The Long Island network deal raises a few eyebrows: The New York Times sticks "newcomer" right in the headline of their story about Suffolk County and Nassau County's selection of e-Path Communications to build the largest currently proposed single-contract network. The counties chose e-Path and its partners Cisco and KeySpan because the municipal entities didn't have to cross the consortium's hands with filthy lucre. Here's the money graf from the article:
"Some Wi-Fi systems elsewhere have fallen short in their expected advertising revenue, and [Suffolk County executive Steve] Levy acknowledged that it remains to be seen if e-Path’s innovative financial plan will succeed. 'Let's see how this works,' he said." Yeah. That's how I plan a reportedly $150m, 700 sq mi network, too.
(Wireless Silicon Valley's 1,500 sq mi requires 40-odd individual contracts with cities and counties; Houston's contract with EarthLink covers 600 sq mi. A network in Eastern Oregon is larger and growing, but covers a population that numbers a fraction of Long Island's two counties involved in this deal.)
Newsday follows up on their brief account yesterday of the deal by surveying how other networks are faring, and whether the model proposed by e-Path et al can work. I'm quoted saying, no, it can't. More significantly, the reporter spoke with Chuck Haas, CEO of MetroFi, which was one of the bidders on the Long Island network. "That company bid on the Long Island project, including upfront costs in its plan, an expense county executives sought to avoid. But Haas said lack of upfront money makes the business model unsustainable."
It's critical to recall, too, that "upfront money" should really be described as "fees currently paid to a variety of telecom and data providers, mostly incumbent monopolies, that would be transferred to a new wireless operator as the network achieves benchmarks of performance." There is plenty of money to be moved over or saved from city telecom budgets for dedicated wired lines, among other areas, where the service commitment to a MetroFi or EarthLink would involve no incremental increase in expense, or perhaps a one-time increase followed by a decline.
Joining in on the fun of describing the change in the muni-Fi market, the Wall Street Journal provides its take: This article details the cost overruns, delays, and business model problems with many networks that are being and are not being built. Note that everyone quoted is now in agreement that cities need to step up to the plate and agree to purchase services to have their networks built. That used to be a narrowly held opinion as recently as early this year. As reality has set in, so, too, has the attitude changed. One note about the article, though: It repeats the common fallacy that "Initially, cities funded their projects out of their own budgets." Only certain smaller cities chose that funding route. Some larger towns planned to fund their networks that way. But I know of no deployment of any scale that didn't involve a vendor bearing all the cost. Networks in Chaska, Minn., Lompoc, Calif., and St. Cloud, Flor., were built at city expense; the former two as for-fee networks, and the latter as a free one. Corpus Christi, Tex., built the largest city network I'm aware of, but for municipal purposes, selling it to EarthLink when the transition to a for-fee public access network came into view.
What about the equipment vendors? It's been a while since I spoke to Tropos, BelAir, Strix, Motorola, Cisco, and SkyPilot about their metro-scale gear, because the focus of the industry (and this site along with it) moved to deployments and applications rather than the hardware. How does your business model change, when networks that would require tens of thousands of nodes are put on hold? I expect we'll see the answer to that question by year's end. One part of the answer is that the four startups in the list above may have promoted themselves as municipal solutions, but are selling products worldwide and for corporate campuses and private purposes. I expect we'll also find none of these firms were silly enough to put all their eggs in one basket.