EarthLink and MetroFi applied a similar business model to the muni market. Upsell customers from a free, ad-supported service and seek anchor tenant commitments from the city partners. So why is MetroFi succeeding with a strategy that failed EarthLink? This week I caught up with Chuck Haas, MetroFi’s founder and CEO, to get his take on the muni market in this post-EarthLink era.
MetroFi remains solidly in the muni market as EarthLink retreats from it. MetroFi deployments in Portland, OR, Riverside, CA, and Aurora and Naperville, IL, are not only operational, they’re getting heavy use and are beginning to merit praise from early critics. Early hiccups in performance on the Portland network have been addressed and it’s now returning positive reviews.
In a post yesterday highlighting Esme’s interview with Joanne Hovis , Sam Churchill commented in his blog, DailyWireless.org:
Numerous reports in the general media have tended to paint MetroFi and its deployments with the same broad brush they apply to EarthLink. But actual experience points to a reality that’s vastly different.
So what distinguishes the companies and their experiences? According to Chuck Haas, MetroFi’s founder and CEO:
1. The companies played in different markets. EarthLink was focused on the top 30 cities whereas MetroFi has been focused on the suburban rings surrounding them, towns of 50,000 to 150,000 population, where deployments scale to more manageable sizes.
2. “A little over a year ago,” he says, “we came to a realization that you really have to have the city use the network.” MetroFi began insisting that their muni partners agree to be anchor tenants on the network, paying for services that, Chuck says, deliver “real value” to the city. In Riverside, for instance, MetroFi is working with AT&T to deploy an open network for subscribers in the city, alongside a licensed 4.9 public safety network. Chuck sees muni applications, particularly on the licenses 4.9 band as the “future” of muni Wi-Fi.
3. EarthLink tried to rapidly carve a new market in muni wireless to replace its eroding base of dial-up customers. “Companies based on subscriptions have a hard time embracing a new business model,” says Chuck. “We didn’t come into this business with an installed base of customers. We could really pick our customers. We lowered the barriers of adoption. That’s because we have a business of charging advertisers instead of users. I think it’s great we can offer free Internet access but we’re really doing it because we can make more money that way.” By offering free ad-supported Wi-Fi, MetroFi is able to enjoy an income from the advertising as it attracts potential customers. “It means no customer acquisition costs,” says Chuck, “Ours is virtually zero.”
The ad support within the model is what Chuck calls the “higher volume, lower cost route and also the differentiated service route. The only network that can really offer a differentiated broadband service with the service being free is Wi-Fi.”
Of course, there is the cost of deployment. And that, says Chuck, is “one of the reasons why MetroFi moved to the anchor tenant model. The payback was too long without that as an additional revenue stream.”
Sorry, but this appears to be just more ho hum hype considering the status of the failure of the Access Point at N. Lombard and N. Jersey St. and the lack of anything being done to correct same.