Wifi Revolution

It seems like hardly a week goes by without news about another city embarking on a municipal WiFi (News - Alert) project to bring high-speed, mobile broadband access to ordinary citizens and business power users alike.

 

Leading the pack is Philadelphia, which just over a year ago jump-started the trend with its municipal WiFi project. In March, the city signed a contract with EarthLink and began working in earnest on its WiFi deployment.

 

For an update on the Philadelphia project, and others like it around the country, TMCnet recently spoke with Craig Settles, president of successful.com and an independent WiFi analyst who has written several books on the subject.

 

 

Settles told TMCnet that Philadelphia has begun to build its proof-of-concept WiFi network, a test deployment that will cover about 15 square miles. Once that network is finished, and everything checks out, work will begin on the full project, eventually providing about 135 square miles of coverage.

 

Settles is an expert particularly about the Philadelphia project; his book,

Fighting the Good Fight for Municipal Wireless, is based on interviews with people involved in that project.

 

Fighting the Good Fight, Settles explained, is meant to be a guide for other cities looking into setting up their own municipal WiFi networks.

 

He noted that among those using the book as a guide is the mayor of Miami-Dade County, Florida.

 

“Obviously they won't be doing the same thing as Philadelphia, but some of the key points in the book address their issues,” Settles said of Miami-Dade’s WiFi project.

 

 

One of the things Miami-Dade’s government is hoping to avoid—and that has been a problem elsewhere, including Philadelphia—is a contentious battle with incumbent service providers (telcos, cable companies) that face potential competition from the services WiFi networks provide.

 

Settles used the Philadelphia project as a prime example of how incumbents can cause major headaches for cities wanting to set up WiFi networks.

 

At the beginning of its WiFi project, he noted, Philadelphia’s city government invited local incumbents (notably Verizon and Comcast) to attend focus groups. But, Settles told TMCnet, the incumbents refused to take that olive branch.

 

“The telcos and cable companies saw this as a major threat,” Settles recalled. “They made a big stink, and it became a distraction that had to be addressed.”

 

With their strong lobbying power, the incumbents were able to get legislation passed in Pennsylvania that essentially prohibited city governments from taking ownership of any WiFi networks they wished to deploy.  

 

The battle shifted, however, when Philadelphia’s government successfully put pressure on Pennsylvania’s governor to exempt the city from the new legislation, Settles said. 

 

Settles expressed the opinion that Philadelphia’s government should have fought harder against the incumbents from the beginning; if it had, perhaps the worst of the battle could have been avoided.

 

The solution that was reached is a compromise of sorts: EarthLink, as the vendor, has ownership of Philadelphia’s WiFi network, but the company is working with the city’s non-profit group to facilitate digital inclusion goals.

 

“It looks good economically on the face of it,” Settles said of Philadelphia’s municipal WiFi plan. “Because Philadelphia has a non-profit set up, they're fine. A lot of other cities are negotiating from a point of weakness.”

 

To be fair, incumbent service providers do have a lot to potentially lose: a recent Pike & Fischer report estimated that “broadband service providers could eventually see their revenues fall by as much as 48 percent due to competition from city-run broadband networks.”

 

But Settles take a different view. During the phone conversation with TMCnet, he made no attempt to hide his disapproval over the way most incumbent service provider approach the perceived threat from WiFi networks—especially given the strong lobbying power they have.

 

Rather than view city governments as competitors, Settles suggested, incumbents should see those governments as consumer groups constituting part of the marketplace.

 

 

Settles also had a bone to pick with the idea that municipal WiFi networks are unaffordable projects for cities to take by themselves.

 

Cities have always found ways to fund projects deemed important (like sports stadiums and schools), Settles said, so surely they can find a way to find money for WiFi networks.

 

To illustrate this point, Settles compared the cost or a typical sports stadium (roughly $175 million) to the typical cost of a municipal WiFi network (about $15 million).

 

“We're talking about so little money relative to other things that have been funded, it's an absurdity,” he emphasized.

 

 

Battles with incumbents, when you get right down to it, are about money, Settles noted. Specifically, the issue is how to fund the initial deployment of a WiFi network, and how to maintain it once the deployment is completed.

 

The impression that WiFi projects are beyond the financial means of city governments leads to those governments overlooking funding methods other than handing ownership of the network over to a service provider.

 

“Cities need to be more involved,” he said.

 

The ideal situation, Settles told TMCnet, is to have the city government in question underwrite WiFi projects using fees, grants, and other related techniques. Only by getting creative with funding can they take ownership of the networks, and the developmental and digital inclusion goals that typically go hand-in-hand with this type of project.

 

Typically, the funding scenario for a municipal WiFi project goes as follows, Settles said. A city asks a vendor to build a WiFi network, with the condition that access to that network be free. The vendor has to find a way to make that network cost-effective.

 

Ad revenues may bring in enough money to set the network up, he said, but vendors often have to settle for less-than-optimal equipment. Plus, there’s no guarantee that revenues will be high enough to fund regular maintenance and upgrades.

 

Unfortunately, Settles said, many U.S. cities (for example, Sacramento) are abdicating ownership of WiFi networks, to the detriment of their constituents.

 

Portland is one example of such a city, but with a slight twist; the government got creative by committing itself as an anchor tenant, purchasing WiFi services for mobile government workers in order to help mitigate the financial burden to the vendor.

 

Portland’s government also signed an agreement to take over the WiFi network if the vendor finds maintaining it isn’t cost-effective. But, Settles asked, what happens in the network survives but is sub-par? In that scenario, the city’s constituents would be the real losers.

 

 

Luckily, Settles said, some cities and incumbents are taking a more sane approach. Two examples illustrate this development:

In St. Paul, Minnesota, the city chartered a group to investigate different funding options, asking specifically for detailed pros and cons related to three different ways to proceed.

Henderson, Nevada (just outside Las Vegas) is working with incumbent telco Embarq to explore financial options, and so far seems to be taking a reasonable approach to questions about the best technologies to use, and how to avoid protecting one type of wireless technology at the expense of customer needs.

 

 

Looking toward the future, Settles told TMCnet that he believes broader WiFi initiatives—involving regions containing more than one city, or even an entire state—will be one way to address the needs of incumbents, local governments, and network users.

 

Two examples of broader projects now in the initial planning stages are those in Michigan and Silicon Valley, California.

 

The upside of larger-scale WiFi deployments is that standards might be created by the communities involved, creating a stronger and more useful network overall, Settles told TMCnet.

 

“These regional efforts and statewide projects can facilitate standards, if done properly,” he said. The danger is that larger projects will further dis-empower city governments.

 

Stay tuned—the story is just beginning.

 

Related Articles:

Municipal WiFi News: Rhode Island Plans Statewide Network, Philly’s Project Continues

Metro WiFi Pioneer Philadelphia Signs Contract With EarthLink

Metro WiFi to Cover 126k Square Miles by 2010

WiFi and GPS to solve e911 issue

Philly CIO Blasts Opponents of Muni WiFi

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