11:05 AM

Muni Wi-Fi: Next Big Thing--Or Next Tech Boondoggle?

Three California cities serve as case studies in what works, what doesn't, and what's still unknown.

As San Francisco's Board of Supervisors mulls a proposal for a citywide wireless network, it faces a question being asked by cities nationwide: Is municipal Wi-Fi an overhyped technology in search of a problem?

Dozens of U.S. cities, including Alexandria, Va., Houston, Philadelphia, and Portland, Ore., have built Wi-Fi networks, and many others are evaluating them. The lure is that Wi-Fi is a relatively easy way to bring broadband Internet access at little or no cost to the municipality, funded in-stead by subscription fees and advertising.

Up on the roof: WiFi antennaes atop the roof of Anaheim's city hall. -- Photo by Gilles Mingasson/Getty Images
(click image for larger view)

Up on the roof: WiFi antennaes atop the roof of Anaheim's city hall.

Photo by Gilles Mingasson/Getty Images

view the image gallery
Many of these projects, however, were begun in haste as radio frequency fever gripped mayors' offices and city councils across America. As a result, they're based on dubious "build it and they will come" economic models.

Many of the most ambitious projects have yet to go live, while several that are up and running have reported trouble signing up subscribers (see story,"Municipal Wi-Fi Pioneer Asks, 'Where Is Everybody?'"). When customers do sign up, spotty network coverage is an issue. Tempe, Ariz., for example, had to double the number of access points originally deployed per square mile in order to get adequate coverage. The rule of thumb used to be that 15 to 20 Wi-Fi nodes would cover a square mile; now it's twice that many.

The uncertainties are manifest in a variety of ways. EarthLink, one of the biggest network players, last month revealed that it would consider new muni Wi-Fi projects "on an individual basis." After reporting a $30 million loss in its most recent quarter, EarthLink is putting the brakes on a technology with no clear return on investment.

"We're at a point in the industry where everyone is pausing and taking a step back to see how this is going to actually work in practice," says Cole Reinwand, VP of product strategy and marketing for EarthLink's municipal networks division, while giving me a tour of downtown Anaheim, Calif., where an EarthLink Wi-Fi system is under construction. "The whole market is in this wait-and-see mode, to see if this thing can be proven."

One of the most affluent communities in Orange County, Anaheim has a population of 329,000 with an average household income of $57,000, 14% above the national norm. The city's mayor, Curt Pringle, sees nothing but upside in the $5 million construction of a Wi-Fi network, since local taxpayers won't have to bear any of the cost. "We don't want to own it, we don't want to manage it, and we don't want to set prices," Pringle says. In fact, the city stands to make money by charging "a small rent" for access to the streetlights on which the wireless gear is mounted.

InformationWeek Download

Pringle had one requirement when negotiating with EarthLink--the network had to extend across the entire city. "We've brought about a change in government mentality by establishing a market-based framework surrounding all our major decisions," he enthuses. "And we've applied that in the case of bringing about a new way of instituting a municipal Wi-Fi network."

That new way is to let the market determine whether Anaheim's network will thrive or fail. From the roof of City Hall, you can see Anaheim's new wireless system, based on Tropos Networks access points (including RF antennas) and Motorola Canopy gateways, which backhaul the signal to fiber-connected points. Currently covering several square miles of downtown Anaheim, the network will be 80% completed by early summer, Reinwand says. Anaheim eventually will be blanketed with Wi-Fi, providing residents, visitors, and local businesses with Internet connectivity outdoors and, via signal-boosting wireless modems, indoors as well.

When you dial the offices at Curt Pringle & Associates, the mayor's P.R. consulting firm (he says, laughingly, that Anaheim is "the largest city in America with a part-time mayor"), the hold music is Frank Sinatra singing "Come Fly With Me":

Once I get you up there, where the air is rarefied
We'll just glide, starry-eyed
Once I get you up there, I'll be holding you so near
You may hear angels cheer ... because we're together.

It's a sexy come-on, filled with gauzy promises and vague images of paradises. With starry-eyed mayors and city councils betting on Wi-Fi to do everything from promote economic development to read water meters, the lyrics sound a bit like the rationales for municipal wireless networks.

