Major telecom corporations have finally embraced the principles of collectivism and cooperation: they will soon be working together to gouge you.
Bids are in for the MTA’s plan to wire 277 underground subway stations for mobile phone service, and leading the pack is the juggernaut alliance of the nation’s four largest wireless carriers: Cingular, Verizon, Sprint-Nextel and T-Mobile. The MTA came up with the idea in response to the July London bombings in the hopes commuters would use their cell phones to report suspicious activity, thereby thwarting potential terrorists. But like its companion piece, the random bag search policy, the notion that increased wireless service will make us more secure is faulty in its conception, and further, the process by which the MTA has put the plan into action so far ensures it will do more to deliver dollars to major telecom corporations than deliver us from the terrorist menace.
The role of cell phones as anti-terrorism devices has a recent history that is checkered at best. Mass transit systems are vulnerable targets for “the evildoers,” and increasing riders’ capacity for rapid reporting of emergency situations is an intuitive way to improve response. However, such capacity also allows would-be terrorists to coordinate their efforts over the phone, enabling larger and more devastating attacks. In addition, it is less than clear whether calling in suspicious persons or behavior genuinely enhances safety amid the slew of tourist-sees-his-first-ever-Arab false positives it inevitably creates.
Of course, cell-phones did allow passengers on board United Airlines Flight 93 to learn of the fates of the other planes hijacked that September morning, and caused themselves to crash in a wooded area in Pennsylvania, perhaps saving thousands of lives. They were also central in the March 2004 bombings of the Madrid subway system, in which terrorists used mobile phones to detonate ten explosive devices hidden in backpacks on trains.
The double-edged nature of mobile communication as a security measure is indicated also in the way the use of cell phones in this city’s tunnels has been managed thus far. Following the London bombings, the MTA, along with the Port Authority, shut off wireless service to the Lincoln, Holland, Battery and Midtown tunnels, fearing a Madrid copycat attack. Cell phone service was partially restored a few days later after drivers complained they felt safer being able to make calls, over and above the threat of remote-detonated explosives. Facing criticism, the MTA claimed that they had shut off service at the request of the NYPD, but Commissioner Ray Kelly denied making such a request, saying he supported the use of cell phones both in the tunnels and in subways to improve communication between the public and police. The MTA responded by returning service to the remaining tunnels and issuing a statement declaring, “There appears to be miscommunication between NYPD and the MTA. This communication problem has been rectified.” Mayor Bloomberg was apparently kept in the dark about the whole plan.
Shortly after this embarrassing episode, the MTA had what could charitably be called a change of heart. In announcing the plan to wire underground stations, which make up roughly 60 percent of the overall system, the MTA must have anticipated a flurry of bids from eager telecom companies, because it was also announced the Authority itself wouldn’t put up a dime for the project. Deadline for proposals was set for October 12, 2005, but the bids did not come in.
The deadline was extended to November 30, and then again to December 28, and still no bids. How could a project as plum as the nation’s largest mass transit system go unclaimed by the major carriers? Because of the way cell phone contracts are generally set up in the US, telecom companies make most of their money by leveling hefty per-minute fees on customers who exceed their monthly usage limit. Since people were unlikely to use up many of their minutes while waiting on the subway platform, the major carriers proposed that they be allowed to wire the tunnels as well, providing complete underground cell phone use. But the MTA insisted that servicing the 700 miles of tracks across the five boroughs was unfeasible and would cause massive service interruptions. Representatives of the individual telecom companies maintained that the project was too expensive and presented too limited an opportunity to recoup on their investment. The MTA refused to budge, digging in its heels and refusing to spend any money to enact the plan.
Finally resolving this stalemate was the creation of a unique alliance among the wireless providers. Usually in dogged competition with one another, the four major carriers banded together and submitted a single bid to the MTA on January 18 to wire just the stations, for now. Cingular Wireless, which is the nation’s largest carrier, lead the group in name, but unlike other metropolitan areas where one carrier has built the infrastructure and then leased coverage to other companies, the MTA “teaming agreement,” as it’s being called in corporatese, represents an unprecedented level of ground floor cooperation.
Three other groups submitted bids, two encompassing a loose coalition of smaller, local carriers, whose public comments on the project have ranged from “very feasible” to “a nightmare.” The MTA has not yet disclosed the identity of the fourth bidder. It seems unlikely, however, that these bids stand a chance against the 800-pound gorilla of Cingular and friends. Since service providers will have to buy in once the system is in place in order to allow their customers to talk underground, the major carriers, who hold the lion’s share of customer contracts, are in a dominant position from the get-go.
So what does this new era of telecom collaboration mean for consumers? In other systems, such as California’s Bay Area Rapid Transit (BART), a single carrier was charged with implementing wireless service and guaranteed the agency a minimum annual income, in BART’s case $326,400 per year (which includes full tunnel coverage). Based on this agreement structure, the primary carrier has a strong incentive to build infrastructure quickly and offer coverage to as many other service providers as possible. In the MTA contract, however, all meaningful competition between major carriers has already been cut out of the deal, so there is little incentive to complete the project in a timely manner, and because the four alliance members share the risk, each is less beholden to the MTA and to the service and security of its customers.
The New York City Subway originated as two competing systems, the I.R.T. and the B.M.T. Between 1910 and 1920, the two private agencies became more and more integrated under the City’s Dual Contracts. Though these contracts greatly increased service initially, expansion leveled off and the two systems, no longer in real competition with one another, became sluggish, causing massive overcrowding on trains and the B.M.T.’s eventual slide toward bankruptcy. Against the objections of these two corporate behemoths, the City began to build the publicly-owned Independent Subway Line, which revitalized the entire system and completed the grid we use today. In 1940, the three systems unified, creating the largest municipality-owned mass transit system in the US. Instead of following this vibrant model, the teaming agreement further consolidates corporations into a single monolith, without incentives for efficiency, reliability, or real security. The MTA should reconsider the big business approach, and judge the bids against the truly competitive tradition that made it great.