The proposed wireless network also will provide residents and business with a low-cost Internet option, they say.

City leaders will select a private vendor this spring to build the network. Portions are expected to be up and running by the end of the year, but it could take 18 months for completion, said Bill Beck, the city's deputy chief information officer. Antennas positioned on telephone poles and buildings throughout the 60-square-mile city will broadcast the wireless signals - creating a citywide Wi-Fi cloud.

Earthlink, an Atlanta-based Internet Service Provider (ISP), and U.S. Internet, a Minnetonka-based ISP, are the two finalists competing for the contract. The companies will set up test sites in North Minneapolis and the Cedar-Riverside, Seward and Ventura Village neighborhoods.

The City Council was scheduled to vote on the city's business plan for the broadband network Feb. 24 after this edition of the Southwest Journal went to press.

Mayor R.T. Rybak said the wireless network, will help level the playing field for residents and small businesses.

“The Internet is an essential tool for a student or small business, but we're still in a period of time where access to high-speed tools is easier for those with more resources. This is going to bring the cost down and increase the accessibility,” Rybak said. “You will no longer have to look for a coffee shop that happens to be a hotspot; the whole city will be.”

Residents and businesses could subscribe to the network, but its primary purpose is to provide city employees with a more powerful and portable Internet connection.

City inspectors, for instance, could carry hand-held devices while in the field, police officers could file police reports from neighborhoods, and firefighters could access building information before entering burning structures.

“We're building this out to meet the institutional needs of the city, border-to-border, which includes public safety - police and fire. This is unique,” Beck said. “We believe the benefit to this is the city's demand for availability, reliability and quality of service are significantly higher than those of a pure residential network.”

The network is expected to be two to three times faster than typical high-speed connections and cost between $16 and $24 a month, he said.

City officials and the two vendors competing to build the network expect 20 percent to 30 percent of current broadband users - or 20,000 to 30,000 - to subscribe.

“We're taking a conservative approach - as service grows and becomes common place that is going to grow rapidly,” Beck said.

Why outsource?

The city has opted to turn over construction and management of the network rather than run it to save on costs, Beck said. The winning vendor is projected to invest $20 million to $25 million to build the network.

Relying on a private vendor to build and maintain the network makes sense to City Council President Barb Johnson (4th Ward). “We didn't want to get in the position of buying technology that could be outdated quickly,” she said.

Some have been critical of the city's decision to outsource the network without considering public ownership, however.

Becca Vargo Daggett, a research associate for the Institute for Local Self-Reliance in Southeast Minneapolis, said the city should have held public hearings to consider other ownership models.

While the upfront costs are steep, the wireless network could generate millions in revenues. In a report released earlier this month, the institute predicts the broadband network could generate a surplus of $19 million within 10 years. David Morris, the institute's vice president, said that money could be used to ensure that all of the city's residents have access to the high-speed network.

Despite some criticism, the city is sticking with its plan.

‘Virtual economy'

Before becoming mayor, Rybak ran an Internet-consulting business out of his home in Southwest and said building a wireless network is a critical step in preparing for the new economy.

“You don't see us in office towers and you don't see us in storefronts, but we're out there doing work. That's the core of the new economy,” he said. “What we're doing here is providing a tremendous, new low-cost tool to allow the home-based business, the creative class to move seamlessly throughout the city.”

By providing cheaper service and teaming with community groups to help lower-income residents gain access to technology, the city also hopes to bridge the digital divide. No citywide data exists, but according to a recent report by the Community Technology Empowerment Project (CTEP), about 35 percent of Minnesota households don't have a computer and about 44 percent of households don't have Internet access. That figure is considerably higher for African American and Hispanic households.

Nationally, 68 percent of African American households don't have computers, while 76.5 percent don't have Internet access. As for Hispanics, about 66.3 percent of households lack computers and 76 percent aren't connected to the Internet nationwide.

AOL recently informed customers that beginning next month, AOL will charge dial-up subscribers $25.90 per month. The price won't be that much of a shock, since it's $2 more than those dial-up customers are paying now. More important, it's equal to what high-speed DSL (digital subscriber line) or cable subscribers pay to get AOL services such as e-mail and customer support along with high-speed Internet access.

The price jump shows just how important it is to the Internet giant to get more of its customers onto broadband. It has led to an obvious question for longtime AOL customers: Who wouldn't move to broadband when it costs the same price?

"Given their overall strategy in the Web portal business, (AOL) wants fewer, if any, dial-up customers," said Allen Weiner, an analyst at Gartner. "I think it is part of a strategy to basically shake out of its base the people who are likely high-speed subscribers."

AOL makes no bones about the fact that it is trying to encourage people to upgrade to faster service so they can better view the bandwidth-intensive content on the AOL site. "The hope is that we'll be encouraging users to upgrade to broadband because a majority of them will be able to get high-speed connections," said AOL spokeswoman Anne Bentley.

But the move could anger some price-sensitive, casual Internet users who will resent paying more for a slower service, Weiner said. "Disincentives are a tragically bad way to go about things," he added.

Of course, that may not be a serious concern to the planners at AOL. It has been losing dial-up subscribers for several years as prices for high-speed access have dropped, from 26 million U.S. subscribers in 2002 to 19.5 million in 2005. DSL is priced between $15 and $40 or higher per month, compared with dial-up prices of $4 to $10 a month.

About 5 million people in the U.S. pay $15 per month for an AOL subscription and then pay a different Internet service provider for high-speed Internet access under AOL's Bring Your Own Access plan, Bentley said. By bundling high-speed access and AOL service for $25.90 a month, AOL is offering a package alternative to members who are now paying for their AOL service and high-speed access separately.

"All about broadband"
AOL announced in late January a new coast-to-coast high-speed network and has been signing deals with providers for its bundled offering. AOL's ISP partners include DSL providers BellSouth, Verizon, AT&T and Qwest, and cable providers Time Warner Cable and Charter Communications.

"I'm sure one of the clauses in AOL's deal with broadband partners was a fairly hefty commitment as far as how many customers would make the switch," said Joe Laszlo, a senior analyst at JupiterResearch. "Two dollars removes any sort of price-related inertia that their dial-up customers might feel."

AT&T and Verizon have succeeded in using price cuts to lure customers away from dial-up, while cable companies have been competing more on speed than price.

"This is yet another example of how AOL is becoming a company that's all about broadband," said Will Richmond, president of consulting firm Broadband Directions. "There's no question that all the forecasts point to the dial-up subscriber count decreasing in the next few years. AOL understands that."

In August AOL launched a new AOL.com portal, that opens up to any Web surfer content that used to be available only to AOL subscribers. This enables AOL to better compete for lucrative online advertising with Google, Yahoo and MSN.

AOL's affiliation with Time Warner and other subsidiaries also enables it to focus on video and other multimedia content, which can be painful to experience on dial-up.

In addition to Web, local, video, image, music and shopping search, AOL's Web site offers video on demand, AOL radio programming, tons of entertainment and other news, as well as AIM Triton, a communications service that includes instant messaging, e-mail, SMS mobile text messaging, voice and video chat.

AOL is not overly concerned about losing customers over the price increase, Bentley said. "We still offer the most comprehensive package" including round-the-clock customer support, access to an AOL e-mail account and unlimited e-mail storage, she said.