Anaheim's Mayor Pringle: Leave the headaches to someone else -- Photo by Gilles Mingasson/Getty Images
(click image for larger view)

Anaheim's Mayor Pringle: Leave the headaches to someone else

Photo by Gilles Mingasson/Getty Images

view the image gallery
The promised benefits stem from the marvel of mesh networking technology. Mesh networks are self-configuring, meaning that setup and maintenance costs are low while reliability is high, and each access point or node in the mesh serves as a relay, reducing the need for expensive gateway routers to propagate the signal over long distances.

The technology, however, is imperfect. Wi-Fi runs on the unlicensed 2.4-GHz spectrum, so interference is a problem and always will be. Foliage and tall buildings get in the way, and Wi-Fi has a hard time penetrating walls without signal-boosting antennas on the premises.

Wi-Fi vendors and city fathers are still trying to figure out how such projects should be structured. Is muni Wi-Fi a public utility, like water and power? Is it a massive economic-development effort to bridge the digital divide and bring opportunity to disadvantaged residents? Is it a purely private enterprise, as in Anaheim, or some hybrid of all of the above? So far, all these models are being tried, and none has shown itself to be a clear winner.

City managers can remain neutral on Wi-Fi or "take the lead" in pushing Wi-Fi to its potential, says Craig Settles, a wireless networking consultant and author of Fighting The Good Fight For Municipal Wireless (Hudson House, 2006). Anaheim's laissez-faire approach is an example of the former. On the question of whether EarthLink can sign up enough subscribers to succeed, Mayor Pringle says, "Candidly, it's not my job" to worry about that.

Anaheim's philosophy, says Settles, can be summarized as, "If it's successful, that's fine. If it's a failure, that's fine. Have a nice day."

If Pringle isn't worried, EarthLink clearly is. EarthLink has adjusted its business model to re- flect the fact that more revenue will have to come from sources other than fee-paying subscribers. EarthLink originally figured that it could turn a profit if 20% to 25% of local households signed up; faced with slack demand, it has lowered that to 12% to 15%.

To make up the difference, EarthLink is counting more on "municipal solutions" such as public-safety applications, video surveillance, and access for mobile government workers for revenue, says Donald Berryman, president of EarthLink's municipal networks division. Going forward, EarthLink will require that planners in other cities commit to "anchor tenancy"--a minimum level of Wi-Fi services to be used by the municipality--before EarthLink will move forward with a project.

Anaheim already has a wireless public-safety network, funded by the Homeland Security Department, that covers its major thoroughfares. When it comes to the city using the new EarthLink system, Pringle says, "all avenues are yet to be explored." For now, EarthLink remains almost wholly dependent on subscriptions and advertising revenue to make the project financially viable. Reinwand projects the Anaheim network to be cash-flow positive in its fourth year and to return the company's investment in its seventh.

City managers in other places are taking a more hands-on approach. In Philadelphia, another Wi-Fi network being built by EarthLink will provide access for up to 25,000 low-income households for $9.95 a month; other residents can expect to pay more. The project is being funded by taxable bonds that will be paid off from revenue generated by access fees, from which the city will take a cut. Wireless Philadelphia, the nonprofit formed to promote the network and bring its benefits to disadvantaged residents, plans to distribute 10,000 PCs as part of the effort.

Down the road from Anaheim, the city of Glendale is undergoing a thorough planning process in hopes of maximizing the potential benefits of municipal wireless to citizens, businesses, and city government. "It sounds really good to say, 'We're gonna have wireless broadband for our citizens,'" says Ellen Kirk, former VP of marketing at Tropos and now a wireless networking consultant. "They don't think about who's going to pay for it."

The word "free" gets the attention of local politicians, and no-cost service was originally the basis for muni Wi-Fi pitches from MetroFi, a startup building networks in seven California cities plus Portland and Aurora, Ill. Founded in 2002, the company planned to make money selling ads on top of its free service, but MetroFi had to rethink that approach because ad revenue alone won't cover its costs. MetroFi CEO Chuck Haas describes the shift as an "evolution" of the company's business model.

"Executing these projects in a logical, well-thought-out fashion is critical," Haas says. "You can't just throw up a network and hope that people will get on it."

