For two decades, Allegany County in western Maryland has seen its glass, textile, and tire industries wither -- one reason the depressed rural community of 80,000 wants to attract high-tech employers. But spotty high-speed Internet service from phone and cable companies has been an obstacle. Luckily, the county has already connected its government offices, schools, and police force with a fast wireless network. Now, by spending $4.7 million on upgrades, it will offer homes and businesses speedy links by yearend. "You've got to have this technology to run a business today," says Douglas S. Schwab, chief operating officer of Cumberland (Md.) clothing maker S. Schwab Co., which uses Web connections to track inventory.
Allegany County isn't alone. New technologies -- which extend the range of wireless broadband from Wi-Fi's cafe scale to metro-size -- can cost a fraction of what competing cable and phone systems must pay to dig up streets and upgrade lines. By sending signals over the airwaves from inexpensive antennas mounted on light poles, small-town mayors and local entrepreneurs around the country are already providing low-cost broadband. Now large cities are getting into the act. Corpus Christi and Houston are moving forward on Wi-Fi networks, as is Philadelphia, which recently announced plans to build its own $10 million Wi-Fi network. By next year the city hopes to offer free or cheap broadband access to its 1.5 million residents. "We want everyone to have an equal opportunity to compete in this digital age," says Dianah Neff, the city's chief information officer.
Not surprisingly, cable and telcos aren't happy about their new rivals. The muni wireless network is an unexpected twist in what had been a two-way race to sign up broadband subscribers. By creating "a third pipeline," muni networks should lower prices and speed the spread of broadband, says Michael Calabrese, vice-president at the New America Foundation, a Washington think tank.
Phone and cable companies are lobbying hard to halt the trend. So far, 13 states have restricted towns from offering broadband. "It's better for all involved if private companies are using risk capital and not taxpayer money" to provide broadband, says Link Hoewing, vice-president for Internet policy at Verizon Communications Inc. But while the broadband giants fight to protect their hefty investments in copper and fiber -- and head off price wars -- they may ultimately be forced to adopt the new technology if it takes off. Verizon today offers wireless service in rural Grundy, Va.
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Certainly, the economics of Wi-Fi are compelling. Some wireless systems cost as little as $30 to connect each home, compared with the $60 to $80 it can cost a cable or telecom company. That makes wireless attractive for rural towns looking to stoke economic development and cities seeking affordable Web access for low-income citizens and government employees. At least two dozen communities had started their own networks by June, and the rate of launches is on the rise, according to MuniWireless.com, a Web site.
Entrepreneurs are taking note. Some 2,000 of them are selling fast wireless links to communities, most of them rural, across the country. And in June wireless-phone mogul Craig McCaw launched Clearwire Corp. in Kirkland, Wash., to sell high-speed wireless services in cities such as Jacksonville, Fla. Unlike many municipal networks, Clearwire will use exclusive licensed spectrum to reduce interference and boost reliability.
Will wireless wind up being the Holy Grail of broadband? Probably not. The new technology still needs to prove its reliability over long distances. The best broadband will eventually come via fiber, which can transmit data 100 times faster than today's wireless systems. That will enable video as well as voice and data services.
Yet for now, fiber's cost, at around $2,000 per home, poses a huge hurdle. So wireless networks will be sticking around. And that's likely to give the big cable and telecom providers one more thing to worry about.
By Catherine Yang in Washington and Heather Green in New York