Communications and Technology Industry Research

If you’ve ever traveled through the Denver International Airport, you might have noticed that there is no Starbucks, though there are other coffee providers. You might also notice that the busiest food-related shops are brands most people recognize, such as McDonalds or Pour la France.

 

The reason there is no Starbucks is because Denver wanted local ownership of the shops, so national chains without local franchisees were barred. But people still want their brands. In 12 years of heavy travel through the Denver airport, I have never ordered a single cup of coffee, though I am a big Starbucks fan.

 

As it turns out, brands are important even for municipal WiFi (News - Alert) or broadband projects, the Yankee Group says.

 

 

Municipal broadband projects succeed when they address the issue of trust in the brand or brands providing services to the end consumers, Felten says.

 

“End customers must be able to trust the brand that provides the service,” he says. “For wholesale models, this means attracting well-known service providers, often national incumbent brands.”

 

And since incumbents have reasons not to cooperate, the wholesale network ends up with unknown or local service providers that do not have established brands and then struggle to attract customers.

 

In late 2008, Amsterdam municipal broadband project Citynet reported that although it had reached its goal of passing 43,000 homes with the network, less than 10,000 residents actually allowed a drop cable to be put into place and only 3,000 subscribed to a service.

 

So Citynet is hoping that getting Dutch incumbent KPN on network as a service provider will boost penetration.

 

Similarly, the Pau Broadband Country project in the South of France had less than 3,000 customers out of 45,000 homes passed until early 2007 when national service providers Neuf (now SFR (News - Alert)) started offering services there. In less than a year, the number of customers more than doubled and is now set to reach 10,000 shortly.

 

All of those experiences suggest that it isn’t enough to attract financing and build a network. In the communications services business, as in other businesses, consumers have brand preferences.

 

Oddly enough, it appears the best way to boost penetration for a municipal WiFi or broadband network is to entice well-known brands to participate. In many cases, perhaps the best way to stimulate competition to incumbent providers is to encourage incumbents to compete with themselves.