MetroFi's revised strategy dates to the fall of 2005, when the Portland RFP came out with a strong anchor-tenancy component. Since then, MetroFi has become convinced that "if the city wants the network for its residents, and it sees the value of wireless broadband for the citizens, it ought to see the value for its own employees as well," Haas says. Meanwhile, the proliferation of "dual-band" gear--which operates over the 4.9-GHz spectrum licensed for public-safety agencies as well as the unlicensed 2.4-GHz band typically used for Wi-Fi networks--has enabled MetroFi to offer multiple use systems that feature a public-safety component, such as video hookups in police cruisers.

"It's not unlike if you build a water treatment plant," says Haas. "Say it costs $5 million to build the plant. You would expect the city to use that over the life of facility and return your investment. That's not new in the public-private model."

The difference, of course, is that everyone has to drink water and flush the toilet, while not everyone needs a high-speed connection to the Internet. For those who do, there are other options--DSL, cable modems, T1 lines, and free Wi-Fi connections in coffee shops, cafes, and hair salons. When city government-supported Wi-Fi has to compete against private-sector incumbents, it's not hard to predict a winner.

"If somebody's already got fiber in the ground, if they've got DSL, T1s, or cable, they've got the most consumer-friendly lever possible: the ability to lower price," Kirk says.

The wide availability of broadband alternatives is just one of the issues raised in San Francisco, where a joint proposal by EarthLink and Google to provide free Wi-Fi is under consideration. In many ways, the San Francisco network has become the poster child for muni Wi-Fi planning: Critics have charged that the deal was struck in backroom negotiations, that the city is getting services inferior to those in other markets, that spotty coverage will be a problem, and that San Francisco, which already boasts more Wi-Fi hotspots than just about any city on the planet, doesn't need a municipal system anyway.

Earlier this year, an independent budget analyst's report commissioned by the City Council criticized the EarthLink-Google proposal and said that a city-owned municipal network would be a viable alternative. Last week, the city controller's office weighed in with its own assessment, concluding that the EarthLink-Google approach would save local Wi-Fi consumers between $9.6 million and $18 million a year. San Francisco's Board of Supervisors is scheduled to take up the issue of what to do in July.

The extent to which businesses will tap into muni Wi-Fi remains to be seen. No one's suggesting that muni Wi-Fi can supplant a company's own network, though it's easy to imagine realtors and pizza-delivery people taking advantage.

In Bedford Park, Ill., Manny Singh, director of IT for Prairie Packaging, wonders if a planned Wi-Fi network in nearby Naperville might serve as a backup to his company's network. Prairie has three manufacturing plants and three distribution centers in the area, plus a lot of people who work from home at least part of the time.

"If it comes this far south and it works, we'll jump all over it," he says. Muni Wi-Fi's reliability and security would need to pass muster first, he adds.

Given the many business and technical uncertainties, it's reasonable to ask: Is municipal wireless really worth it? The answer is yes--if municipal leaders have the patience to see it through.

"In some ways, it's just like the beginnings of the Internet," says EarthLink's Berryman. "All these companies dove in and got more venture funding for losing money than for making it. Then they discovered you need to have a strong business model."

In Portland, a MetroFi network built with equipment from SkyPilot has proceeded relatively smoothly. The Emerald City's 2.5-square-mile proof-of-concept network went live in December, and MetroFi is deploying hundreds of access points per month. Haas calls Portland's RFP a model of citizen-business-government involvement. "They were very thorough in identifying the assets the city could provide, what they wanted to do with the network, and the anchor-tenant use of the network by the city," he says.

Portland isn't contractually obligated to buy services off the network but plans to do so on an as-needed basis, according to Unwire Portland project manager Logan Kleier. The citywide network can be accessed for a monthly fee of $19.95 or at no cost via an ad-supported version, eliminating the primary barrier to Internet access for low-income residents.

Portland's build-out hasn't been without its hiccups--third-party tests revealed coverage problems. But 5,800 users have signed up to date in the pilot phase, and Haas considers that a great start.

The question is whether muni Wi-Fi will have a strong finish. Right now, it's anything but a sure bet.

Continue to the image gallery:
EarthLink's Wi-Fi deployment in Anaheim

Continue to the sidebars:
Wi-Fi Hits The Hard Streets Of South-Central L.A.
Municipal Wi-Fi Pioneer Asks, 'Where Is Everybody?'

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Email This  | 
Print  | 
More Insights
Copyright © 2021 UBM Electronics, A UBM company, All rights reserved. Privacy Policy | Terms of Service