City of Philadelphia: Dianah Neff

>> Ms. Neff: In our low income minority and disadvantaged neighborhoods connection to the internet can be between 25 and 10 percent. We need to do something.

>> Narrator: The City of Philadelphia is looking to be the first major city in the U.S. to provide low-cost broadband access to it's residents.

>> Ms. Neff: We want for government workers, for businesses, for visiters, for individuals to be able to have wireless access both indoors and outdoors.

>> Narrator: But the plan has faced some bitter opposition. CIO Dianah Neff sits down with ZDNET Editor-in-Chief Dan Farber and explains the politics and the technology behind the Wireless Philadelphia Project.

>> Mr. Farber: Dianah, thanks for joining me.

>> Ms. Neff: You're welcome. It's a pleasure to be here.

>> Mr. Farber: Well, Dianah, as the CIO of the City of Philadelphia I know that you've been very involved in the Wireless Philadelphia Project which has come under a bit of scrutiny and perhaps you can outline it for us and give us a little progress report.

>> Ms. Neff: Sure. Mayor Street when we came into office in 2000 identified neighborhood transformation as a key for his administration. He's also passionate about family and children. So as the wireless technology has emerged I looked to bring the suggestion to the mayor to do a citywide wireless infrastructure that would cover all 135 square miles and help bring economic development to our neighborhoods, overcome the digital divide, and reduce the cost of service deliver for the city.

>> Mr. Farber: Now that's a pretty incredible project because I see that in many states they're trying to outlaw this notion of bypassing the local phone companies as well as the cable companies.

>> Ms. Neff: Yes. And in fact that happened in Pennsylvania as well. Last November right as we were doing our business plan and getting -- working with the community we discovered that the House had passed the rewrite of the Pennsylvania Telecommunications Act which had been dormant for 18 months. Out at like at 11:00 at night and over to the Senate which would have barred municipal participation in broadband. But because we had been working with the community we had over 3,000 people call, write, and e-mail the governor's office and he helped us negotiate to Verizon to get a waiver so Verizon Wireless Philadelphia could continue. Unfortunately for a rest of the state the governor did sign the bill into law and we were able to get it delayed to take effect until January 1, 2006, so if smaller communities were interested in wireless they had a year to be able to put their program together and then they would be grandfathered in.

>> Mr. Farber: Now last count I looked there were about 200 cities and towns across the United States that are investing in these kinds of wireless projects bypassing the local phone companies and cable companies. And then governments such as the states in Nebraska or Colorado pass laws as well as in Pennsylvania, there are bills in congress in Washington, D.C. How do you think it's all going to shake out?

>> Ms. Neff: Well, I think that when people really look at what the programs are all about they'll find that you know economic in the neighborhoods are local. The digital divide is local. And the governments do have a role in helping to ensure that all of their citizens have affordable access to be able to compete in this digital economy that we live in. And you know there are roles. Each community will have so analyze what best works for them and then take the appropriate steps. For us in Philadelphia where in our low income, minority, and disadvantaged neighborhoods connection to the internet can be between 25 and 10 percent. We need to do something to help make sure that people have computers and training and then affordable access to the internet.

>> Mr. Farber: Well, let me ask you to respond to a quote from the Chairman of Qualcomm, Irwin Mark Jacobs. He said, I don't think there's a ban required but if I were voting in a municipality, I think I would not vote in favor of using tax funds to go ahead and compete with commercial service that are available and that are rapidly improving.

>> Ms. Neff: Well, I think that that's a misconception. People assume that it's tax payer's dollars that are being used but in Wireless Philadelphia's case that isn't true. We're not using general fund or capital dollars. We will actually pay the city to be able to mount the wireless devices on the light poles. And then we will use private funding or taxable bond revenues to build the network and then the revenue stream will pay that back. And we're partnering with the private sector. All along we have said we believe this should be a public private partnership and we're doing that. But we need the focus to be on the communities on those that don't have access and to do that you need local representation. You need to be able to have a system were you can keep the cost low so people can afford it.

>> Mr. Farber: Well, how are you partnering with the private sector?

