12 Comments

Summary:

Micah Sifry believes that cheap WiFi based muni-networks are about empowerment and opportunity. Joi Ito agrees, and points out that its not that tough. Chris Holland thinks that for Hermosa Beach, a city he calls home, can do it for $200,000. Just a few observations. I […]

Micah Sifry believes that cheap WiFi based muni-networks are about empowerment and opportunity. Joi Ito agrees, and points out that its not that tough. Chris Holland thinks that for Hermosa Beach, a city he calls home, can do it for $200,000. Just a few observations. I think it has become highly fashionable to comment about Municipal Networks and how they will save the communities from being left behind. I find the business logic is missing from most arguments. The reality of the matter is that its easy to make these arguments now, given that there is no data available on the likely success of these projects. What about the operational costs of these networks? Remember op-ex not cap-ex is what killed the fiber boom. I like the idea of WiFi networks for all, but in the end its models like that adopted by Minneapolis makes the most economic sense. Sifry offers up an African village opting for a satellite phone instead of roads as an example. Different environment and different needs. Another thing which works against the muni wi-fi projects, (telcos don’t need to lobby for this!!!) is that they are lighting up parks, town-hall, depressed retail areas – i.e. all areas that the wi-fi target demographic avoids.

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  1. Jesse Kopelman Tuesday, July 5, 2005

    The problem I have with your argument, Om, is that it assumes access to the Internet is a luxury. I think at this point it has become a necesity. Would you say that a city shouldn’t provide paved roads to the economically depressed areas because the people with nice cars tend not to drive through there anyway (some East Coast cities seem to have this philosophy)? Some things that will never make sense from a purely accounting perspective are still very worth doing (street lights, sidewalks, public schools, police, fire departments, ect.).

  2. Jesse

    my argument is that instead of building their own, and taking a risk, let companies take a risk. they are doing it in minneapolis, which is the first coherent and right approach to this issue i have seen so far.

  3. chris holland Tuesday, July 5, 2005

    Om, risk factors are precisely why Hermosa Beach only rolled out the system on a trial basis last August. With only 2 antennas, it covers 35% of the city, deployment cost around $30K. Since it’s been out, a few businesses have enthusiastically signed-up to offer advertising on the system’s portal page, which all users have to hit at the start of a browsing session ( http://wifihermosabeach.com/ ). Monthly fees paid by those businesses have not not only been paying for ongoing maintenance costs, but also generating extra money currently being used to “pay-back” the initial disbursement for the system.

    Which is unheard of as far as municipal projects go. Are we looking for our $6 Million pier renovation project to “pay itself back” over a period of X years ? Of course we’re not. We just know it will add value to our community as a whole. For some reason, I’m having a hard time getting two council members to think in similar terms when it comes to WiFi. I keep being pointed to reports by the Heartland institute, whose arguments fellow residents and I had thoroughly debunked in e-mail discussions.

    In Hermosa Beach’s specific case, the economics have been worked out, and proven sound on a small scale, and somebody has yet to demonstrate they will fail on a larger scale with ubiquitous coverage of the city.

    With that said, our economics are very likely atypical as we’re a wealthy community, with a large concentration of residents on a very small surface.

    The point i’m making is that there’s likely plenty of opportunity to make local business or resident-subsidized WiFi work for many communities out there. In many cases, if a WiFi system requires monthly contributions from residents, a private business might indeed be a more practical approach to operate and run it.

    They key here is for elected officials to start adopting a more progressive and solution-oriented stance.

  4. Jesse Kopelman Tuesday, July 5, 2005

    My argument, Om, is who cares if you “lose” money. There are many things governments do that do not make money from an accounting prospective, yet that does not mean they shouldn’t do them. Again, paving roads does not make you any money, but something tells me it would be bad for the long term health of your town if they stopped doing it (just look what happened to the Newark area in the 90s). That said, if you can get companies to pay for it, all the better. It is just that this may not be the case in certain “undesireable” locals and these are the places that need it the most. Since when have cities been in the business of making money anyway? The “greatest city in the world,” NYC, is chronically in tremendous debt despite being the seat of global corporate power. Something tells me that if all the past administrations had cared about was making budget, NYC would just be Baltimore with bad weather.

  5. baltimore with bad weather. i thought baltimore does have bad weather. jesse i do see your point, but i think there are many different options here, and if you can get private sector to invest, the government dollars can be spent wisely elsewhere, sort of like education!

  6. Jesse Kopelman Wednesday, July 6, 2005

    Compared to NYC, Baltimore has nice weather. I debated whether to write bad or worse, but, for my tastes at least, Baltimore weather is pretty nice. They have seasons, but it doesn’t snow that much or get ridiculously hot in the summer. Still, I wouldn’t particularly like to live there.

  7. Om, I think it’s important to be clear about whether you’re talking about municipal Wi-Fi networks, as opposed to municipal networks generally (which could include FTTH). I tend to agree with you with regard to the former.

    (And by the way, Baltimore’s a very underrated city. Definitely up-and-coming with lots of changes over the past 15 years.)

  8. i agree casey. the ftth networks might have a long term utility and have the ability to act as a lightening rod for the incumbents to get their act together. my point is that not everything works for every place, and i think in tiny communities, well like hermosa beach, the wifi network could pay off it dues no problems. in poorer communities, i feel it could be tougher, and perhaps one needs to pause a little and think the whole thing through.

    baltimore is a nice place, except my hating is because they are spanking the yankees like a dominatrix. baseball clouds all judgement.

  9. Om Malik’s Broadband Blog » Jupiter questions MuniNets viablity Thursday, July 7, 2005

    [...] Excellent point, I must add. Daily Wireless is also in the optimistic camp. My feelings you all already know! In Unwired Posted Thursday, July 7, 2005 at 12:3 [...]

  10. John Thacker Thursday, July 7, 2005

    For all the talk about how it’s progressive, and how even poor citizens need the Internet, the fact remains that these networks, if they’re not going to make money, will be taking money out of the pockets of the poor and less Internet-savvy in order to give something to the Internet-savvy, who tend to be richer. Sure, it’ll benefit some poor people– though largely students who are technically in poverty but have good education and a bright future in front of them. (And often parents who buy them computers.) In aggregate, it will be disproportionately used by the wealthy, out of proportion to the tax payments that support it I would expect. So it’s regressive, not progressive.

    If it can break even or make money, fine. But if it’s a big money loser, it’s yet another money losing project designed to give things to the middle and upper class.

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