Out of Control Policy Blog

More Questions About Muni

Telecom business analysts continue to express more disappointment with municipal wireless. Market research firm Forrester Research, has identified basic flaws in municipal business models and Craig Settles, who increasingly comes across as a reluctant advocate of municipal wireless, continues to find fault with the way cities continue to view muni wireless as a ticket to free Internet services.

In the wake of decisions by Anchorage, Alaska, and Corona, Calif. to scrap muni wireless projects after their partner, MetroFi, said it could not offer free service, Carol Wilson at Telephony looks at new research in the first what she promises to be a series on the potential and pitfalls of municipal wireless.

Here's some of what Wilson reports:

Those two situations reflect a new market reality that muni Wi-Fi isn't about "free, free, free," said Craig Settles, president of Successful.com, and author of the report, which was sponsored by [the International Economic Development Council].

"The market shouldn't have gone in that direction in the first place," he said. "A lot of cities saw other cities getting a Wi-Fi network, seemingly for free, and thought 'We have to have one, too.' Rational planning took a back seat in a number of cities. And the ones that went down the path of having everything for free are having the moment when the hens come home to roost. You can't make money with this business model."

The cities most likely to fail, Settles said, are those that put resources into building a network in the expectation that it will both attract new businesses, and generate income from consumer use.

Turning to the Forrester report (executive summary here), Wilson talks to author Sally Cohen, who addresses a key miscalculation cities are making–focusing on outdoor coverage when most WiFi use occurs indoors.

"Most of today's consumer public Wi-Fi use happens indoors," Cohen states in her report. "When using public Wi-Fi away from home, most consumers access the Net in public indoor spaces, such as hotels, office buildings, airports and train stations. Yet most municipal networks are designed to cover only public outdoor spaces, where most of today's users don't go online. In order for the wireless signal to reach the interiors of local businesses or homes, most muni networks require the purchase of additional equipment, a consideration that is likely not obvious – and thus potentially confusing – for potential consumer customers."

Finally, Cohen addresses how muni networks are failing in closing the digital divide, a reason used to justify the heavy borrowing and spending needed to build them.

Another misconception, which both reports address, is that muni Wi-Fi can close the digital divide by making broadband access available to lower-income residents. Instead, Cohen reports, the people using public Wi-Fi are early adopters, who tend to be young, tech-savvy men with higher-than-average incomes.


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