Google's Wireless Plans May Pose Threat To Telecom Companies

Telecom and cable providers are already at battle with a number of government municipalities that are launching free or low-cost Internet services for their communities. Now Google could join the fray with its proposal to provide such services in San Francisco. If chosen as a provider, Google could compete with the city's local telephone and cable companies such as SBC Communications and Comcast.

Google made it public late last week that it was among the vendors that had submitted proposals to offer citywide Wi-Fi in San Francisco, which would give businesses and residents, including lower income neighborhoods, free Internet access. San Francisco Mayor Gavin Newsom launched the city's wireless initiative in August and submitted the Request for Information and Comment, which invited public, private, and non-profit companies to participate.

San Francisco is one a number of municipalities building city-wide wireless networks in hopes of overcoming the "digital divide" that keeps poorer residents from getting online. Telecom and cable providers, including BellSouth, Comcast, Cox, Qwest, SBC, and Verizon, have been lobbying Congress to stop municipalities, claiming that there are plenty of affordable broadband services already available from private providers. And a number of states, including Pennsylvania and Virginia, have passed laws that restrict municipalities' from offering broadband services. California, however, doesn't have such laws.

A law was passed in Pennsylvania late last year that prohibits municipalities from proceeding with wireless services without approval from the local telecom carrier. Philadelphia came to an agreement with Verizon, the state's primary phone-service provider, which will let Philadelphia proceed with its plans to build a citywide wireless network. The city is spending $10 million on a 135-square-mile wireless network, to go live in about a year. Low-income residents will pay about $10 a month for a subscription to the service and businesses will pay about $20 a month per subscription, 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," says Neff. Verizon, however, has indicated that it may not approve requests by other Pennsylvania cities looking to run their own wireless services.

Many technology vendors are encouraging and helping municipalities build wireless networks. Intel has backed Philadelphia's efforts and started an initiative called Digital Communities to increase adoption of wireless technology. Thirteen cities are on-board so far. Cisco Systems, Dell, IBM, Microsoft, and SAP are among the vendors planning to provide software and systems for cities.Google's move raises the question as to whether it's looking to San Francisco as its entrance into the telecom and cable market, but Google says it doesn't have plans to offer citywide Wi-Fi beyond San Francisco. It's also still unclear if Google is a front-runner. Other companies have responded to San Francisco's request, including EarthLink.

In the meantime, Philadelphia is expected to announce the winner of the "Wireless Philadelphia" contract as early as this week. Hewlett-Packard and EarthLink are the finalists in the bidding, and the winning company will build Philadelphia's wireless network.