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May 20, 2006

Budget Error Boosts St. Cloud Network's Costs

St. Cloud, Florida, is probably unfairly receiving close scrutiny on its free, city-wide network paid with municipal funds: The city's mayor explained some months ago that he sees part of the point of this kind of network is keeping the $700+ per year spent on average by broadband users from leaving the state. It's an interesting article. But the network has been perhaps overcovered as the first municipally run free network of this scale; others that offer free service are substantially smaller or offer it only over a downtown or limited area. The latest report suggests $464K above the $2.6m spent to cover the city will be required to achieve close to 100-percent coverage.

Half the new expense was due to a mistake in timing. Developers will start paying a $118.46 per new house fee Dec. 1, but 14 developments weren't factored into the budgeting for the network. Covering these neighborhoods will come out of the city's pocket, although it's possible developers will voluntarily contribute to the effort, since they're passing this along in some form to buyers. (Yes, it's a free network, but that's how "free" can work.) Three neighborhoods were annexed since budgeting happened, and about 20 percent of this new expense covers service for them.

Another chunk, $185k, is for 35 APs--hey, we just found out these Tropos nodes cost $5,000 each to buy and install!--to fill in poorly covered areas, according to this newspaper story. The coverage level is now estimated at 82 percent, and expected to top 90 percent soon, which is the contracted amount. One council member thought the contracted coverage was 100 percent.

Given that 100 percent is impossible for any wireless technology and most wired technologies without excessive expense, it's a bad number to shoot for. That last one percent could cost more than the most expensive 20 percent of the network. (That last 0.001 percent--a crank in an underground concrete bunker--is the killer.) HP, which is building the networks, suggests that anyone with a problem receiving a signal by the end of June should the consider a PepLink bridge or a higher-gain antenna.

St. Cloud isn't unique in having a free service city-wide in a larger town, just for the city paying for it. Some smaller towns offer free Wi-Fi and I would like to guess that between 500 and 1,000 cities and towns now have some public or private limited or unlimited free Wi-Fi in at least one popular place.

But the only other cities that have free service on a metro scale are those operated by MetroFi, which went free several months ago. (That's free with ads; there's a fee-based, no-ads version, too.) MetroFi hasn't received the same kind of scrutiny and critique as St. Cloud because their first cities were unwired without municipal involvement. With the Portland, Ore., contract in hand, MetroFi might expect the same kind of close observation as the St. Cloud network. But given that MetroFi isn't required to disclose finances and runs its own budget, there shouldn't be any cost carping about their deployment in Portland.


Glenn your comments are correct. I would like to add a few points that the reporter did not bother to include in the article, even though she had the facts.

The additional AP's which need to be added to optimize the system where alwayas anticipated (there was no way to know the number or location intil the system was up and operating) and as a matter of fact were part of a contingency fund (15%) in the original budget. That reality is not as sexy for her story but is reality.

Additionally, the City did change the LDC (Land Development Code) so that new developments would have to pay to expand the system as they came into the City. While it is true that there was a timing difference between the original deployment contract and when the LDC got changed the reporter also knew for a fact that one developer that represented half of the cost had already agreed to fund it.

FYI - next week about 85 days after the launch the 5,000th home will register for the system. There a thousands of citizens enjoying the system in St.Cloud every day. At the 5,000 mark the citizens are saving about $2.5 million per year. Money that was leaving the local economy but which is now available to be spent for local goods and services. In addition 40% of those subscribers were previously digitally disadvantaged with either dial-up or no access and are now enjoying broadband service.

Johnathan, I like the St. Cloud model. One question: How did you get to the $2.5M savings? If 40% of 5,000 homes are digitally disadvantaged or with no access, how do they contribute to the savings? They were not spending much money on internet access to begin with.

Using your 40% number: If 2,000 dial up or disadvantaged homes paid an average of $15 per home -- my SWAG on a weighted average because some homes did not have internet access -- their yearly savings is $360K. This means the remaining 3,000 homes, that cancelled their broadband for the free access, picked up the remaining $2.14M. This equates to almost $60 per month for internet access. Is this what the DSL providers or cable provider in your area are charging for broadband?