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Earthlink, which launched the first phase of its city-wide WiFi netowrk last week, announced agreements with AOl and DirectTV that allows those companies to purchase the service wholsale and resell in Anaheim:

AOL and DirecTV will offer Wi-Fi subscriptions to customers in all cities where EarthLink builds networks.

"We don't want to be a franchise that has a monopoly on Wi-Fi," said Donald Berryman, president of municipal networks for EarthLink. "It will be a truly open market, price-competitive system, and that was a big selling point for the cities."

EarthLink said it has now completed about 20 percent of Anaheim's network, which will ultimately cover about 100,000 households over 49 square miles. It will also offer access to the city's throngs of tourists; some 50 million people go to Anaheim each year to visit Disneyland and attend conventions and sporting events.

You can read the entire article here.

Net Access in Anaheim Untethered by EarthLink

By James S. Granelli
Times Staff Writer

June 29, 2006

Internet service provider EarthLink Inc. expects to launch its first municipal wireless system today, with high-speed connections in six square miles of downtown Anaheim.

The Orange County city is key to EarthLink's strategy as it adapts to changing online habits and the evaporation of its dial-up business. Anaheim is the biggest city so far to embrace a nationwide trend of creating citywide wireless Internet access for residents and businesses.

"We want to see competition for broadband Internet access," said Mayor Curt Pringle, who will join EarthLink executives for a "wire cutting" ceremony at City Hall. The project is expected to be completed this year.

The service will cost $22 a month, more than the base prices of limited broadband offered by the phone and cable companies that provide most Internet access across California.

Unable to get cable modem service at her Caracol Toy & Candy shop three blocks from City Hall, Rosie Navarrete became EarthLink's first customer, switching to wireless during a test period that started at the end of April. "The first thing I noticed was that I got reception everywhere in the store and the surrounding areas outside," Navarrete said. "It was great reception. No interference."

EarthLink needs more customers like Navarrete.

Executives of the Atlanta company appreciate that the wireless system is just another option for residents who already can get DSL from AT&T Inc. and cable modem service from Adelphia Communications Inc. But Adelphia doesn't reach Anaheim businesses. Earthlink figures it needs to attract 15% to 20% of the households with Internet access to make its effort profitable.

"We're looking at it as a replacement for dial-up Internet users, for people who are new to the Internet and for those who want a roaming service," said Donald Berryman, president of EarthLink Municipal Networks.

About half the nation's online households still use their regular telephone connection to dial into the Internet, according to Forrester Research Inc.

"That's a pretty good market to sell to," Forrester analyst Charles Golvin said. "I think EarthLink has a really tough row to hoe, but it is focused on the right market."

The company's business model, he said, is unproven.

EarthLink customers in Anaheim will get data at 1 megabit per second — about 18 times faster than dial-up. Phone and cable companies sell slower broadband for $13 to $18 a month and faster speeds for more than EarthLink charges.

Last year, the company lost about 300,000 dial-up customers. After counting gains in broadband customers, its subscriber base fell by 73,000 to just over 5 million.

A problem for EarthLink is that it doesn't own any broadband access pipes. "Given changes in regulations, it can't assure itself of holding on to its broadband customers going forward," Golvin said.

That's why EarthLink Chief Executive Garry Betty decided to go after the municipal wireless market.

The company is starting to put together a 135-square-mile network in Philadelphia as well as systems in hurricane-ravaged New Orleans and in the Silicon Valley town of Milpitas. It has won contracts to unwire San Francisco and Aurora, Colo., and is a finalist in bids for building networks in Long Beach, Pasadena, Minneapolis, Arlington, Va., and Grand Rapids, Mich.

In Anaheim, EarthLink is building two linked systems based on wireless technologies known as Wi-Fi and WiMax. Residents within 6 square miles around City Hall downtown can get wireless broadband now, and coverage will grow to 10 square miles within a month, said Jay Dugas, the company's local network director. Earthlink plans to cover all of Anaheim's 50 square miles by the end of the year.

At some point, Dugas said, EarthLink also will offer higher speeds to businesses.

But even as EarthLink completes its network, AT&T is rushing to finish upgrading its system to a mix of fiber-optic and copper lines to provide more reliable digital subscriber line, or DSL, service and pay TV.

The nation's largest phone company expects to start offering television programming to Anaheim residents by the end of the year. AT&T also aggressively markets its phone, video, high-speed data and Cingular Wireless services in discounted packages that neither Adelphia nor EarthLink can match.

EarthLink is undaunted. "We're not going to take many DSL customers anyway," Berryman said. "I think our service will be complementary. Customers can take it and roam around."

