Michael Oh and I talk about the unique aspects of Boston's initial look at citywide Wi-Fi: Oh was on the task force that released a report with recommendations earlier this week on how to bring ubiquitous, inexpensive broadband across all of Boston. The plan includes some interesting angles, such as spending $2m to light and connect dark fiber to build a 50-mile fiber ring, and the formation of a non-profit that would be dedicated to this project and yet not under the control of the city. (The mayor's office announced today that a local former tech exec with head the group that will figure out which nonprofit to pick for the plan.)
In Oh's estimation, the task force's key recommendation is that the enabling non-profit that will raise funds and contract for the network to be build will not be allowed to sell retail access. There will also be a very low bar for companies that want to be retail ISPs of the service. Oh's own business, TechSuperPowers on Newbury Street will launch a Mac-focused ISP--his business is a Mac integrator and repair shop. There's no conflict of interest in being on the task force in this case because he cannot obtain better terms; the wholesale service will be priced on an equal, nondiscriminatory basis.
Oh speculates that a neighborhood group with some volunteers could meet the criteria for being an ISP--there's no large deposit for escrow required as on other networks--and offer practically the wholesale rate to a small community. One that expects that tech support and help will be local, of course.
We also talk near the end about how existing non-profits in Boston that already are involved in training and digital divide work have been and will be involved. [42 min., 20 MB, MP3]
Michael Oh: Thanks for having me.
Glenn: Great, well, you know we were talking the other day, we just talked, gosh, about two weeks ago about some general issues about NewburyOpen.Net, which is the free, commercially supported network that runs on Newbury Street--the famous commercial street in Boston on which you are located--and at the time you mentioned there was a report that was about to come out. So it's been issued, it's gotten a ton of press coverage, and you sat on the task force that developed this report. So there's a primary recommendation in the report. What's the big, executive summary of that recommendation?
Michael: Well, I'll try to do the report justice. The executive summary is, essentially, the task force recommends--and let me first qualify this. You know the point where we are right now is that the report's been submitted to the mayor and the mayor has accepted the idea as something they want to move forward on and they are in the process of doing it. So just to clarify for readers, there's no network being built on this model quite yet. Nor have a lot of these sorts of open questions that are presented as part of this open report do we have all the answers for, but we do actually think we can get all the answers for them and that the model can move forward. So we're certainly not as far ahead as cities like Philadelphia or San Francisco and things like that.
Glenn: Ok, I'll give you all the provisos, that's actually very good, that's right, this report as a task force is recommendations that still need to be evaluated before actions proceed. But Boston should have a network built for it is the executive summary, right?
Glenn: I'm just trying to get to the, that's the money shot in the report, the network. But I mean, this is the interesting thing in the report, I think that's why there's so much press coverage is because: one-Boston's an enormous city, of course and two- it's in the spotlight because of big dig problems right at the moment, but three-it's a somewhat different approach that's being recommended as the top line way to get a network built. It's not a lets hand it over to a private company. Tell me a bit about how this approach is envisioned.
Michael: Well this approach is that essentially that there will be a non-profit entity that will either be formed out of an existing non-profit entity, but most likely it will actually be a brand new entity, and that entity will get handed the assets of the city. So, the street poles, you know, light poles and telephone pole access or whatever the places where the mesh nodes or wireless nodes would go, which are on city property, including tall city buildings and things like that, would essentially be handed over to this non-profit entity and that non-profit would use those assets in combination with obviously a tremendous amount of monetary assets in order to create, not only sort of the wireless portion of this network, which I think a lot of people focus on obviously since it's called a wireless task force, but actually one of the things that's very important is that they're creating an infrastructure for backhaul, which is not necessarily wireless. Certainly I think that the non-profit entity as it creates this network will use high-bandwidth wireless links in various places in the city for the backhaul but we're also thinking tremendous amounts of fiber as well. We want this entity to actually create a network that is growable, sustainable, and has an insane amount of capacity.
