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Summary:

Craig Settles, a consultant who studies all things MuniFi, sent out a report last night that says public access of city-wide Wi-Fi networks “will be widely viewed as financially the weakest pillar in the business case for municipal wireless,” by the end of 2007. Instead, mobile […]

Craig Settles, a consultant who studies all things MuniFi, sent out a report last night that says public access of city-wide Wi-Fi networks “will be widely viewed as financially the weakest pillar in the business case for municipal wireless,” by the end of 2007. Instead, mobile workforce applications will be “muni networks’ big ROI generator.”

You didn’t have to tell us that public use of MuniFi networks isn’t likely to be the saving grace it’s often painted as, and carries some real business concerns. The more we test out and examine city-wide Wi-Fi deployments like Milpitas and Mountain View, the more we are starting to realize that resident use based on a $20 plus subscription, might end up being pretty limited. Free services will likely be used more frequently, but the ad-based revenue model for free service is also so far unproven.


What we are starting to realize is that MuniFi isn’t a very attractive replacement for DSL or cable service, as use within homes isn’t always guaranteed, particularly without extra hardware. In San Francisco, EarthLink says a third of the households could need additional hardware ($50 to $100) that pulls in the Wi-Fi signal. When we previously reported on Google’s Mountain View network, the company had said that it is unlikely that a Wi-Fi-enabled laptop or computer with a conventional Wi-Fi card will work indoors at most locations — ie, extra hardware is needed.

For a free service, like in Mountain View and Portland, residents are more likely to use the service, even with some spotty connections. But in a city like San Francisco, (if the deal is approved,) EarthLink’s 1Mbps service will be offered for $21 per month to most residents.
If I lived in San Francisco I’d likely choose any of the other options over that choice — Google’s 300 kbps for free, $15 to $20 for comparable speeds with DSL, or cable’s more expensive but often faster options.

Settles says: “Public wireless access is good political sound-bite marketing, but the beef is mighty hard to round up.” We’re not sure how much of EarthLink’s profits are based on those $21 subscriptions, but given EarthLink is looking for revenues, not running for office, that could be its business model’s biggest concern.

  1. When I lived in Mountain View, I still wouldn’t go as far as disconnect my Comcast cable Internet to completely rely on Google WiFi. Even though the hotspot was right outside my apartment window, the best connection quality I ever got was round 80%.

    At certain places in the apartment the quality quickly deteriorated to 20-30%. Occasionally the connection would drop for no reason, and it’s hard to tell whether the problem was on my end or hotspot’s.

    Anyone using Internet for business or work would be careless to trust public hotspot to be there 24/7. On the other hand, it’s quite convenient to flip the laptop open in a public park or in downtown cafe, and be online instantly, if GoogleWiFi is one of your trusted wireless networks in Windows.

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  2. Jesse Kopelman Monday, January 22, 2007

    When we move away from large cities, public access becomes less of an issue. With cities I have dealt with (who’s names would be unfamiliar to 95% of you), the big issue was mobile broadband for public workers and emergency services. In some cases public access was not even on the table. The interesting thing about this is that the service positioning for public worker mobile broadband is directly against 3G from Verizon et al. The telcos haven’t done a good job positioning themselves in this natural market for 3G due to two factors. First, their refusal to even consider that there might be additional options open to the customer and market accordingly. Second, unwillingness to alter their build plans to address specific customer coverage concerns (this is especially the case where decisioning making has been moved upstream from the local market).

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  3. With the news that AT&T will be offering 768k/384k DSL for $10 a month if you already have bundled phone service or $20 if you don’t have a phone line currently:

    http://www.dslreports.com/shownews/80964

    For people who already have a bundled phone service they are looking at getting a much more reliable wired connection for 75% of the premium wifi ‘Best Effort’ Average 1000k speed for HALF the COST. – (Best effort – so if your neighbor is downloading video you will probably not get that 1000k speed)

    For people who don’t already have phone service and which is bundled, they are looking at getting a much more reliable wired connection for 75% of the premium wifi ‘Best Effort’ Average 1000k speed for the SAME COST.

    BUT the DSL wired connection can also support local WiFi with a $50 device and conceivably if you live near two neighbors you could share the wifi and split the monthly cost by two (as well as share it with multiple computers in your place) so your actual monthly cost could be 1/3 the monthly cost in both scenarios above – or possibly upgrade to a higher shared speed.

    And if people go with the DSL who already have a phone bill, then they get one less bill a month.

