractive to city leaders.

EarthLink will provide access for up to 25,000 low-income households in the city for $9.95 a month, below the $12 or so it will charge wholesale providers who will re-sell access to the public. EarthLink will also rent space on about 4,000 city light poles for the network access points, paying the city $74 a year per lamppost -- twice what Google (Nasdaq: GOOG) is paying the city of Mountain View for space on its poles.

Philadelphia will also get a cut of EarthLink's revenues from the network. The project is being funded by taxable bonds that will be paid off from revenues generated by access fees, says Neff.

Neff was instrumental in negotiating with state lawmakers and with Verizon Communications Inc. (NYSE: VZ) when the telecom company threatened to sue to block the Philadelphia network, saying it was an unfair intrusion of government into private markets. The state legislature wound up passing a bill that banned cities from building and operating wireless networks, but Wireless Philadelphia obtained a waiver and Verizon agreed not to sue the city.

Donald Berryman, president of EarthLink's municipal networks division, has said he expects the network to have 50,000 to 80,000 subscribers by the end of its second year and to be profitable by then. More recent municipal wireless projects have either scaled back their ambitions or sought alternative models, however, believing that hybrid networks like the one Philadelphia is building -- part commercial and part subsidized -- will not be viable in the long run. (See New Muni Models.)

"We particularly looked at Philadelphia, Portland, and San Francisco in crafting our business plan and our [request for proposals]," says Seth Fearey, the executive director of Smart Valley, the group that is heading the wireless-network project for the San Jose Peninsula. "And we decided to do some things very differently, by learning from them."

For one thing, says Fearey, the Silicon Valley network will not be aimed at providing low-income residents with free or discounted access: "It was more important to us to have a viable business plan," he adds.

"Digital inclusion programs," Neff counters, are key to the Philadelphia project. "We are well-positioned to be successful and move forward."

The Philadelphia network is still a ways from completion: EarthLink is currently building a 15-square-mile "proof-of-concept" network, and the citywide system is now expected to be up and running in fall 2007 -- more than a year later than originally planned.

In Pennsylvania's other big city, Pittsburgh, city officials decided last year to put off deploying a municipal network until they have a chance to study deployments in other cities -- particularly Philadelphia.

"Our thinking was: Do we really want to be the guinea pig?" Alex Thomson, who chaired the wireless committee for Pittsburgh, told ZDNet last year. "Philadelphia is getting a lot of great press out of this, but we still have to wait and see if the network really gets built and if it works like they hope it will."

— Richard Martin, Senior Editor, Unstrung

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