The Do It Yourself Model
Corpus Christi, Texas, adopted a publicly funded model for its widely admired citywide Wi-Fi network. The city's smaller size forced it to pay the infrastructure costs, requiring $7.1 million on top of nearly half a million dollars in annual maintenance costs. Naturally the advantage is that Corpus Christi owns the network and completely controls the network's direction.
After setting aside 40 percent of the bandwidth for mobile applications designed to streamline agency functions, the city chose to lease the remaining 60 percent to ISPs. The resulting revenue will pay for the network's startup and maintenance costs, and possibly turn a profit that could pay for the city's other technology needs, according to Leonard Scott, program manager of the Corpus Christi Wi-Fi network.
The recently finished network will power several mobile applications, one of which is already succeeding, according to Scott. Corpus Christi implemented a home building inspection application long before finishing the network. Verizon, Cingular and Sprint installed their own medium-speed cellular equipment at various spots throughout the city where the main Wi-Fi network hadn't yet been installed.
Before the new inspection application, the city's roughly seven home building inspection processes took at least five days each to complete from the time a builder requested an inspection to the time the county approved it.
"Each one of those steps took a minimum of five days ? to have the developer make the request, get it on somebody's schedule, bring them into the office, get them the copies of the drawings, get them the copies of the regulations and code, put them in a truck, get them out to that site, survey it, come back, fill out the paperwork, route the paperwork to the supervisor for approval, get the paperwork down to the service center, have somebody notify the developer that the paperwork's ready to pick up, send somebody back to the site and post the notice on that board," said Jeffrey King, director of the utilities business unit at Northrop Grumman, the city's Wi-Fi vendor.
Now inspectors receive their work orders on Wi-Fi-enabled laptops in the morning and drive directly to their first inspection site without stopping at the office. Their laptops are equipped with all necessary documents, a digital camera and Internet access for reference materials.
Inspectors go to inspection sites, complete their inspections, take photos, fill out forms, capture signatures from various city approvers and send the information via e-mail to their supervisor, who approves it and posts it to the building division's Web site the same day, King explained. He said the application cut 35 days to 40 days out of the time it took to build a house in Corpus Christi.
Scott said the city is introducing a new mobile application that would let engineers inspect repairs of city property from their desks. On-site workers would use a Wi-Fienabled video camera to send footage back to engineers in real time. Scott said the application would raise everybody's productivity by eliminating engineers' travel time to and from repair sites.
He also noted that the citywide network gives local dial-up providers a chance to offer Wi-Fi-based services at a time when dial-up demand is vanishing. Since the network already exists, any provider wanting to transition to offering Wi-Fi-delivered Internet services would bypass the expensive network infrastructure costs normally involved.
"Estimates are, in the next three to five years, those folks will be out
of business if they don't find some other technology," Scott said. The providers can sell Wi-Fi Internet services and make a better profit. "There is no overhead," he added. "They buy it. They resell it. All they've got to do is support their customers because they didn't have to build an infrastructure first."
Boston is densely populated enough to attract a privately funded Wi-Fi network but recently opted for the public model. Beantown preferred a model that would let several providers share the network and compete against each other.
The Boston Wireless Initiative will likely form a nonprofit organization, separate from city government to fund the project, said Mark Horan, consultant to the initiative. Community organizations and corporations would supply most of the funding rather than taxpayers.
Horan said Boston doesn't plan to subsidize Wi-Fi access for low-income citizens. The city's Wi-Fi nonprofit couldn't afford to fund a service speed that was worthwhile for lowincome citizens, he explained, and offering substandard services to those citizens would certainly not close the digital divide. Horan added that subsidies would ultimately raise prices for paying users.
He said an inexpensive rate for a desirable speed generated by the market would be a more practical way to bridge the digital divide than politically and financially treacherous subsidies.
The Ad Experiment
Some cities are embracing an experimental advertising model for free citywide Wi-Fi access. In this case, the vendor offers free Wi-Fi to anyone in the city willing to endure a 1-inch advertising banner constantly at the bottom of the screen. Some vendors claim the resulting ad revenue will recoup their infrastructure costs and produce a profit. They boast of guaranteeing online visibility for ad clients because the user looks at those ads no matter where he or she travels on the Internet.
San Francisco accepted an offer from Google and EarthLink to install and pay for a citywide Wi-Fi infrastructure. Google would provide the free ad-funded service, while EarthLink would contribute the infrastructure and regular fee-based services for those wanting to skip the ads and have a faster connection.
