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June 9, 2006

MobilePro Pulls out of Sacramento

Company issues press release about rug being pulled: MobilePro uses Strix gear to build privately operated metro-scale networks that provide some services to cities--typically mobile workers--with a larger focus on mobile and fixed access for consumers, businesspeople, homes, and businesses. They put out a press release that they've withdrawn from the Sacramento, Calif., project because the city changed its terms. MobilePro says Sacramento now wanted to require them to build a high-speed, free, advertising-supported network contrary to MobilePro's business model and original response to the RFP.

The Sacramento Bee has a reaction from local officials: The city's CTO says he was surprised that MobilePro went public instead of further negotiating. Stephen Ferguson says in this article that the city council directed him to work on a deal closer to those in San Francisco (300 Kbps free via a Google partnership with network builder EarthLink) and Portland, Ore. (free ad-supported access with a fee-based no-ad option).

Ferguson says in this story that they'll have to go back to the drawing board, but that their pilot project with MobilePro will aid them in finding a replacement faster. According to earlier news accounts, AT&T (then SBC), Motorola, and MobilePro submitted bids, with AT&T withdrawing at one point. I imagine that Sacramento could get as many as a dozen bids on this go-round.

Update: I talked to Stephen Ferguson, the city's CTO and Jim Rinehart, the head of the economic development department for Sacramento, about this development. Both Ferguson and Rinehart said that the evolving nature of metro-scale wireless networks in other cities affected the city council's requirements for this network. Because other cities were able to find providers that could meet the city council's targets, this meant that MobilePro was asked for comparable services. "The council's feeling was if we're going to sign a contract with a provider, we want it to be comparable with what we're seeing in other locations like Portland, San Francisco, and Philadelphia," Ferguson said.

"We wanted to give MobilePro every opportunity to the city's issues. They were repsonding in good faith," Ferguson said. "We just got to the point where they couldn't close it, they couldn't make it worth, according to their own internal business model." The city wanted advertising-supported free access to be a part of the mix, they said.

Ferguson and Rineheart noted that with so many changes in technology and in the economics of these networks, they would rework the RFP to incorporate newer ideas, such as including tests of more cutting-edge technology, like mobile WiMax, as part of the mix, although the core end-user access will still have to remain Wi-Fi. The RFP will be reissued within four to six weeks with a 30-day deadline for responses.

Ferguson noted that municipal CTOs and CIOs talk to each other all the time, and that Philadelphia's technology head, Dianah Neff, is someone he's known for 20 years. Sacramento sent their own RFP to five other cities to use as a model. "We know more about them [vendors] than they know about themselves," since cities aren't competing on technology and they have broad public disclosure.

This development in Sacramento may put more pressure on firms entering the metro-scale market because city's may increasingly ask for escalation. Some cities already state in contracts that they will get at least a good a deal from the company that's building the wireless network as that company will offer elsewhere. But since it's a partnership, one expects cities not to push too hard--or the firms they contract with will, like MobilePro, decline to proceed.


This is something analysts really need to look into and provide some sober comments on.

MobilePro was right-on in backing out of this effort by the City to force an untenable Business Model on them.

Bottom line: An Ad supported Model providing Free Wireless Access to all residence is ridiculous both from a technical and a ROI standpoint.
Technically with todays Wireless Mesh and latest Point to multipoint Fixed radios combined, a provider can provide a wireless link to everyone outdoors within Line of Site and reach of these radios. This is not what these cities have in mind and will be requesting. When they say residence they mean you and me at home indoors.

I just knew that the Philadelphia Model (with Earthlink)would cause problems for everyone in our market, and it hasn't even started yet. It is causing City Council folks to dream.

An Ad supported models may work in very select markets with tightly defined deliverables-very low bandwidth to select customers etc.. When addressing the residential side of the market one needs to have a robust business community (commercial/finacial service sector) supporing it or forget it.
This does not apply to most cities and will be a problem if it spreads.


If Sacramento cant negotiate for a new arena using taxpayers money how does a company like MobilePro expect city council or whomever to agree on a network that uses the same idealism...taxpayers are not going to pay for anything that doesnt make since except the #1 priority for Sacramentans which is building a new arena thus negotiations on that matter seem to finally be in the final stages, meaning MobilePro and any other company will be offered the same advertising-supported free access deal...someone somewhere will go for this deal and Sacramento will reap the rewards, heck I wish I was in the bid for this because Sacramento is a thriving community especially Roseville (suburb of Sacramento) and anyone who wins the bid will win also as far as advertising and marketing goes.