Suzi Pilat clutched a glossy Verizon Communications Inc. advertisement. The vice president of a small Internet service provider in Clearwater, Pilat eyed Verizon's latest pitch to dial-up customers to upgrade to faster digital subscriber lines.
The Verizon ad promised to put new customers on a free DSL modem without activation fees for $29.95 a month. That happens to be the same price that Pilat said Verizon charges her to connect DSL customers.
DSL technology relies on copper wires wrapped inside local telephone lines. If Pilat or anybody else wants to sell DSL in the Tampa Bay area, they must deal with Verizon.
Since Verizon got into DSL, competing against Ma Bell's regional offspring (Baby Bells) for high-speed Internet customers has unnerved upstart companies.
'Let's say you want DSL from me. You don't want Verizon Internet," said Pilat, who works for Intelligence Network Online Inc., IntNet for short. 'So you call up (Verizon) and say: 'Look, all I want is a DSL line. I'm getting my Internet from IntNet.' It's $29.95, same price. What they're doing is giving away the Internet."
An exasperated look crossed Pilat's tanned face. 'So how am I supposed to make money on it?" she asked. 'They're giving you the modem for free, but they're making our customers pay for it."
At Verizon's wholesale cost to her, Pilat has to charge $10 or $20 more to connect IntNet's DSL customers to the Web, on top of up to $200 for the modem.
Independent Internet service providers are voicing similar complaints about Verizon and other Baby Bells. Such anti-competitive practices were supposed to be outlawed by the federal Telecommunications Act of 1996. But ISP complaints haven't moved politicians or telecom regulators in Washington, much less in Tallahassee.
'I've had a lesson in politics that I've cared not to know," said Dustin Jurman, who found out the hard way that elected officials seldom heed any interest group that didn't give large to their last election campaign.
Jurman runs Rapid Systems Inc., a Tampa ISP, with his sister Denise Jurman. She traveled to Capitol Hill recently to try to defeat a House bill that ISPs fear could wipe them out. She was unsuccessful.
'She went up there and spoke with representatives, stuff like that," said her brother. 'Interesting enough, everybody she spoke with had a Verizon or a BellSouth mug on their desk."
The Bells are even better at spreading around campaign cash. For the 2000 election cycle, according to the nonpartisan Center for Responsive Politics, Verizon gave $3.4-million while BellSouth Corp. chipped in $2.1-million. And that was only for federal candidates.
'We didn't have the money to work that," said Jurman. 'As ISPs, we could take that money and put it into our network to compete."
Ah, free enterprise.
The DSL entrepreneurs who put their faith in that quaint American delusion have been lining up in bankruptcy courts across the nation since teleco behemoths finally started pushing wired broadband in the late 1990s.
Rhythms NetConnections Inc., Covad Communications Group Inc., Northpoint Communications Inc. Household names only to your office IT geek, maybe.
But these were not dot-com dreamers trying to sell groceries over the Web.
They had viable business plans with sufficient capital to begin to serve a huge potential audience for affordable broadband. Instead, the Baby Bells, the cable companies and others swooped in to corral an ISP segment that hasn't grown nearly as fast as predicted.
The dot-com bust didn't help. But some analysts believe the next phase of the Internet Revolution has been delayed by monopolistic conglomerates driving out entrepreneurial rivals in order to inflate prices artificially.
'If cyber-geeks selling their BMWs were the most visible sign of the dot-com crash, then the failure of companies like Rhythms signals a much more important collapse in high tech," Karen Kornbluh wrote recently in The Washington Monthly. 'Scores of such companies have closed up shop, and DSL prices have risen substantially."
Kornbluh, who directed the Federal Communications Commission's lobbying office during the Clinton administration, noted that DSL sales slowed during 2001 after several years of explosive growth. 'As broadband services failed to take off, companies stopped buying new computers and software, which hurt suppliers and left massive inventory on the shelf."
Some of the tiny ISP pioneers have hung on. And now they are rolling out a new form of high-speed Internet. These survivors of the first broadband shakeout think — perhaps too optimistically — that their bigger brethren won't be able to mess with them this time.
Even in our Bay area, a high-tech backwater in the eyes of much of America, independent holdouts such as Suzi Pilat and Dustin Jurman gird for another battle for market share in the wild, wild world of Web access.
