Municipal Wi-Fi: No More Free Ride

By Eric Marx

June 12, 2003

No matter what model municipalities propose to use, the days of cities getting a free wireless network from generous companies are coming to an end as vendors look to get paid for their services and equipment. The questions then are: do they need Wi-Fi, how do they get it and how do they pay for it?

The towns of Elgin and Walla Walla in Eastern Oregon might as well serve as advertisements for the positive attributes of municipally-supported Wi-Fi. Long neglected by the telco's who refused to offer high speed broadband to such sparsely populated communities, today, thanks to wireless technology, these communities have the chance to bridge a digital divide that's left them feeling isolated and marginalized.

"This isn't a luxury. This is a necessity," said Dan Stark, director of the Oregon Center for Rural Policy, Research and Services, a nonprofit group that's attempting to generate support for a public-private partnership that would bankroll a wireless signal broadcast from two fiber drop points.

"If we don't have broadband, that's going to be the death knell of us. And so we have to be able to bridge that and find a way to do it. It's not a matter of can we do it, but when and how."

City planning officials are best advised to look to a number of successfully deployed municipal wireless networks that have revived economically depressed business districts, extended government services and lessened the digital divide in disadvantaged communities.

But which model the municipalities choose to pursue depends on citizen demographics and, to a larger extent, budgetary shortfalls that today are an all-too-common reality for most cities and towns.

Municipalities that own their own fiber can most cost-effectively deploy wireless. But oftentimes they're paralyzed by disagreements between IT departments concerned with security risks and the public relations folks who want to hype the technology, said Sean LeMon, president of Color Broadband, which provides high speed Internet access to Long Beach's downtown wireless hotzone.

Color Broadband more than doubled in size after linking up with Long Beach, and yet LeMon said he's frustrated because the $4,000 contract barely covers the cost of the raw bandwidth. Moreover, the sweetheart deal offered to Long Beach has created unrealistic expectations.

"Every mayor in every city has heard about Long Beach and they've all been calling us and e-mailing us," said a perturbed LeMon. "We're becoming a bit of a name brand for Wi-Fi in downtowns, which is great, but everyone wants it for free."

If donated services and equipment enabled early-adopter cities to launch wireless networks, going forward there won't be any more free rides, LeMon said.

"The Proxims and Verniers of the world will do one or two for hype but the problems is now there's hundreds of cities that want wireless in their back yard and they're not going to donate any more equipment. They're saying, we're here to make money, too. That's what they're saying. They'll give them discounts but it's the first cities that jump on the bandwagon that get the free toys and everybody else has to figure out how to get it some other way."

In-kind contributions from wireless vendors Color Broadband, Vernier Networks, G-Site and Intermec reduced the Long Beach hotzone price tag from $300,000 to under $10,000, according to Chet Yoshizaki, the city's economic development manager.

But although the project exceeded his expectations, Yoshizaki said he doesn't exclude the possibility of having to limit usage or institute a fee-based model when the contract comes up for renewal.

Still, Long Beach airport will soon go wireless thanks to the help of JetBlue Airlines, and Yoshizaki says he is optimistic Long Beach businesses will provide advertising revenue as well.

"I just have to think of ways to partner with other people in terms of marketing," said a satisfied Yoshizaki.

But such partnerships are merely preludes to fee-based models that generate revenue for cash-strapped cities and the ISPs who view wireless as simply another distribution mechanism for their services, warned municipal wireless consultant Nigel Ballard, currently the Wireless Director for Matrix Networks in Portland, Ore.

"It's no different from the Starbucks T-Mobile network," complained Ballard. "You'll still have to get your credit card out if you want to play."

"We [city hall] don't have any money. And you know city council doesn't have the money," said Ballard, repeating a commonly heard refrain uttered by city officials. "So what they wait for is for you to come to them with a deal that means that they get what they want but they don't have to pay for it. And what that means is a commercial entity that doesn't want to give it away. They want to sell it. They want to stick it on the roofs of city buildings and so they get free landlords in effect. The teaser is that they'll put some restrictive bandwidth free service in an underprivileged area of town as long as they can milk the rich part of the cow of retail."

In Ballard's estimation, municipalities are foreclosing the possibility that one day they might provide free wireless access to parks, libraries, schools and low-income communities that he says deserve equal access to the Internet.

"You're just delivering it in another way as opposed to putting down a phone line or a broadband cable."

Ballard fears the city of Portland may be making that same quid-pro-quo tradeoff because of its poor financial health. City officials say they're still reviewing proposals, and they point out that because Portland owns its own fiber it may choose to become a provider in select circumstances.

Yet expanding one's broadband service to the public requires additional funding, said Matthew Lampe, Chief Technology Officer for the City of Portland. When faced with budget shortfalls, the inclination may be to first roll out a fee-based system.

"It's not like building a fiber network where you're talking millions of dollars," Lampe said. "But in times that we're facing where every year we've been cutting--having to cut money, cut staff, cut training--coming up with a chunk of money to expand our ISP services and devote some people to separate stuff for security purposes, is some work and has some costs to it.

"I think cities have a role in bridging the digital divide and I think this is one tool that may help do that. But that's just one piece of it," Lampe added.

"The other piece is that if we can facilitate this then it is also one of the tools that helps your business environment, particularly for businesses that are either in the technology arena or are interested in using technology to help improve their bottom line."

Lampe's wish list may be unrealistic, given Portland's present economic climate. Yet there are examples of other cities such as Jacksonville, Florida, where, one year after deploying a riverfront hotzone, the city expanded the program to low income neighborhoods through a partnership that included Conexsys, a network management firm, and BellSouth.

Connexsys president, James Higbe, says it's all part of a "maintenance" model (as opposed to a subscriber mode) by which Internet connectivity costs are spread out (and thus kept lower) to the entire community.

It's not social obligation, said Higbe, but something that will pay off in increased employment opportunities, education levels and services access.

"The trick is it's hard to show people where it's going to make them lots and lots of money," added Higbe. "But as far as ISPs go, you're going to get ISPs who are going to want to operate in this space as well and, as an integrator, I can't wait."

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