Muni Wifi: The Paths Forward
Analysis: What is the state of the muni wireless market? And what is the path forward? Plenty of readers asked us both questions following EarthLink’s decision to vastly scale back its own business operations. When a big, publicly held company changes direction, it certainly grabs your attention. Fortunately, there are multiple proven paths forward. And there are hundreds — perhaps thousands — of companies serving the municipal wireless ecosystem. So, what can you count on from MuniWireless.com in the days and months ahead?Analysis: What is the state of the muni wireless market? And what is the path forward? Plenty of readers asked us both questions following EarthLink’s decision to vastly scale back its own business operations. When a big, publicly held company changes direction, it certainly grabs your attention. Fortunately, there are multiple proven paths forward. And there are hundreds — perhaps thousands — of companies serving the municipal wireless ecosystem.
So, what can you count on from MuniWireless.com in the days and months ahead?
Frankly, we have to do a better job of highlighting the deployments that have, in fact, succeeded.
Carol Ellison provides some perspective in this post.
We don’t want to hype successful deployments, but we do want show the world — particularly the mainstream media — that there are solid networks in place today. And we want to help you connect with the leaders who drove those successful deployments, so that you can share best practices.
As you likely know, Esme publishes a lengthy list of MuniWireless U.S. city and county initiatives as a PDF download. Watch for a subset of that list — highlighting a dozen or more of the most intriguing projects — to pop up on MuniWireless.com shortly. I will provide a link here as soon as the list goes live.
Evolving Business Models
In the meantime, we will continue to share our opinions, and we ask you to debate us on those opinions–especially when it comes to business models.
In a recent online poll, 63 percent of MuniWireless.com visitors said finding an ideal business model was the biggest challenge facing current projects. The other challenges involved technology limitations (12 percent), negative press (10 percent), managing user expectations (9 percent) or some other challenge (6 percent).
Although this wasn’t a scientific poll, we hear questions about business models both online and at our conferences. We believe that anchor tenancy provides a natural starting point for many municipal broadband projects. But as one critic pointed out to us, business models will surely vary from one project to the next — and we shouldn’t position anchor tenancy as the only option going forward.
That’s for sure. For instance, Esme has some strong thoughts about how the ad model will potentially evolve in the months and years ahead — and she hopes that model will extend beyond traditional PCs to non-browser devices like the Nintendo DS.
And Mike Perkowski recently published our latest research on business models. I don’t want this to be a pitch for our own research reports, but I encourage you to ask Mike questions if you have them. His address is mike [at] microcast.biz.
Who Can Help You?
Next, we have to do a better job of showing the world that there is a healthy, growing ecosystem of integrators, service providers, VARs, consultants and vendors serving the MuniWireless sector. And we have to help municipalities find those experts through online search and other tools. I don’t want to pre-announce our plans in those areas, but you now have a few hints about where this site is heading next.
Finally, a closing thought on EarthLink. Whenever a company stumbles badly, it’s important to ask the following question: Is the company broken or is the industry broken?
Before you answer, think back to when IBM was tanking in the early 1990s. Big Blue was losing money due to internal challenges and a disruptive technology (networks of PCs), rather than some massive problem in the IT sector.
Similarly, many of EarthLink’s problems were in place long before the company attempted to move into the MuniWireless market. A disruptive technology (broadband) undermined EarthLink’s traditional dial-up business. And a long-term recovery strategy — involving municipal broadband — has been scrapped in favor of short-term cost cuts.
So, is EarthLink broken or is the municipal wireless industry broken? Admittedly, big city build-outs are proving more complex and, in some cases, more expensive than originally anticipated. Some of those projects may need to be delayed until new ROI models emerge.
But for every project setback, there are numerous examples of successful deployments around the country. As Richard Bull, chief of police in Ripon, Calif., told me over email earlier this week, the city’s mesh wireless system “continues to grow and expand without any problems.”
This industry spends considerable time listening to cities that are still sorting out their public broadband strategies. That’s fine. But it’s time for us — MuniWireless.com included — to spend more time listening to the Richard Bull’s of the world as well.
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Muni WiFi will succeed ONLY when whoever ponies up for the multimillion dollar infrastructure sees a reasonable return on investment. Today we have HUGE problems with the business models:
Subscriptions: Without ubiquitous and reliable coverage INDOORS, WHERE PEOPLE USE THE INTERNET, Joe and Jane Websurfer WILL NOT pay $20 a month for muni WiFi.