Glenn: Yeah, this was really fascinating--there's only a certain number of the municipal RFPs (request for proposals) that have gone out--for what I've been calling municipal authorization or municipal encouragement of wireless networks--in the past, almost none of these actually require or include fiber networks as part of the deal. Now, Seattle just put out an RFP which has gotten an enormous number of responses that's fiber only with an optional wireless part. Minneapolis had a mandatory fiber part coupled with a mandatory wireless part. But Boston's, I thought there was some really interesting detail in there. Where it said that the due diligence had been done, that after talking to incumbents who owned fiber that was already in place that for only two million dollars a 50-mile fiber ring could be built that could connect all the city buildings that may be put onto this sort of network. Which seems like a really interesting efficiency/cost-conservation thing that's buried inside this larger proposal.
Michael: That's correct and that's one of the sort of amazing things that has been done as part of this. I mean, if you look at the overall process of what we've done in Boston, is built the task force as well as, you know, the city. It is, I think we're doing all the right steps. We're frontloading everything with a tremendous amount of research and we're lucky also to have as part of the task force there's a hired consulting firm, Altman Landry, that's also very good with telecom information. They were able to gather information about what fiber networks were near to map out to do topological maps of the city so you could actually see what the heights of different buildings were and how you would actually sort of construct this theoretical non-profit entity. So even though we're just at the report stage, as the city moves forward with this there is a tremendous amount of this research which has been done, which you know now we're able to use to predict what the cost will be and how this network will be built. So fiber is a very big piece of that.
Glenn: And the non-profit, the idea here is that the non-profit is going to raise the funds in some fashion, grants, donations, loans and so forth. It's going to raise the funds, it's going build the backbone, it's going to build some kind of wireless backhaul, almost assuredly a wireless backhaul network as well to serve nodes in more distant places where the fiber ring won't suffice, and it's going to build this end-user service that going to be ubiquitous. So where's that non-profit going to come from? That seems like a big task to ask either an existing group or something to form out of nowhere. How is that going to come into existence?
Michael: Well, I think that it will come into existence through the sheer will power of the people involved. I mean, as is probably the case with a lot of non-profits. Without some sort of motivation to make something happen, you certainly can make a non-profit that will deal with this type of money and this type of network infrastructure. It must happen just out of people being focused on that Boston really needs this, and then gathering a set of people together that are both from the technical and business sides to go out and solicit funding but to also design this network.
I mean, I think that's one of the questions: that where do the people come from, where does the money come from. I could certainly try to answer as best that I can, what I think will happen, but I think what it really comes down to is, we've got to find a CEO and board for this non-profit. Let's presume for a second that we're actually creating an entity from scratch. You really want to have somebody who's a tech-minded CEO, who maybe had a tremendous amount of success in the dot-com era but is looking to move on and do something more civic minded and they can use their technical ability and prowess to build a network which is for an entire city essentially to use, and if you can find someone with that duel personality in a sense where they've made their millions but want to focus on something that's a little bit more, like I said, civic minded. And then you get board members that fill in the holes of where that person has weaknesses or maybe they are people who are very good at fundraising and things like that. Then you've got this basis or foundation for this non-profit, and then, obviously, you can start building the layers.
Glenn: Bob Metcalf has a townhouse in Cambridge. He's the inventor of Ethernet, founder of 3Com. He's still active in business and you should tap him. I actually wouldn't be surprised if he throws his hat in the ring for being involved in something like this. He actually helped, sort of through the backdoor, helped an ISP on the coast of Maine back in '97 get started with broadband wireless, and he's involved in one of those companies now.
Glenn: So that's going to be part of the challenge right, it's going to be that part of it. And I know that one of the aspects that's described in the report, this is something that's been criticized about wireless Philadelphia, the non-profit that is essentially acting as an intermediary between the city and EarthLink as a contractor in some of the utility agreements for that town. Wireless Philadelphia formed as a nonprofit by the city and it's essentially controlled by the city. Now this putative non-profit that would be formed or spawned from an existing one--in the task report it says that it should be free in order to keep the long-term sustainability of the network of this sort. It should be free of a whole number of encumbrances, but I did notice that it said the mayor or the CIO should be able to appoint a significant number of the board of director positions. Now, significant isn't a majority; is there some distinction that was made in the report between how this entity would actually be controlled?
