Chicago backs away from muni Wi-Fi

In an interesting alignment of announcements, Chicago is putting its plans for a municipal wireless network on ice on the same day that EarthLink, one of its potential partners, announced 900 lay-offs, including the president of the company’s muni division.

Coincidental? Probably not. EarthLink was Chicago’s best bet for getting city-wide Wi-Fi at no cost to the city. It was competing with AT&T for Chicago’s business. If you look at AT&T’s current involvements in Riverside and Napa, California, and St. Louis, Missouri, you’ll find a trio of deployments that involve anchor tenancies. AT&T tends to treat muni wireless as one in a suite of telecommunications services it offers to cities. EarthLink, on the other hand, followed the free, ad-supported Wi-Fi model until fairly recently. It has only been since EarthLink’s last quarterly earnings call, that company has insisted that cities partner as anchor tenants.

Here’s the city’s announcement:

City to re-evaluate approach for citywide wireless network

Mayor Daley Asks for New Ways to Achieve Goal After RFP Requirements Could Not Be Met

The Chicago Department of Business and Information Services (BIS) announced today that it will reevaluate its approach to offering an affordable, city-wide wireless network after potential private-sector partners who responded to the city’s request for proposal (RFP) were unable to meet certain objectives of the plan.

“My commitment remains for Chicago to have the most advanced broadband network in the nation, especially in our schools and especially in underserved neighborhoods. We must give everyone in our city‚ regardless of where they live or who they are‚ the same access to the Internet if we’re to keep our progress going and give everyone the same chance to succeed in life,” said Mayor Richard M. Daley.

During the last several months BIS worked closely with two very qualified potential partners on how to meet the city’s goals and objectives to bring affordable wireless services to our residents.

“When neither organization could justify a business case for the type of partnership outlined in our proposal, we realized after much consideration that we need to reevaluate our approach to provide universal and affordable access to high speed Internet as part of the City’s broader digital inclusion efforts,” said Hardik Bhatt, Chicago’s Chief Information Officer.

Last fall, at Mayor Daley’s request, the City issued an RFP seeking private-sector partners to provide Internet access throughout the city, including free wireless service in schools, parks and major public places. Since that time, the city received two qualified proposals, and spent the past several months evaluating the proposals and engaging in preliminary negotiations.

Through the RFP, the City sought to offer the long-term use of its infrastructure, such as street lights and lamp poles, for instance, to a private partner interested in constructing, owning, and operating – at its sole expense – a wireless broadband network throughout Chicago.

“In Chicago and in many other cities, a municipal WiFi network was initially envisioned as a way to provide cheaper, high-speed access to consumers,” said Bhatt. “But given the rapid pace of changing technology, in just two short years, the marketplace has altered significantly.”

During the City’s negotiation process it determined that the unexpected high cost of building a WiFi network, combined with increased competition from other service providers, meant that these networks are unlikely to succeed without extraordinary financial support from the local government.

Even with such support, as is the case in other cities, there appears to be far less demand from consumers for these networks than originally projected.As a result, such an investment of local taxpayer dollars became difficult to justify.

Chicago’s wireless project is one part of a comprehensive digital inclusion effort. The City’s effort to build a municipal WiFi network was first initiated by the City Council in 2005 as part of a larger effort to address the digital divide. That effort has already included many successes:

- Awarding $250,000 in small grants to non-profit organizations to support new and existing community technology programs and service delivery;

- Initiating a dialogue with leading regional and national technology companies to identify ways they can help bridge the digital divide;

- Identifying opportunities for government actions that can foster digital inclusion; and

- Offering free wireless access in all 79 Chicago Public Libraries and in major public places including Millennium Park, Daley Plaza and the Dirksen Federal Building.

“Chicago’s efforts to provide affordable broadband Internet service to all its residents has first and foremost been about creating greater access and education to the people of our city in order to build a more modern and sophisticated workforce so Chicago can better compete in the 21st century economy,” said Bhatt. “We are still focused on that goal.”

As part of the city’s reevaluation, BIS announced that it will take a number of steps towards the goal of achieving full access to a broadband network and helping to bridge the digital divide:

- Finalize a broadband map to identify gapsin availability and assess current pricing to have a clearer picture of the state of today’s infrastructure and how much consumers are paying.

- Explore new partnerships with the technology industry and other relevant stakeholders to identify remaining barriers to achieving universal, affordable access and develop a range of options for overcoming those barriers.

- Implement policies that meet the goal of universal, affordable access, while also encouraging the build-out of a network that meet today’s needs and takes into account the increased needs that may result from continuous technological progress.

- Seek opportunities to partner with the private sector to subsidize computer equipment, software and education for schools, libraries, community centers and low income families.

- Support education and careers in technology and telecommunications as a means of continuing to expand digital literacy and stimulate demand for broadband.

- Promote Chicago as an attractive location for technology companies to do business.

“We believe the most prudent course of action now is to reevaluate how these goals can best be achieved,” said Bhatt.

“We have said from the onset that our goal is not to be the first city to go wireless, or execute this the fastest, the goal is to provide residents with broadband access to improve their exposure to technology.

“As we strive for full access, we will also continue our other efforts to help bridge the digital divide, including our efforts that focus on the provision of affordable and appropriate hardware and software, digital education and awareness.”

Comments

  1. WiFi Gadfly says:

    Interesting, Chicago hired the “market-leading management and technology consulting firm for municipal governments” yet they could not figure out that the City needs to bring more to the table than rooftops and poles? Does not appear to be the service providers who could not justify the business case, but rather the City and its consultant that could not develop the business case.

    Maybe it is time for cities to include a performance clause in their contract with their consultants? If the consultant cannot develop a business case that leads to a successful conclusion to the RFP process, then the consultant needs to refund their fees. I wonder how many other clients of Chicago’s consultant are facing a similar dilemma right now?

  2. Looks like Chicago IT is being dazzled by what other new technologies can do for them-2.5Ghz based WiMAX and future 700Mhz Networks.
    I am afraid they will be dissapointed in both, one due to the spectrums limitation and the other due to the fact that it will be 2010 before it becomes available.