Advertising: Without indoor coverage, again, the Websurfer family’s ad-consuming eyeballs will remain glued to their DSL or cable-fed computers.
Anchor Tenancy: There are not nearly enough WiFi-hungry cop cars, fire trucks or union job-displacing AMRs in a city of any size to pay for these networks.
Earthlink saw the writing on the wall. AT&T, IBM and other potential network operators see it also. Unfortunately, they are the ones that count, not the Richard Bulls of the world.
I’ve been posting on these events on MetroNetIQ. The principal bottom line conclusion I can make after a long week is that considerable noise, press, and attention in this industry flowed to EarthLink after they announced they would build the Philadelphia network on their nickel. Since that date, cities lined up in the hopes of getting their “free pony ride,” and that seemed to be all that the main stream press wanted to cover.
Collectively, those of us who sought to shift the conversation to other models, to multi-purpose networks, to models where cities paid, etc. could not get much attention, when all the buzz was about “free” Wi Fi and ever larger big city networks in SF, Houston, Chicago, etc.
While I feel for EarthLink and all their problems, I’m breathing a sigh of relief, because like a strong wind that blows away the sand to reveal what lies underneath, we can now hope to get some attention for more sound business models and other applications that were relatively ignored before.
Let’s hope so, because underlying technological drivers have not changed. We still need more broadband, cheaper broadband, mobile broadband, disaster broadband, and rural broadband; incumbents will still be slow to provide it, and Wi Fi Mesh and WiMAX still have a role to play.
We need to move away from thinking only of citywide networks to think of Hot Zones, away from single purpose networks to think of multiple niche applications sharing a network, away from residential access revenues to think of industrial access revenues from AMR and other distributed infrastructure monitoring, sensor devices, and video surveillance support, to name just a few.
We need more creativity and imagination, and finally, a lot more patience. Our thinking to date has been too one dimensional.
I applaud all of you. Now we are starting to get traction again. It is all about grass root creativity and the passion to implement it. Bravo! The focus should be on small-mid sized integrators and niche application companies. “The people” want to get away from the Big Brother incumbents and cities turned to Earthlink? IBM? AT&T? HP?
Hello!
PS: Joe Panettieri, I like your perspective here. Great work. This is the kind of article angle we little guys want to see.
I recently gave a case study presentation at the Texas Municipal League 2007 Technology Conference on our wireless mesh project. I am the IT Director for the City of Granbury Texas. In that presentation I made a point to the audience that while we had started our implementation in a private/public partnership we had now moved to a totally City owned network. I also made sure that everyone understood that I had run the numbers every way possible, and based on our costs (IT Staff, T1’s, hardware, software, maintenance) there is no way I can see to pay for this network based only on subscription sales.
Maybe this is why our private partner was not really responsive to keeping this network up and running. It was not a positive cash flow for them thus smart business decision to let it go. Has Earthlink come to this realization.
Is subscription sales the only way our municipality is going to see a return on our $500,000. Not really. We see other benefits. Police on the street longer because they can do their reports from the cars rather than the squad room. More information to our firefighters before they make scene on a possible structure fire. AMR project. Tourist access to city wide internet. These are all hard dollar and soft dollar returns that are real.
When I look at our customer reports and see daily users each weekend that are not from Texas, heck, not from the US, and think what is that worth to our tourist industry. That someone from another state or country has come to our little rural community and found ubiquitous internet connectivity. How does the commercial go, “Priceless”.
We took ownership 4 months ago and have been signing up new customers everyday. We receive at least 3 calls a week from folks that are in the process of moving to Granbury and have heard of our network and want to make sure that the home that they are moving into has access to our network. We are selling CPE devices to customers to enhance the signal inside to address the issue of poor indoor reception. We are continuing to evaluate our deployment based on usage and adjusting units based on usage trends.
Our current project is to deploy our vendors indoor routers into the businesses in town (Hotels, Resturants, Retail Shops) and expand the mesh indoors. The problem is we have more businesses wanting it than resources to deploy. I really think this is going to add a whole new dimension to the network.
