MuniWireless

Once a municipality decides it’s time to start the wheels in motion for a wireless network, the single most important next step is determining the network’s business model – specifically:

• Who will own and/or operate the network?
• Who will pay for the network’s build-out and/or ongoing management?
• Where will the funds come from?

Much of the decision-making around those questions starts with the municipality’s strategic goals for the network. A city or county that wants to deploy an ambitious WiFi cloud over hundreds of square miles will likely opt for a different approach for funding the network than a community that decides to start with a single municipal application, such as public safety or meter reading.

In the first few years of the market, many municipalities chose to fund networks on their own, often using a combination of annual operating funds and longer-term, debt-based funding through bonds or loans. Since most projects were narrow in scope and usually supported a limited number of applications, municipally funded projects often weren’t seen as a huge drain on public monies.

Innovative municipalities such as Corpus Christ, Texas; St. Cloud, Florida; and Chaska, Minn., helped pioneer the market by committing public monies to build their networks for a combination of applications. As the market heated up in 2005 and 2006, a few overly aggressive service providers and integrators – led by EarthLink Networks – embarked on projects where they would bear the brunt of the funding responsibilities, in return for owning the networks and generating revenue primarily by Internet access subscriptions. Understandably, the idea of a “free network” was very appealing to many communities, some of which contracted with EarthLink and other service providers. But that business model came under pressure in 2007 when initial assumptions on network build-out costs proved too conservative and subscription rates too ambitious.

What the past few years has taught the market is that there is no one, single funding approach that works for every community: Every municipality’s goals and objectives are different, as are their economic, demographic and political situations. Increasingly, even in communities with strong anti-tax attitudes, the idea of public/private partnerships has taken hold. In these partnerships, there often is some form of financial commitment by both the private and public sector to fund the network. For instance, in some cases the municipality will devote at least some money to fund infrastructure build-out or to become an “anchor tenant” on the network for certain annual fees, with the private-sector partner also kicking in funds to build the network. The municipality also often supports the partnership by granting rights of way to mounting assets such as street lights, tall buildings or other structures were mesh radios, access points and video surveillance cameras can be attached. (A word of caution to municipalities: Make sure you do a full discovery of mounting assets to ensure proper ownership. Many communities assume they own assets like street lights, only to discover that they were installed years ago and are still owned by local power utilities.)

Another approach several communities are taking is the not-for-profit corporation, which is an arms-length organization that works closely with both the municipality and the private-sector partner, but raises money independently to fund the network. Of course, the money has to come from somewhere, so one of the most important tasks of these not-for-profit corporations is lining up sufficient funds from various sources, typically businesses or organizations that would benefit from having a wireless network in place. These include local businesses, media companies, financial institutions and educational institutions such as universities and public school districts.

Still another funding option is emerging from local utility companies. For instance, Burbank Power & Light has been deeply involved in efforts to build a network in Southern California communities, and Keyspan Energy is one of the key partners in Long Island’s plan to deploy a privately funded network across 900 square miles in Nassau and Suffolk counties.

Finally, one of the most popular and important funding sources is grant money, typically from state and federal agencies and often affiliated with public safety requirements. Such federal government agencies as the Federal Emergency Management Agency, the Department of Homeland Security and the Defense Department all have funded projects to use wireless networks at the heart of public safety applications. State agencies also have grant monies available for these projects, as do private foundations designed to promote the use of new technology. (These often include “green-friendly” foundations that seek to encourage municipalities to use environmentally friendly network infrastructure rather than dig trenches or string cable above ground.)

Also, don’t forget your local elected officials, especially at the state and federal level. For instance, while the practice of Congressional “earmarks” has come under scrutiny in recent years for alleged abuses on projects of questionable merit (remember the so-called “bridge to nowhere”), political leaders still do enjoy considerable influence in directing funds to worthwhile municipal projects.

A taxonomy for funding strategies has emerged, with different blueprints for different communities with different objectives and scenarios. These options include:

• Municipal capital budgets
  • Long-term projects funded by bonds and other public debt
• Operating budgets
  • Short-term projects funded with annual operating funds
  • Savings/offsets within operating budget
  • Overtime savings
  • Delayed/reduced hiring
• Revenue opportunities
  • Advertising
  • Improved traffic infraction collections
  • More accurate meter reading
  • Subscriptions from businesses and residents
  • Wholesaling to local Internet Service Providers
• Grants, awards and other third-party sources
  • Local representatives
  • State and federal agencies (FEMA, DHS, DOD, Dept. of Energy)
  • Economic development agencies, chambers of commerce, Small Business Administration loans
• Public/private partnerships
  • Anchor tenancies
  • Rights of way/mounting assets
• Other partnerships
  • Not-for-profit corporations
  • Other private- and public-sector partners/investors
    • Parks districts, libraries, school districts, universities, hospitals, utilities, etc.

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2. European Commission approves public funding of fiber network in France
3. Wireless Communities Georgia Program: an interview