Industry Insiders: Ron Sege

By Naomi Graychase

December 27, 2007

A 'state of the union' conversation with Tropos Networks’ CEO Ron Sege.

Ron Sege, Tropos Networks’ CEO, is optimistic. Not just because Boston College, where two of his children are enrolled, is having a miraculous football season; and not just because, when we spoke in late October, the Red Sox were well on their way to winning their second World Series in 90 years. Ron Sege is optimistic because outdoor Wi-Fi is doing well—and his company is leading the way. With more than 500 deployments in the U.S. alone, and bragging rights for both durability (Tropos’s solution famously survived Hurricane Katrina) and performance (Novarum’s on-the-ground testing ranks Tropos at the top of the pack), his optimism is well-placed.

Sege (pronounced, “Seggy”), whose company—despite his Boston sports fan leanings—is based in Sunnyvale, California, is one of a handful of industry leaders with a uniquely valuable vantage point on the wireless market. On October 25th, we spoke about where the industry has been, where it is, and where it’s going. What follows are highlights from that conversation.

On EarthLink

“We are the primary supplier for EarthLink…The market is evolving today from being driven largely by consumer-led applications, which is EarthLink’s primary focus. Going forward you will see a much more diversified approach, with cities and providers building “mixed use” networks that support consumer access, plus what I call 'Municipal Enterprise' applications. In many respects, you can think of these as offering the utility of an indoor wireless LAN, but supporting mobile municipal and mobile enterprise employees and devices in a large outdoor setting. These applications, which include such things as mobile broadband in first responder vehicles, mobile video surveillance, automated metering infrastructure, and intelligent traffic systems, are driving the majority of our business now. It’s about safer citizens, more services per tax dollars, and more efficient use of energy.”

On muni Wi-Fi

Laguna Beach, with their Fire Watch application, is a great example of how our customers are deploying metro-scale Wi-Fi. It’s very much of a municipal-application-led market right now. We see that trend continuing for certainly the next one or two years, until there’s enough critical mass of mobile Wi-Fi devices--BlackBerries, iPhones, etc.--to stimulate the consumer market.

“We’ve done some analysis on the size of the muni enterprise market, and divided it into the applications we see as driving muni Wi-Fi deployments. Video surveillance and public safety have received a fair amount of press, but utility meter reading and intelligent transportation are also emerging as important applications for cities.

“This can be big business--in the U.S. muni enterprises represent potentially a $4 billion market…

“Most [of our equipment] is going to where a city is purchasing it for its own internal use. We’re also seeing service providers deploying muni Wi-Fi as an extension of their existing infrastructure…Frontier Communications, for example, is the telecom provider in 250 cities, including Rochester [New York] and Wilkes-Barre, [Pennsylvania]. They are aggressively rolling out muni Wi-Fi offerings to give cities the choice of buying a subscription or “managed service” instead of deploying their own networks.”

“The focus on supporting consumer applications over the last two years has meant that metro Wi-Fi technology works better than it ever has before. It is being more utilized than ever before. As an industry, we have now found where today’s real benefit is for these solutions. Today there is more benefit to be found in the enterprise space than in the consumer one, but we certainly do expect more consumer adoption as demand for Wi-Fi mobility grows.”

On putting the horse before the cart

“Look at the IT applications a city relies on. This is where muni Wi-Fi got its start. We sold our first Tropos system to the San Mateo [CA] police, and our second to the Milpitas [CA] police. When I first started at Tropos in 2004, we sold a 600-square-mile system to the city of Oklahoma City [OK]. All these systems put true mobile broadband into police cruisers for the first time ever. 

“So, back in 2003-04, muni applications were the bread and butter of the industry. Then EarthLink came along and made the bold statement of, ‘We’re going to use Wi-Fi to compete against DSL to give consumers more of a choice.’ This captured the attention of the country. We all would love to break up the big telephone company oligopoly in this country. That’s why we received so much press in 2005-2006.

“So in many respects, here at the end of 2007, we’re back to our roots, building broadband wireless infrastructures to support municipal applications. But, Wi-Fi is a general purpose, open-standard technology. So, as consumers want to take their Internet everywhere, they will want to use Wi-Fi. Over the next one to two years, you’ll start seeing the consumer-funded models coming back.”