Kurt Weber, a columnist on Townhall.com's Conservative Weblog, posted this on on June 24:

There are good things happening at the local government level. As concerns cable and video services, the always informative Reason Foundation vice president Adrian Moore recently wrote, “A few states, like Texas and Ohio, have passed legislation requiring that cities allow competing services. And a few mayors have spoken out in favor of competition in television providers and an end to the old monopoly regulations and franchise fees.” But, pointing a positive finger, Moore says, “Mayor Curt Pringle of Anaheim has been out front on this.” Moore mentions that the Anaheim Mayor and city council are making “good policy decisions that embrace competition and markets. Mayor Pringle’s perspective on competitive telecommunications providers … will give city residents more choices, a better deal, and make the city more competitive with its neighbors.” The next time your local officials blather on about franchise fees, the need for a monopoly provider, and other blah, blah about the importance of Soviet Central Telecomm Planning, hand them the City of Anaheim media release that extols the benefits of reduced government interference and franchise fee elimination. Next, send ‘em to Disneyland to see firsthand what a wonderful telecomm world we could have if they’d just stop acting Dopey.

The July 3 edition of Forbes magazine features an article on Anaheim's cityiwde WiFi network -- the first phase of which will debut next week:

OutFront
Tomorrowland
Scott Woolley 07.03.06

Anaheim is about to turn on the first Wi-Fi network to blanket an entire city. Has Earthlink's Garry Betty finally found a way to make a mint selling Internet access?

In the past decade Garry Betty has experimented with just about every possible way of connecting his customers to the Internet--and wiped $1 billion of his shareholders' capital off the balance sheet in the process. But now the chief executive of Earthlink says he sees a way to take his revenge on the giant rivals who have long beaten him bloody.

In Anaheim, Calif. Earthlink has attached little white boxes to 1,500 traffic lights. At the end of the month Anaheim Mayor Curt Pringle will cut a ceremonial wire, turning on those boxes and powering up America's first big-city Wi-Fi network, which will offer residents high-speed wireless Web access across Anaheim for $22 per month.

While many cities have fought bitter public battles over building urban Wi-Fi networks--phone and cable companies loathe the idea of the cut-rate competition--Anaheim is about to become the first major-league city to do it.

The 49-year-old Betty hopes to repeat Anaheim across the nation, turning Earthlink into the leader, by far, in building and running urban Wi-Fi networks. He has won contracts to build networks in Philadelphia and New Orleans, both of which will go live in the last quarter of this year. He hopes to finalize similar contracts with Honolulu, Minneapolis, Arlington, Va. and, with help from Google, San Francisco. Dozens more cities are eyeing Anaheim before deciding to sign up.

It's a sweet moment for Betty, who has spent most of the past decade trying to beg, borrow or buy access to the networks owned by big phone and cable companies. His larger rivals had no interest in letting him turn a profit selling dial-up or high-speed access using their wires. Government efforts to force them to share--which Betty lobbied for--did little to create real competition.

"For the first time I don't have to go crawling on my hands and knees asking for a better deal," says Betty.

Earthlink, based in Atlanta, has spent $5 million building the Anaheim network and expects that it can earn a decent return on that cash once 15% to 20% of Anaheim's 100,000 homes sign up. The monthly $22 buys a customer access at 1 megabit per second. That's not as fast as cable or DSL, but it's cheaper and, unlike most Internet connections, is accessible from a car or a park bench as well as home.

That's just the start, says Betty. Last year Earthlink and South Korea's SK Telecom launched their jointly owned high-speed wireless service called Helio. Helio buys minutes on Sprint's broadband cellular network and resells them. Betty plans to offer Helio customers new phones that can sense Earthlink's Wi-Fi networks and shunt calls off the cellular network and onto Wi-Fi. The Wi-Fi option has the potential of offering clearer calls at cheaper rates, by letting callers pay for smaller monthly buckets of cellular minutes. While cell phone companies don't have much incentive to let their own subscribers use such phones, Helio has plenty.

Another potential new market is lower-income Anaheim residents who can't afford broadband or a standard cell phone. Betty expects to offer them unlimited calling from anywhere in Anaheim to anywhere in the U.S. for around $25 per month.

Betty dreams of creating new wireless markets that don't exist: tracking cop cars and fire trucks; reading electricity, parking and gas meters; monitoring inventory and breakdowns in soda- and candy-vending machines. He figures he can make a fine profit charging the likes of Coca-Cola a few pennies a day per machine. "Prior to this they could never afford to connect all those machines, but for a buck a month they will," Betty says.

