Federal stimulus dollars are promising to revive failed attempts to build city-wide Wi-Fi networks. But this bMighty columnist believes the money would be better spent on technologies that are better suited to creating wide area networks.
Municipal Wi-Fi seems to have as many lives as a cat. The wireless Wide Area Networking (WAN) option created a great deal of buzz several years back. At first, supporters thought such services would be free. When that business model didn't pan out, they tried a variety of others but were eventually pretty much forced to the kibosh on the whole idea, and Muni Wi-Fi appeared to be dead.
Well, the national stimulus package has breathed new life into this wireless networking option. In my opinion, though, it doesn't seem like a particularly good use of government money.
Why Bother With Muni Wi-Fi?
Cities envisioned a number of potential benefits from moving into the broadband market, depending on the particular scheme and the business model -- or models -- the chosen plan carried.
Most importantly, Muni Wi-Fi gives local governments a way to fix some of the problems created by the limited commercial deployments of cable modem and Digital Subscriber Line (DSL) Internet access services. In rolling out these services, carriers naturally concentrated on markets where there was a strong likelihood of a quick return on their investments.
As a consequence of that, as much as half of their total area of America's inner cities -- as well as most rural areas -- have been left with only dial-up or satellite-based Internet access. As the Internet becomes an ever bigger component of commercial, social, and civic life, many municipal leaders feel an obligation to close this Digital Divide between the rich and the poor and urban and rural areas.
Across the United States, hundreds of cities showed interest in these services, but the local governments quickly encountered significant hurdles. Telecommunications is an extremely competitive business, and cities struggled to find business models that would actually hold water.
Wi-Fi is an inherently local technology. To build a city-wide Wi-Fi network, municipalities had to invest in network infrastructure, including control centers to monitor connections, as well as new billing systems.
A variety of options emerged that proponents believed would not just pay for those investments, but would also generate new money to replenish depleted city coffers. Some of these options seemed logical, like subscription fees (for those who could afford it) and location-based services (advertisements that target users when they are near certain locations). Others, such as solar-powered access points, were more idealistic and quirky. None of them were ever fully tested.
A Different Kind Of Market Collapse
That's because about two years ago the municipal Wi-Fi market collapsed. Hundreds of cities abandoned their projects. Chicago, Philadelphia, and San Francisco (one of Google's first setbacks) were three of the highest-profile failures. Earthlink, which had tried to refashion itself as an ISP focused mainly on municipal networks, burned through $100 million before dumping its municipal Wi-Fi business in early 2008. The idea seemed poised to fade into oblivion.
Not so fast. The stimulus package has revived the idea. For example, Champion WiFi, a subsidiary of Champion Broadband, has partnered with the city of Monrovia, California to apply for a $2.7 million grant to build a Wi-Fi network in the SoCal town. The government will be on the hook for 80% of the cost as Champion said it will fund 20% of the project if the application is approved. The partnership is also examining building solar-powered network equipment, which raises a big red warning flag as far as I'm concerned.
The real problem, though, is that nothing has changed in the last two years to make such Municipal Wi-Fi more feasible. In fact, success seems less likely for a number of reasons, including new competing technologies.
WiMAX has emerged as a new potential wireless WAN option. Unlike Wi-Fi, it was designed from the ground up as a WAN technology and each access point has a much longer range: more than 30 miles in some cases for WiMAX compared to 1,000 feet for Wi-Fi. While WiMAX has has faced its own struggles in urban areas, it continues to emerge as a potential way to provide wireless coverage in rural locations. Open Range Communications, a rural telco service provider, plans to spend $100 million on Alvarion's BreezeMAX WiMAX equipment in the next five years to bring six million rural Americans wireless Internet access. This plan seems more viable than anything that the municipalities and their Wi-Fi partners have dreamed up.
So, what impact will these new attempts to create municipal Wi-Fi networks have on small and midsize businesses? Nothing good I'm afraid.
SMBs increasingly rely on mobile communications to support their employees. Mobile employees need fast, broadband connections. Muddling along with slow or inconsistent connections hurts productivity. Clearly, work is needed to make wireless access faster and more ubiquitous.
But pumping money into municipal Wi-Fi networks is tossing dollars into a sinkhole. Funds wasted on this inappropriate technology cannot be spent on other technologies that have proven to offer viable business models, such as wireless cellular, or on ones with potential, such as WiMAX. Spending money on municipal Wi-Fi will actually slow progress toward bridging the Digital Divide.
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See more columns by Paul Korzeniowski.
Paul Korzeniowski is a Sudbury, Mass.-based freelance writer who has been writing about networking issues for two decades. His work has appeared in Business 2.0, Entrepreneur, Investor's Business Daily, Newsweek, and InformationWeek.
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