A year ago, Mayor John Street tossed a giant gauntlet at Philadelphia's two major broadband providers, Verizon and Comcast. Last week, that gauntlet formed a fist, as city WiFi diva Dianah Neff announced she's negotiating with two other major corporations currently vying to build the city's high-speed wireless network.

With Hewlett-Packard (HP) and Earthlink now in the running, Wireless Philadelphia's innovative business plan that landed on Street's desk by February is firmly on track. By mid-September, either HP or Earthlink will start to hang about 3,000 transmitters to blanket the city's 135 square miles. Within a year, cheap Internet should be available throughout the city, and should begin to force down current broadband rates. Not only should you be able to get the Internet for less, but other services — like wireless telephone over the net — will also be available throughout the city.

By forcing major telecom and cable companies to fight for your dollar, the city is bucking the federal trend that has let corporations consolidate more and compete less. A recent court decision confirms that cable companies can essentially avoid Internet competition by locking out other service providers. And the FCC is soon expected to let phone companies likewise monopolize their wires. So just as most Philadelphians using cable Internet now have a choice of only Comcast, subscribers getting DSL through the phone company will likely be forced to use Verizon.

At the moment, Philadelphia is caught between two monopolies — a duopoly, if you will. But Street's plan will break their hold, offering an alternative business model. This unique new strategy is called a cooperative wholesale model; participating companies must continue to compete in order to play.

Wireless Philadelphia appears to be learning from the mistakes of the current cable franchise situation, which for most has been a fiasco. By buying small, failing cable companies, Comcast may soon control all cable throughout the city. Without competition, rates will surely continue to rise, as service — a recent J.D. Power survey confirms — continues to fall.

The Wireless Philadelphia cooperative wholesale model is designed to avoid the franchise trap. In a franchise model, the winner takes all. In Philly, a single corporation, Comcast, not only controls the system, it owns the cable, equipment, even the right to dig up streets. But in a cooperative wholesale model — as outlined in the Wireless Philadelphia business plan — the city will continue to own all the hardware, and companies must continually compete to offer services. There is no single winner who has the power to lock out competition.

HP and Earthlink are now competing for the right to be the lead contractor in this cooperative wholesale model. But even after one corporation presumably emerges victorious in September, the loser could still join dozens of companies who are now lining up for their piece of the action. Some companies may offer phone services, others may specialize in ultra-high-speed services, business services, teleconferencing or distance learning.

Just as Verizon now must still let other phone companies offer local and long distance services, WiFi's winning lead contractor will have to offer access to any company at a fair wholesale rate.

But the big difference is that Verizon will always own the wires, while the city will continue to own the entire wireless system and all its equipment. So far, the scheme is working. Even before Neff's announcement last week, corporations like AT&T and Lucent Technologies had effectively signed on — by helping to finance pilot programs in Powelton, Olney, Norris Square and elsewhere. And with last week's announcement of HP and Earthlink going head-to-head came still more good news that megacorp Intel will stay in for long haul. The chipmaker has already donated $100,000 for the current crop of test hot spots and now says it will help put some 10,000 computers into homes in poor neighborhoods — featuring Philadelphia as one of 13 cities worldwide in its Digital Communities initiative.

A cooperative wholesale system is a new idea in municipal services. The plan appears to be financially sound, but only time will tell. The system is expected to cost between $15 and $18 million to build and operate for two years, and is even scheduled to start generating a profit after four years. And the best part of the deal that Neff must soon strike is that it will cost taxpayers nothing — and the city will still own it all.

Should it succeed, in addition to bridging the digital divide, this Philadelphia experiment could kick-start a revolution.