My friend Ed Antecol sent me a note about the WiFi project in Philadelphia.

A week ago, Philadelphia released information about the terms they negotiated with Earthlink in awarding the contract to build their pioneering WiFi umbrella over the city. It is significant because the Philadelphia approach is to gain the benefits at no cost or risk to the taxpayers.

The contracts call for EarthLink to rent space on 4,000 city light posts for its equipment, and pay the city $74 annually per light post – for a total of nearly $300,000 a year.

EarthLink will give Wireless Philadelphia 5% of its access revenue to be used to provide 10,000 computers and training to children and low-income households. EarthLink will also provide Internet access for up to 25,000 low-income households at $9.95 a month, and give the city government free or discounted access.

Earthlink is also providing free hotspots in 22 sites designated as tourist zones.

Contrast that deal with Toronto Hydro’s WiFi announcement yesterday, which targets the downtown business core, with no special attention on the disadvantaged segment of the community.

With budget shortfalls in so many Ontario cities, we can learn how to truly develop private-public partnerships from our neighbours to the south.

A report in the Financial Times suggests that equipment makers will bear the brunt of the impact of the AT&T; / Bell South acquisition.

I’m not convinced this generalization applies to this particular instance, nor for that matter, to the Bell Canada / Aliant transaction.

In the case of AT&T; / Bell South, the companies did not really compete against each other. Bell South was a supplier of access services to AT&T; and was a shareholder in Cingular with AT&T.; Bell South had adjacent territory to that held by the SBC component of AT&T.; The transaction will result in better focus for Cingular, driven by a single management vision. Contrast that to uncertainty at the Board level brought by competing viewpoints from the SBC versus Bell South representatives.

Improved focus may permit the integrated company to improve its decision making – releasing more capital faster. It also improves the ability for AT&T; to rollout newer backbone services, knowing that it controls the advanced access capabilities in 33 of its operating states.

Similarly, the Bell transaction should result in increased wireless spending in Atlantic Canada.

Don’t blame reductions in capital spending on these deals!

The Toronto Tourism and Economic Development folks must be happy today. Toronto Hydro Telecom announced that it plans to build a WiFi umbrella over the downtown core of Toronto. Toronto joins an elite club of major world cities, including San Francisco, Philadelphia, London, Ottawa and Whistler.

There are lots of questions that can be asked about this project:

• Should the city be competing against the private sector? Since Bell and Rogers pay municipal taxes and both have lots of employees in Toronto paying taxes, do you really want to have the city own a company that will compete against these corporate citizens?
• Who are the beneficiaries of this service? This service isn’t targetting the Toronto Housing Projects or disenfranchised youths at Jane and Finch; it is blanketing the downtown core, including the bank towers. Is this trying to help make it easier for already rich to make those new car payments?
• What about advanced services? Like competitive Voice over WiFi IP to compete against high cellular rates? Things like smart meter reading? Is there going to be an announcement from the electricity side of Toronto Hydro that they have a plan to leverage this new capability to allow time of day incentives for energy conservation?

But there are some very important answers:

• The high speed market isn’t competitive enough. Both Rogers and Bell have recently announced price increases. Toronto Hydro may help to discipline the pricing from the current duopoly.
• Other cities are building these networks. That isn’t a good enough reason on its own (just like your mother used to say “and if your friends were jumping off a bridge would you do that too?”). But, the market is pretty fierce for convention recruiting, high tech jobs and other drivers of municipal economic development. A city WiFi network is the kind of ‘amenity’ that people will come to expect. It doesn’t hurt for Toronto to be a leader, not a follower, in offering this kind of service. Premium soap and shampoo used to be amenities reserved for upgraded rooms in superior hotels. Now we have come to expect hair dryers, plush bathrobes and ironing boards in anything above Red Roof Inns. If WiFi helps land one giant convention per year, it will pay for itself many times over.

As Industry Canada has said, consolidation has left the Canadian Telecom industry feeling a little too comfortable. It may take some municipal activity like Toronto Hydro Telecom’s WiFi Zone to shake things up.

With the excitement surounding Bell’s acquisition of Aliant and the creation of a massive regional telecom income trust, I wonder if anyone at MTS is having second thoughts.

Almost exactly 2 years ago, on March 18 2004, John McLennan and Bill Fraser announced that income trusts make no sense in telecom and that was why MTS would abandon such a proposal in favour of the acquisition of Allstream. At the time, Bill Fraser said that acquiring Allstream gave shareholders all the benefits of an income trust.

Two years ago, Fraser went so far as saying it would be quite a stretch to find any executive in any telco in Canada to say that revenues and cash flows are predictable and stable enough to fit an income trust model. VoIP and competition coupled with regulatory uncertainty raised concerns of being capital constrained under an income trust structure.

At the time, Yellow Pages, Bell Nordiq and Amtelecom were the examples of Income Trusts that people pointed to In fairness to MTS, neither of the remote and rural operating companies had substantial sized cities like Winnipeg inside their operating territory to be direct comparables.

Still, a lot of MTS’ forecasted revenue increases and capital savings didn’t materialize and it is hard to see which shareholders actually received benefits. It sometimes seems that the main asset that Allstream brought was its $3B in tax losses.

At the time of the Allstream transaction, Fraser spoke of an income trust stock price of around $55 – the same as the reference price for Allstream deal. It just happens that $55 would be a dream for MTS today, which has been languishing closer to $40.

An income trust appears to be a more realistic option for regional carriers like MTS with the new plans for Aliant. Although Winnipeg is much larger than Halifax, the rest of Manitoba looks an awful lot like a flattened version of Atlantic Canada. And I’d take Winnipeg Goldeye over Nova lox any day of the week!

I wonder whether MTS is willing to take a fresh look at how to best unlock shareholder value in its asset base.

Is there anyone who would take Allstream off MTS’ hands to enable the rest of Manitoba to be gobbled up by the Bell Income Trust? If we see a relaxation of foreign ownership restrictions, Allstream could help a global player gain a national footprint at bargain prices.

With all of the attention on bigger news releases today (see Bell’s announcement on Aliant and Toronto Hydro’s WiFi plans), it might have been easy to miss an important filing by Vonage, complaining about Shaw’s VoIP tax.

This is an old issue that doesn’t seem to be going away. Joe Parent first raised the issue at The 2005 Canadian Telecom Summit on May 30, 2005. Today, Vonage filed a formal compaint with the CRTC, in part claiming that Shaw’s “quality of service enhancement fee” is:

part of a bigger issue of network neutrality and who controls how Canadians use their Internet service

So, the issue of Network Neutrality is now being moved to centre stage at the CRTC. It will be interesting to see if the Commission keeps the focus narrow or will it use this Vonage filing as the opportunity to launch a broader public process.

The issue of Network Neutrality was raised by some presentations to the Telecom Policy Review panel, but it merits a close examination on its own. This is an issue being examined broadly by regulators and politicians in Canada’s closest trading partners.

Thanks to Vonage, it is now time for the CRTC to hear from Canadians about who controls how they use their internet access services.