"Sweeping statements were made without any substantiation," says Tropos CEO and president Ron Sege: After last week's kerfuffle over the release of the New Millennium Research Council (NMRC) report on municipal broadband, telecom, and cable, I thought it would be useful to the readers of this site to hear from Tropos Networks, a leading municipal wireless product vendor.
Tropos is a metropolitan-scale mesh network provider that I've been following for a few years. While they started in competition with enterprise campus networking equipment manufacturers, they quickly found a niche in public-safety and broadband networking in cities and towns that needed the kind of infrastructure that mesh can provide. Ron Sege, the CEO and president of Tropos, spoke with me yesterday about the NMRC and the municipal market in general.
Sege agreed that municipal networks don't always make sense, but said that the report overstated the case by far. "Sweeping statements were made without any substantiation," he said.
Read the rest of the interview after the jump.
He also noted that the report relied entirely on third-party information. "As far as I'm aware--and several of my customers called me when they saw the report--none of my customers were contacted for insight into the report. I have 135 of them" in the municipal sector, he said. This confirms a detail I have from Tacoma Power's Click! Network: they weren't called about the Beacon Hill Institute report from March 2004. There's only so much information you can gain without going to primary sources and relying, often, on newspaper accounts.
Sege cited Chaska, Minnesota, as a city cited in the report that wasn't contacted and that is a success story. The town has 2,500 users paying $16 per month and expects to have their total investment repaid within 18 months. Sege said, that the city's position is that "30 percent of our town is voting with their pocketbooks."
In New Orleans, Sege said the town has seen a 57 percent reduction in murder rates in areas covered by video surveillance transmitted over their wireless mesh network.
More generally, Sege agreed that the report's fundamental approach of only presenting negative evidence was flawed. "The right way to write the report is here's a list of cities that we've analyzed, and it makes sense in this situation, and it might not make some sense in this situation," he said. "That's the kind of analytic rigor we need."
Sege said that Tropos's business has been burgeoning in the municipal sector partly due to Verizon's heavy-handed lobbying effort in Pennsylvania that led to an outbreak of articles about the attempt to suppress Philadelphia and other nascent municipal networks. Philly eventually signed a side deal with Verizon after the governor apparently intervened.
The publicity has been a remarkable boost for Tropos, Sege said. The company added 25 customers in December alone. Many cold-called Tropos saying, "tell me more about why this is scaring Verizon so much."
Sege said that Tropos was initially working with public safety divisions of municipal entities that needed better or more comprehensive coverage without proprietary networking equipment for fire, police, rescue, and emergency workers.
But that focus has changed: in the last 4 to 6 months, municipalities have started asking for a multi-purpose network that encompasses public safety, but also fosters competition with other local players, adds service for lower income citizens, and expands overall broadband coverage in an area. "The Philly themes have really been taken up by most of the municipalities that we've been talking to," Sege said.
More interesting applications keep popping up, too. In Corpus Christi, the utility is working with a 900 MHz power meter that sends its signal to points that are connected to a Wi-Fi mesh network. "That's up and operational today," Sege said. The company will also shortly announce a plan with a major public utility that will use the mesh network for meter reading, fleet management, and demand management. Timely information that allows shifting loads can dramatically reduce power costs, Sege said, by avoiding the use of the most expensive power sources.
Towns and cities tell Sege that they're looking for more operational efficiency. By putting broadband into the field, they can keep workers out working instead of them having to return to central offices to file paperwork. Sege noted the coincidence that Corpus Christi says they can get two more hours on the street from police officers while San Mateo, another installation, said they get two more hours of a building inspector's time actually inspecting buildings. (I've heard similar figures in the health-care industry.)
Municipalities are also planning networks to replace aging and soon to be extinct CDPD (early cellular data) networks that were sold to police departments a decade ago. The standard is being turned off, and has only remained on this long due to a loud outcry when an earlier phase-out was announced. Municipalities "feel somewhat burned by CDPD that was sold to them as a long-term solution and then was summarily withdrawn," Sege said.
Their next investment has to be commodity based and multi purpose, which is why Wi-Fi has been fitting the bill. "They're using what is essentially technology derived from high-volume consumer electronics," Sege said. Because different departments in a city may make use of a new network and because some networks must be upgraded, there's an easier time of spreading the cost among municipal stakeholders.
A frequent statement in the NMRC report and in other discussions related to municipal data and related services has been the so-called inefficiency of cities at running utilities; I say so-called, because these have been assertions without public versus private utility comparisons on efficiency, cost to consumers, and customer satsifaction.
Sege noted that power utilities have been particularly interested in adding broadband because they already have staff in the field, bucket trucks, and a billing system. "In that case, the notion of being an ISP is really a natural," he said. But, "in other cases, cities like Philadelphia or Dallas or Tempe or Tucson or Madison, Wisc., are looking for partnerships. They rightly realize that billing and customer care are not their competency. Looking to go into partnership with AOL or Earthlink or another ISP and in effect confer a franchise on this new entity."
Sege called it ironic that the franchise model might arise for broadband just as it has for cable given that cable operators are among the companies fighting against the emergency of municipal networks. In fact, I would argue that cable and telelcom firms will wind up among--possibly chief among--the companies building, maintaining, and offering service on municipal networks as contractors or suppliers.
The idea that municipal wireless is a be-all, end-all, is a position that Sege refutes, too. In some cases, it's enough bandwidth, but he cited the town of Lompoc, Calif., one of Tropos's customers. They're building a fiber-to-the-home system that will take a few years to fully deploy. They want Wi-Fi now because it's a great adjunct, can be installed quickly, and provides a ubiquitous coverage. The FTTH project can easily bring bandwidth to locations as it expands, reducing separate network costs there, too.
Sege ultimate conclusion is based in part on his previous experience spending years selling to competitive and incumbent local exchange carriers: the Baby Bells and their competitors. "Verizon is eventually going to come around; they're going to do it, too. They just need some time to understand what it is," he said.