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Roadblocks on the Information Superhighway

SBC and Comcast aren't providing broadband to Chicago fast enough or cheap enough, so the city wants to try. They'll have to fight state and federal lawmakers for the right.


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Every day Reverend James Demus sees people who can't get the Internet connection they need or want. Kids come into his south-side church, Park Manor Christian Church, and ask to do their homework on its computers because their families don't have access to the Internet at home or can't afford a fast connection. Other people come in because they can't get a fast connection where they live even though they can afford it. Nine months ago the church put in a local wireless network for its own computers, which had the side effect of making the building a Wi-Fi (wireless fidelity) hot spot. "We had a meeting organizing for the tenth anniversary of the Million Man March," Demus says. "People who were there with laptops came up afterwards and asked, 'Did you know this is a hot spot? We'll tell our friends!'"

In April 2004 President Bush announced that he wanted affordable broadband, or high-speed, technology in "every corner of our country by the year 2007," declaring that it was critical to education, health care, and the economy. At the time the U.S. ranked tenth in the world in broadband availability. "That's not good enough for America," Bush said. "Tenth is ten spots too low as far as I'm concerned." A year later we've slipped even lower. The International Telecommunication Union, a Geneva-based organization devoted to standardizing telecommunications networks of all kinds, reports that by January 1 the U.S. had dropped to 16th in broadband penetration, trailing Japan, Taiwan, Canada, and South Korea, among others.

Frustrated that phone and cable companies aren't making faster connections available cheap enough or quickly enough, many municipalities have decided they'll do it themselves. In Chicago aldermen Ed Burke of the 14th Ward and Margaret Laurino of the 39th are forming a task force to explore the possibility of creating a citywide wireless network. "The point is to make the entire city a hot spot," says Burke spokesperson Donal Quinlan, "and to negotiate a much better price for users of the system." Chicago's chief information officer, Christopher O'Brien, will issue a feasibility report at the end of June, and aldermen plan to hold neighborhood public hearings through the summer and fall.

The burgeoning municipal-broadband movement has alerted many state and federal lawmakers, and some are now trying to kill it in the cradle. They say cities would be competing unfairly with the current providers--usually the phone and cable giants--and that they'd be wasting tax dollars. Fourteen states--including Minnesota, Wisconsin, Missouri, and Pennsylvania--have already passed bills forbidding their municipalities to offer Internet service. In February Illinois state senator Steve Rauschenberger introduced a similar bill, and though it got buried in committee, the issue isn't dead. On May 26 Pete Sessions, a Texas congressman with close ties to SBC, introduced federal legislation that would ban municipalities from offering any form of broadband service if a private company already offered a similar service. The other side was expected to weigh in on June 23. The office of senator John McCain (R-Arizona) confirmed at press time that he and Frank Lautenberg (D-New Jersey) would introduce a bill guaranteeing cities' right to provide affordable broadband if they see fit. While state and federal battles rage, Burke and Laurino want to get Chicago into the game before someone says it can't play.

Complaints about the current system come down mostly to speed, cost, and availability. Dial-up Internet access is too slow if you want much more than words--you need a good book at hand if you're downloading even a single e-mail with a picture attached. The alternative is broadband service, which, roughly speaking, refers to any Internet connection that's faster than dial-up. It can be delivered by DSL (digital subscriber line) over copper-wire phone lines, by cable modem, by fiber optics, or by a wireless relay of signals from a hub served by one of the above. The speed of each type of connection varies, depending on such things as what computer you have and how many users are online at the same time; it ranges from as low as 200 kilobits per second to well over 100 times that fast. (At 256 kbps an average one-megabyte digital photo should take about 30 seconds to download; SBC says it guarantees a minimum of 384 kbps for its DSL service.) As a consequence, broadband doesn't necessarily mean high-speed.

Broadband costs more than dial-up, though providers bundle so many different services in single packages that price comparisons are hard to make. SBC's new $14.95-a-month start-up offer, for instance, is available only to those who also buy its local phone service. Money is clearly an issue for users. A February-March 2005 survey by the Pew Internet & American Life Project found that nationwide only 48 percent of families with incomes under $30,000 used the Internet in any form, compared to 85 percent of those with incomes of $50,000 to $75,000 and 91 percent of those with incomes over $75,000. These percentages are greater than in 2002, but they continue to reflect an income-based "digital divide" that troubles people like Reverend Demus. Current corporate marketing plans won't help much, if a November 2004 SBC presentation to investors is any indication: at the end of its "Project Lightspeed," within three years, 90 percent of households defined as "high value" by the company will have access to high-speed fiber connections--compared to 5 percent of "low value" households.

