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February 20, 2007

Municipal WiFi Projects in the U.S. - Part 1 of 3

By Mae Kowalke, TMCnet Associate Editor

In this first of a three-part series about municipal WiFi projects in the U.S., we look at the bottom line of installing wireless networks in cities (where the money comes from, different business models used) and the importance of careful planning.

During the past couple of years, there has been what some might call an explosion in the number of municipalities deploying WiFi (News - Alert)-based wireless networks covering large geographic areas—in some cases, entire cities.
 
Some of these deployments have been more successful than others, and it often is the case that the make-or-break factor is nothing less than the bottom line. Yes, money makes the world go ‘round, and it also is necessary when embarking on any sort of project, WiFi networks included.
 
Just how are cities paying for their WiFi projects? Where does the money come from to set up the network initially, and how will it be maintained once installed? Who will use the network, and will those users pay for access? These are some of the questions city governments have asked themselves—and, in some cases, perhaps have not answered adequately.
 
TMCnet recently sought further perspective on the wireless trend by speaking with three people who have some expertise and perspective regarding municipal WiFi projects: Craig Settles, author of several books on the subject; Esme Vos, founder of muniwireless.com; and Karen Hanley, Senior Marketing Director at Wi-Fi Alliance.
 
Bottom Line of the Trend
 
To start off with, just how big is the municipal WiFi network trend? Karen Hanley at Wi-Fi Alliance told TMCnet that, during the past couple of years in the U.S., roughly 350 citywide WiFi network projects were launched. She noted that no two cities have approached funding these projects in exactly the same way.
 
Nonetheless, several key business models for funding muni WiFi projects have emerged. Craig Settles said that, for the most part, cities are choosing between two models: using taxes to pay for the network, or bringing in a provider and giving that company control of the network in exchange for build-out and maintenance.
 
Within those two broad models, many variations have emerged. From the wideshot view, it appears that the most successful WiFi projects have employed a hybrid approach to funding, rather than putting all the eggs in one basket. And keeping things in the black need not be an either-or proposition; subscriber fees and advertising revenues are other ways to raise funds.
 
Depending on whom you ask, the word “free” in association with “muni WiFi network” can raise some hackles. In some cases, cities may be a bit too eager to get something for nothing, by asking a provider to build and maintain a network free of charge.
 
That’s definitely the view of Settles, who in multiple conversations with TMCnet chastised city governments for handing over control of WiFi networks to service providers in exchange for being able to offer a cool, new technology to residents without having to pay a dime.
 
The problem with the “free” model is that not all WiFi networks are created equal—capabilities of the network depend on the technology used and where it is placed. If the building and planning are left to the service provider, the network may not end up adequately serving the needs of the city government, citizens and local businesses. Worse, the provider may find it can’t support the type of network the city wants, and either change the specs or pull out completely.
 
Settles noted that, when put in perspective, building a WiFi network is not that expensive. City governments regularly shell out hundreds of millions of dollars to build sports arenas, ballparks, and stadiums, yet balk at the much smaller cost (usually measured in tens of millions of dollars) to build and maintain a WiFi network.
 
“When you come down to it, you’re not talking about a lot of money,” Settles said of the cost to build a WiFi network.
 
From Settles’ perspective, too often city governments are being cheap and shortsighted when it comes to WiFi projects. The result is that those networks likely won’t end up meeting the expectations laid out for them.
 
Once a network is build and running, just how does one judge the success or failure of the WiFi project? That’s a hard question to answer, Hanley said, because success depends on what your original goals are.
 
“There are so many different factors that get back to what success mean,” she said.
 
One way to measure success is to look at how many people use the network and whether or not those users are satisfied with the experience. If the experience is a good one, and access if free or offered for a nominal fee, people will use the network, Hanley told TMCnet.
 
Esme Vos at muniwireless.com said that, not surprisingly, usage rates are significantly higher when access is free than when it’s subscription-based. For example, in St. Cloud, where users pay no fee, usage rates are close to 80 percent. By contrast, in Tempe, Arizona, where access is provided through subscription from MobilePro, usage rates are only about 15 percent.
 
Planning Ahead
 
Perhaps we’re getting a bit ahead of ourselves, though, by judging the success of a completed muni WiFi project. This might be a good time to back up and look at the planning process, since all true successes rely on a solid foundation.
 
It very well could be that the best strategy for successfully building a WiFi network is to start by defining what that network will be used for and determining the technology needed to ensure adequate network performance, and then figuring out how to pay for the project.
 
The reason for this is finding the funding first will limit goals set out for the network. Perhaps those goals will end up being limited anyway, but it probably behooves cities to dream big and then fit that dream into reality.
 
In determining specs and goals for the network, Hanley listed the following recommendations:
 
1. Use certified equipment to ensure the best possible user experience.
2. Set realistic expectations for citizens regarding what the network will be able to offer.
3. Build a robust enough network to ensure that users get a good experience.
4. Plan to invest in keeping the WiFi network viable once it is built.
 
The second item on that list is a particularly important one. Managing expectations, Hanley said, is a key element of a successful WiFi project.
 
The discussion of expectations should include not just what citizens look forward to when they imagine the network coming to their area. It also should include expectations of city officials planning the network, along with government employees and local businesses who will use the network.
 
WiFi networks in different cities have been received in different ways, Hanley said, depending on the expectations involved. She used the analogy of drinking water to illustrate this point.
 
Here’s how the analogy goes: city residents often drink both bottled water and stop for refreshment at drinking fountains. These people are willing to pay for bottled water because it tastes better and is filtered. Water fountain water is adequate, but the expectations for it is lower. The same is true of WiFi; if the service offered is of a high enough caliber, people will be willing to pay for it. If not, they’ll use it only if it is free.
 
“Depending on how the network is built and what the expectations are for recouping funding, some cities are offering it for free, and some are looking at a mixed model,” Hanley noted.
 
For example, in Hartford, Connecticut, the Mayor decided to offer WiFi free for the first few months. After that, citizens will get 20 hours of free access, and then will need to pay a nominal fee—about $12-$17 per month—to use the service. Revenue also will be generated from advertising sources.
 
Hartford’s model illustrates that, once a network is up and running, multiple sources of funding may be used to support it.
 
Creativity in funding applies both to the build-out and maintenance, of course. Let’s return to the build-out stage for a moment. WiFi networks have definite, potential economic benefits for any city, and when viewed in that light Settles pointed out that governments should be able to find creative ways to realize those benefits.
 
One way cities could fund WiFi networks is through grant money, Settles suggested. A creative city could look at a WiFi network project in a truly visionary way. A WiFi network could, for example, affect how healthcare is delivered, help local businesses thrive, or transform how the government's mobile workforce does its job.
 
When cities get creative with funding sources, Settles noted, they are empowered to approach vendors and providers with a specific set of requirements for the network and, because they are paying for it, get what they want.

CONTINUED... click here for part 2.

Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.


 







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