Portland, Ore., released an RFP for its Wi-Fi network in 2005, expecting the winning vendor to offer free Internet service in just a few select spots in the city. Portland also asked for a "walled garden" arrangement, which would allow all citizens free Wi-Fi access to 20 Web sites of the city's choice.
MetroFi, a venture capital-backed ISP, offered Portland the citywide advertisingfunded model and won the contract. Construction is under way, and the vendor will complete two square miles for testing by early 2007, said Logan Kleier, project manager for the Portland Wireless Initiative. "Once that's finished, tested and approved by the city, then MetroFi will build out to the rest of the city, finishing by mid-2008," Kleier said. "MetroFi thinks it will finish sooner."
The free service, advertising model may sound enticing, but "free" often comes at a price. Normally when you lose your Internet connection, you call technical support. MetroFi's free Wi-Fi services don't include phone support. Kleier said the company would set up an online forum for users to trade advice on how to fix connection difficulties and other service problems. It seems fair to note, however, that users might have trouble participating in this online forum while disconnected.
Portland users wanting to bypass the advertising banner and help forum can purchase services from MetroFi for $20 per month, a deal that includes telephone technical support.
The Portland Wi-Fi deployment faced a few major difficulties however. The city does not own its public utility, and MetroFi had to negotiate power rates with Portland General Electric (PGE).
PGE had a minimum rate that would have charged MetroFi for far more power than its antennas used, Kleier said. The utility eventually agreed to file a new tariff that would bill the city at a rate closer to the antennas' power usage. MetroFi would then reimburse the city for paying that bill. Sacramento, Calif., is on its second attempt at an advertising-based, citywide Wi-Fi network.
Before Portland's MetroFi contract, Sacramento accepted a proposal in 2005 from MobilePro, an ISP offering Wi-Fi at 56 Kbps and free service for two hours a day. Later, the vendor rescinded its offer when Sacramento officials demanded additional terms and conditions they began seeing in other citywide advertising-funded Wi-Fi contracts.
MobilePro said it couldn't do a financially viable advertising model under those demands, according to Sacramento CIO Stephen Ferguson, who added that MobilePro tried saving the deal by requesting that Sacramento commit to buying more than $1 million in Wi-Fi services annually, but the City Council declined.
"As time went on, and we saw other deals happening, the City Council got a clearer picture of what they really wanted," Ferguson said. "When we issued the new RFP after MobilePro withdrew, we were very specific, unlike the first time where we just said, 'We want Wi-Fi. Tell us what you can do.'"
Craig Settles, an IT analyst based in Oakland, Calif., opposes the advertising model, doubting its business viability. Publicity expenses, he said, and networkrelated building and maintenance costs create too much overhead.
"You have to build a $7 [million] to $10 million network," Settles said. "That requires a lot of ad money to generate that kind of revenue. Then you have to support and sustain the network, which runs you about 10 to 20 percent of the cost of building it out. If you build out a network for $10 million, you've got to raise $1 million a year for ongoing support and upgrades."
Philadelphia was the first large metropolis to pursue a citywide Wi-Fi network. Wireless Philadelphia, the city-created nonprofit organization charged with implementing the network, accepted an offer from EarthLink to build the infrastructure for free. EarthLink will be the sole ISP on the network.
"We've got a pretty good arrangement that shifts the financial burden and the risk to a private company, but ensures through strong agreements and the presence of a nonprofit partner that we achieve our civic, public and social mission," said Greg Goldman, CEO of Wireless Philadelphia. EarthLink agreed to start paying Wireless Philadelphia 5 percent of its profits after the third year of the project's life. The company will also offer below market price Internet service accounts to qualifying lowincome users. Regular users will pay $20.95 per month while select low-income users pay $9.95 for the same quality of service, Goldman said.
IT analyst Craig Settles derides the private model as a municipal copout. He argues that a city can only ensure a Wi-Fi network fully benefits citizens if the city itself controls the network. A private-sector ISP would prioritize its shareholders' wellbeing before that of the city as a whole, Settles explained.
Goldman said he couldn't deny the benefits of a city-owned network, but he countered that the Philadelphia arrangement has mechanisms to protect city interests.
