Where will broadband competition take Philadelphia?

For many years, broadband Internet in Philadelphia was only available to large companies and institutions with the budget to literally build connections.

But Verizon‘s successful push to bring FiOS to the city has spurred Internet service providers operating in Philadelphia to compete. The result, city officials say, is that residents will pay less for better service.
Since early 2010, Verizon has been building a fiber-to-the-home network throughout the city with the goal of providing cable TV and high-speed Internet. Verizon representatives say they expect to make millions from customers looking to switch from rival Comcast.
Comcast says it welcomes the competition. But both companies and city representatives agree that city residents will win big from the deal. And in a city where broadband adoption — not physical access, but the use of commercial broadband — is low, increasing competition will be an important part of providing access to low-income individuals.
Forty-one percent of the city lacks broadband Internet in the home, according to data commissioned by the Knight Foundation and published in the city’s newly published Philadelphia 2035 comprehensive plan.

This afternoon, five new computer centers will open officially during a ribbon cutting hosted by Media Mobilizing Project and the Freedom Rings Partnership, part of a federal grant that is bringing neighborhood-level web access to Philadelphia. News of the public computers centers has been at the forefront of our broadband coverage this summer, as partner organizations across the city launch the start of 70 centers that hope to help bridge the divide.
It is a divide that is more defined now not by physical infrastructure, as is common in rural areas, but by the price for service.
After all, the city was turned down last year for federal middle-mile infrastructure build-out grants, though it was awarded funding for adoption projects, in part because access to broadband services in the city is so widespread.
“There are few apparent populated portions of the city where no broadband is available. Indeed, the National Broadband Map shows that most areas of the city have access at over 50 mbps,” says Temple broadband researcher and GIS analyst Charles Kaylor, who provided data to the Planning Commission for the comprehensive plan. “This suggests that the relatively low rates of adoption have something to do with socioeconomic factors than with whether or not service is available.”
Those socioeconomic factors could, in time, be impacted by the competitive broadband market in Philadelphia.
“Citizens will eventually see an increase in broadband speeds, which is great, because now we have competition and we have broadband being delivered to the home,” says Joseph James, deputy CIO, who negotiates franchise agreements for the city.

COAXIAL COMPETITION

The delivery of broadband Internet to the home is a definition that should be spliced.
Comcast representatives say they already have fiber throughout much of the city, but unlike Verizon, it is not fiber-to-the-home. The “last mile” connection to residents is still made with coaxial cable. Coaxial cable can handle broadband speeds, but unlike fiber, the signal deteriorates the longer it has to travel.
As Verizon has rolled out FiOS to customers, Comcast has upped its offerings to include 105mbps download speeds.
“We feel very strongly that, for the price, we offer more value and choice than anyone in the marketplace, bar none,” Comcast spokesman Jeff Alexander says.

Representatives from both companies agree that the already fierce competition will ramp up between the two companies as Verizon brings new portions of its network online.
“What we’ve seen so far from their entrance into the market in Philadelphia, is that Comcast has adjusted their rates and is more responsive to market conditions whereas before there were the only game in town except satellite,” James says.
“Providers like Comcast now are forced to offer [residents] more attractive deals that they wouldn’t have had to do in the past when there wasn’t a provider like Verizon in the market,” Verizon spokesman Lee Gierczynski says.
A primary hurdle for the building of fiber networks is the cost of installation, a focus of the new National Broadband Plan.
Verizon says it can install fiber around the city easier than other providers because of its existing network of phone lines. Once focused on its telephone business, Verizon has right-of-way access to city streets for its network of copper wire, Gierczynski says. Building the FiOS network, at its heart, is overlaying existing copper wire with optical lines.

DIFFERING REGULATION STANDARDS

Finding out where the network is headed can be a difficult task.
Publicly, Verizon is only required to disclose which half of the city it will wire before 2013. The process is further complicated by the fact that build-out phases don’t follow normal political boundaries like zip codes or council districts.
“Because of the level of rules around competition we have less insight into ‘Are they specifically going down this street, or building in that neighborhood?’ We kind of get a report back, but it’s very generic,” James says.

In private, Verizon provides the city with more details about its buildout once every six months. Both Gierczynski and James agreed that the company is on schedule with its buildout.
But those behind-closed-doors reports might be good for city residents.
Verizon says that disclosing its exact footprint to the public could give competitors an edge to target those neighborhoods with long-term contracts. By keeping the competition in the dark, Verizon says that residents could see lower bills.
Unlike phone companies, cable providers like Comcast are required to disclose infrastructure plans. In its last franchise hearing with the city in 1998, Comcast was required to provide census information and zip codes where it planned to upgrade its network, the company’s spokesperson says.
“We cover them down to routes and streets and know exactly where they’re going all the time,” James says of Comcast.

That sets unfair standards, Comcast representatives say.

But both telecommunication companies struck deals with the city that require them to provide the same level of service for all residents without redlining poorer neighborhoods. Both companies also provide to the city’s operating budget 5 percent of gross revenues from the sale of cable TV services in the city.
Verizon’s agreement requires it to have 45 percent of the city wired for FiOS by 2013. If it fails to meet those benchmarks, the company can be charged $1,000 per day by the city.
James says the real incentive for Verizon is not avoiding any financial penalty from the city, rather, getting a return on their multi-billion-dollar investment.
“They are having very good success at selling their product and getting customers. Their incentive is to grow that market share so they can get back their capital investment,” James says.
Technically Philly Co-founder Brian James Kirk contributed to this report.