Ultimate Christmas bargain: Philadelphia to buy citywide WiFi network for $2M
The city of Philadelphia plans to buy the citywide wireless mesh network for the bargain basement price of $2 million from NAC (Network Acquisition Company), the firm that bought the network from EarthLink, which pulled out of the municipal wireless business in 2008. NAC’s investors include Dave Hanna, Chairman of Tropos Networks, the equipment vendor whose mesh nodes were used by EarthLink for the original project. NAC had never rolled out any kind of detailed plan for the municipal use of network and did not even get around to finding a real name (NAC sounds too much like “NewCo”, a placeholder name that people use for new companies). The last time I spoke to someone from NAC, they were planning to get key institutions around the city such as colleges to sign on as anchor tenants and to offer paid Wi-Fi to residents.
This time around, the city plans to use the network primarily for public safety, municipal communications, and field work with free Wi-Fi service in certain places (not the entire city). A story on Philly.com about the city’s acquisition says in part:
In order to build a public safety network and realize the full benefits of acquiring these wireless assets the City would need to make capital investments to upgrade and build out the existing infrastructure. Over a five year period from Fiscal Year 2011 through Fiscal Year 2015 the City would invest close to $17 million in Capital Funding to build out both its existing core fiber network as well as the wireless mesh network acquired from NAC. This initial investment will allow the City to realize close to $9 million in operating expenses over a five year period as well as significant other savings. By Fiscal Year 2012 operational savings will outweigh expenses and by Fiscal Year 2015 the net savings over the five year period will total almost $350,000. Without acquiring these existing assets the City would have to spend in excess of $30 million and several more years in order to create from scratch a capability like this.
In case you are wondering about why the most prominent of these municipal wireless networks failed (while the smaller, quieter ones succeeded), read this 2008 article by Sascha Meinrath entitled Municipal Wireless Success Demands Public Involvement.
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Another silly decision by Philly. Better to take that money and negotiate a deal with Clearwire.
How exactly do you propose to connect an iPhone to Clearwire’s WiMAX network? Nearly all smartphones, netbooks and laptops contain WiFi chips, not WiMAX.
WiMax to WiFi hotspots are in the works now.
WiMax would be for backhaul which where most citywide deployment need help.
Clear is here and to not use them one can is just poor planning.
Clear will bring us MANY smaller networks to towns / cities who would not be able to pull off a network using telco / cable companies.
Clear has stated they not only allow sharing they will help do it (via the WiMax to WiFi AP’s.
cox / google / sprint / comcast are all working on WiMax phones…WiMax is here and it will only grow.
They are buying the network for public safety systems and surveillance. They were going to build tower sites anyway and got a sweetheart deal. They also have a very good shot at getting wi-fi to actually work in the public spaces as they are not determined to put it into everyone’s home.
Until a WiMAX chip shows up in the iPhone, WiMAX will remain a niche technology.
Esme,
The purpose of public safety networks is not so that you and other consumers can connect with your iPhone
I’m liking the $1.25 million that Earthlink “gave” to have the network taken off their hands now generating another $2 million for the owner of the network. In addition, there seems to be a fiber component to this deal that the City of Philadelphia isn’t purchasing for their money.
As to the estimate that the city would have to spend $30 million more to replace the network, I can only wonder where that number came from. I remember a qualified business offering to build out this network for $5 million – and that was years ago, when the equipment was significantly more expensive.
And backing up Esme’s assertion that WiFi is critical to cell phone users is this article from Cellular News that states, “Wi-Fi Access Accounts for a Quarter of Smartphone Internet Traffic”
http://www.cellular-news.com/story/41163.php
I bet the current owners are not going to make a dime off of the sale. If you listened to any of the EarthLink earnings calls, these networks cost a bundle to run. They have likely lost money.
Mike,
The Current Owners were given the network along with $1.25 million in cash. The City of Philadelphia is now buying the network for $2 million and I believe the current owners get to keep the existing fiber backbone.
So, now that you know all the facts, exactly how much were you thinking of betting?