    Lastly, a wired connection uses the phone service electrical grid which often lasts in a general electrical blackout, so if you have your equipment plugged into a Uninterruptible Power Supply (a battery) you will still be up (this actually happened to me, my computer was on but the lights were out). It’s useful if you want to find out what the heck just happened or to send a mass email letting people know you are ok etc.

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  4. Hey Katie: Couple of things…

    For those that are looking at DSL pricing, it is important to look at the
    recurring fees going forward and the additional requirements. For example
    AT&T DSL requires the user to have telephone service to get the promotional
    rate. There are also long term commitments, after which the price increases
    to over $35 per month.

    Business and municipal solutions do represent an attractive opportunity for
    citywide network operators. In addition to the roaming Wi-Fi accounts for
    municipal workers that we are already providing, EarthLink has a number of
    products in development targeted at this sector including mobile vehicle
    connectivity, fixed wireless for municipal use, video surveillance and an
    automated meter reading (AMR) solution. We are piloting several of these
    products today in the cities where we are operating.

    Ultimately the ubiquitious access and the standarized method of connection
    available through citywide mesh Wi-Fi, will enable many different business
    models, connection types and customer segments.

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  5. We are a long way off before public use(for a fee) takes off. I don’t think the current technology being used in EarthLinks networks is up to par(for public use) and it will be interesting to see if they stick with Tropos for SF.

    The only advantage I see of MuniFi for public use is the mobility which Sprint and others have been doing for years. Sure my Sprint service cost 60+ a month, but it just flat out works everywhere I go. If I were to subscribe to EarthLink, then I couldn’t use it when I’m on the road all the time for work.

    The only way I see myself ever signing up for EarthLink would be if they offered vastly improved speeds. I currently get the fastest package offered in my area(8mbps cable) but I want more. Where is my fiber?!!

    Having said all that, I still have hopes things will improve and EarthLink is going to cash in from all the money it makes off the cities and businesses it supports with these networks.

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  6. Keep in mind…

    Public WiFi access gets all the press.

    But replacing T1 lines with cheaper wireless access and providing for government services is how a lot of these municipal networks really get funded.

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  7. I and my company Novarum have been in the field measuring both WiFi and cellular networks in 14 cities and over 41 wireless networks including Sprint, Verizon, Cingular and the major WiFi networks.

    So we actually have real data rather than anecdotal stories. You can see more of the complete report on our website http://www.novarum.com.

    Some conclusions:

    1. Well designed WiFi can be VERY good. In St. Cloud, FL 100% coverage outdoors over the city and NO 3G service. In Toronto in the deep urban canyons of downtown – high coverage and often over 5 Mb/s bidirectional service.
    2. Poorly designed cellular and WiFi can be terrible.
    3. 3G is still a modestly deployed service. In the cities we have surveyed to date with both a WiFi cloud and multiple 3G providers … a user is MORE likely to find WiFi service than 3G service.
    4. And our conclusions are quite different than the original article. We think the technology CAN scale and be successful technologically.
    5. Business models are still in flux. But an anchor tenant is key. And in San Francisco, Earthlink’s anchor tenant is Google. Who is likely paying $ for capacity that they use to provide an ad supported service. Nothing is really free.
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  8. Craig Settles’ assertion that public access is the “weakest pillar in the business case” for metro Wi-Fi doesn’t square with what Tropos Networks has seen in our customer base. For example, the metro Wi-Fi networks in Chaska and Moorhead, MN quickly generated 20-25% household penetration, numbers that have been stable for the past two to three years. Both cities charge for the service ($17 to $20 per month) and both have DSL as an alternative. You can build a great business case on 20-25% penetration!

    I agree with Craig that mobile workforce applications will be a big ROI generator for metro Wi-Fi networks. In fact, I’d go a step further. Mobile consumer usage is already an important application for metro Wi-Fi. In the networks whose usage we track at, up to 20% of users already are mobile in a city on any given day. With devices such as the new Nokia n800 tablet, Skype Wi-Fi phones, Nikon s7c Wi-Fi camera and more will accelerate this trend toward Wi-Fi-enabled Mobile Internet usage.

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  9. Jerry Grasso of Earthlink:

    The new ATT pricing I put up there of $20 for dsl is naked dsl – you don’t have to have phone service to get it. Check out the link I provided.

    This pricing is what AT&T agreed to as part of the Cingular merger –

    and it’s not the $15/month for dsl (and a year agreement) on top of phone service as part of the Yahoo deal previously out there.

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  10. [...] major problem is the one that Wi-Fi consultant Craig Settles pointed out to us in January, that “public access of city-wide Wi-Fi networks will be widely viewed as financially the [...]

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