Most people assume you can get some form of broadband service anywhere in Chicago if you can afford it. A spokesperson for SBC, one of the two main local providers, says you can get DSL in all but a few places, but it's not clear how extensive fiber-optic and cable coverage is. Comcast, the other main provider, didn't respond to inquiries about its coverage. "This is difficult information to get," says Nicole Friedman, who manages the Wireless Community Networks for the Center for Neighborhood Technology. "We've been told it's proprietary information in the past." But she also says she's heard that there are pockets in neighborhoods where residents can't get any form of broadband.

In the boonies high-speed connections are hard to come by--downstate remains the land of dial-up. David Kolata, who hears a lot of industry presentations in his capacity as director of policy and government affairs for the Citizens Utility Board, seems to have the sole statewide figure: he says only about 25 percent of Illinoisans have some form of broadband.

Of course broadband service can be "available" and still take a long time to get. Friedman says that when the Center for Neighborhood Technology first contacted a local private provider about getting DSL service at the office of a community organization in Pilsen "it took months to process the order and get the service." Living in the suburbs doesn't necessarily make it easier. Eldon Frydendall, who sells insurance and serves on Batavia's city council, spent years trying to get SBC to give him DSL service in his downtown office. He worked with four different salespeople in succession before finally getting hooked up in May.

Because the term broadband encompasses such a wide range of speeds, it's easy to make the existing coverage sound better than it is. The Republican-dominated Federal Communications Commission has kept its standards low, allowing it to present a rosy picture of broadband availability in a September 2004 report to Congress. The agency defined broadband as any connection faster than 200 kbps, even though the International Telecommunication Union defines high-speed as connections that are at least 1,500 kbps. Even more remarkable, the FCC considers broadband "available" in a zip code if even one household there has it. (It's not as if the agency didn't know better; a National Research Council panel questioned the validity of using zip codes to measure availability back in 2000.) Commissioner Kevin J. Martin gushed in the report that "over 70 percent of the sparsely populated zip codes have a subscriber with 'high-speed service.'"

It's not hard to understand why the big phone and cable companies have been slow to make truly high-speed connections widely available. For one thing, some forms require expensive new infrastructure, and there's no guarantee that enough people will sign up to cover the cost. More important, the new service could eat into the old, and the provider's shareholders want the company to make as much money as possible from its existing investments in copper or cable. "Cheap, high-speed broadband would lead to widespread use of Internet telephones and thus threaten the phone companies' lucrative voice-telephone business, and more inexpensive broadband would multiply outside video and movie offerings and endanger the cable companies' profitability," writes Thomas Bleha, a former foreign service officer in Japan, in the May/June issue of Foreign Affairs. "So, although both the telephone and cable companies could provide cheap, high-speed broadband if they chose to, they are not rushing to develop it."

And because the U.S. government hasn't actively promoted competition among private pro-viders, as Japan and South Korea have, they don't need to rush. James Carlini, a consultant and Northwestern University adjunct professor, refers to state laws out-lawing municipal broadband as "protect the Victrolas" legislation.

It's also not hard to understand why towns and cities across the country are tired of waiting for the private providers to help them keep up with the rest of the world. According to "Knowledge@Wharton," a biweekly online business newsletter from the University of Pennsylvania's Wharton School, the director of information systems in Glenwood Springs, Colorado, was told that it wouldn't be profitable for Qwest or AT&T's cable unit to provide the town of 8,000 with broadband service. In 2001 the town considered becoming a municipal provider, but the information systems director was told by a corporate representative, "You can't do it either." As the CNT's Friedman told a May 9 hearing held by Burke and Laurino, "The market has failed to ensure that all citizens have access to the fundamental information and infrastructure that broadband provides."

Like many other cities trying to go their own way, Chicago is focusing on a wireless network because it's relatively cheap to provide--cities own lots of the light poles and other tall structures that are the best places to put Wi-Fi relay equipment (almost all the city's 79 branch libraries are already hot spots). Burke and Laurino were inspired in part by the plan Philadelphia announced in early April for a $10 million citywide Wi-Fi network to be run jointly by a nonprofit and a private provider. In late April Los Angeles released a study recommending a "public/private partnership business model designed to deploy fast and easy broadband communications services in every neighborhood." Closer to home, discontent with poor service from the usual cable-phone duopoly led three irreproachably Republican western suburbs--Geneva, Batavia, and Saint Charles--to hold simultaneous referenda in April 2003 and again in November 2004 on whether to build municipally owned high-speed fiber networks reaching every home. It was an expensive plan--proposed before Wi-Fi came into vogue--and SBC and Comcast reportedly outspent its proponents 100 to 1. The referenda all lost. But some suburban and downstate towns--including Naperville, Rock Falls, and Sullivan--already have what might be called municipal-broadband systems to coordinate their local police, fire, and utility services.