Michael: Well I think the idea of city control was something that was discussed a lot within the task force. We want to be very sensitive, being in the Big Dig areas, government isn't one of the most popular, shall we say, entities to run large projects around here. And not just because of the Big Dig, but, in general, there's a lot of sentiment like that all around. So, we want to separate that, so the non-profit is an independent operating entity. But we also wanted to acknowledge the city's interests up to a certain point do need to be heard and board positions that aren't majority board positions, but the CIO obviously is an important person to have here. But anyone else on that board that would be speaking for the city, especially since presumably the city would be an end user or you could even say a retailer in this model. And they would be buying services from this non-profit entity as a wholesaler, and so in a sense it makes sense for them to have these board positions. So, certainly not majority, so that they have control over the direction of it, and I think that's perfectly fair as well because if you look at the goals of these types of networks for economic development, and that's usually more in the business and entrepreneur side of things, digital divide and city services as well, the city is a portion of that but certainly not a majority of those different elements.
Glenn: That's been an interesting part, too. Is once you have the city committing to spend the dollars, it makes it, I would imagine, enormously easier to get funding for a non-profit like this because it means there's a baseline commitment of resources.
Michael: That's right, and you know the interesting thing about the number, and just so your listeners know the number, they're saying anywhere from 16 to 20 million dollars is how much this non-profit would have to initially raise. Or not even initially, but sort of for a five-year period to get going. They need that kind of money. You know, they could start with a smaller amount and do smaller parts of the network, and could start with smaller amounts and do kind of a phased approach, and that may be how they approach it. But the numbers that are being talked about here don't actually include any revenue from the city services. We built the model with idea of, let's be as conservative as possible, let's assume that the city services, that the city itself, are not going to be throwing in a tremendous amount of money either on the revenue side or certainly on taxpayer dollars we ruled that out. What would the number be without that? We'd love to have the city say, because we're going to get cost savings from it we're going to throw this into the pot and that's going to make it less than $20 million. You know, we'd love to see that but that's not contingent on, the business model is not contingent on that.
Glenn: So really it's all operating revenue as opposed to capital expense or operating expense is the city's participation in this, and I think it's pretty clear in the report, is it's going to be, you were saying, as a retail partner, in the sense that the city will buying wholesale access to use within the city's municipal purposes on a retail basis. But essentially that lets them buy things like the 50 miles of fiber. One might imagine that they could be spending a few million dollars a year now for connectivity that could be replaced by a half million or million dollars a year in payments to use that fiber network and that would help very rapidly amortize the fiber networks' cost.
Michael: That's true and one of the reasons that we did play it safe is actually as much as a lot of city services or a lot of cities when they do these sort of models and what not, they look at the cost effectiveness of having wireless and they say "oh, well, it's going to save us from having to spend this or that and this within the different departments." We looked at those things within Boston but there weren't clear, there wasn't a clear path that as soon as something was lit up on the wireless side that you suddenly have a million or two million dollars a year in savings. Even the fiber, for instance. Comcast is building a new fiber, they're doing a fiber build out for the city, and that's going to be there regardless of whether or not that wireless network is there or not. It's part of this obligation that Comcast has to the city, to operate this network. And we really weren't able to say that just because this wireless network was here that that's going to go away and that will save a tremendous amount of money. So, because of that, we decided to play it a little safer and assume that there's not going to be tremendous cost savings from the city and so the city is not going to be able to commit to funds from day one to operate this network. With that assumption, that's the number we came up with. And that's one of the reasons that we feel very comfortable with this number, that it's not going to grow past that.
Glenn: Well that's interesting, and so the city's early use of this network might really be mobility, might be people out in the street with handheld devices, laptops, where right now they need to be using expensive EVDO service or having to return to the office in order to file reports or do whatever. So mobility will be a key focus on the city's use of the service initially?
Michael: Yes, mobility will initially be a key focus and then as they can migrate and use more of this fiber, use more of this bandwidth, and certainly as the data needs of the city grow, which obviously as you know, video cameras and things pop up all over the place and things like that. You're going to have data needs that grow beyond maybe what the arrangement with Comcast is, or maybe just contractually they're not able to have certain types of traffic go over the municipal fiber that's being run by somebody else. They may choose to use this network to do that, and it could be just over fiber instead of over wireless to do so. So, certainly, those cost-effective measures are kind of going to come into play over the long term, but they are not required I guess for the success of this business model, that's one of the important points.