'Litigation Machine'Suzanne F. Summerlin, a Tallahassee telecom attorney, stood before the Florida Public Service Commission last September. She took a deep breath and began her opening statement.
Summerlin represented Miami's IDS Telecom LLC, which was asking for sanctions against BellSouth.
'BellSouth is a litigation machine," said Summerlin. 'BellSouth has a huge legal staff and support personnel." Most competitors the size of IDS wouldn't dare complain to a state or federal regulator, she said.
'This is because they cannot afford the money it takes to pay enough lawyers to handle such a case," said Summerlin. 'They cannot afford to take their key employees away from their job responsibilities to file testimony and try to respond to overwhelming discovery requests."
Yet IDS had no choice. 'BellSouth was quite simply destroying IDS," Summerlin told the PSC.
Summerlin, IDS's only legal counsel for most of the case, submitted numerous sworn statements. They made BellSouth look for all the world like it was sabotaging orders from customers switching to IDS.
It is nearly impossible to prove a local phone company is deliberately screwing with customers it has lost to a weaker rival, according to Jurman. Speaking of his nemesis, Jurman said: 'Verizon has this wonderful thing that it can hide behind. It's called incompetence."
Still, Summerlin had testimony from business owners who had gone through BellSouth to receive IDS service and lost all phone connections during or just after the conversion.
After their vital business lines were restored, these customers received BellSouth telemarketing calls. They were urged to come back to BellSouth at big savings by telemarketers who claimed IDS was going bankrupt.
In an affidavit, Hialeah beverage distributor Alvaro Lozano vented: 'I have lost valuable time ... having to investigate a matter, which now appears to be false ... I want BellSouth to stop calling my business and making misrepresentations."
The Telecommunications Act requires the BellSouths of the telecom pecking order to open their local infrastructure to hardy competitors like IDS at the same wholesale prices that the Baby Bell offers its various subsidiaries. Summerlin amassed an impressive body of evidence that BellSouth may have violated the law.
BellSouth must've agreed. After just a day of testimony, the Atlanta-based Baby Bell settled with IDS on undisclosed terms. With BellSouth presumably agreeing to lay off IDS, a rare challenge to the alleged predatory practices of Florida's local phone companies came to an end.
The IDS case notwithstanding, BellSouth has occasionally worked with — instead of against — the small fry, according to Joseph Marion, executive director of the Federation of Internet Solution Providers of America, a Delray Beach trade group to which many independent ISPs belong.
Marion said BellSouth has offered legitimate volume discounts for DSL-related services to federation members. Spero Canton, a BellSouth spokesman in Miami, said: 'We've seen this as a very important market for us for a long time."
In the Bay area, however, Verizon is another story. Renamed after the 2000 merger between Bell Atlantic Corp. and GTE Corp., Verizon won't cooperate with Marion's federation under any circumstances.
'They want you to sign a nondisclosure (agreement) before they'll even tell you who you're talking to on the other end of the phone," said Marion.
Vexing VerizonSuzi Pilat, sitting in her downtown Clearwater office, pointed at the Verizon logo in a DSL ad. 'When the merger happened, it just grew horns," she said of Verizon. 'I liked it better when they were GTE."
As gatekeeper to the local phone system, Verizon can torment DSL competitors in frightening ways.
'They misbill us relentlessly, every month, unbelievable amounts," said Jurman, who co-founded Rapid Systems in 1997. 'It really consumes an inordinate amount of our own resources 'cause we have people who sit here all day long and do nothing but dispute Verizon bills."
That's not easy for a young company with just 13 employees that gets 24 monthly bills from a maze of Verizon subsidiaries.
Rapid Systems and two other local ISPs, Internet Junction Corp. and Tampa Bay DSL Inc., sought relief from Tallahassee last year. State regulators passed the buck up to the unsympathetic FCC.
'I'm not surprised that you said the FCC is not responsive," state Public Service Commissioner J. Terry Deason told Jurman. 'But they're the ones that say they have jurisdiction and we don't."
Public Service Commissioner Lila A. Jaber urged patience amid the ISP carnage. 'Some of this is just going to have to take time," said Jaber. 'We have to give the market the opportunity to work."
