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 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

services, with user speeds greater than 1 megabit per second. And these don't include costs associated with much-needed network redundancy, customer service, antihacking security measures, billing and other administrative costs. Under these conditions, the cost of truly building out an advanced network could skyrocket.

And were we, optimistically speaking, willing to put out the additional hefty funds to build a truly state-of-the-art network, we would still face a costly Hobson's choice of constantly modernizing and updating the network or sending it to the junkyard.

Wireless networks run on protocols that must be compatible with laptop computers and other user devices. Today, millions of printers, cameras, speakers and other computer attachments can no longer be used because new embedded computer technology is no longer compatible with those devices. It's highly conceivable that the protocols used for Philadelphia's wireless network today will be outdated tomorrow when new equipment is manufactured to accommodate more robust wireless technologies like WiMax. To keep apace, taxpayers would have to be asked to continually subsidize this open-ended proposition.

When we hear that a municipal network will cost the city of Philadelphia $11 million, it's important for our taxpayers to know that we are speaking about the most rudimentary, basic network. Ms. Neff has been mum about the architecture and underlying assumptions that make up the $11 million price tag but nevertheless critical of those questioning the seemingly low price on the grounds that they haven't seen the details.

There are a host of other unanswered questions relating to security, government control of Internet content, and the long-term availability of the low-cost unlicensed wireless spectrum on which Wi-Fi technology relies. And of course, a redundant municipal Wi-Fi network will not solve the bigger problem of putting wireless computers and other devices in the hands of students and others caught on the wrong side of the digital divide.

The point here is that with a shrinking budget needing to accommodate ever increasing social needs, an open-ended municipal gambit that creates redundant wireless capabilities seems a bit fanciful. Further competition among wireless providers has already produced 93 "hot spots" in the city of Philadelphia as hundreds of wireless ISPs, big and small, compete for a slice of the action. The notion that we would use precious taxpayer subsidies to disrupt that competition--competition that would otherwise help bring service to underserved areas--seems a bit odd.

For my part, I share the bipartisan goal of bringing universal broadband to every American household that wants it by 2007. A more sensible, cost-efficient and less risky policy would be to adopt a national plan for reforming the Universal Service Fund.

Rather than subsidizing old-school narrow-band technologies with fees imposed on all carriers, we should modernize our policy to ensure universal and affordable broadband with a host of marketplace incentives and by promoting competition among carriers. Countries such as Japan and South Korea have shown remarkable success in promoting universal access to broadband by promoting competition rather than by having government attempt to take control of the market.

We should also ensure that underserved communities get access to needed computer hardware. Philadelphia could start with a more sensible and achievable objective of placing hotspots in libraries and other public buildings, while creating a public-private partnership dedicated to providing, through tax deductible donations or otherwise, computer hardware where it's needed.

A national broadband policy, backed up by municipal governments with sensible, affordable policies would dramatically boost our economy and our literacy without putting vulnerable municipal budgets at dire risk in a Don Quixote-like search for the broadband cure.