Glenn: Well that's interesting. So I've been focusing on the municipal side of how things are going to get funded but obviously one of the primary goals here is, there's a great number in here about digital divide issues in which it says that--and I say this uniquely, but it's fascinating that 90% of Boston residents have the ability of getting their passed by fixed line broadband through cable, DSL--and the report notes that 40%, well fewer than 40% of households have broadband of some form, 30% still using dial up, 30% with no Internet access at home. So those numbers are actually, they seem to show that broadband uptake is below the national average. The dial-up uptake or the total Internet access availability is below the national average despite having it there. So that seems like one of the conclusions of the report stated over and over again is that there is so much cost built in to a long value chain that this is an attempt to shorten that chain a bit. To reduce the wholesale price and reduce the retail price.
Michael: That's correct and I'm not sure the sources or the reasons those statistics are what they are, but certainly you can make those conclusions that 90% broadband availability and given the pricing that's available here in Boston, people are making the choice, because they have the choice to not purchase it, because it's simply too expensive. And, certainly, maybe they just don't understand the value of it, maybe they aren't able to see that, but the truth is if you're able to bring that down to the mid $30s to $15 a month then you'll see a tremendous uptake, and that's something we're very confident in seeing that it will happen. That's not to say that the model builds that in. If you look at some of the anticipation of revenues and things like that based on 10 or 25 percent at most kind of uptake. So we're not anticipating that 50% of households are going to do this, 10% I think is a very reasonable number for us to hit especially given then number of households which would essentially just jump on because of the price.
Glenn: When you look at the dial-up numbers, we know that dial-up costs anywhere from $10 to $25 a month, and it ties up the phone line and if this is going to be $15 a month, and I noticed that the target is one and a half megabits per second symmetrical which is much higher upload speed and somewhat higher download speed than other networks. So that's actually, it's definitely broadband, and it's clearly a broadband service, but it's still, in many ways, somewhat below what people who really want the highest speed DSL or cable are going to get. So there's still a tiered difference, there's still the reason why people would buy a cable or DSL solution if they wanted five or six or eight megabits per second downstream.
Michael: That's correct, and I think the 1.5 was a number that was decided on because of exactly that. It was significantly more than dial up and it really, truly is broadband. The symmetrical aspect of it was very important for us to put in this report. Then it still leaves room for Comcast and Verizon who are the predominant companies in this area to have services that they can sell at higher prices. To me, dial-up users will hopefully move over to the wireless network and then potentially some of the DSL users and people that are looking for something cheaper, but more importantly it's that section of people that don't have any Internet access. With this network there really shouldn't be as many barriers--either from a cost standpoint and certainly not from an availability standpoint--that would keep them from doing it. I think that's going to be very important.
Glenn: Well one of the things I thought was interesting and I don't hear mentioned as much because the focus has often been on dial-up replacement or digital divide issues is that it seems when you get down to a price that could be as low as $15 a month that there are going to be a significant percentage of people with broadband connections who also have mobility, who have a laptop for work or personal use, as an increased number of consumers have laptops that they carry around with, or they have a Wi-Fi equipped handheld. That you're going to see this model doesn't prevent, in fact I think it encourages, Comcast and Verizon, RCN and other companies to resell their service, buy it wholesale and sell it to their consumers on a single bill. So maybe I'll pay $40 a month for a five or six megabit per second service at home but also pay $15 a month through Verizon or Comcast to get that same service everyone else is getting, as a flat service, as an add on for me or when my broadband goes down or when I'm in the backyard and I haven't set my Wi-Fi network up in the house to reach service. Do you think there is going to be a market? I have predicted there is a market there, too, where people have more disposable cash or more interest in that does that seem like part of what the uptake could be is from that market?
Michael: Absolutely. I mean, I think that's a big part of the market, because with our experience here on Newbury Street and the area of Boston that we're in. Newbury Street is a very nice part of Boston. Relatively well to do. And there are people who would pay multiple connections even per person. In a way, they're paying for cell phone bills and various other things. Adding another $15 to have that mobility is something that a significant proportion of people who are professionals who have laptops I think would pay. And so that is one of the reasons I really don't think that 10% is a hard number to hit. I think 25% is more challenging but still very possible, because we're not talking about replacing 25% of the lines out there; we're talking about numbers of subscribers, that's what we hit. And so I think the mobility is a tremendous application, and one of the nice things about where we have landed with this report is that right now we haven't landed on a particular technology, we haven't specified a particular mesh provider or vendor at this point, and that's somewhat on purpose, because we want to make sure that when we're involved with the design of a network--and I use the royal "we" here, because I 'm not sure that I'm necessarily going even be involved in it--but whoever is involved in designing this network, if it's the non-profit entity or the board members or whatever, that it's built with some of those uses in mind.
