A Tale Of Two CitiesA Tale Of Two Cities

San Francisco is looking for a vendor to build a citywide Wi-Fi network, while Philadelphia is one step ahead, having selected EarthLink Inc. last week for its Wi-Fi project. They're just two of hundreds of cities that are creating new opportunities for technology providers vying for a stake in the growing market for municipal Wi-Fi.

Philadelphia disclosed last week that EarthLink had edged out the other finalist, Hewlett-Packard, and will develop, implement, and finance the wireless network, estimated to cost the city between $10 million and $15 million. It will span 135 square miles and is expected to go live in about a year. Low-income residents will pay about $10 a month, while others likely won't pay more than $20 a month, says Dianah Neff, the city's CIO. "Only about 10% of our low-income neighborhoods have Internet connectivity and about 90% of higher-income neighborhoods have connectivity. The goal is to give everyone equal access," Neff says.

EarthLink and Google Inc. are among the vendors competing for the San Francisco project for free or low-cost Internet services for city residents. Hundreds more cities are planning Wi-Fi projects, though many are more limited in scope.

The venture into wireless is still somewhat new for EarthLink--most of the Internet service provider's revenue comes from broadband services over cable and DSL. EarthLink, through a joint venture with SK Telecom Co. Ltd., provides wireless data and voice services to Treo and BlackBerry device users, but it has been looking for more opportunities in wireless. "In that quest, we've uncovered municipal Wi-Fi," says Bill Tolpegin, director of corporate development at EarthLink.

Many more tech vendors are getting into the market. Intel is working with 13 cities to build wireless networks, and Cisco Systems, Dell, IBM, Microsoft, and SAP are among the vendors partnering with it to provide software and systems for cities.

But large telecom vendors have lobbied Congress to stop such efforts in markets where they compete, resulting in the passage of some state laws restricting municipal Wi-Fi projects. Philadelphia reached a deal with Verizon before it could offer Wi-Fi, and San Francisco could face opposition from local telecom vendors. "We continue to believe that it is inappropriate to use public money to provide service or to indirectly subsidize select providers," a Comcast Corp. spokesman said last week. SBC Communications Inc., meanwhile, has indicated it won't oppose San Francisco's plan. Said a spokesman, "We support consumer choice and welcome competition."