>> Ms. Neff: In a couple of ways wireless Philadelphia has be set up as a nonprofit corporation. We've issued a Request for Propose to design, build, and maintain the network. And that's with the private sector. We have 12 responses, 8 of those were turnkey systems. They're coming in good quality in the price ranges that we had expected and we're working through all of the technical aspects to select the finalist and move forward into contract negotiations. Once the network is up and running we'll then partner with internet service providers to provide the actual connectivity for individuals and business to the network -- or to the internet through Wireless Philadelphia Network. They all pay a wholesale fee to Wireless Philadelphia and then by having multiple ISPs will have true competition that will keep the prices low.

>> Mr. Farber: And then the ISPs will pay you back per subscriber?

>> Ms. Neff: Correct.

>> Mr. Farber: And how does it work out financially? What do the numbers look like? Because let me also quote you a statement that recently came out from Jupiter Research which said that in their report they estimate that the average cost of building and maintain a municipal wireless network is $150,000 per square mile over five years. And the report also noted that roughly 50% of current initiatives will fail to break even, even if the benefit of the initiative is assumed to be $25 per user per month.

>> Ms. Neff: Well, as I've not had the opportunity to look at how they came up with their numbers it's difficult for me to analyze it. I can tell you from Philadelphia's experience that those numbers are very high. We're seeing costs in the 70 to $100,000 per square mile and a lot of that depends on the density, the topology, so you know the cost could be higher or lower. And you know we believe that we can for under $20 a month break even within 5 years.

>> Mr. Farber: Now are you also going to be providing wireless service to businesses?

>> Ms. Neff: We will provide a point to multi-point capability. So for example in our light industrial neighborhoods it may cost up to $1300 a month for a business to have T1 access. That's very heavy expense cost if you're a small or disadvantaged business. And by having the wireless network we'll be able to offer that for you know much lower closer to the $300 or less a month.

>> Mr. Farber: Now does the same hold true for a City of Philadelphia? Are you going to be getting rid of your leased T1 lines?

>> Ms. Neff: Absolutely. We estimate for the government they'll be able to save as much as $2 million per year in about the third year.

>> Mr. Farber: Now in terms of a project like this how do you expect it to really satisfy all the needs of the city beyond your just providing some low cost wireless? Are there other goals for the Wireless Philadelphia Project?

>> Ms. Neff: Yes. In fact a lot of what we've learned in our pilot neighborhood projects will be very beneficial as we roll this out citywide. You know we're seeing the schools that have been working very hard to unwire their campuses but they've been missing that last mile. So that they need to be able to communicate with parents on their timeframes in their homes. And they're working with us to help identity what are those households that either need computers and training and then to help get them connected through affordable rates. This will benefit the schools that have created parent portals and simple things as parents finding out what their kid's homework assignments are for the evening. Kids may not like that as much but you know it's very poplar with the parents or if you need a tutorial or academic information. If you think about colleges today. If you want to submit a paper application you have to pay extra. College students coming in must have laptops. We need to prepare all of our families to be able to survive and to thrive in this digital economy.

>> Mr. Farber: Well. May be you could go into some of the detail about the technical aspects of the infrastructure of the mesh network you're building.

>> Ms. Neff: Sure. We're looking at a hybrid system from the proposals that have been submitted which are both wifi on what we call the edge because that's the only broadband technology today that has mobility capabilities. So we want to be able for government workers, for businesses, for visiter, for individuals be able to have wireless access both indoors and outdoors. And so we're looking at wifi mesh on the edge. Those will aggregate back into gateways and backhauls and we believe that about 60% of our backhauls can be wireless or WiMAX and there you get the bigger throughput, longer distance coverages, and then that will provide the connection out to the internet.

>> Mr. Farber: Have you run any WiMAX tests yet? And what kind of distances and coverage are you getting?

>> Ms. Neff: We have as a part of one our pilots or actually two of your pilot areas had a WiMAX. When we did our radio frequency analysis of the city, we had a WiMAX backhaul and were able to take a look at that.

>> Mr. Farber: But you don't have any idea exactly what the coverage was. 15 miles? 30 miles?

