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August 28, 2006

Minneapolis Doesn't Pick EarthLink

By Glenn Fleishman

The city has spent many, many moons deciding on who to anoint to build a fiber, Wi-Fi network: A local firm called US Internet has gotten the nod to move ahead for further steps of approval. They won out over EarthLink, which has notched mostly wins in its bids around the country for the largest cities. The fiber part wasn’t even mentioned in this article, which focused on competition and pricing for Wi-Fi.

An interesting part of this plan is that Minneapolis will advance the sub-$7m/year revenue firm $2.2m, and pay $1.5m for city and public safety even before services are fully active. These fees will wind up paying for services later; essentially a credit against those future services.

The network will be built over 9 to 12 months, and US Internet wants 18 percent of 168,000 Minneapolis households within five years. That is awfully ambitious, especially because the promised speed is 1 Mbps each way for $20 per month. According to one local source, there is no provision for an increase of speed nor a higher price for higher speeds. Businesses will pay $30 per month for the same service, and city employees will pay $12 per month for accounts. (A far sight from $60 to $80 per month for unmetered but not unlimited Verizon, Sprint, or Cingular 3G broadband, though municipalities can pay less for large plans.)

A $75 bridge will be required for reliable indoor reception; it can be leased for $5/month, but the articles doesn’t mention if that includes hardware upgrades as the bridges turn into last-year’s technology. The firm will also offer VoIP plans, with video downloads coming a few years later.

As has happened in some cities, this pricing and these goals for penetration may ignore the 800-lb. gorillas. Comcast and Qwest could offer lower-speed upload but similar or faster download services that directly compete, but, of course, they lack the mobility.

One of the big questions in cities that aren’t suffering from a large broadband availability gap—a St. Paul reporter told me that nearly the entire city has DSL and cable availability—is whether the mobility portion is as important for residents and businesses as it is for municipalities. Municipalities need mobile accounts across an area clearly defined as their city. But do windshield warriors and average folk if you couple it in with home service and business service? This is the big question, and that’s why 18 percent penetration in five years seems like a high bar to set.

Posted by Glennf at August 28, 2006 7:02 AM

Categories: Municipal

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