Even With Microsoft And Google On Board, City Wi-Fi Projects Have A Lot To Prove

More than 300 cities have or plan to have Wi-Fi networks. But the business models and even the technology still are being ironed out.

Elena Malykhina, Technology Journalist

November 17, 2006

10 Min Read

Everyone wants a piece of the municipal Wi-Fi market--even though no one is entirely sure how this business will turn out.

Microsoft entered the market last week as a partner of MetroFi, a wireless Internet access provider, for a Wi-Fi network in Portland, Ore. The pitch is that residents can get free access in exchange for ads served up by Microsoft or pay for an ad-free version. Google is considering a similar model for a Wi-Fi network in San Francisco, where it's partnering with EarthLink.

Corpus Christi built it. Now it needs a partner to run it.

Microsoft plans to offer locally relevant MSN content and services, including weather, news, and local government services, as well as restaurant, nightlife, and movie listings. Like many city Wi-Fi efforts, this one starts small; the companies expect to have it available in Portland's downtown by year's end, but probably not across the city until 2008. The service will let users search for addresses or businesses and show those locations on a map. Advertisers will use Microsoft's adCenter platform to reach Wi-Fi users.

Many cities are getting municipal Wi-Fi plans rolling. In the United States, 154 cities, from Philadelphia to Chaska, Minn., have Wi-Fi networks across some span of the metro area, says Roberta Wiggins of the Yankee Group. Another 132 have networks under construction or proposed. Abroad, Taipei, Taiwan, has the most ambitious project, trying to cover 105 square miles in a wireless mesh. London, Paris, and Moscow have smaller-scale projects under way, and New York City is deploying Wi-Fi across its largest parks. If people in hundreds of cities really do get free, widespread Wi-Fi service, it has the potential to change how and where we use the Internet.

But first it has to be proven that muni Wi-Fi works. From a technological standpoint, early attempts show that deploying and maintaining a network of acceptable quality is a challenge. The model of ad-supported Web access is a leap into the unknown, and Wi-Fi technology could be leap-frogged by the increasing data speeds of cellular and eventually WiMax, which promises speed and coverage advantages.

The Latest Microsoft Vs. Google Battle
Microsoft's advertiser-supported Internet service in Portland initially will be available in the city's Pioneer Courthouse Square. MetroFi, which has agreements with 13 other U.S. cities to design, build, and operate municipal Wi-Fi networks, will build Portland's network and plans to offer an ad-free service for $20 a month. Within 10 to 24 months, the Wi-Fi network is expected to cover 95% of Portland, home to more than half a million people. Microsoft considers Wi-Fi "a natural complement to its focus on building software services," says Stefan Weitz, director of planning at Microsoft's MSN division. "We view this partnership as an opportunity to learn from how our advertisers and MetroFi customers benefit from the locally relevant content and ads," he says.

If it's Taipei, it must be Wi-FiPhoto by Richard Chung/Reuters

And to make sure Google doesn't know something Microsoft doesn't. Google and EarthLink--one of the biggest service providers in muni Wi-Fi--in April won the bid to build a Wi-Fi network in San Francisco. Google won't say what services it will offer as EarthLink's anchor tenant, though it will likely involve serving up ads to users depending on their location and their search content. But Google won't place ads that greet users as they sign on. Before construction can begin, the two companies must negotiate a final contract with the San Francisco Board of Supervisors.

Google and Microsoft don't have the muni Wi-Fi market to themselves. In October, AT&T received approval for its first Wi-Fi network, which will provide free high-speed wireless Internet access throughout Riverside, Calif. AT&T plans to sell ads on the network's logon page and offer several plans based on access speeds. Cisco Systems and IBM, meantime, are part of a group called Metro Connect, which in September won the right to build a Wi-Fi network across four counties that make up Silicon Valley (beating, among others, MetroFi). With the help of Internet service provider Azulstar, they'll offer tiered services, from free access limited by connection speed and duration to paid voice- and video-quality services. Construction should start by year's end but will take years to span the valley's 1,500 square miles.

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It's remarkable progress for a movement that really only began in the last two years, when several U.S. cities saw free or cheap Wi-Fi as a way to overcome the "digital divide" that keeps low-income residents from getting online. More cities have followed with visions of spurring economic development and tourism. Some are now moving beyond pilots to offer services for residents, businesses, and city workers.

None Of Government's Business
The business models have changed as well, as cities that considered creating Wi-Fi networks themselves realized they're not cut out to build, operate, and manage metro-scale infrastructure. It can cost $10 million to $15 million just to buy and deploy equipment in a metropolitan area. And most cities don't have the IT staff needed to support these networks, so they've brought in specialists. EarthLink, for example, is building and operating Wi-Fi networks in Anaheim and Milpitas, Calif., as well as New Orleans and Philadelphia. It has contracts to build Wi-Fi networks in San Francisco and Pasadena, Calif.

