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Summary:

While Mountain View residents have been living under Google’s city-wide wireless for more than a month now, San Francisco is the next (if it happens) city that will go wireless via Google. In partnership with Earthlink, the duo plan to unwire SF with a free slow […]

While Mountain View residents have been living under Google’s city-wide wireless for more than a month now, San Francisco is the next (if it happens) city that will go wireless via Google. In partnership with Earthlink, the duo plan to unwire SF with a free slow service and a faster fee-based plan. But the team has been facing a series of obstacles and opposition since it was chosen by the city earlier this year.

This weekend the Institute for Local Self-Reliance and the Media Alliance circulated an economic argument for a city-owned muni wireless network for San Francisco, as opposed to the corporate-owned Earthlink/Google plan. The organizations’ data states that a publicly-owned network would:

1). Payback its original investment in 4.2 years.

2). Generate at least $6.1 million in surplus revenues over the first 5 years.

3). Generate at least $16.8 million more in surplus revenue over the following 5 years (after the million debt is retired).

They say that the total benefits of the network over 10 years is $22.9 million (via Kimo’s Crossman’s SF WiFi list).

That sounds pretty good when you think about muni WiFi as a self-sustaining public service. Other cities have taken the public route, including a plan for Boston to create a non-profit. At the same time the numbers aren’t compelling enough to be considered a lucrative business model, and VCs might scoff at the return. And other often-cited cities like Chaska, Minnesota have been reportedly less successful. But perhaps making sure broadband is available to all residents should indeed fall mostly under the public domain.


And when you consider this data in relation to some of the talk about San Francisco’s current WiFi plans, it starts to look better. Even Google execs are getting annoyed by how slow and convoluted the city WiFi talks are going, with Google’s Chris Sacca expressing his frustration over the project in the Chronicle earlier this month.

This is all part of the age-old debate of whether public-good projects should be kept publicly-owned or turned over to the private sector. (That is, if you think muni WiFi is a public-good.) Later today the city plans to hold a meeting on the question of city-owned WiFi, and next week Google will hold its first San Francisco WiFi education meeting. What do you think? Who can screw up the project more, Google/Earthlink or the city itself?

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  1. If the city takes control of the project then it will never happen. I can see the S.F. supervisors mandating all kinds of unrealistic regulations and provisions that require that any profits go to their personal pet projects or fronts for their re-election funds. Before the paperwork gets signed there could be a requirement that all shopping carts in the possession of homeless individuals be equipped with wi-fi receivers that can only be installed by technicians who are members of a new labor union established just for this purpose.

  2. I am working with the City of Palo Alto on a pilot project around municipal WiFi. We are making a very strong business case around using muni WiFi for improved municipal services. We started with automatic fleet vehicle tracking (for fire, utilities and police fleet), followed by applications such as water quality monitoring, video surveillance, building permits, asset management etc. The city can save tons of money with these applications. If we can convince businesses to use this broadband data infrastructure too, there wouldn’t be any need to charge residents for the service at all. I think municipalities need to focus on these business models.

  3. A significant number of consultants and integrators go on and on about how Muni owned networks pay for themselves. What they fail to mention is that the savings are one time. After that the requirements from consumer applications will demand network hardware refreshes that no Muni could afford.

    I doubt City council will want to upgrade a network to 802.11n in 2 to 3yrs. Or update the backhaul to the existing network in 2yrs. They have other priortise. If they did we would all have fiber to the home by now, AMI water meters etc.

    Often these guys preach that the City can outsource the IT management functions to a 3rd party…hmm more money to the Integrator and/or consultant. Many Muni’s have tried this with their existing IT departments needs.

    Everytime they want to install something new the outsource IT company/consultant charges outrageous “change fees” and fail to deliver on time. After all, at this point they have the City trapped in a multi year contract. Muni’s across the country are taking back their IT departments because of this phenomenum.

    Leave the ISP business to private enterprise…otherwise we’ll get second rate service on WiFi and be forced to use EVDO/HSDPA?WiMax.

  4. Becca Vargo Daggett Tuesday, September 26, 2006

    These are good points – points that have to be addressed by cities looking at any wireless project, whether publicly or privately owned.

    “A significant number of consultants and integrators go on and on about how Muni owned networks pay for themselves…”

    The savings are annual – each year those expenses are not in your operating budget. That money is freed up to invest in the network on an ongoing basis.

    That’s if you’re talking about a Saint Cloud model – publicly owned wireless as a free amenity. In the publicly owned wholesale model that we propose, the city has incentives to upgrade and a revenue stream to do it with, just like a private company would. The wholesale network must be kept up to date for its customers – the retail service providers.

    (I would suggest that cities be very careful about justifying the expenditure on soft avoided costs, like increased efficiency. I’d rather see an argument made that a basic citywide wireless network is like the libraries – something you provide to improve quality of life.)

    “I doubt City council will want to upgrade a network to 802.11n in 2 to 3yrs. Or update the backhaul to the existing network in 2yrs. They have other priortise. If they did we would all have fiber to the home by now, AMI water meters etc.”

    The biggest barrier to municipal fiber to the home has been the incumbents. Cities do have other spending priorities, but this is not a typical infrastructure project (e.g. roads, bridges, sidewalks) because it produces a revenue stream.

    “Often these guys preach that the City can outsource the IT management functions to a 3rd party…”

    This is an interesting argument, but it contradicts your point. Cities that choose the Philadelphia-Earthlink model – a privately owned network with the city as an anchor tenant – are entering into exactly this kind of long-term contract.

    Instead of getting trapped not only in a long-term contract, but a long-term contract with the vendor who owns the infrastructure, cities need to evaluate owning the network and entering into shorter-term management contracts. Saint Louis Park, MN is a good example.

  5. http://www.communityhooks.org/mag_view.php?org_id=23

    Join our community to voice your opinion on SF Free WiFi Initiative. The panel includes people from SF City Council so your voice will be heard.

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