[Ecommerce] Philadelphia Inquirer: Newly signed law reverts broadband to phone firms

[Thiru Balasubramaniam]

http://www.philly.com/mld/inquirer/business/10316390.htm

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Newly signed law reverts broadband to phone firms

*Fast Internet access was assured in all of Pa. by 2015.
Critics say Rendell "sold out" cities' service.*
*
By Akweli Parker*
*Inquirer Staff Writer*

A telecommunications bill signed into law by Gov. Rendell this week
provides assurances that telephone companies will bring fast Internet
access to all of Pennsylvania - even remote, rural areas - by 2015.

But critics of the measure complained yesterday that Rendell "sold out"
cities that themselves may want to provide broadband service for their
citizens.

Rendell noted in a message to the House of Representatives that the City
of Philadelphia and Verizon Communications Inc. reached a separate
agreement Tuesday evening permitting Philadelphia to proceed with its
plans to provide wireless Internet access throughout the city.

The bill, crafted by Sen. Jake Corman (R., Centre) and pushed heavily by
Verizon and other incumbent telephone companies, gives the companies the
right to block such municipally run projects if the companies themselves
install fast Internet service. Verizon promised last week that it would
not use the provision to impede Philadelphia's efforts.

"Philadelphia's shortsighted bargain with Verizon leaves the rest of the
state high and dry," said Ben Scott, policy director of the Northampton,
Mass., media-reform group Free Press.

"Verizon may be promising not to interfere in Philadelphia's plans - but
since when does a city need a permission slip from the phone company
before providing a necessary service for its own citizens?" Scott said.

James V. O'Rourke, president and chief executive officer of Verizon's
Pennsylvania unit, said many parties backed the bill, the majority of
which dealt with fast-Internet deployment. Among those supporting it, he
said, were the Pennsylvania School Board Association, labor groups
including the AFL-CIO and Communications Workers of America, economic
development groups such as the Pennsylvania Chamber of Commerce and the
Pennsylvania League of Cities and Municipalities, and many others.

Jeffrey Chester, executive director of the Center for Digital Democracy,
noted that Verizon had substantial political clout and said the law
"means less competition, higher prices for consumers, and an irreparable
harm to freedom of expression for the public."

Philadelphia already has begun offering free wireless fidelity, or
Wi-Fi, Internet access in selected public locations, such as LOVE Park.
If it expands the service and charges a fee, as it has said it would
like to, it would almost certainly undercut the $30 monthly fee Verizon
charges for its high-speed DSL Internet service and Comcast's $42.95
charge for cable-modem access.

So Prometheus Radio Project, a West Philadelphia-based group that helped
organize a grass-roots attempt to defeat the bill, said the outcome was
a mixed bag.

"We were able to make Verizon quake in its boots in a very big way,"
said Hannah Sassaman, program coordinator for Prometheus. "What we need
to do is enact responsible legislation that not only allows but
encourages municipalities to develop communications networks on their own."

Besides establishing a timetable for Pennsylvania's phone companies to
wire the entire state for fast Internet access by 2015, the new law
contains discounts for schools to obtain broadband service and allows
communities to petition for broadband service ahead of their phone
company's deployment schedule.

Schools will get $60 million in grants for broadband connections,
service, equipment, distance-learning programs and training, from a
special program funded by phone companies.

"This far outstrips any commitment made by local telephone companies to
any other state," Rendell said.

Another sticking point in the bill was the potentially harmful effect it
could have on companies that compete with Verizon and the other
incumbent phone companies.

Rendell, however, said his office had worked with Verizon to ensure that
competitors could remain viable, by giving them favorable wholesale
rates for leasing parts of Verizon's phone network.

"These deep discounts will be a major factor in stimulating local
telephone competition in Pennsylvania," Rendell said.

An official for Covad Communications, a competitive telecom provider
that opposed the bill, said it was still too early to tell if Rendell's
interventions were enough, but they were welcome.

"Overall, we're happy the governor was so concerned about competition,"
said Valerie Cardwell, vice president of external affairs for Covad.

She said it appeared that the Pennsylvania Public Utility Commission
would continue to have a strong role in promoting phone competition, a
status that competitors lobbied strenuously to maintain.