We're big Mac fans here, and one of the things that the consultants on this project and I were talking about was, "Wouldn't it be great, actually, if"--and this is going to get a little technical for your listeners, but I know a lot of them are technical--If when you went on to your wireless network on your iBook or your Mac Book, it gave you an IP address and gives you access because you paid for access there. But then there's a machine that's sitting at home that's on this wireless network as well. And actually you pay for a subscription for that device as well. And you bring it in on the network, and it gets a different IP address. But the way the system would be built is that it would know that those two devices were associated with each other in some form or fashion, so you would essentially set up a VLAN [virtual local area network] between those two devices on this wireless mesh no matter where they were. So the idea being that wherever your laptop was, it's actually on the same local network as your home machine anywhere across the city of Boston. This is presuming again that you live in Boston, right, that you...
Glenn: Right. This has been the Holy Grail for some businesses, too. And that's been something that municipalities have been asking for in a lot of the bids that have gone out, is exactly the capability, having the possibility of being that granular. That makes it more likely that a business in Boston with a lot of employees who live in the city, or teleworkers or whatever, that are within reach of the service--and even outside of it--in fact, the way they could set it up is you'd be able to provision a network where that business could have its own private VLAN, could be running a VPN [virtual private network] over the VLAN for extra security, but have its own local IP-addressed network that's protected, right? And then someone who is working remotely would be able to connect and through their broadband they could VPN into the VLAN. I know this does get complicated, but I know that's exactly what businesses ask for, it's exactly what municipalities ask for, that precise ability, and that increases uptake.
Michael: Yeah. And I think that the important thing is that obviously that requires a tremendous back-end intelligence in your routers, in your mesh nodes, and then in everything going on up from there. But if you're able to design that in... Looking at the things that EarthLink is putting together and the equipment they're using, I think they're looking at if from the standpoint of "What's the least amount of money we can spend in order to get this up and running so we can start making revenue?" They're not thinking about "What's the best investment for us to make in terms of equipment, both from the mesh nodes all the way up to the backhaul so that we can create real opportunities for innovation." Because when you talk about business applications and you talk about VPNs and V-LANing there, certainly that's innovation in itself because that doesn't exist in a lot of network architectures.
But if you can imagine even a home user being able to stream movies from your TiVo at home because you're on the same local VLAN no matter where you are in Boston, there's tremendous opportunities not only with existing software like iPhoto, sharing your iTunes, sharing your Front Row or TiVo type of applications. But then you think about what other applications could you use with these VLAN types of systems. So those are the kinds of things that we're really looking to do with this, and as part of that investment of the non-profit entity, it's going to have to make sure that the network that it's building from top to bottom is going to be able to support some of these advanced technologies and innovations.
Glenn: Right. Because these are rolling out into lots of different kinds of networks, and these sorts of things always start in the enterprise. They trickle down to more public networks, but I think about the number of cities that are rolling out, or their vendors are rolling out, metropolitan-scale networks. Many of these cities and their vendors have been talking about how they'll be either no-charge roaming, or have some really tight relationships among the various networks. I think EarthLink has said--I'm not sure how recently they've said this--they had talked in the past about trying to make sure there was no-fee roaming around all the cities that they put together. So if I go from San Francisco to Philadelphia, and I'm a San Francisco subscriber, ostensibly I wouldn't pay anything in Philadelphia, and there wouldn't be any huge arbitrage on fees or something that wouldn't make any sense. But once you start putting in these business kinds of services, VLANs and VPNs and being able to have one set of IP addresses in a pool that would be the same subnet to the way the computer is looking at the local network, I could be in San Francisco and someone else could be in Boston, and we could actually use metropolitan networking to offer us this security, this kind of business-scale performance. That extends a lot beyond the digital-divide issues and some of the basic stuff, but it certainly seems like that makes the network even more useful to more people--without adding necessarily lots of expense, given that these capabilities are actually starting to appear.
