updated 11/30/2004 11:40:08 PM ET 2004-12-01T04:40:08

The city of Philadelphia and Verizon Communications Inc. struck an agreement Tuesday that would allow the city to provide wireless Internet access as a municipal service even if Gov. Ed Rendell signs legislation to give Verizon the power to scuttle the project.

Philadelphia’s plans are the most ambitious of any major U.S. city to provide free or cheap high-speed wireless to all residents.

Lawyers for the city and Verizon, the city’s local telephone company, found common ground Tuesday in discussions with the governor’s office, said Luz Cardenas, a spokeswoman for Philadelphia Mayor John F. Street.

The parties “reached an understanding that protects our interests and allows us to move forward with the Wireless Philadelphia initiative,” Cardenas said.

The agreement relieves pressure on Rendell, a former Philadelphia mayor whose political base is in the city, to veto the bill, which lobbyists for the telecommunications industry helped draft. Tuesday is the last day he has to veto it, or the bill becomes law without his signature.

Rendell’s spokeswoman, Kate Philips, said the governor had not made a decision by mid-evening.

Municipal wireless a growing trend
Even with a deal between Philadelphia and Verizon, the legislation, if signed, would mean every other city and town in Pennsylvania would have to give the local phone company right of first refusal before moving forward with any plans to provide municipal Internet.

Details of a Philadelphia agreement were not immediately available, but it would guarantee that Verizon waives in advance its right under the legislation to bar the city from providing the service for a fee, both sides said.

“We would waive our right of first refusal,” Verizon spokeswoman Sharon Shaffer said Tuesday. Verizon’s concession to Philadelphia was motivated by its desire to see the legislation signed, Shaffer said.

The provision is tucked into a larger, 30-page bill to give telephone companies financial incentives to quicken the rollout of broadband networks — a carrot worth as much as $3 billion to Verizon.

“It’s a good bill for not only for the telecommunications industry and Verizon, but for the commonwealth in general,” Shaffer said, noting that the bill includes provisions to spur business growth and broadband connections to schools.

Dianah Neff, the city’s chief information officer who is overseeing the wireless project, said the governor’s office had asked last week that Verizon and the city settle its differences over the bill.

Dozens of cities and towns have either begun or announced such plans, from San Francisco to St. Cloud, Fla., as regional and long-distance phone companies, who sell broadband Internet to consumers and businesses, have increasingly lobbied for laws to regulate or bar such municipal competition.

Under the Pennsylvania legislation, any political subdivision, such as a city, after Jan. 1, 2006, would have to get the permission of the local telephone company to provide a telecommunications service for a fee, including broadband Internet. If the company rejects the plan, it would have to offer a similar service within 14 months.

Despite the victory for Philadelphia, a wireless equipment provider said the legislation is an ominous sign since the rest of the state is subject to the right of first refusal.

“This technology works today and this is going to slow its deployment. And that’s unfortunate,” said Ron Sege, the president and CEO of Tropos Networks Inc. of Sunnyvale, Calif.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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