>> Ms. Neff: You know it really varies in again in our downtown were we have very tall high-rises the distance may have been shorter but in the neighborhoods where there it's kind of the rolling topology you know it could be 30 miles.

>> Mr. Farber: And what kind of throughput, what kind of speeds are you expecting to deliver to the end user?

>> Ms. Neff: We're promising or committing to a megabit both upstream and downstream as a minimum. Today if you go into our pilot areas with a laptop you can get 3 to 11 megabits throughput depending on who is using it and at what times.

>> Mr. Farber: And back to the phone companies and cable companies. Where are they falling down? Why haven't they addressed this issue?

>> Ms. Neff: Well, I think that you've heard in testimonies around the country that they're really looking at the affluent neighborhoods. That 90% of their customers come from that higher, high mid income households and only 5% of their customers are in your low-income neighborhoods. Our surveys show that of the you know 58% that were connected 72% were still dial-up and the majority of the dial-ups were in our low-income neighborhoods.

>> Mr. Farber: In terms of the criteria as the CIO and someone who is really specking out this service what are you looking for from the people who are bidding on this job?

>> Ms. Neff: We're looking at the financial stability of the company, their commitment to research and development so that the network will stay up to speed. We're looking at their ability to deliver then we're doing quite a bit of research into the technologies that have been proposed and to come up with what we believe is the best solution that will meet to requirements that we defined in our business plan study.

>> Mr. Farber: Now what who are the prime contractors for this Wireless Philadelphia Project?

>> Ms. Neff: Well, we have three finalists and they're all consortiums of companies. You have AT&T who is partnered with Lucent and BelAir. You have EarthLink that is partnered with Motorola Canopy and Tropos. You have HP that has partnered with Tropos, Avarion, Aptilo, Promto Networks.

>> Mr. Farber: So you'll be making that decision in the next few weeks?

>> Ms. Neff: Yes.

>> Mr. Farber: And what is the rollout schedule for bringing it across that 135 square miles of territory.

>> Ms. Neff: Well, we'll be doing contract negotiations through august. Our goal is to start construction in September October timeframe and have the entire city covered within one year.

>> Mr. Farber: Great. Well let me ask you about some of the other areas that you're your working on as a CIO in a major U.S. city. I know that you spent time in some very high-tech areas such as Palo Alto, California; Belleview, Washington, which is near Microsoft's headquarters. As the CIO of Philadelphia what are the major eGovernment initiatives besides the Wireless Philadelphia Project?

>> Ms. Neff: We've been doing a number of exciting projects in our electronic bill presentment and payment, getting transactional capability online, integrating providing enterprise capabilities whether that's an enter prose imagining content management solutions, and then obviously reducing costs in the use of technology throughout the city. We run on an average of about 140 projects annually.

>> Mr. Farber: How big is your budget and how many people on your staff?

>> Ms. Neff: Well, the city is a very large metropolitan city, we have over 24,000 employees. About a $3.3 billion budget. The IT budget across the city, if you include capital projects, is about a million and a half and about 90 million of that is in general fund, operating, people, service contracts, hardware and equipment, and then the rest are in major capital projects.

>> Mr. Farber: Did you say a million and a half?

>> Ms. Neff: $150 million. I'm sorry.

>> Mr. Farber: Okay. There we go.

>> Ms. Neff: Just dropped a 0.

>> Mr. Farber: Are you doing much outsourcing?

>> Ms. Neff: We do not do a great deal of outsourcing but we do procure off the shelf software where we can. We will fill in with skills so we call it selective sourcing. So if we're missing some key project management skills we will contract that for the term of the project. And we are also in the process of centralizing a lot of our core services. So we have you know a central data center, that we have a central e-mail, help desk, server farms.

>> Mr. Farber: And are you on the web services bandwagon or has that not yet hit Philadelphia?

>> Ms. Neff: No. We are definitely using web services. You'll see a lot of that in our web applications that are up on your web site. We also run an extremely large geographic information services where we've have an enterprise solution and we use web services to actually push those mapping capabilities out the department so if they have a business application they don't have to rewrite that code.

>> Mr. Farber: Well, great. Thanks very much for speaking with me, Dianah.

>> Ms. Neff: You're Welcome.

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