I read a book quite a few years ago about the JPL Mars Rover project called Faster, Better, Cheaper. Maybe the Earthlinks of the world need to read it. We run the entire City, not just the wireless mesh network, all of our servers, users, 100+ desktops, websites, mail, you name it, with a staff of 3. I always tell my staff “Don’t tell what we can’t do, Tell me what we can do.” Until municipalities engage integraters that take this type of approach, and find that Faster, Better, Cheaper route, you will continue to see the Earthlinks of the world re-evaluating their involvement and bailing.
The real mindset that needs to take place in government is this, name one capital improvement project that municipalities, states, or even a nation can take on that has an impact on all tax paying citizens. I argued, yes purchasing this network back was expensive, $325,000. But show me another capital project for that cost that every citizen could use, or be impacted by.
Of course that’s just my opinion, I could be wrong……
EarthLink backing out? No surprise to me. I live in the St. Petersburg Florida area that awarded EarthLink the RFP bid and I told city officials months ago this is exactly what was going to happen. The problem with EarthLink is that their applications and revenue sources from municipal wireless networks are too basic. The old subscription model is just one part of a much bigger application puzzle for municipal wireless networks.
As a director and industry consultant that has independently studied not only technology applications but also business models in municipal wireless networks, I’ll say what I have been saying for years. Municipal wireless networks are public/private networks. In fact my organization’s business and technology cluster (ProjectSafety) years ago not only identified the importance of wireless mobile mesh technologies and applications but offered a business model called Community Network Integration (CNI) that required both public and private participation for it to work.
The CNI model makes it clear that all the local stake holders need to have skin in the municipal wireless network from the start. This includes every local government agency, business and citizen. By sharing network assets, costs and revenues; every individual organization can then target and deploy their specific application on a single shared network. What we have today in local wireless access to networks is a separation of available communication assets and spectrum, many times requiring specialized end devises to even connect to the network. The new municipal wireless networks designs are the local wireless Internet following national and international shared standards. The very design of these muniwireless networks support a one size fits all infrastructure. Local government agencies, businesses and citizens will soon realize that sharing municipal wireless network costs, just like we did with the Internet, is the proven answer to high quality survivable and efficient municipal wireless networks.
Let me quickly end this with a disturbing reality. The big application enchiladas in municipal wireless networks are in transportation applications. If we don’t get the core municipal mesh to mobile mesh infrastructure in place, and begin to share existing applications in the network, we may have to wait for a whole new transportation network to be built. The sociological implications of delaying these new wireless technologies as stated years ago by Intelligent Transportation Society of America are staggering:
Annual Safety Impacts
42,000 lives lost
3,000,000 Injuries
$230 billion in medical costs
Traffic
$ 6 billion in personal hours lost per year
$ 80 billion in lost wages and wasted fuel
20-30% more roads built ($280 billion ITS America)
Homeland Security
Goods monitoring
Oil dependency
Environment
Quality of living
Enough is enough. No more local government RFP’s asking for the world from private companies and giving nothing in return. This is not about some popular flash in the pan political hype about your city being cool and having municipal wireless. This is about the core safety, security, economic and quality of life responsibilities that are priorities of all local governments. Municipal wireless networks are just ways of using technology to rapidly and economically addressing these basic responsibilities. There are virtually hundreds of grants and billion of dollars available to support these types of local services. Then there is still a place for the private sector and the citizen to even further subsidize these core services that could eventually eliminate municipal recurring costs. It’s all about public/private and the workable business model is called Community Network Integration. So who wants to be first to do it right?
As outlined in most discussions on this subject the main issue with networks that had their plug pulled was the lack of revenue versus the enormous costs. The solution seems to be to look past using these types of network to provide “plain vanilla” internet access and rather see it as a conduit for selling services and applications through.
It’s all about adding mobility to services, so Carlos Rios’s argument in respect to the networks not penetrating residential units is faulty (to say the least). The concept of using WiFi to provide residential access is “soooo last year”. People want access while mobile and want to be able to use the same set of services whether at home, in the office or on the move.
Also public/private partnerships often seen with these types of networks seem to create a lot of problems because of a difference in performance expectations. It would make more sense for a private sector entity to own the network and to provide access to the municipality in exchange for access to locations (for instance).
A good “place” for municipalities in this picture is as the owners of the backhaul infrastructure (fiber?). That way the threshold for operators would be a lot less which would hopefully lead to increased competition in the market.
E.