Michael: Yeah. Absolutely, and I think that's one of the advantages that Boston has in being so "late" to this game. We're not late in that there aren't any other major metropolitan areas with huge roll-outs that are active, but from the standpoint of doing this research and looking at the technology and not jumping ahead and saying "we're going to do this by 2007," we're saying, "Okay, well, we're looking at all the different applications," and we're saying that if you really want to emphasize innovation on your network it's good to make sure that all these enterprise-level things have trickled down so that you have mesh nodes that are relatively affordable that have V-LANing capabilities that will work throughout your network, and that's something we've focused on as well. But before we run out of time, I want to talk a little about this wholesale retail model, which is...
Glenn: Oh, yeah! Because this is something--this has been part of one of the big things as municipal networks have rolled out, is that almost all the proposals I've seen have required the RFP, or the just even the answering party without an RFP if it's a contract-to-city proposal, they've said, "These are wholesale networks. These are vendor-neutral networks, these are networks that are going to be resold at a non-discriminatory price to anyone who meets the technical requirements and maybe a deposit or whatever the other requirements are. It's going to be very low bar, so you can have as many different providers, national, local, but with specific interests. So that's seems to be enshrined very strongly and illustrated throughout this proposal, this report rather.
Michael: That's correct. And one of the concerns we had about the predominate model, the signal vendor being subcontracted out to build a networks, is that in most of those cases the vendor is also the retailer as well. So your value chain, at least for some of your customers from top to bottom, is owned and operated by one particular entity, and then at the same time that entity is also going to be competing on a retail level with other retail providers, but they're defining the wholesale price. And to us, as much as that scene seems to have gotten traction within the municipal wireless world, it seems a little ludicrous, because at a certain point--I understand there's contracts and there's pieces of paper and lawyers who are going to keep that from happening. Wireless Philadelphia is supposed to keep that from happening within this organization, but we wanted to have structural separation, where it was not simply just someone agreed to it and then eventually their intentions deviated from the first person who signed the piece of paper, and they go to court over that.
Glenn: You want to avoid a situation in which you had to use an enforcement mechanism to cause something to happen if you had a poorly performing vendor, who wasn't honoring the non-discriminatory practice, where really the courts are the recourse, as opposed to not providing that position where you'd have to go to the courts in the first place, let's say.
Michael: Right. Exactly. And the structural separation basically means that the non-profit entity that we've been describing earlier is the wholesaler. And so that wholesale price is somewhere less than $10, probably in the $8, $8.50 range per month per account, is something that's offered across the board to all potential ISPs. The other thing we wanted to do, which isn't really specified in task force report, but is a big piece of how we move forward, is the ISPs don't have a very large bar to become an ISP. My company, TechSuperPowers, we just sent out a press release saying we're intending to be an ISP on this network if this model moves forward. But I'll tell you that in any other city in America with the ISP ranges that we've seen where you have to put $10,000 in some sort of escrow account just to prove that you've got the money to throw around to run this business...
Michael: And that goes essentially into an EarthLink bank account and then they sit there and gain the interest on it, and they're not even paying for the network or anything. It's just sitting there to prove that we can be an ISP. Those bars are going to be removed. Because what we'd like to do is we'd like to make it so the person with a really good idea and not a lot of money but the willingness to move ahead and create something, and that may be a wireless application that may need an ISP-like organization, has the ability to do it. Alternatively, in the digital divide world, you can have a community organization which gets a little bit of grant funding to pay for the $8.50 accounts for 100 people...
Glenn: Oh, yeah...and they do volunteer customer support and they have some part-time person to do some accounting or pay for the paperwork, but then they could end up charging $9 a month instead of $15, so those...
Michael: Or they could charge even, depending on how the numbers work out, that could be your free accounts or your very, very minimal accounts, in terms of the digital-divide issues. That's kind of our approach to it because of that separation. I think that really fosters that innovation portion, which I think a lot of cities talk about economic development over the long term, and they're looking at it from the standpoint that wireless will magically create economic development...
Glenn: [laughs] Right.
Michael: That may or may not be true, but what we're trying to deliver here is to make that promise happen in the shorter term by actually saying, "In the first place, we're going to allow innovation actually within the model itself." It's actually going to able to have ISPs that come out with a different idea. In our press release, we said, "We're going to be the first Mac-only wireless ISP in the country, because we're going to serve Mac users." The press release basically said they're cheaper to support, so why shouldn't they get cheaper Internet?