Towns across America have a history of doing for themselves what private industry won't. In the 80s Cedar Falls, Iowa, and other out-of-the-way places built their own cable-TV systems when they couldn't get satisfactory service any other way. And decades ago rural electric cooperatives brought another technology to farmers who didn't live close enough together to be profitable customers of private utilities.

The prospect of that happening with broadband technology has been too much for a lot of legislators, who've passed bill after bill in effect protecting the right of private industry to drag its feet. The bill Steve Rauschenberger introduced in the Illinois General Assembly would have forbidden cities in the state to sell Internet services. Rauschenberger, who ran for U.S. senator in the 2004 Republican primary and may run for governor in 2006, says he intended it only as a discussion starter, though the discussion didn't happen. He thinks local governments are better at running low-tech networks such as electricity and garbage collection than high-tech networks that require constant upgrading. But he's willing to give a little. Municipal broadband, he says, "needs a big yield sign, not a big stop sign."

That kind of conciliatory attitude appears to be unusual. Pennsylvania, for instance, grandfathered out Philadelphia, but other cities in the state that want to provide their own service now must give any existing private providers the right of first refusal.

Most of the prohibitive measures that have been passed around the country have come from conservatives and libertarians, which is odd given that they usually claim local authorities know their communities better than state lawmakers do. So why would a conservative or a libertarian forbid local bodies to use their local knowledge to make their own decisions? "For the same reason I want the U.S. Supreme Court to rule that New London, CT, cannot take someone's home in the name of 'economic development' and give the land to a company that will pay more taxes on it," writes Joseph Bast of the Chicago-based Heartland Institute in an e-mail. "Fascism is fascism regardless of what level of government does it, and socialism is bad whether the federal, state, or local government does it." As he put it in the Houston Chronicle in March, "Municipalities do not have a constitutional right to experiment with socialism."

Using such scare words in this context seems like little more than an attempt to stifle debate, especially since the proposals on the table are to compete with private providers, not take them over. Taken seriously, this rhetoric implies that all public services should be disbanded. But cities pave roads, collect trash, light streets, and support libraries--all services the private sector could provide--without undermining capitalism. Dozens of Illinois towns and cities distribute electric power, and some generate their own--their right to do so has been enshrined in the Illinois Municipal Code for nearly 100 years. And UPS and FedEx have somehow managed to survive even though they're competing with the U.S. postal service.

There's a basic philosophical reason to leave the overheated rhetoric at home, well explained by Charles Wolf Jr. of the conservative Hoover Institution. It's in the title of his 1988 book Markets or Governments: Choosing Between Imperfect Alternatives. Neither mechanism is perfect, he writes, and neither one is self-justifying. Research has shown that in most cases private companies can provide garbage collection, water, transit, and the like more efficiently (meaning cheaper) than governments can. But there are exceptions, and there are services that private companies have declined to provide at all, almost always because they can't make a profit on them.

Furthermore, while efficiency is important and relatively easy to measure, it's not the only standard. Wolf notes that values such as accountability, participation, and fairness are also important. A cheaper private service that excluded part of a town or part of a state--or was inordinately secretive, or treated customers and employees badly--might be less desirable than a more expensive publicly provided service. Making decisions about who can best supply which services is the function of a community and its elected leaders. There's always the risk that a given decision might be imprudent, but since when has a free society been about outlawing all imprudent behavior?

In Illinois and 35 other states, cities and towns still have the right to choose for themselves whether they want to get into the broadband business. Is it a good idea? Most economists would probably say no. They argue that, over time, most public decision makers fall victim to political pressure to provide cheap universal service, and then they either run the enterprise into the ground or sock taxpayers with a big ongoing bill.

There's some history, going back to those municipal cable systems founded in the 80s, that could tell us whether the economists are right. Unfortunately, knowledgeable professionals who've studied these cases without taking sides are scarce. Instead the debate has been highly partisan, with zealous supporters such as the American Public Power Association acknowledging no failures on the part of the municipalities and zealous opponents such as the big phone and cable companies and free-market think tanks acknowledging no successes. It seems likely that there've been some of each--and a bunch of cases in the middle that only the green eyeshade brigade could label.