To comply with various federal edicts, Verizon has established — at least on paper — separate divisions for local exchange, Internet, cellular and other services.
Bob Elek, a Verizon spokesman in Tampa, told Weekly Planet that the DSL business market is very competitive in Florida, where the Bell Atlantic-GTE combine has lost 25 percent of its customers. With residential, Elek said, the lack of competition is due to the failure of any ISP, including Verizon Online, to figure out how to make money off home users.
Independent ISPs 'rent the copper," as Jurman put it, from Verizon — the 'last mile" in telecom parlance that connects a customer's DSL modem to the local exchange company's central office.
To get from the central office to the online world beyond, customers tap the Rapid Systems network. 'It's our Internet bandwidth," said Jurman. 'It's our switches. It's our core gear. People don't really understand that."
ISP enhancements might include automatic virus protection or popup ad-free zones. 'People think they are going to get better service if they stick with the phone company," said Jurman. 'The rest of us who have dealt with the phone company know that service isn't even in their vocabulary."
Verizon spokesman Elek acknowledged past problems. 'We had our share of glitches," he said.
Elek attributed the problems to a federal requirement of the Bell Atlantic-GTE merger that Verizon create a 'separate company within the same company" called Verizon Advanced Data Inc. The new company is responsible for fairly parceling out broadband capacity on Verizon's local phone system to all DSL providers, including Verizon Online.
'We get in the queue like everybody else," said Elek.
Elek chuckled when asked if Verizon Online is accorded the same nightmarish treatment by Verizon Advanced Data as independent ISPs.
After the formation of Verizon Advanced Data, DSL orders were backlogged 14 to 20 days, Elek conceded. The typical wait now is five days, he said.
That could explain Mark A. Nowacki's experience.
The St. Petersburg internist has sued Verizon and two subsidiaries for deceptive advertising. With their DSL service, the Verizon units proclaimed: 'Your Internet will always be on." To the contrary, after Nowacki's service was finally activated, he stated his Verizon DSL was 'often 'down,' inaccessible or unreasonably slow."
Despite a Verizon repair visit, Nowacki stated his DSL never worked as advertised and he canceled within a year of his August 2000 order.
So independent ISPs still draw DSL customers. Even as the Verizon monopoly lets a local-exchange division subsidize another division's modem giveaways, attracting new accounts that won't be profitable for two years.
By the way, Verizon's $29.95-a-month introductory DSL rate jumps to $49.95 after three months.
Elek denied that Verizon engages in predatory pricing. He said all Verizon tariffs on wholesalers like IntNet were approved by the FCC or the state.
Verizon inherited 10,000 DSL customers from Bell Atlantic and GTE. In two years, the number has grown to 1.35-million. Verizon Online may enjoy price advantages, said Elek, but only because the tariffs allow discounts for resellers who bring in more customers.
IntNet's Suzi Pilat is skeptical. 'They're basically trying to control this market, completely," said Pilat. 'Look at AOL and Earthlink. What did they do? They drove the prices down, down, down, down. Seventeen-something a month for dial-up? Then, when they cornered the market, what did they do? What does AOL and Earthlink cost now? Twenty-three bucks?"
Radio Wave of the FutureSuzi Pilat's husband and business partner, George R. Pilat, thinks wireless is the last remaining broadband distribution option that teleco bullies cannot manhandle. 'The only thing they can't control is the air," said George Pilat.
Countless Web pages are devoted to the vagaries of wireless Internet technology, companies and implications. Corporations by the hundreds are installing wireless networks in their offices, and homeowners by the thousands are purchasing base stations that send their existing Internet service airborne, broadcasting it throughout their property.
Outside of tech and business circles, however, the concept of wireless Internet has only recently risen in profile. In-home setups like Apple's AirPort have been available for years, but the technology was largely seen as an afterthought. It was a small and optional final link in the chain. Nobody provided wireless Internet; you paid for Internet access, and then, if it suited your needs, you purchased additional hardware to convert that access to a short-range radio signal at your end.
'Three and a half, almost four years ago I was looking at wireless as a solution," said George Pilat.
A relatively small portion of radio wave bandwidth — called 'spread spectrum" — has been set aside by the FCC for free miscellaneous usage. Microwave ovens, newer cordless phones, wireless computer networks and any number of other industrial applications use these frequencies. Realizing the potential, the Pilats began exploring the idea of providing wireless Internet. They could sell the necessary equipment to customers for a one-time charge and, by beaming access through the air, cut Verizon and its 'last mile" completely out of the equation for subscribers.