Betty's initial capital outlay works out to $50 per home within the territory (i.e., $250 per customer, if he achieves that hoped-for 20% market penetration), and he thinks that price will fall to close to $20 per home passed as volumes ramp up. Within the next two to three years Earthlink's antennas could be upgraded at minimal cost to speeds of 5 to 10 megabits a second, says Donald Berryman, the Earthlink executive in charge of building the networks.

Cellular data networks offer vastly greater coverage areas, but installing cellular towers and licensing cellular airwaves cost far more per customer. Last year U.S. carriers spent $23 billion upgrading their networks to "3G." Telcos are spending $1,000 and up per home passed to lay capacious fiber in the ground. Betty is happy to cherry-pick the urban areas that are the cheapest to serve with Wi-Fi.

It is too soon to say how many cities will qualify. Earthlink chose to start in Anaheim because it is blessed with friendly geography. The city is mostly flat (hills block Wi-Fi signals) and studded with slender palm trees (leafier trees damp signals); the tallest building in the center of town happens to be city hall (so the Wi-Fi antennas around town can beam their data back to one central location).

The $1 billion of shareholders' money that Earthlink spent over the last decade has left it with 1.6 million broadband and 3.6 million dial-up Internet subscribers. That customer base produced $188 million in cash last year, but is atrophying as dial-up customers disappear. Revenue fell 7%, to $1.4 billion last year, and building out cities with Wi-Fi will eat up a big chunk of the cash flow the remaining subscribers throw off.

Betty had to assiduously cut costs to bring the company to profitability in 2004. It earned $143 million last year. Betty thinks citywide Wi-Fi won't produce meaningful revenue this year or next. "But by 2008 or 2009," he says, "it could be a really big number."

Mayor Curt Pringle and local business leaders hosted NFL Commissioner Tagliabue and key NFL owners to further discuss opportunities for the NFL in Anaheim.

Read More »

Mayor Pringle participated in a Heritage Foundation panel last week in Wahsington, D.C. entitled From The OC To DC: Anaheim, Congress and Video Competion (forgive our East Coast fellow citizens -- they don't know nobody here in Orange County calls it "The OC").

You can watch video of the panel here or listen to the podcast here.

Here's an account how Mayor Pringle is blazing an entriely different trail from the worldview dominating local government thinking about ending cable franchise monoploies and opening the delivery of video entertainment services to competiton that lowers consumer costs and expands consumer choices:

Technology Daily PM

Mayor Bucks Local Line On New Video Franchises
By MICHAEL MARTINEZ

The mayor of one of the largest cities in California on Thursday said that local governments have denied their citizens cable television choices and choked competition by adhering to franchise rules he considers to be barriers to the marketplace.

Speaking at panel discussion hosted by the Heritage Foundation, Curt Pringle, the mayor of Anaheim, Calif., said he favors creating a more competitive marketplace by eliminating local franchising rules and allowing more companies to offer services in his city.

Earlier this year, Pringle filed comments with the FCC in support a federal proposal to streamline the video-franchising process. He has allowed AT&T to deploy fiber throughout Anaheim and to upgrade its network to offer video without a franchising agreement with the city.

His stance on the issue is diametrically opposed to that of both the U.S. Conference of Mayors and the National League of Cities, which are fighting fiercely to defend the franchising authority of local governments as various state and federal proposals are being considered.

According to Pringle, local governments should not prevent consumers from making video choices in their jurisdictions. But he said many cities are "pregnant" from the revenue streams created by the arrangements they have established.

"I would like to eliminate them all and step away from this completely as a revenue model," he said.

Read More »

The city’s lawsuit against Angels Baseball has been fun for no one – least of all the parties involved. But in order to protect the interests of Anaheim taxpayers and uphold the sanctity of contracts, it was a lawsuit the Anaheim City Council had to pursue.

After the jury verdict came out against the City of Anaheim, my colleagues and I spent the next few months carefully consideration whether we should appeal the verdict. After judging the information before us, we voted in closed session last week to pursue an appeal. Mayor Pro Tem Richard Chavez, Councilman Bob Hernandez, Councilwoman Lorri Galloway and I voted to appeal. Councilman Harry Sidhu voted against an appeal and to instead accept the jury verdict.

Believe me, I wish this whole matter could be resolved between the parties and made to go away. And the city tried to no avail, to negotiate with the Angels over these last months for a mutually beneficial outcome. But we have a duty to the citizens of Anaheim to hold the Angels to their contract, and I want to present to you our reasons for appealing the verdict.

Jury Instruction Errors
A number of errors were made in the conduct of the trial that negatively impacted Anaheim’s case.

For example, the attorney who represented Anaheim during the contract negotiations with the Angels – when the stipulation about the team name was made -- was not allowed to testify.

