1 Comment

Summary:

Over past few weeks I have been in talks with many mesh networking and muniWiFi companies, such as SkyPilot and Tropos Networks. My question to them: what is the growth potential for this market? Many executives said that they believed it was a market with high […]

Over past few weeks I have been in talks with many mesh networking and muniWiFi companies, such as SkyPilot and Tropos Networks. My question to them: what is the growth potential for this market? Many executives said that they believed it was a market with high growth potential, and more and more municipalities were interested in rolling out their own networks. Today, my dear friend Esme Vos released her much awaited report on the total market size, as she gets read to kick off here MuniWireless’ rookie event in San Francisco.

“U.S. cities, towns and counties will spend nearly $700 million over the next three years to build municipal-owned wireless broadband networks,” she estimates. That translates to a compound annual growth rate of 134% between 2004 and 2007. She expects that the market will exceed $400 million by 2007 as more municipalities, including larger cities like San Francisco and Portland, embark on wireless initiatives.

There are a few concerns about the market: who is going to make money? Not revenues, but profits! There are just too many vendors. The big players like Nortel and Lucent have jumped in, and will do their best to undercut upstarts. The entire business is based on “commoditized” hardware, which means the margins are wafer thin to begin with. Layer on top of that “Munis” would be looking to spend as little as possible, and would try and squeeze the vendors even harder. Despite those reservations, I still think the reasons Esme offers for the continued deployment of Muni Networks are spot on. (After the turn…)

  • Growth is taking place with equal vigor in large and small municipalities alike. Growth will more than double annually for the next three years, both in cities with populations of more than 500,000 people, and those with less than 100,000 residents. More than 60% of total 2005 municipal wireless network spending is being done by large cities, a figure expected to hold fairly constant in the next two years, as more and more large cities issue Requests for Proposals (RFPs) for their wide-area wireless initiatives.
  • The top application for current municipal wireless networks is public safety (police, fire, emergency services). Just over half of U.S. municipalities that have deployed municipal wireless have done so for public safety.
  • Many municipalities are starting their “unwiring” efforts in an attempt to reduce skyrocketing telecommunications costs. But small municipalities often are driven to offer inexpensive broadband access to residents and businesses that are typically underserved by the large incumbent communications carriers.

You’re subscribed! If you like, you can update your settings

  1. Just like any other aspect of the IT business, the best place to make profits is on the services end. Munis need consulting help on every aspect this: from planning and design to maintaining a live system. Clearly, the big winners will be the major players in IT consulting. For hardware makers, the best plan of action is to try and lock people into “platforms” and start trying to milk training and certification programs — in other words, copy Cisco.

Comments have been disabled for this post