Eventually, wireless gained enough momentum that they were able to find the equipment they needed at acceptable prices.
UltraWave, the name of their new service, is broader and faster but less far-reaching than the vast majority of wireless broadband services. More companies than households are expected to sign up. Though pricey, UltraWave boasts available speeds many times faster than industry-standard T1 lines, at a fraction of the cost. The system takes an office completely off local connection loops and consolidates billing. The only bill subscribers deal with is UltraWave's.
Right now, the ISP's service area encompasses only a 2.9-mile radius around its Clearwater office. The Clearwater Chamber of Commerce, several blocks away, is UltraWave's flagship subscriber and demonstration site. Installed in a few days, as opposed to the several weeks a T1 line takes, the chamber's service has yet to experience serious technical difficulties.
Inside, computers on the network download massive chunks of data at speeds that make DSL look like a telegraph wire. The Pilats are in search of tall buildings in corporate centers like Rocky Point and Carillon where they can raise antennas and expand their range because the signal needs an unobstructed line-of-sight, unlike standard frequencies.
The fledgling company also looks to serve smaller businesses and homeowners. The Pilats are waiting for hardware costs to drop enough to justify competing against cable and DSL providers.
According to Suzi Pilat, however, the biggest obstacle isn't price. It's overcoming clients' innate fear of something they can't see.
'You try to explain wireless to them, and they're like 'satellite dishes? Do you mean microwaves?' The average person does not know what a radio wave is," she said. 'They don't have any idea that when they walk outside, jillions of 'em are passing through them, all the time."
Free for AllAs UltraWave and others try to find profit in wireless broadband, a movement grows to make this technology available to all for free.
In tech-intensive locales such as the San Francisco Bay area and New York City, savvy Net-heads are begging bandwidth and boosting signals. By attaching homemade antennas (the Pringles-can booster is already the stuff of legend) to their own store-bought access points, they can widen reception zones beyond their apartments and offices. Anyone with the right device can sit on a bench outside and check his or her horoscope online.
'Wireless is very, very empowering," said Nigel Ballard, a consultant for wireless-solutions outfit JoeJava.com. 'From a commercial point of view, it means you can move from one office to another, one meeting to another, around the campus and stay connected. In the home, it's the same thing. You want to work upstairs where it's quiet, down in the basement, out back by the barbecue. And community wireless extends that to say there's this third place; there's the town square; there are all these coffee shops."
Ballard is volunteer press liaison for an Oregon community wireless project called Personal Telco. The nonprofit accepts donations of high-speed bandwidth to the cause and creates free access 'nodes" all over Portland. People donate because they love the idea. Companies also give, probably because it makes great 'giving-back-to-the-community" press fodder.
Closer to home, the city of Jacksonville worked with local companies to bring free wireless Internet to an upscale riverfront shopping district. The wireless project went online last August. Shoppers and diners have since been able to log on for free anywhere within the retail district.
Jacksonville-based corporate 'idea incubator" inc.well came up with the concept. Several other companies joined forces with the city and the chamber of commerce to make it reality.
'They donated their time, their hardware and their software to the city, and the city really led that project," says inc.well's Drew Thoeni. At the time, Jacksonville was the first city to offer free wireless Internet to citizens.
The Jacksonville project gets its bandwidth at no charge from none other than BellSouth — ironically, through a DSL hookup.
The project has been wildly successful. The shared-bandwidth service tends to slow when lots of users are logged on (or when a couple of folks decide to sit by the river and download Apocalypse Now Redux in its entirety). But people just can't resist showing each other a live, wireless Web-based promotion or marketing pitch at one of the restaurants. After its debut, several cities nationwide began similar experiments.
Possibly the most important aftereffect is Jacksonville's next endeavor: rigging a couple of the city's low-income neighborhoods for free wireless Internet. The plan is to broadcast a signal from two centrally located community centers. Companies have volunteered to donate computers to families within range. For the price of a wireless modem card (around $149), these families will have an incalculable educational resource. City-subsidized training classes will take place at the community centers.
