Olga Kharif writes in BusinessWeek about the flat-fish nature of the current municipal wireless market: Kharif plays the kazoo--as I have been--at the pre-wake for the idea of freely built city wireless network that may or may not offer free access to residents and visitors. Freely built networks involve a firm agreeing to bear all costs, with no commitment of revenue from the city, businesses, or residents. Those are dead.
The new model involves upfront service contracts from cities that replace existing telecom line items, ostensibly offering cost conservation or reduction in fees. But it's unclear how rocky the transition will be between the current model and the new one, with so many networks in rough shape during construction, and EarthLink ostensibly working with existing contracted cities to figure out how to make the business model work.
I'm quoted in the article noting how my research shows that where numbers of subscribers are reported, the level of subscriber is always enormously below the long-term break-even point, even on networks that have been operating in some fashion for a year or more. I also found that metro-scale service providers stop giving out numbers after initial excitement, which can only be attributed to a failure for those numbers to improve. While few networks beyond smaller towns are fully built out, one would expect that in areas covered, subscriber rates would climb towards predicted penetration levels if residents were able to use the service in their home. This is another data point in my book for how poorly in-home coverage from outdoor Wi-Fi nodes works.
Kharif mentions Lompoc, Calif., which appears to be the poster child for how these networks wind up not meeting expectations. The Lompoc Record said a few months ago that the city had spent $3m so far. Kharif reports that with 40,000 residents, they have just 442 users, hoping to grow to 1,000 by the end of the year. That's with a price cut implemented a few months ago. The original break-even point was 4,000 paying subscribers.
Meraki builds network from small pieces, loosely joined: Meraki has 6,500 regular users of its Free the Net network, which has grown to cover a hunk of Mission, Haight, and Alamo squares using about 200 nodes, according to the company. They had just 50 nodes and 1,500 users a few months ago; growth is rapid. They have a live map showing overall users, active nodes, and bandwidth transferred. Meraki's mesh networks allow multiple entry points for backhaul bandwidth, and communicate with each other using a slightly modified form of Wi-Fi; end users can use normal Wi-Fi to connect. At $49 a node for the indoor nodes, it's pretty cheap to expand the network. Meraki has 1,500 volunteers involved in the network now, and believes 15,000 will get involved by the end of the year. Strange how bottom-up networks seem to be building where top-down is proving more complicated, expensive, and elusive.
Long Island's Suffolk and Nassau counties pick new firm for unwiring: e-Path Communications got the nod in a field that included an IBM consortium, MetroFi, and EarthLink. (I don't know that the latter two firms stayed in the bidding at the end, since bids were solicited early in the year.) e-Path Communications, a Florida firm (which apparently likes the "e" logo from Microsoft Internet Explorer; see their site), was founded in 2006, and will work with Cisco and KeySpan, a Northeast natural gas utility that offers service in those counties. KeySpan also owns 80,000 miles of fiber optic lines. 2.7m are covered in the two counties across 750 sq mi. Cisco's involvement probably involves financing, as they have elsewhere. The network's cost to build is estimated at $150m.
Newsday reports that this is an "old school" deal, with the consortium not requiring any fees from the counties. Limited access will be available for free outdoors--which means for mobile use without a booster, ostensibly--while higher tiers of service intended for homes will start at $25 per month and businesses at $55 per month. ePath is currently working in a joint venture with ATCI (a firm that mostly deals with high-tech security) to unwire Delray, Flor. It's hard to imagine how a deal like this is financially feasible without service contract commitments from the county.
Minneapolis and St. Louis Park don't know how good they got it: A short piece by the marvelous Steve Alexander, a business and technology report for the Minneapolis Star Tribune about the "bumpy" road that the two cities have had in getting Wi-Fi networks up and running. The delays they've seen are so miniscule compared to those in other cities, they should consider it smooth sailing. Minneapolis took forever to pick a vendor, and US Internet has a few technical hurdles to deal with.