Glenn: Well, you've got an interesting position too. If it's successful, if this idea is successful, then conceivably, as other networks were formed, if there's less of a requirement--Philadelphia is one of those cases where you have to make a $10,000 escrow account to put your hat in the ring. But as requirements evolve then you assume things become more standardized because that's the way it all works. There's going to be standardized authentication, standardized this and that. Conceivably your ISP, which is going to be Boston-only to begin with, could expand to other cities where it's entirely logical service support. There's no truck roll, there's no whatever, but it's Mac specialty. So this could give an ISP such as that a foothold, and innovate, and bring more money into Boston from outside because of this model being an incubator there.
Michael: Yeah, absolutely. And if you look at a business like mine trying to break into this ISP market in another city, not only is it a $10,000 thing that I've got to throw money into, but you also know that the person that's defining your wholesale prices is your direct competitor. So at some point EarthLink may just decide, "I'm just going to start messing around with the pricing a little bit and have my retail arm do some promotions so that we can start undercutting the end user price." For six months we'll do the lower cost, and then the wholesale price edges up, and then it starts moving people like me out of the market. And of course, as a businessperson I'm going to look at that opportunity and say, "It's not worth it for me to go in there." So as much as other models say, "Yeah, it's open for ISPs to be retailers," I think the end result is going to be you're not going to have a lot of commitment. The $10,000, plus there would be the other factors. You're not going to have a lot of people jumping into the ring and saying, "We're going to be an ISP." Whereas in Boston, it's sort of like the days of the dial-up ISPs, a little bit of the Wild West for those with the...
Glenn: This is where you see perhaps municipal involvement provoking more competition. It's a question, because in some cases, Philadelphia's a great example, where they kept RCN for years out of the market as a competitive cable television provider. I believe eventually the company had some real financial issues because it couldn't get into the markets it wanted to because of city feedback, but the flip side is that cities that are progressive in the right way, if they see a model that they've put together that they've signed with a vendor to work isn't working because it's not provoking and only one ISP signs up, or it's AOL and EarthLink in one city, I'm hoping that this is where citizens complain to the city, the city has some ability in the contract, one hopes, to have some flexibility there and to force changes that could provide this. I should also note that since you're a member of the task force, the interesting thing about this model is that it's certainly not a conflict of interest for you to start or think about being an ISP or anyone on the task force because the non-profit is going to be a separate entity and it's going to provide only wholesale access and only non-discriminatory access. Everyone's going to pay the same amount for the same services. So that's actually interesting, because this task force brought in a lot of people who may actually be involved in aspects of this business, but it doesn't seem to have caused any conflict of interest among them because of how the entity will be set up and the way it's going to sell its service.
Michael: That's right. The only advantage that I have over anyone else in the Boston market is that I read the report before everyone else.
Glenn: [laughs] Right.
Michael: But actually in terms of how the model is set up, it's very clean and actually very fair. For every Mac-specific ISP that's created, you could have a Linux ISP that's created, or a PC...
Glenn: All five Linux desktop users in Boston will now...
Michael: Right [laughs].
Glenn: Hey, I'm running three Linux servers. I shouldn't be critical. Hey, there's one last thing I want to talk about in the report before we finish up here. The report, by the way, I'll put the link on the podcast. But it's cityofboston.gov/wireless, where you can get all the information about this. And the last two pages of the report go into a little bit about existing groups that were involved in preparing the report, existing non-profits and digital divide groups and a little of their histories. And I thought it was fascinating that even though a new non-profit will be created or pop off from one to build the wholesale network that's going to be resold, that there's a strong focus on using existing resources, that Boston appears to be rich with existing resources that are trying to reach out to people, provide computers, computer training, a reason to use a computer, not just, "Hey, I have one and I'm going to stream something on it." So Wireless Philadelphia is having to create this, other cities are going to have to create infrastructure. Here you've got non-profits that are going to line up, it seems like, to partner and work with this network.
