City's WiFi Network Won't Close Divide. Scott Wallsten. February 2005.

Does anyone really believe that impoverished families are going to run to the store and plunk down more than $500 on a computer just because they can suddenly save a few bucks a month on Internet access?

That's exactly what would have to happen for Philadelphia's planned city-owned WiFi network to fulfill its promoters' promises of bridging the digital divide.

And Philadelphia isn't alone. San Francisco, Los Angeles, Portland, Atlanta, and a growing list of other cities are either implementing or considering similar plans. Anyone inside city limits will have a free or cheap wireless high-speed Internet connection. One of the main benefits, according to proponents, is that the public network will bring Internet access to the poor.

It all sounds great: Wherever you are, just open your laptop, find your friendly city WiFi signal, and surf away on an egalitarian Internet cloud.

Coffee shop denizens, professionals, and students will rejoice in the brave new world of always-on, wherever-you-are connections. I know I will.

But that's the problem. The real winners in this deal will be people who already own computers (generally laptops) that can pick up wireless signals. In other words, primarily well-off people, most of whom probably already have access to high-speed Internet connections.

To narrow the digital divide, the project would have to induce people who currently have no or only limited access to connect to the Internet. But the poor are less likely to own computers, much less WiFi-enabled laptops. For them, that wireless signal might as well not even exist.

The rich, meanwhile, will be enjoying their taxpayer-subsidized Internet access.

And the subsidies are unlikely to be recouped. Philadelphia estimates that its network will pay for itself within four years. But four years is an eternity in the fast-changing high-tech world. Today's wireless standards are likely to be outdated sooner than that, replaced by something faster and better.

In fact, a new technology called WiMax is already nipping at WiFi's heels, promising to provide better coverage over large areas. After all, WiFi was designed to cover relatively small areas, like your home, not entire cities. Policy aside, a citywide WiFi network is likely to have spotty coverage, with especially poor reception indoors.

And what will the city do when nobody wants today's flavor of wireless Internet access anymore? Will it ask taxpayers to pony up millions more to upgrade to the next technology and trash the old one?

Existing providers of high-speed Internet services, who are already investing billions, are crying foul. They're legitimately worried about competing with governments, which can operate their networks at a loss by subsidizing them with tax dollars. If that happens, private providers may be less likely to invest in upgrades for fear that cities will prevent them from earning a reasonable return on their investments. And then even the elites who benefit at first from city WiFi may miss out on future innovation.

City-provided, taxpayer-funded WiFi may be a popular idea, but don't be fooled. It's not a bridge over the digital divide. The poor largely won't see any benefits. Instead, it's a gift from politicians to their middle-class and wealthy constituents who will be happy to pay less for Internet access than they do now.

So go ahead and build that network, Mayor Street. Some citizens will be thrilled to sit down (outside) with their $5 lattes, pop open their slim new laptops, and enjoy their tax dollars at work. Other citizens will only watch enviously from the sidelines as they get left behind again.
  
Scott Wallsten is a resident scholar at the American Enterprise Institute and a fellow at the AEI-Brookings Joint Center for Regulatory Studies.

This article appeared in The Philadelphia Inquirer on February 17, 2005.