MuniWireless

The news this week has been somewhat colorful in its reporting of the role that municipalities need to play in the future buildout of fiber infrastructure, wireless infrastructure and so on. At my firm, our analysts decided to take a step back and identify any thought leaders who may well have identified accurately the key stakeholders who should be involved in deciding upon municipal wireless deployments, along with the associated risks and costs.

What may be surprising to us all is that a team of scholars drafted an article for the
Communications of the ACM in February of 2008 entitled, “Municipal Broadband Wireless
Networks.” This article was based on research conducted by an “expert group” comprised of public and private participants which actually analyzed the Philadelphia Municipal Wireless Network by conducting 13 focus groups with 100 participants. This is a must read for those needing to decipher their municipal role in deploying broadband technologies and you will find the graphs and charts quite illuminating. Additionally, conducting such a process before deploying your own network should be a mandate for municipal decision makers. So, before you agree to the notion that you will have to invest significantly in your broadband infrastructure, do yourself a favor and decide what you will use it for and who might be willing to share the cost within the community. Then, make sure you engage and partner with private industry correctly.

In the ACM article, as well as in the WSJ article, a comment was made that internet and telecommunications providers have lobbied against municipal wireless, pointing to anticompetitive behavior. This is described by both articles as being powered by the value associated with mounting assets, such as poles and rights of way, present within municipal jurisdictions. This seems to suggest that cities have power if they own mounting assets and that private industry knows they do. So, municipal broadband, for some, is likely lucrative, isn’t it?

Now, take all the hype about Philadelphia and put it into perspective. This city more than any other has paved the way for the rest of us in terms of learning and we owe them for taking the risks for us as we determine collectively the best model for broadband deployment. Based on the ACM article, they did the right thing in choosing a private industry partner to build and manage the network; but not unlike other community deployments, they decided to deploy only a not-for-profit model, as pointed out by Naveen Lakshmipathy in the New America Philadelphia Story. Choosing only a not-for-profit model, produces significant limitations on the network. First, the idea of making and driving a profit is lost completely and thus cash flow, or shared savings from the network, are not directed towards deploying necessary municipal applications that can, in turn, generate additional cost savings efficiencies. Second, the liabilities associated with running private data or critical real-time data over a community network limits the use of the asset by businesses and institutions that require enterprise-level security and accessibility. Fundamentally, a not-for-profit business model focused on consumer usage seems flawed in terms of running an enterprise or municipal wide network. Indeed, in respect of the network, perhaps the real consumers (businesses and municipal departments) need the assurance that they will not be in the headlines due to critical data leaking out across a “community” network.

It appears there are three levels of hype around Municipal Broadband (remember the hype curve by the Gartner Group?).

1. Municipally Owned – Here, the business case is typically easy to construct because these cities are underserved by telecommunications providers and they own their mounting assets. They usually run municipal utilities and for the same reasons they entered into the electric business, they are forced to get into the broadband business for economic development. They deliver service and reliability. The hype is that public carriers are limiting competition, which is certainly not always the case.

2. Not-for-Profit Partnership – These initiatives usually involve a not-for-profit entity and involve a private industry partnership of some sort. They typically focus on digital divide objectives because industry requires more robust network management. The hype is that by focusing on digital divide, your community becomes an Intelligent Community, which makes sense because universities are usually driving these network deployments based on educational enrichment.

3. Public /Private Partnership – These initiatives account for a private industry revenue stream and deliver cost savings, efficiencies and strategic applications to consortium members. Digital inclusion is a wonderful by-product of this model. Run by private industry, they allow large municipalities to reduce spend and deploy mobile applications, whilst generating cash flow that benefits the residents. The hype is that sexy handheld applications for consumers are the wave of the future, when real ROI to citizens comes from municipal field applications that improve service delivery and security in growing regional communities. All of these models work at some level, but the trick is to understand early on what the stakeholders and users of your network require.

Circling back to the ACM article, the authors suggest that municipal wireless networks may eventually disappear, merging back into the larger broadband food chain…after all isn’t this really what is happening to Earthlink and MetroFi? However, we believe firmly that well-constructed public/private partnerships (not ISP models) in the municipal setting hold very rich rewards for those who leverage their government assets and deploy wireless technologies through cost-savings achieved by meticulous forward planning alongside strategic partners.