Power Struggle
Sacramento, Calif., learned the hard way that a city should first check whether it has gang-switched streetlights or streetlights using light-level sensor technology before releasing an RFP, said Stephen Ferguson, the city's CIO. Light-level sensors individually power streetlights, keeping electricity in the poles 24 hours a day. Gangswitched streetlights ? thus called because a single switch controls several lights ? are only powered at night.
Wi-Fi antennas can't operate on a gang-switched streetlight during the day without expensive alterations
to the pole or antenna. Sacramento officials didn't know most of the city's streetlights were gang-switched, Ferguson said.
"We didn't ask the Street Department because I didn't know the difference between gang-switched and light-level sensor-switched," Ferguson said. "We basically said it was up to the vendor to determine any issues with using the city streetlight poles."
Tempe, Ariz. ? MobilePro's last city Wi-Fi client ? used light-level sensor streetlights, Ferguson said, and MobilePro assumed Sacramento used them too.
"When MobilePro didn't do their research and submitted their bid, we then told them, 'Well, tough luck guys. You were responsible for determining that, and you made assumptions that were inappropriate. You're stuck with it,'" Ferguson said.
The oversight added roughly $2 million to MobilePro's infrastructure costs. Ferguson said MobilePro indicated it was willing to swallow those costs before negotiations dissolved. Portland, Ore., used the potential for a Wi-Fi powered automated meter reading system to help sell the wireless initiative to citizens. Later, city officials learned that the technology wasn't mature enough, said Logan Kleier, project manager for the Portland Wireless Initiative.
"They take too much power and drain the battery down from our wireless parking meters," Kleier said. "That's really a technological issue that has to be overcome. The city's not a research and development lab, so we can't hurry that process along."
Free Ride
Philadelphia was the first large metropolis to pursue a citywide Wi-Fi network. Wireless Philadelphia, the city-created nonprofit organization charged with implementing the network, accepted an offer from EarthLink to build the infrastructure for free. EarthLink will be the sole ISP on the network.
"We've got a pretty good arrangement that shifts the financial burden and the risk to a private company, but ensures through strong agreements and the presence of a nonprofit partner that we achieve our civic, public and social mission," said Greg Goldman, CEO of Wireless Philadelphia. EarthLink agreed to start paying Wireless Philadelphia 5 percent of its profits after the third year of the project's life. The company will also offer below market price Internet service accounts to qualifying lowincome users. Regular users will pay $20.95 per month while select low-income users pay $9.95 for the same quality of service, Goldman said.
IT analyst Craig Settles derides the private model as a municipal copout. He argues that a city can only ensure a Wi-Fi network fully benefits citizens if the city itself controls the network. A private-sector ISP would prioritize its shareholders' wellbeing before that of the city as a whole, Settles explained.
Goldman said he couldn't deny the benefits of a city-owned network, but he countered that the Philadelphia arrangement has mechanisms to protect city interests.
"It's not like Philadelphia just went forward and said, 'Here, EarthLink; here are the keys to the city ? have at it,'" Goldman said. "There is a very strict network agreement and series of agreements between Philadelphia, its agents, Wireless Philadelphia and EarthLink to ensure that this network meets the objectives of the city."
Settles said the potential for agency mobile applications, citywide Wi-Fi access and the likely economic development ought to justify a city funding the network independently. Many municipal officials reject that option, he added, saying it constitutes the city exceeding its boundaries and entering the telecommunications business.
"In Springdale, Ark., they levied a sales tax, raising $33 million to pay for a minor league baseball stadium. No one ever says, 'The city is getting into the sports management business,' or, 'The city is going to own a baseball team,'" Settles said. "All of these arguments you hear against municipal wireless, you don't hear in the sports stadium scenario,
yet it's the same basic thing."
He added that cities pursuing the private model are misguided to think citizens won't blame city government instead of the provider if problems occur. Perception is reality, Settles said, and users will perceive the city as responsible for the network's success or failure.
"If something goes wrong [the average citizen] is going to city hall," Settles said. "If [he or she] is unhappy, it's going to show at the voting booth. There is going to be a price to pay for failure, and if it's not dollars, it will be in political fallout."
As a middle ground, Milwaukee is combining elements of the Philadelphia plan with aspects of the Corpus Christi model. Midwest Fiber, a private broadband provider, is paying to build Milwaukee's network, but only to lease it to several competing ISPs. Milwaukeeans won't pay a dime to build the infrastructure but will still get a slew of competing service provider choices.
