Prameet Kumar | Broadband for Broad Street

In 2005, the city floated plans to renovate its wireless network with its Wireless Philadelphia proposal, a well-intentioned idea that failed in execution. The plan was to establish the nation’s first high-speed, low-cost wireless fidelity (Wi-Fi) network throughout a large city for use by government agencies, residents and tourists alike. Unfortunately, Wireless Philadelphia’s disastrous attempt at municipal broadband — a plan almost too utopian in vision — has derailed the project for the foreseeable future.

Wireless Philadelphia was one example of a growing international trend of initiatives to create what is known as municipal broadband. (Broadband is a term used to describe a network connection that can support very high rates of data transfer; municipal broadband is the involvement of the city itself in creating the broadband network to support the needs of its constituents.) In his final years in office, former Mayor John Street created a non-profit organization named Wireless Philadelphia to manage the municipal broadband initiative, which in turn outsourced the construction and management of the Wi-Fi network to Atlanta-based internet service provider Earthlink.

Earthlink would spend $22 million to build the network, and then sell access to it for a rate of about $20 per month — with a special rate of about $10 per month for up to 25,000 low-income households — and provide 22 free Wi-Fi hotspots throughout the city. (Although Penn students are served by the University’s wireless network, these free hotpots would have come in handy on the go.) But this public-private partnership was ultimately doomed. In August 2007, Earthlink — facing severe financial difficulties — began to rethink its partnerships and decided to terminate its broadband agreements, citing the exorbitant costs of constructing the network infrastructure. In Philadelphia alone, EarthLink was losing $200,000 every month; having built $16.8 million worth of the network (almost 80 percent), the company wanted out of its contract and abandoned the broadband initiative. Wireless Philadelphia became so synonymous with failure that the nonprofit organization rebranded itself as the Digital Impact Group in May 2009.

A major reason for the failure of the Wireless Philadelphia initiative was the foolishly heady optimism of its business plan. It predicted that a total of 85,000 subscribers (equaling 13 percent of city homes) would sign up for the broadband initiative by the end of the first year, with this number rising to 151,000 (22 percent) after five years, calling these forecasts “conservative.” In fact, a 2006 paper by Balhoff & Rowe, LLC, a telecommunications consulting group, criticized the business plan for being more of a work of cheerleading for municipal Wi-Fi than a thorough economic study: “There is no real analysis of critical business or financial issues, including segmentation of market needs, the competitive landscape, likely trends in pricing and technology substitutions, specific economic benefits, or risks.” The business plan’s predictions were quickly disproven when the network was implemented; EarthLink managed to obtain only 5,000 subscribers by mid-2008.

In July 2008, Allan Frank became Philadelphia’s new Chief Information Officer, and he came to the position with a plan called Digital Philadelphia, which sought to improve the city’s technological capabilities while avoiding the mistakes of Wireless Philadelphia. In December 2009, Frank purchased EarthLink’s leftover network materials for the low price of $2 million, paid for by a mix of federal homeland security grants and the city’s public safety budget. Frank decided not to continue Wireless Philadelphia’s initiative to provide low-cost Wi-Fi to the entire city; instead, he set his sights lower and decided to use the existing materials to update the city’s government network, which is used by various agencies. This undertaking would admittedly improve public safety, make the government more efficient and lower operating costs, but it is a major step down from Wireless Philadelphia’s dream of pervasive municipal broadband for all residents to enjoy.

Prameet Kumar is a rising Wharton junior born in India but raised in New York. His e-mail address is prameet@wharton.upenn.edu.

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