Muni Wi-Fi Flap Nixes Deal in New Orleans

Opinion: BellSouth takes back a gift to the disaster-ravaged city to make a point about what the company considers unfair competition.

In the medley of things going wrong in New Orleans of late, the BellSouth hissy fit over municipal Wi-Fi service hardly rises above the din.

But at the heart of the story, which, admittedly, is getting more traction in the blogosphere than it is in the mainstream press, lies a fundamental debate pitting business ethics and social responsibility against fair trade and capitalism.

How much should a business be expected to give back to the community it serves when that community wants to be a competitor?

To catch you up on all this, the story began before the storm waters had even receded in the Big Easy. The citys police department, or what was left of it, was holed up in stores and hotels and unused apartments because of the damage to its own facilities.

/zimages/6/28571.gifColumnist Chris Nolan is in favor of the government providing free municipal Wi-Fi, but her colleague Joshua Trevino begs to differ. Click here to read both sides.

BellSouth stepped in and offered to donate one of its own buildings, a 250,000-square-foot facility that had suffered only minor water damage to its basement. The building was to be home to the 1,600-member department.

Things were going along well until earlier this month, when New Orleans Mayor C. Ray Nagin announced a plan to attract residents and business back to the ravaged city with municipal Wi-Fi service free for all comers.

It took only a few hours, according to city officials, for BellSouth to cry foul and pull its offer of a building for the cops off the table. Bear in mind that Louisiana, like a number of states, passed telco-backed laws in recent years limiting municipalities ability to offer high-speed data services. It was only the state of emergency in the wake of Katrina that allowed Nagins Wi-Fi plan.

Nagins announcement came exactly one month from the day that BellSouth rolled out wireless broadband services for New Orleans recovering businesses at $69.95 per month.

Still, it seems at least a bit of bad PR, if not full-blown uncharitable behavior, for BellSouth to react so swiftly in pulling its gift—an offer completely unrelated to the Wi-Fi controversy—in order to make a point about what the company considers unfair competition.

The loss of goodwill aside, jumping ugly with municipalities is not an unfamiliar tactic to telcos, including BellSouth itself. The carrier has been papering Lafayette, La., with lawsuits for the better part of a year trying to stop that city from rolling out its own broadband service.

The city has won most of its legal battles thus far, but the suits have kept the public utility commission in court rather than in the streets installing fiber. So, despite the backing of 70 percent of the voters and a $125 million bond issue for the project, BellSouth maintains its upper hand in Lafayette.

A similar battle raged last year in Pennsylvania, where Verizon was pushing to stop cities such as Philadelphia from offering free wireless broadband.

It lost its fight in Philly, which is rolling out a free Wi-Fi system in stages through next year, but the carrier did get Republican-sponsored legislation signed by Gov. Edward Rendell last December to block such municipal services in the rest of the state.

New Orleans Chief Technology Officer and Deputy Mayor Greg Meffert told reporters last week he was disappointed in BellSouths decision and saddened that telco officials couldnt recognize a prime way to help the city get back on its feet.

For its part, BellSouth issued a statement last week saying it was still willing to work with the city and was awaiting further dialogue with Nagin.

Officials at both BellSouth and Verizon do make a compelling argument that, even if left to free-market pressures, competition with the entity that taxes and regulates you would be difficult at best.

None of that, however, helps the New Orleans Police Department, which continues to look for a home. For all of the charitable things BellSouth did in the wake of Katrina—and it did a lot, including waiving fees, providing call centers and giving $5 million for students to continue education through virtual courses—its hard not to view the telco as many in the blog world have described it: a spoiled kid who didnt like the rules of the game so it took its ball and went home.

Executive Editor of News Chris Gonsalves can be reached at

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