The wireless backbone provider Towerstream will flip on a dense Manhattan Wi-Fi network: Towerstream built a wireless network in the skyline, paying for prime locations on the top of buildings to point high-speed service at line-of-sight locations where conventional wired or even fiber broadband wasn't available, would take too long, or wasn't competitive or reliable enough. Now it's taking aim at Wi-Fi.

But it's not trying to be a metro-scale Wi-Fi operator. That would be foolish. Rather, Towerstream is building out a dense Wi-Fi zone, described by BusinessWeek as seven square miles of Manhattan. The firm is deploying 1,000 routers, and the backhaul is clearly its own building-top network. Being able to leverage its own backhaul is a distinct financial advantage, as it already has a business model that works for the point-to-multi-point service it offers today. This is icing on the cake.

Towerstream will sell access to the network to carriers looking to offload mobile 3G and 4G traffic from congested, expensive cellular networks to Wi-Fi. AT&T has built similar zones itself, although I doubt quite as dense or extensive. Towerstream could become a vendor-neutral cost-effective alternative to carriers building these "heat sinks" for high bandwidth usage themselves.

Phone users benefit from this offloading as well as carriers. You get a much faster rate of service from a dense, high-speed Wi-Fi network than the comparable 3G or even 4G service, and no carrier in the US bills by the byte for Wi-Fi: if it's included, it's free. Thus, you can use much more data without hitting limits or paying overages.

The BusinessWeek article has a serious flaw, however. It misstates the nature and reason for failure of municipally backed Wi-Fi networks. The writer, Peter Burrows, makes a variety of historical errors, including stating, "While most of the failed experiments of yore were based on taxpayer-funded municipal projects, this time there's a clear business need for wireless carriers." In fact, there wound up being built no taxpayer-funded municipal networks. All of the deals involved cities or counties bidding out the right to build a network, with access to public facilities (conduits, towers, building tops, etc.) as part of the carrot. Very little municipal money was spent, while private firms went through tens of millions in never-completed network buildouts. Minneapolis stands as a shining example of the only network that was completed and thrived. (The city purchases services from the network operator, but the network was funded and is run by US Internet.)

Burrows also describes the router that Towerstream will use somewhat incompletely. He talks about it being an antenna, for starters, and claiming the units run $800 each. That might be the unit cost, but installation and providing an electrical feed will run the installed price much higher. He notes, though, that Towerstream will pay $50 to $1,000 per month to the owner of the property at which a router is installed. Nice fees if you can get them.

There's a great capper to this story: Towerstream's quiet 3-month test of 200 routers in Manhattan: "Last year, Towerstream conducted a three-month test of a 200-device Wi-Fi network in Manhattan. Without any promotion, the network handled 20 million Web sessions by consumers who happened to spot Towerstream when trolling for a Wi-Fi connection." That's the kind of data that might get carriers to sign up.