Citywide Wi-Fi networks building momentum.

While most of the attention about large-scale public Wi-Fi networks has been on large cities, smaller communities are establishing their own networks to encourage broadband use among low-income constituents and promote economic development.

“Cities want choices beyond the monopoly telcos and cable companies,” said Bill Tolpegin, vice president of development in Earthlink’s municipal networks division, at the recent ISPCON conference in Baltimore. “We believe the technology is proven to deliver Wi-Fi on a municipal scale.”

But a number of questions remain to be answered about municipal Wi-Fi networks, starting in some instances with opposition from incumbent telecom and cable providers. In addition, there are questions about the who’s going to pay for such networks.

Those concerns have not deterred communities. According to Kirby Russell, director of product marketing for wireless network operator Strix Systems, between 250 and 300 municipal Wi-Fi-related requests for proposals (RFPs) are expected to be issued or completed by year-end.

In May alone, cities ranging in size from Summit, N.J. (21,000 residents within six square miles) to Chicago have asked for proposals, while New Orleans has hired Earthlink to build a citywide Wi-Fi network.

Perhaps the highest-profile municipal Wi-Fi project announced to date is a collaboration between Earthlink and Google to build and operate a citywide network in San Francisco. The network is expected to provide free, advertising-supported access at 300 kilobits per second, while a 1 megabit-per-second service will be available for about $20 per month. Earthlink estimates construction costs for the network will be between $6 million and $8 million.

The municipalities and counties hope to generate numerous economic and social benefits from Wi-Fi access. A common motivation is providing affordable high-speed Internet access to low-income residents or to people in locations that are impractical or too expensive for traditional broadband.

Tom Gruba, senior director of marketing for wireless broadband products in Motorola’s networks and enterprise division, said at the ISPCON conference many cities see Wi-Fi access as a cost-effective tool that can allow people to improve their economic status or make a location more attractive to business owners.

“Broadband is becoming a utility, and from a digital-inclusion standpoint, people don’t want to be left behind,” Gruba said.

The differences in the proposed financial models vary almost as much as the cities’ terrain. With some networks, cities pay the construction and equipment costs for a network that in turn is operated by a private company, generally in exchange for free municipal use and a share of network revenue. In others, a municipality may charge a network operator franchise fees or solicit payments for installing Wi-Fi access points on city-owned light poles or rooftops.

Many cities are planning to offer free or low-cost use to residents. Others may have tiered pricing that allows users to access municipal services or receive e-mail for free, while charging a subscription fee for unfettered Internet access.

“A lot of our network is based on cost-avoidance,” says Ken DiPietro, senior network engineer for wireless network operator Conxx, which built a network that’s operating in Cumberland County, Md. “If you look at voice and data costs, we provide [communication services to the county] without charging for those services.”

However, there are still pending issues before municipal Wi-Fi networks take off. Some telecom and cable providers have opposed such networks; a number of state and federal bills have been introduced to bar cities or counties from offering Wi-Fi access to the public, though competing bills would guarantee their ability to do so. The question is also being debated as part of Congressional efforts to update the 1996 telecommunications laws.

Another unsettled question is whether free networks can generate enough ad revenue to sustain ongoing network management costs. Jay O. Wright, chairman and CEO of wireless network operator MobilePro Corp., expressed doubts about the sustainability of no-cost Wi-Fi.

He noted that several ISPs tried to offer free, ad-supported dialup access during the dot-com boom, but eventually switched to subscription-based revenue models.

And in early June, MobilePro withdrew from a pilot Wi-Fi project in Sacramento, Calif., after disagreeing with the city’s position that an ad-supported service should be offered for free.

In addition, it’s unclear if consumers are going to show the same enthusiasm in signing up for municipal Wi-Fi networks that cities and counties have in building them.

“The real questions [about consumer adoption] won’t be answered for another two to three years,” Wright said. “History will tell us whether demand for these services is there or not. Our experience [so far] is favorable, but at this point it’s too early to make a blanket assertion.”

Motorola’s Gruba said that for home users with existing broadband connections, municipal Wi-Fi will generally be a complement to cable or DSL services. Although Wi-Fi signals will reach inside most buildings, hard-wired connections are usually faster and more secure. To access the Wi-Fi network indoors, some residents may need to invest $100 in equipment to improve the strength of their signal.

For municipalities, Earthlink’s Tolpegin said creating citywide Wi-Fi networks can help them reduce communication costs and improve efficiency by providing a way for police and fire officials to prepare reports and other documents in the field, and for utility workers such as parking meter attendants to send data back and forth.

Other public safety applications include providing emergency communications after a natural disaster, sending video signals from traffic stops or other incidents to headquarters or mobile command posts. Over time, other applications such as remotely reading electricity meters are expected to emerge.

In most instances, the Wi-Fi networks are designed as “open,” which means other ISPs can purchase bandwidth on a wholesale basis, according to Rich Bader, president and CEO of Portland, Ore. ISP EasyStreet Online Services. Selling bandwidth to local and regional ISPs in addition to the network operator can provide additional revenue that is shared by the municipality and the network operator, and can help reduce opposition on the part of incumbent telecommunications and cable providers.

By Dave Pelland, Managing Editor, Technology Insider

Courtesy of http://www.kpmginsiders.com