On funding sources

“As far as ad-funded networks…there may be anywhere from a buck to five bucks per subscriber per month for ads on these networks, however consumers will be forced to look at a rotating ad bar or something similar. Even if you can generate three bucks per month per subscriber, you can go a long way towards supporting a network. As ad targeting improves and new models for user experience develop, that model may pay for itself. If that happens, it is no different from how we pay for broadcast TV and radio today--watch ads and get TV for free. In the meantime, service providers who have championed that model, MetroFi for example, have had to change their business model to insist upon some sort of city anchor tenancy to supplement the revenue they’re getting from advertising.

“There is also still a market for a DSL alternative--what EarthLink was primarily trying to do--but mostly in smaller cities. Chaska and Moorhead [MN] have successful growing metro Wi-Fi networks there. …[Wi-Fi can be] more affordable than DSL in smaller markets. With the pricing umbrella, Moorhead can charge $17.95 and can raise the price because DSL costs $35. Incumbents are not forced to be very price-competitive in these smaller markets. There is also a very good market for consumer “hot zones” in downtown and tourist areas with high footfall.”

On quality-of-life applications

“In Tucson [AZ], they’ve put two-way video in ambulances. In some cases, they can treat patients on-scene as opposed to having to transport them to hospitals. This leads to a safer and healthier population. In Amory, Mississippi, [the deployment was] funded by a local foundation dedicated to education. They built up an education-based portal that is used in the schools...Their idea is to deploy Wi-Fi over cities and to provide students with laptops so that they can access the Web at home and at school. Now, they can do their homework and their parents can help them. They can become computer-literate at home and at school. If they graduate high school, they get to keep the computer. That’s a pretty innovative program.

"In Baton Rouge [LA], they’re using Wi-Fi mesh with an application called ‘ShotSpotter’ and video cameras that track and discourage handgun crimes. ShotSpotter identifies the location of the gun shot and using the camera, can help in identifying the individual that discharged the gun.”

On lessons learned and secret sauce

“When we started deploying consumer networks in 2004 with Chaska, EarthLink, and Google, Wi-Fi mesh technology was in a rapid state of improvement. Nobody had built an outdoor Wi-Fi system designed to support a heavy group of users in a 12-square-mile city like Mountain View [CA], let alone a 130-square-mile city like Philadelphia. We learned a lot about what’s needed in optimizing mesh protocols, but frankly, the most important thing we learned were ways to improve the Wi-Fi protocol itself for outdoor operation. When Wi-Fi is highly utilized, its performance starts decaying, and it doesn’t decay gracefully because it is a shared medium.

“With feedback from our customers, we have improved our algorithms to compensate for these limitations in Wi-Fi. Novarum has reported on [our networks] in the last year or so, and found significant performance and reliability improvements. This is not simply a function of increasing node density—or of better Wi-Fi radio technology--it’s really that we’ve dramatically improved the software algorithms for mesh and for client access. So, it’s not accidental that the Tropos networks continue to improve, despite being more and more heavily utilized …yet another reason to be bullish on Wi-Fi in enterprise and consumer settings.”

On WiMAX

“I think WiMAX will go through the same cycle as Wi-Fi or any other new technology. There will be a hype phase, which is what we’re going through now. I think this past WiMAX World is perhaps going to mark the peak of the hyperbole surrounding WiMAX. Then, it will go through the same 'trough of disillusionment' that Wi-Fi has gone through. There are not many WiMAX devices out there yet, it’s not widely deployed. How much node density is required? How long will batteries last in consumer devices? How much capacity will there be on the network?  We will be learning all these things as we go along.

“…WiMAX is a fine radio technology, but there are a lot of kinks to work out in anything new in radio …especially technology designed to work in the outdoors. I think one of the biggest things that WiMAX will have to overcome is that in 2009 there will be a billion Wi-Fi devices in the world and less than 100 million WiMAX devices. So, WiMAX will be fighting the law of large numbers on the client side. This is also true for WiMAX relative to CDMA and GSM technologies.

“For these reasons I believe you will see the WiMAX service providers start mixing some Wi-Fi into their offerings…It’s all about subscriber acquisition, regardless of what technology they use…The WiMAX providers will run into the same problems as Wi-Fi providers: consumers are not ready to take their Internet with them everywhere yet in huge numbers. So, they’ll say, ‘Gee, maybe we should sell to enterprises.’ And then, ‘Gee, maybe we should have a Wi-Fi component so we can appeal to iPhones and BlackBerries.' It is just what we have been going through in the last year or so with Metro Wi-Fi."

Naomi Graychase is Managing Editor at Wi-FiPlanet.



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