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September 21, 2004

How to Pay for Municipal Networks

By Nancy Gohring

Some municipalities may have already learned some lessons about offering telecom services that they can consider when deciding to build Wi-Fi networks: Some of the most successful municipal offerings of wired telecom services started out with small trial networks and were offered by municipalities that already offer utility services to customers.

But beyond whether a municipality has experience with billing and marketing a service, Wi-Fi presents a bunch of additional uncertainties. In the wired example, in many cases the market doesn’t have any other option for broadband Internet access and customers definitely pay for the access. In the case of Wi-Fi, in many cases other service providers may already offer wireless access.

Plus, cities have to decide whether they want to offer access for free or for a fee. If they want to deliver free networks, they have to decide how to fund it, considering both the initial outlay and ongoing support costs. Ultimately, citizens of communities may end up deciding. In St. Cloud, Fla., the city is trying to decide how to pay for the ongoing maintenance of the network and will likely ask residents to decide on a ballot referendum.

If municipalities decide to ask residents to pay for access, they have to hope they can cover their costs. At this stage in the market, based on the experiences of commercial Wi-Fi providers, it’s not clear that an operator can make money from for-fee networks.

Posted by nancyg at September 21, 2004 11:15 AM

Categories: Municipal

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