Many in the movement trumpet free Wi-Fi as the answer. What started off as a movement of the people, bringing free Internet access to the populace in the name of the digital divide and economic growth, has become a phenomenon dominated by service providers as cities realize the technical implications of a citywide mesh Wi-Fi deployment. And even where a service provider is involved, the free phenomenon persists.
There is danger, however, in making connectivity a nonissue.
“It’s part of the packet network evolution,” says Nan Chen, vice president of marketing at vendor Strix Systems Inc. “The wired voice world is being destroyed by cellular, and the same is happening with data. This is about speed, flexibility and scalability – with wireless you have the 100 percent reachability factor.”
And if the bandwidth is there – everywhere, and in the air – it radically reduces the importance of the network provider. Content and applications may be high-value, but the bread and butter comes from providing the pipe.
“There’s a shift from cities wanting to build a municipal-owned network to wanting a free lunch,” says Rick Rotundo, director of marketing at Motorola Inc., which has about three dozen “muni” deployments. “Cities say, give free access to us, and the downtown corridor, and for low-income people, and the rest of the area is yours to try and make money on. In areas where there’s very low broadband penetration – like Philly – the model makes sense, but for most places, no.”
By dis-incenting service providers, that places a large burden on the municipality to pick up the slack. “If you’re offering broadband to residences and businesses, an overlooked component is customer service and tech support,” adds Rotundo. “Municipalities often aren’t set up for that.”
Of course, muni wireless can’t fulfill its promise to the community if cities become unable to maintain the networks. “If you don’t have enough money to provide good service, you will go out of business down the line,” says Craig Settles, a consultant in the field.
So how does one plan a successful municipal deployment? Communities and their vendors should consider the goals of the network as a starting point. Will it be used for city services? E-Government? Economic development? The capital expenditure can vary widely, depending on the requirements for security, bandwidth and other technical specifications. Density is also a factor – the lower the density, the less opportunity for revenue and cost savings; however, higher density means higher equipment costs.
For the initial capex, cities can apply for grants, and if using it internally, can justify the expense – at least partially – with the opex reduction from in-field reporting or applications such as automated meter reading. Some vendors are offering programs to get cities into the game; Proxim Wireless Corp. announced a selective equipment grant program, and plans to award two cities, each of which will meet certain qualifications, a quantity of its new outdoor mesh products without cost for use in municipal Wi-Fi or public safety applications.
The modeling follows classic economic lines. “Say you want to cover 50,000 people and you spend a half million to build the network,” says Settles. “Then 20 percent will go for opex every year, so that’s $100,000 a year. Cities have to think, ‘Can you actually generate that much revenue?’”
If they cannot cover the costs, municipalities must look to other sources of revenue. Options include wholesaling the service to a service provider, charging for it themselves, setting up a franchise program for the bandwidth or launching an advertising model. In some cases, a free component can be maintained, either by layering “premium tiers” on top of a basic free service (as in San Franscisco’s model), or restricting free usage.
“The free model works well in a limited scope,” says Chen. “You can offer free services in a time-limited or geographically limited way. For instance, in Tempe, [Ariz.,] users get two hours free and have to pay after that.”
An increasingly popular idea is sponsorship and advertising – if one can get a sports franchise on board to sponsor the service, the city can offer them a constant branding opportunity in return for big dollars.
Settles offers a few caveats to the advertising concept. “I don’t think a lot of small regional cities can make that work,” he says. “There are only so many local merchants in smaller places. You need marketing muscle, and then the sheer numbers tend to work against you. Plus, if you’re in Poughkeepsie, [N.Y.,] you don’t have the draw to attract national advertisers, which is where the money is.”
Chuck Haas, president and CEO at MetroFi Inc., has a different opinion. MetroFi has a successful model based on giving away 1mbps of Internet access in suburban areas; it pays for its deployments through advertising. In crafting an RFP for Portland, Ore., for instance, Haas determined MetroFi would need 4 percent of the local businesses to sign up to buy ad space for the model to work.
Typically, a one-inch ad bar runs across the top, and the company can rotate national and local advertisers in it. Space is sold on a per-city or nationwide basis, and can offer geo-targeting to 500 feet, so local businesses can target users nearby.
“It’s not for every location, but where it can work, it works well,” Haas notes.
Bottom line – cities, vendors and service providers must consider all the variables before deploying muni Wi-Fi.
“You need to figure out the requirements,” says Settles. “There are too many people on the municipal side who don’t know what they’re doing. Vendors and suppliers need to know that and be willing to educate, or walk away from the deal.”
Autor/Author: Tara Seals
Quelle/Source: xchange Magazine, 02.05.2006
