Richard Lewis, CIO, of the city of Houston gave the opening keynote at the Muniwireless Dallas conference today and provided details of the city’s agreement with EarthLink. Lewis compared the necessity of broadband today to Houston’s need for water right in the 1950s when the city began growing. The driving force behind Houston’s citywide Wi-Fi plans is the business community, which approached the city demanding competitive, inexpensive broadband. The city began exploring its options first with a project to deploy wireless parking meters in the downtown area.
Months later, the city decided to issue an RFP seeking a partnership with a private company to roll out the network. Among the city’s objective are to reduce government cost of mobile data devices, provide inexpensive broadband service to 700,000 low-income households who today cannot afford the $30 to $50 per month DSL or cable Internet fees, allow the municipal government to become more efficient and cost effective. Lewis admits that AT&T recently dropped the price of broadband access to $14.95 per month and he believes that it reflects incumbent operator’s realization that the market is more competitive now, thanks to Houston’s broadband plans.
Like other cities’ public-private partnerships, Houston will contribute city assets such as light poles and other property, for which EarthLink will pay a leasing fee. Lewis estimates that EarthLink will invest between $40 million to $50 million in Houston. They are required to open up access to other Internet service providers and the wholesale rate cannot exceed $12 per month for the first seven years. The coverage is 640 square miles and they are setting June 2009 as the target date for full deployment. EarthLink expects to install 15,000+ nodes, one-third of which are gateway nodes.
EarthLink will pay city 3% of all subscriber gross revenue on an annual basis to be used for digital inclusion programs and defray city’s program management expense. In addition, EarthLink will charge $4 per month (for renting the CPE — this is the digital inclusion rate) to low-income families to make access more affordable.
The city will be an anchor tenant on the network, paying EarthLink $500,000 per year at a minimum, but Lewis expects this amount to rise as the city uses the network more intensively for municipal applications: traffic signals, parking meters, police and fire departments (building plans, surveillance, etc.), network redundancy during natural disasters, work order completion and update, and meter reading for utilities similar to Corpus Christi’s meter reading project. Indeed, Lewis made many references to Corpus Christi and to the 23 or more municipal applications that Corpus Christi will use on its network.
Lewis mentioned applications that individuals, businesses, schools and health care organizations can use on the network: education, telecommuting and work at home, telemedicine, T1 alternatives for business community, low cost cell phone replacement.
An interesting tidbit: one of the city’s key considerations for choosing EarthLink over Convergent, the other bidder, was the manner in which EarthLink would finance the network deployment costs. EarthLink will be using cash to fund the network, whereas Convergent was going to fund it using mostly debt. In addition, EarthLink has issued a $5 million letter of credit for this project.
Download Richard Lewis’s keynote Powerpoint presentation here.
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