Also, the judge barred other witnesses who would have helped Anaheim’s case from testifying, including witnesses who could testify to the value to our city of having the team be the “Anaheim” Angels.

The nature of the jury instructions also hurt Anaheim’s case and helped put the jury on course to ruling against us. We asked to have a number of elements included in those instructions. For example, we asked that the jury be allowed to consider outside evidence regarding the intent of the parties when negotiating the current contract between Anaheim and the Angeles. In other words, when the jury considered any ambiguity in the language of the contract’s team name requirement, we believed the jury should have been allowed to consider outside evidence in order to determine what the intent was of contract parties.

But this reasonable request was denied.

There was also a witness who had been one of Disney’s early on negotiators on the contract with Anaheim that led to the team being re-named the Anaheim Angels in 1996. This witness testified as to what Disney’s intent – or at least his own – in allowing the team-naming language to be somewhat loose.

We wanted the jury to be instructed that “unexpressed intent” could NOT be considered, which is clear in California contract law – but our request was denied in this as well.

Interviews with the jury members following the trail also made it clear these factors influenced the jury to rule against Anaheim, and helped convince a super-majority of the city council to pursue an appeal.

Even so, Anaheim’s preference is to resolve the issue outside the courtroom, and we have been in contact with Angels Baseball during the last several months in hopes of doing just that.

Angels’ Want Anaheim Taxpayers To Foot The Bill
Unfortunately, we are unable to make headway due to Angels Baseball’s insistence on continuing to pursue billing Anaheim taxpayers for their legal expenses – and that is unacceptable to me and my colleagues who voted to appeal the verdict.

There is no “loser pays” provision in either California law or the city’s contract with the Angels – and we refuse to be penalized for acting to hold Angels Baseball to the terms of the contract they had with the citizens of Anaheim.

If Anaheim wins the appeal, we won’t have to worry about paying Angel Baseball’s legal bill. Since our attorney’s have agreed to cap their fee at $150,000 for the appeal, I think many would agree that it is smarter to pursue a strong case for appeal than to simply give up and pay the Angels’ multi-million legal fees.

Written Judgment Paves Way For Angels To Leave Anaheim If We Don’t Appeal
There’s one aspect of the verdict that has hardly been covered in the media, despite its serious consequences for Anaheim: the written judgment.

This is the document that actually sets down the terms by which the parties to the lawsuit must abide.

As it stands, the written judgment allows Angels Baseball to call the team anything it wants – anything at all. The team could completely erase any mention of Anaheim from anything Angels related – logos, merchandise, marketing, promotions – as long as somewhere in some legal filing the team was called the “Los Angeles Angels of Anaheim.” We know this because we asked the judge if the team could call itself and market itself as the “Los Angels Angels” and he confirmed it.

We believe that this written judgment goes far beyond what the jury decided, but it will stand if we do not appeal. If we do not appeal, Angels Baseball is free to market the team without any reference to Anaheim – even as the team plays in a stadium they did not pay to build and for which they pay no rent, and otherwise enjoys the financial benefits of an extraordinarily one-sided contract.

One of the only real benefits Anaheim received was the publicity resulting from the team being called the Anaheim Angels. That name was essentially the rent the team paid to the taxpayers of Anaheim.

I believe failure to appeal this verdict paves the road for the Angels to leave Anaheim. If during the next 10 years under the contract the Angels only referred to themselves only as the Los Angeles Angels with no mention of Anaheim, then they will be identifying themselves with another region and laying the groundwork for re-locating when the contract expires.

Mayor Pro Tem Chavez, Coouncilmembers Hernandez and Galloway, and I understand that and acted accordingly – and, we are convinced, rightly.

A final note as to the city’s legal fees, which amount to about $4 million. This money hasn’t come from the General Fund, but from an “enterprise fund”: monies budgeted for operating city facilities such as the Stadium or the Convention Center. As I mentioned, legal fees for the appeal are capped at $150,000.

No one on the City Council enjoys paying legal bills for the city, but we are adamantly opposed to paying other people’s attorneys fees when we are only fighting to protect ourselves.

If there were an acceptable alternative to appealing the verdict, we would explore it. However, given that:

• Jury interviews showed errors caused by the Court molded the opinion of the jurors against the city’s position,

• The Angels insist Anaheim taxpayers pay their attorneys fees,

• And the written judgment allows the team to call itself anything it wants, paving the way for the Angels to leave Anaheim,

…the only course open to us, is an appeal.

It is my sincere hope the three appellate judge panel hearing the case will correct the errors made and allow for a fair hearing to be presented. I will keep you updated as new information presents itself.

-- Curt Pringle