Alexandria, Va., launched its "Wireless Alexandria" pilot project in April 2005 as a free, city-run network in the historic Old Town area, which draws visitors to shops, outdoor dining, a marina, and a weekly farmers' market. Alexandria in May began taking bids from companies to build a citywide Wi-Fi network. Bidders include a team of EarthLink, Motorola, and Tropos Networks, a provider of Wi-Fi mesh technology that has become a de facto standard for municipal deployments. Clearwire, a wireless broadband company, is also in the mix. As envisioned, the network will provide free public Internet access in parks and other outdoor areas, and free or reduced-price Internet access for low-income residents. But one city official is skeptical about the ad model. "One major lesson I hope cities have learned by now is that a wireless network for which nobody is paying isn't viable," says Craig Fifer, the city's e-government manager. "If the government pays, it's usually inappropriate. If ads pay, it's usually unreliable. But when subscribers pay, it's usually reliable and profitable."

Networks Get Messy
Cities are working through a number of other problems. One is that licensed telecom and cable companies don't want to compete with a city-run network to sell broadband. Under industry pressure, 14 states have passed laws that restrict municipalities from offering community broadband services. Most cities diffuse the issue by letting a private company offer fee-based service.

That's what Philadelphia did, hiring EarthLink to deploy and operate a 135-square-mile Wi-Fi network. Its fees are also among the lowest: about $10 a month for low-income residents and no more than $20 a month for small businesses and other residents. Motorola is doing much of the work, and it has struck deals with EarthLink to install Motorola and Tropos equipment in four other cities. The partners began installing equipment in August to cover the first 15 square miles in Philly.

The latest bugbear is privacy, raised recently over Google's ad-based model for San Francisco. Privacy groups see the potential of tracking where people go on the Web based on the user names and passwords they use in signing on to the network. If that information gets stored in a database, then government or private lawyers could subpoena it later in criminal or civil matters. The Electronic Frontier Foundation, based in San Francisco, submitted to the city guidelines and minimum standards it considers necessary for protecting people's privacy. Google says it addresses privacy by not storing the content of online communications. Microsoft says it won't factor in a person's physical location in Portland when serving up ads or providing content on the MetroFi network.

There are technical issues, too. Even cities just looking to hook up a few parks or downtown tourist hangouts should know that metro Wi-Fi mesh equipment--from the likes of Tropos, BelAir Networks, and Strix Systems--won't simply work out of the box. "It's not enough to just mount Wi-Fi equipment on a pole. It has to be engineered and tuned to work," warns Leonard Scott, municipal IS business unit manager for Corpus Christi, Texas, which goes unwired next month. The city used equipment from Tropos and tapped Northrop Grumman for the integration. Corpus Christi spent 18 months and $7.1 million on its 147-square-mile Wi-Fi network, which includes 1,300 access points. Now it's looking for a partner to run a paid service over the network. Another technical limitation is coverage, since public Wi-Fi generally won't reach inside or above the second floor of buildings.

Technical problems can dog a project regardless of scale or resources. Chaska, Minn., population 18,000, had to upgrade its town-owned Wi-Fi network after two years of operation, moving from the 802.11b standard equipment to the faster 802.11g to handle network volume. The world's biggest municipal wireless rollout--in Taipei, with 60,000 registered users and almost 5,000 access points in a 105-square-mile area--required extensive work from several local companies and consulting support from Hewlett-Packard and Intel to bring the network up to quality levels to pass independent testing, says the Yankee Group's Wiggins.

Creating a true Wi-Fi mesh network, where coverage overlaps to create one network, not a series of hotspots, requires a major investment in infrastructure, including access points, wireless routers, and management software. In just a year or two, many cities may look to WiMax technology to provide that kind of broad coverage, as that technology becomes more prevalent and mature. Only some of the Wi-Fi equipment sold today will be compatible with WiMax, so cities might be in for an unpleasant surprise.

Municipal Wi-Fi networks still look like a gamble. But when the risk is getting left behind--whether in selling online ads or building a 21st century city--it's a gamble the biggest names in technology and some of the largest cities are willing to take.

About the Author(s)

Elena Malykhina

Technology Journalist

Elena Malykhina began her career at The Wall Street Journal, and her writing has appeared in various news media outlets, including Scientific American, Newsday, and the Associated Press. For several years, she was the online editor at Brandweek and later Adweek, where she followed the world of advertising. Having earned the nickname of "gadget girl," she is excited to be writing about technology again for InformationWeek, where she worked in the past as an associate editor covering the mobile and wireless space. She now writes about the federal government and NASA’s space missions on occasion.

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