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Summary:

Jay Horwitz, Senior Analyst at JupiterResearch is using pretty much the same words as I did yesterday, in his recent report – “Because the benefits of municipal wireless networks are inherently difficult to measure, and because it is too early to look at outcomes, examining breakeven […]

Jay Horwitz, Senior Analyst at JupiterResearch is using pretty much the same words as I did yesterday, in his recent report – “Because the benefits of municipal wireless networks are inherently difficult to measure, and because it is too early to look at outcomes, examining breakeven thresholds provides the best reference point for decision-makers.” In their estimate, each project costs $150,000 per square mile and half of the current projects will fail to break even.

No word from Esme. Folks over at UnwireMyCity.com see the half the projects that will break even or profitable as a reason to rejoice. But then also caution: “my perspective that these networks are a risk to the degree that the owners and or operators, be they public or private, neglect to nail down anchor tenants that will help them to cover as much costs as they can with long-term contracts.” Excellent point, I must add. Daily Wireless is also in the optimistic camp.

My feelings you all already know!

  1. You guys remind me of “ivory tower” theorists. Perhaps you should all go into academia. There are already networks live headed to breakeven. The costs are dramatically below DSL, cable, EVDO, etc, so if this is too expensive than those really are! The performance and use cases for these networks are much higher than these other networks as well.

    I guess its OK. No one thought the PC would dominate the mainframe and mini computer. And I am sure the same people writing these reports were “certain” that ATM would dominate Ethernet on the metro LAN. History has a way of repeating itself. It is very, very hard to compete with an open-standard…

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  2. Jesse Kopelman Friday, July 8, 2005

    Bill I agree with you. Verizon et al are not warning against these networks out of civic concern, but out of fear. I would only be worried about their viability if the incumbents were encouraging their construction.

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  3. Yeah and the whole debate becomes misplaced into asking whether or not a deployment will make a profit or break-even. Cities are not in the business of making profit or breaking-even. They’re in the business of soundly managing their finances.

    The definition of “soundly managing their finances” will vary from city to city. For some communities it’s okay to spend $6 million on renovating a pier. For some others, this money should go to building or rebuilding high schools. For some others, this money should go to paving roads.

    To me, the only interesting questions regarding MuniWiFi are:

    - how badly do constituents want Muni WiFi or any other form of free or cheap broadband connectivity?
    - can the municipality afford Muni WiFi? Based on “how badly” constituents want Muni WiFi, this should give the municipality an idea of how much money it should allocate to a WiFi project.
    - can it be successfully deployed for a given municipality?

    the heartlandburn institute, jupiter research, or any other shills the telephone and cable companies manage to scare-up have absolutely NO VALUABLE insight to contribute to the above questions, because answers to those questions vary vastly from one community to another. Those questions will have to be answered by each community and consultants they’ll hire.

    This is also not about protecting the interests of business X or Y for the sake of being good capitalists. Private businesses will adapt their offerings to compete with Muni offerings. From QoS, to higher bandwidth and new applications fostering convergence in communications and entertainment, there’s plenty of room for innovation.

    Any report claiming to assess *in general terms* whether Municipal WiFi is “good” or “not good” for municipalities should, in my mind, be received with high skepticism and see its authors tarred and feathered. With that said, I’d love to see a report analyzing in insanely great details the economics of deploying WiFi for a very specific community, as long as said report remains strictly scoped to the specific community it’s analyzing. But why would Jupiter Research do that? This also shouldn’t stop communities who have successfully deployed WiFi to tell the world about it: “this is how *we* did it, here were our precise economics”, on the off-chance other cities might find similar favorable conditions, or extract constructive ideas or lessons. And i believe cities who were unsuccessful in deploying WiFi should also come forward to tell us about why it didn’t work or wouldn’t have worked for them, but I’ll only believe reports that come from city officials and residents. Not the heartland institute’s interpretations of what went on.

    In the specific case of Hermosa Beach, our original plan, down to the last cent, and including contingency funds, had us deploy a city-wide wifi system backed by fiber connectivity to the Internet, covering our entire 2 square miles, with roughly 10,000 dwelling units and 19,000 residents, for a grand total of $141,026.00. Ongoing monthly costs including fiber-backed Internet link, maintenance and warranty, were going to be $1,750/Month.

    In the mind of two pro-WiFi council members, and the majority of residents I spoke with, it would have been perfectly okay to write-off the $141,026.00 without “reimbursement”, because we did have the cash on-hand, our budget allowed for it, the city has zero debt, and very healthy revenue streams, which is partly why we were able to spend $6 Million on the pier renovation project.

    Assuming we didn’t have to worry about “repaying” the initial $141,026.00 disbursement, the only ongoing costs of the system would have been the $1,750/Month.

    Of the grand total of $141,026.00, $36,530.00 have already been spent on a system that already covers 35% of the territory today. Many residents have been enjoying it. Local businesses are bringing today’s system $1,250/Month in advertising revenues, while its monthly costs are only $600/month. Council Member Michael Keagan had secured additional advertising contracts from other businesses, contingent upon Phase 2 deployment, which would have brought our revenues to a near-guaranteed $2,750/Month.

    Phase 1: $600 in recurring costs, $1250 in revenues.
    Phase 2 (planned): $1750 in recurring costs, $2750 in existing and planned revenues from signed contracts.

    All this without even trying hard to promote the system, spending resources supporting it, or further monetizing it beyond the enthusiastic outpour of support from local businesses.

    The advertising model is based on ad boxes on the portal homepage (http://www.wifihermosabeach.com/) one is directed to the first time they start an online session, before their IP traffic gets routed to the open Internet.

    Such is our situation. Hardware vendors and system integrator were all lined-up and ready to deploy. All we had to do to move to Phase 2 and execute on the plan, was to manage to get either Sam Edgerton or Peter Tucker to vote “YES”. But we were unsuccessful pleading our case to them. And they were unsuccessful convincing me they had good reasons to repeatedly vote against this project. There might be aspects of our city finances i’m simply not grokking, but that’s not for lack of asking around and engaging many fellow residents in private and open e-mail conversations.

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  4. [...] Archive by Date How Hermosa Beach Wi-Fi Project Works? In response to my post questioning the unbridled optimism around the “Muni WiFi” [...]

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  5. @ysunil: You sir, are an idiot!

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