July 25 (Bloomberg) -- Every evening, when New York’s Bronx Library Center closes at 9 o’clock, a group of young people carrying mobile phones clusters outside its entrance on a busy commercial street. They are there to access the Internet through a wireless signal leaking from inside.
In a borough where 30 percent live in poverty, many Bronx residents can’t afford a data plan for their phones. At home, they often don’t have broadband connection to the Internet or even a computer. If Mayor Bill de Blasio has his way, by next year New Yorkers will be able to use their handsets to go online through a network that will replace the city’s once-ubiquitous sidewalk payphones with free Wi-Fi hotspots.
De Blasio, 53, the first Democrat to run the biggest U.S. city in 20 years, assumed office Jan. 1 vowing to devote his mayoralty to economic justice. That agenda includes efforts to close the so-called digital divide separating those with high-speed Internet access from those without it. A request for proposals on how to build a citywide Wi-Fi system closed July 21, with a provider to be chosen by year-end.
“If we’re going to create fairness and economic opportunity, high-speed Internet -- affordable high-speed Internet -- has to be available to all of our citizens,” de Blasio said at last month’s meeting of the U.S. Conference of Mayors in Dallas. “We have to make sure the Internet access is truly universal.”
About 60 U.S. cities, including Los Angeles, Chicago and Boston, have joined New York in planning to install citywide free outdoor Wi-Fi. Even so, the U.S. lags behind other countries in high-speed Internet access, according to the New America Foundation’s Open Technology Institute. The group, which ranked the cost of consumer broadband service in 22 cities worldwide, found that Americans in major cities pay higher prices for slower Internet service than their global counterparts.
New York’s plan calls for 10,000 stations emitting signals in a radius of a least 85 feet (26 meters) throughout the most heavily trafficked residential and commercial corridors in the five boroughs.
Google Inc., operator of the world’s biggest search engine, was among more than 50 technology companies that attended an informational meeting for the project in May. Arranged by the city Department of Information Technology and Telecommunications, the session also included representatives of Cisco Systems Inc., International Business Machines Corp. and Samsung Electronics Co.
According to the request for proposals, the provider chosen by the city can charge for phone service, except for 911 emergency and 311 hotline calls, though they can’t require a fee for Internet access.
The Wi-Fi stations also may feature pay-per-use smartphones, electric outlets to charge mobile devices and cars, street cameras and sensors to monitor air quality and other environmental conditions, according Ray Mastroianni, chief executive officer of Queens-based Telebeam, which operates 900 city payphones and is competing to win the right to operate the new system.
The idea of converting the phones to Wi-Fi pods began in 2012 with about 25 spots under former Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP.
The kiosks would add to a patchwork of publicly and privately funded projects bringing Wi-Fi to city neighborhoods, including in about 70 parks and a 95-block swath of Harlem that’s about to become the largest continuous hotspot in the city. The program is financed partly with a private philanthropic grant.
In addition, the Housing Authority operates a fleet of mobile “digital vans” offering free Wi-Fi, laptops, printers and computer-literacy classes to some public-housing developments.
De Blasio wants a task force to review all Wi-Fi coverage. He’s also vetting candidates for a newly created chief technology officer who would coordinate Internet policy.
“He has elevated the issue to the highest level in an effort to close the digital divide,” said Commissioner Ann Roest of the technology department.
The city’s plan to expand Wi-Fi won’t by itself narrow the gap, said Blair Levin, a former chief of staff at the Federal Communications Commission. Although such efforts would give residents and tourists a popular amenity, they won’t help as much as high-speed broadband service in the home would, he said.
“If you offer free Wi-Fi in certain areas, you make it more attractive to come to those areas, stay longer and buy more,” said Levin, who helped create the FCC’s 2010 National Broadband Plan. “We should not kid ourselves to think it will solve the very complex problem of the digital divide.”
In 1995, New York assumed oversight of 35,000 payphones that were under the control of New York Telephone, which had been part of the old AT&T Bell System. Four years later, the city broke up the monopoly and granted rights to run the sites to more than 35 companies.
Since then, mobile-phone use has caused the number to dwindle to fewer than 8,900 phones in about 7,000 locations with 10 operators. They derive 95 percent of their income from ads placed on the booths’ side panels. The city collects about $17 million a year: 36 percent of the ad revenue plus phone-use fees. Those contracts end in October.
The request for proposals seeks one carrier to operate all the Wi-Fi stations. Under the plan, the city would receive a minimum annual compensation of $17.5 million or 50 percent of revenue, whichever is greater. Officials said they expect annual revenue from the newly designed system to exceed the total of $50 million generated by the obsolete payphones.
The single-carrier provision has raised objections from companies that already own payphone-operating rights and questions among City Council members. Mark Weprin, a Queens Democrat, said the contract winner would own a monopoly, providing “no incentive for them to go above and beyond the minimum service.”
City officials say a contract with just one company would promote uniform design, accountability and provide the promise of sufficient revenue to act as an incentive for the provider to invest enough to make the program work. After officials choose the operator, the Wi-Fi buildout will begin next year.
In the Bronx, Michael Alvarez, director of the library, sees the young people clustered near his building when he leaves each night. He also encounters dozens lined up each morning, waiting for a free 45-minute stint at one of the desktops on the fourth floor connected to high-speed broadband.
“It’s gotten to the point where most computers are used all the time,” he said.
Among the users on a recent day was Jasmine Cherry, 22, a nursing student and intern for a social-service agency who can’t afford a computer on her $600-a-month income. She sometimes waits as long as two hours to get online to check job listings, print her resume and check e-mail.
“You do what you can to manage, and what you see here is everybody coming here to do what they can,” she said.
To contact the reporter on this story: Henry Goldman in New York at email@example.com