The economists should note that, for a variety of reasons, many municipalities have become relatively businesslike in their approach to government. Ken Alberts is the director of utilities for Rochelle, a northern Illinois crossroads town of 10,000 that owns its utilities and provides broadband to local schools and businesses via fiber optics. But local residents still depend on dial-up for the Internet. Alberts, who oversaw the municipal cable-TV operation in Cedar Falls, Iowa, says he couldn't offer broadband because Rochelle "didn't have the volume of residential customers for me to be comfortable. I felt there was enough risk that I couldn't go before the people and say, 'We'll never need public funds.'" He'd promised not to use public funds for the cable system in Cedar Falls, a promise he kept. Frydendall, the suburban Batavia councilman, seems to be Alberts's soul mate. "Whether or not the city wants to get into [providing broadband], I'm strong that the public should have the right to do it," he says. "I think if the city got into it I'd like to do a section of town that shows the most response"--a standard business approach not much different from SBC's focus on "high value" households.

It's not clear that cities could be as disciplined. Most of the big-city efforts to provide broadband aren't very far along, but there are already worrisome signs that they might vindicate the economists' fears.

The current cost estimates for citywide Wi-Fi seem shaky. Philadelphia says its system will cost $10 million to install, yet according to the San Jose Mercury News, Moorhead, Minnesota--a city one-tenth the size with one-fiftieth the population--expects to spend $2.3 million. Advocates in Chicago are talking $18 million.

In the Los Angeles report that called for some kind of public-private system, the task force recommended a "citywide broadband survey to determine if there are any gaps." If they didn't know something that basic, how could anyone trust their recommendation?

Leaving aside the scandals that have plagued the Daley administration in other public-private ventures like the Hired Truck Program, this city's existing computer infrastructure doesn't inspire much confidence in its ability to install or maintain a high-tech broadband system. Half of the city's 15,000 computers still use the Windows 98 operating system, chief information officer O'Brien said at the May 9 hearing. If the city can't keep its own computers top-of-the-line, what's the hope for Wi-Fi? O'Brien also pointed out that updated equipment running Windows XP would cost $7.5 million, "and we won't be able to get our hands on that kind of money for a while." If money is so scarce, where's the $18 million going to come from?

Philadelphia envisions making money from providing Wi-Fi, and some Chicago aldermen also think the service might be a cash cow. Chicagoans aren't likely to be any more eager to hand the city their money than they've been to give it to SBC and Comcast, but many municipal-broadband advocates want to believe there's lots of money lying around just waiting to be picked up. For one thing, advocates in Philadelphia want to believe it because they plan to use some of the anticipated surplus to provide training and equipment to help bridge the digital divide.

Reverend Demus, one of three directors of the 8,000-member, Chicago-area organization Ministerial Alliance Against the Digital Divide, likes that idea. "People need access to the Internet," he says, "and they need training to use it"--not to mention Wi-Fi-ready computers and software. But he'd rather not depend on the hope of a surplus, and he's worried that a municipal-broadband system would soak up money that could be better spent. He and MAADD are urging the city not to build its own infrastructure and instead to partner with private firms and nonprofits already at work, putting money it might have spent on Wi-Fi infrastructure into training people to use computers. The group has credibility, as it's blasted both SBC and the Chicago Public Schools for their failures in this area.

The Heartland Institute's Joseph Bast makes a similar point more sharply. "Only a small minority of taxpayers will use [a citywide Wi-Fi network], yet all will be forced to pay for it," he says. "The small number of heavy users will tend to be much wealthier and more highly educated than the average taxpayer. Is that fair? Of course not." This argument might carry more weight if Heartland hadn't consistently debunked the idea of a digital divide when only the private sector was involved.

Wi-Fi advocates in Chicago do seem to be weighing these concerns. Burke's spokesperson Donal Quinlan thinks the city could try pilot projects first in a diverse group of neighborhoods. And Burke and Laurino invited Nicole Friedman, whose Wireless Community Networks project has hubs in Pilsen and West Lawndale, to testify at the May 9 hearing. Her project--which is working with the Gads Hill Center, the Homan Square Community Center Foundation, and the Neighborhood Technology Resource Center--is a small-scale experiment using a decentralized wireless technology called "mesh networking," and it has funding from federal, state, and casino grants through September 2006. So far it's put 95 people online and has a waiting list of 250. But it doesn't just hook people up to the Internet. It teaches them to point and click, and it teaches young people, including ex-offenders, to crimp cable and install equipment to run the networks. Friedman echoes Demus's point that providing Internet access is only half the battle: "Many of our participants have never turned on a computer before." Others have machines too old to deal with broadband.

The Wireless Community Networks project would remain legal even if the General Assembly or Congress were to outlaw municipal broadband. But its grassroots, do-it-yourself spirit challenges the idea that all will be well if we just let SBC and Comcast proceed on their own timetable.

Art accompanying story in printed newspaper (not available in this archive): illustration/Damon Locks.

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