Bigger American cities have looked into similar scenarios using wired cable, DSL or even T1 systems. But the cost of implementation ranges from wince-inducing to out-and-out prohibitive. Wireless, however, could potentially solve that problem for everybody.
'Check back with us in August," Thoeni said. 'If this works, I think it will be an extremely interesting model for the rest of the country to look at."
The idea of free, widespread wireless broadband Internet access is an appealing one — provided, of course, you're not UltraWave or a hardware manufacturer. But there are some who are unwilling to wait for designated zones and a friendly, city-approved network.
They'll take their free access wherever they can get it, whether those who donate the bandwidth are aware of it or not.Access PiratesWhile some build fixed antennas to boost their own, paid-for broadband service for the benefit of those nearby, others build portable antennas so they can locate and access active wireless networks in the vicinity.
Downloadable software known as 'sniffers" can identify adjacent wireless local area networks. Small, home-crafted unidirectional antennas can push the reach of sniffers as far as 200 yards. Some sniffers automatically log onto the first network they find, as long as they don't encounter a security protocol.
Most of the time, they don't.
Virtually every wireless local access network access-point system comes with a security protocol designed to make small home or office wireless networks as secure as a wired system. But Chuck Orde, engineering vice president at Tampa's iNet Security LCC, said almost nobody turns it on.
'It's disabled by default," said Orde. 'You actually have to go in and enable it." Of the wireless access points that Orde has found, he said about 5 percent had their security enabled.
iNet has actively investigated potential security problems. Orde and co-workers built their own antennas and drove around Tampa Bay with their laptops on, sniffing for unprotected wireless networks.
Orde stresses that his company was neither breaking the law nor plundering unsuspecting networks. They were simply locating access points where such things could happen, as a research project.
They found apartment complexes ripe with wide-open AirPort systems. They found corporate buildings filled with unsecured intra-office networks. And, at a recent tech show at the Tampa Convention Center, they grabbed about 15 unprotected access points — many courtesy of vendors selling there.
All told, Orde said: 'I'd say at least half of 'em were corporate, if not more. We grabbed a lot of them on Kennedy; we grabbed some by Rocky Point."
With prospective wireless ISPs such as UltraWave, security is part of the job. Because ISPs provide the system from start to finish, including hardware at the data's destination, they can employ hardwired end-to-end security protocols.
'Maybe they could see that it's there and get all the way to our database, but they ain't gonna get in there," said Suzi Pilat. 'They can't go anywhere if they're not authenticated on the network. Have we ever, since '93, had anybody get in on a dial-up illegally? No."Will the Bells Toll?Given the higher profile of wireless and the well-documented monopolistic tendencies of large corporations, tech observers are keeping a close eye on the Baby Bells.
Huge, venerable corporations traditionally react to pivotal technological shifts with glacial slowness. Some wireless pundits don't believe the telecos will even take notice of wireless until it is imprinted on mainstream consciousness.
Nigel Ballard says that mindset is naive.
'I don't want to break nondisclosure agreements I have with some of the phone companies," he said. In general terms, though, Ballard said telecos are either actively working on business plans or considering it. That goes for every one in the United States, plus major players in England, France and Sweden.
When asked how the Baby Bells could usurp the nascent wireless market, Ballard replies that he doesn't see an obvious answer.
As spread-spectrum bandwidth is universal, corporate America would find it nearly impossible to monopolize the frequency. Since wireless frequencies are global, Ballard said: 'The FCC would be under way too much pressure from other countries."
Should the telecos apply for an FCC license to reserve a portion of the band, they'd find the hardware currently on the market incompatible. In the meantime, the Baby Bells already make money indirectly as a result of wireless Internet. All that data must, at some point, return to wired transmission to get where it's going.
'It's the forward-thinking telecos that have actually said: 'Let's buy a piece of the action,'" said Ballard. 'There's no money in it today; there'll be no money in it tomorrow. But the day after tomorrow, there may be a lot of money in it."
Stand around a Best Buy store for 10 minutes and watch a customer come in for a wireless access device, Ballard said. 'These things are selling in the thousands," he said.
Contact Planet staffers Francis X. Gilpin at 813-248-8888, ext. 130, or [email protected] and Scott Harrell at [email protected] or 813-248-8888, ext. 109.