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Over the past three years, Internet provider EarthLink has established itself as the nation's leading operator of municipal Wi-Fi networks. To date, the Atlanta-based company is contracted to bring citywide wireless to Houston, Philadelphia, San Francisco, New Orleans and St. Petersburg, Florida to name a few of its larger clients.
As is true of most such contracts, EarthLink won the projects after months sometimes years of open discussion and heated public bidding. So when Mayor Francis Slay and AT&T announced last month that they'd struck a behind-the-scenes deal to bring Wi-Fi to St. Louis, news of the agreement stunned EarthLink's top brass.
"For a city the size of St. Louis not to issue an RFP [request for proposals] or, at the very least, solicit information from competing vendors is highly unusual," says EarthLink vice president Donald Berryman. "The only reason we found out about it was from reading the mayor's blog. Immediately, we sent a letter to the board of aldermen informing them that EarthLink would be interested in bidding on the project and letting them know our track record."
By then it was too late. Hours after Slay broke news of the agreement in a February 2 blog post (www.mayorslay.com/desk/display.asp?deskID=633), Eleventh Ward Alderman Matt Villa introduced a bill on behalf of the mayor that spelled out the terms of the contract. With the aid of an emergency aldermanic meeting (called to consider a pair of controversial bills involving public subsidies for Ballpark Village and a Forest Park lease agreement), the AT&T ordinance flew virtually unnoticed through the board, becoming law in just seven days.
Slay trumpeted the deal as a "win-win" proposition that would benefit both St. Louis residents and AT&T, which employs 6,500 workers in the city. Cindy Brinkley, president of AT&T Missouri, returned the praise with a statement that read: "With the diverse, tech-savvy population and growing tourism base here, St. Louis is an ideal city for deployment of citywide Wi-Fi."
Under terms of the agreement, AT&T will build a Wi-Fi network to encompass all 62 square miles of the city. The telecom will provide city residents twenty free hours of service per month. AT&T plans to recoup its $10-to-$12-million investment by charging fees for additional use and faster connection speeds.
As a bonus, AT&T also promises to provide a private network solely for the use of city government. The only cost to taxpayers: the estimated $15,000 in electricity required to power the Wi-Fi transmitters the company will install on city light poles. The first phase of the project, which encompasses downtown St. Louis, is slated for operation by the end of the year, with the rest of the city to follow by 2009.
Negotiating the deal on behalf of Slay were Jeff Rainford, the mayor's chief of staff, and Michael Wise, the city's director of information technology. In selling the bill to the board of aldermen's public utilities committee, the duo described the year-long negotiations with AT&T as "heated," with both sides at times threatening to walk away. Because the deal is "nonexclusive," Rainford and Wise say that a public bid for the service was unnecessary.
"We did this for three reasons," Rainford told aldermen. "First, it's a great deal for the city. Second, AT&T has a strong presence and commitment to the city. Third, other vendors can come to us with alternative plans."
While most of the nine-member committee nodded in agreement, Rainford's rationale did little to appease Eighteenth Ward Alderman Terry Kennedy.
"My concern is the governance," says Kennedy. "This makes it seem like you can come in and make a deal with the mayor's office. It appears more politicized than it should be."
Sharing Kennedy's concern are EarthLink and other wireless providers, who quickly fired dispatches to city hall protesting the surreptitious manner in which the deal was brokered. Their contention: Once AT&T has a foothold here, it will be difficult, if not impossible, for competitors to enter the market.
"They say it's nonexclusive, but what does that mean?" asks Tim O'Leary, whose St. Louis-based company O2Connect already provides Wi-Fi in Kiener Plaza. "If there is going to be a commercial enterprise that comes off city-owned material, why wouldn't there be an RFP?"
Outside observers also questioned the agreement. "Doesn't anyone else think this is strange?" wrote Esme Vos, moderator of the industry's most popular message board, www.muniwireless.com. "I have not seen anything remotely resembling a public consultation process or even a study commissioned by the city on this subject. Why AT&T? Why have they not solicited responses from MetroFi, EarthLink and local ISPs?"
Fueling additional suspicions was a comment Alderman Matt Villa made prior to the bill's passage, in which he suggested that AT&T could bring additional jobs to St. Louis if the board approved the deal.
Conversely, critics wondered, did AT&T threaten to uproot jobs if the city opened the project to a public bid? (More than a few aldermen still recall the day in 1992 when AT&T's precursor, Southwestern Bell Corp., abruptly moved its headquarters from St. Louis to San Antonio, costing the city hundreds of jobs and millions of dollars in tax revenue.)