Michael: Yeah, and I think that's a tremendous resource that Boston's been lucky to have. That goes back to how we think the non-profit is going to be able to raise this $20 million number is that there's a tremendous history in Boston of philanthropy. There's not only individual philanthropy, there's also corporate philanthropy, that has driven a lot of these non-profits, like Technology Goes Home, and the Digital Divide Network, these different types of non-profits that create specific services that address a lot of these technology needs but not necessarily the access base because they haven't had an entry place. And that's one of the opportunities this model is really going to present. With this non-profit entity providing wholesale, that means that the Digital Divide Network could become an ISP, that these other organizations, any organization with just a relatively modest amount of funding could become an ISP, get some volunteer help to manage the phones, to help people out, to hand out wireless nodes and things that people need and help them how to configure it. Those kinds of things could happen on this network using those same non-profits, and hopefully, obviously the different services they provide, providing computers, training, and all of that stuff will definitely help as well.
Glenn: Well, I think it's a really interesting, rich model and in the AP story about this, I hope I didn't sound dubious. I was asked whether I thought it would spawn some more proposals in other cities, and my reaction was "Maybe not, " because so many cities are being approached by or putting out proposals for bid, and having private companies come up and say, "For not a penny on your part, for no real effort on your part, we're going to build this network." That's awfully seductive. So Boston has done something different because they're saying, "We know we could get a network built not at our expense that would probably meet some of the needs that we have. But we think our needs are particular, and we want to keep local ownership or non-profit ownership for that reason." And that to me seems very interesting too.
Michael: Yeah, and honestly, the task force did a lot of work before we even presented even an initial idea to the mayor. And there was a little bit of nervousness there, that the mayor was going to say, "Well, why are you presenting me this, because actually EarthLink just knocked on my door yesterday, and they said that for not a penny we're going to be able to create this network, and you guys are going to be able to have city services, and we're going to address a lot of the needs, just sign on the dotted line." We thought, "Maybe it's going to be too tempting for the mayor and for the city to go that way," but luckily, not only are we at the right time in the municipal wireless space, where there seems to be an opportunity to do something different, but it also doesn't seem that that model is really working in a way. You don't have cities that are coming out and saying this is great because they have this network up and running quickly, they're saving a tremendous amount of money... You don't have these success stories and so a mayor, like Mayor Menino is looking at those models and saying, "If they really were so great, and they really were so great for the city, then why haven't they been such great successes for everyone else?"
Glenn: Right. And we know it's early, and we know that the wheels of bureaucracy grind slowly, and in many cases appropriately. Philadelphia is spending six or seven months to get contracts negotiated and signed, probably in the best interests of the city as it turns out, because they got a lot out of EarthLink for it. But, no I think what you're saying makes perfect sense. But it's neat now that we have several different models at play. The downside is that I think Boston will wind up being later, which is probably good, there's going to be so many networks being built simultaneously without anyone being able to learn from each other. And that's not just MobilePro and MetroFi, and EarthLink, the three big network builders, learning from each other by scouting out competitive information, but EarthLink won't even be able to learn from EarthLink if it has to build San Francisco, Philadelphia, and five other cities at the same time. Any lesson they learn is going to take a lot more effort to cross-apply. So coming a little late to the party--the party is going to go on for a long time, so that may be a good thing.
Michael: Yeah, yeah. That's true. And a lot of it does come down to that sort of final technical implementation. This report is all well and good and you've raised $20 million, but if you can't deliver with the right products and the mesh nodes that do what you want, and that have the range, then you're going to be in some serious trouble. So I think that's one of the reasons that it's good to hold off a little later. Because then you can see how these nodes are performing in other cities, you can go over there, you can try them out. There's no better way with wireless than to walk around with a laptop and see how good your signal is.
Glenn: [laughs] That's right.
Michael: That's an experience you've got to have before you implement in your own city.
Glenn: You want service globally but you can only use it locally, so you have to be able to walk around with it. Right. Well, great. I've been speaking with Michael Oh of TechSuperPowers in Boston, Massachusetts on famous Newberry Street. Michael was on the task force that just released a report in Boston recommending how to build or how to find an organization to build a Wi-Fi network for our fair city, as the Car Talk boys put it. Thank you, Michael, for being on the podcast.
Michael: Great. Thanks, Glenn.
Glenn: Well, this has been Podcast #14, recorded on August 1, 2006. This is Glenn Fleishman, the editor of Wi-Fi News.