Philly Stake With WiFi...Mmm

What's the best tasting action in Philly? It's an investment stake in citywide WiFi and it's got a lot of mouths watering in Philadelphia.

Seems a bit hard to swallow, seeing as Earthlink just bailed on a similar metropolitan wireless system in the very same city. This isn't a duplicate effort. It's the same system under new ownership. A group of local investors believes that they can succeed where Earthlink failed. Seems a bit nervy until you look at the details of their plan.

First of all, access will be free to consumers. Well, that certainly quiets all the grumbling about having to pay twenty bucks a month for spotty coverage. Philadelphia Internet users were lukewarm, to say the least, to the original Wireless Philadelphia service plans. You could get a reduced rate of half that by proving hardship under the Digital Inclusion plan. But even that much can be a barrier for the economically disadvantaged.

Free is much better. Who is going to complain about free? The obvious question, though, is who is going to foot the bill for all this free service?

The answer is a combination of paid access for business users and advertising for everyone else. The press release also mentions integrated wired and wireless access for larger users such as hospitals, universities and corporations. There may very well be enough profit in high bandwidth and converged network services to foot the bill for all the laptop users sitting on park benches and students researching their homework assignments.

Whatever shortfall there is from business and organizational payers is expected to be covered by advertising revenue. Access to the system is via network controlled landing pages that can easily be populated with ads as well as information of local interest. If done well, this could be quite lucrative. After all, the lure of free service is going to result in tens if not hundreds of thousands or more visitors every day. That's advertising space worthy of newspaper and TV types of advertisers.

Wireless Philadelphia is off to a running start with their ambitious Internet service plans. Earthlink had already built the lion's share of the network before they decided it was financially unworkable under their pay-for-access plans. The new operators have only to finish the job to provide complete coverage and get going on their services to business users.

How well this all works out remains to be seen. Civic pride by businesses and other community leaders with a stake in its success are certainly important in getting the revenue stream going. There is also a civic improvement aspect to including those who are always left foundering in the wake of technical progress. There have already been initiatives in Philadelphia to donate both refurbished laptops and Internet access to families in need.

With the recent FCC feelers about establishing free public-access wireless Internet service nationwide, the time for universal broadband does seem to be at hand. When seen in the context of improving the educational base of a city or the nation, with higher level skills leading to more employment opportunities and less need to put people on the dole, municipal broadband could be considered an investment that will pay back in years ahead. Education alone could justify public support as a way of modernizing our school systems. But in these tight economic times, a cleverly managed citywide WiFi network that is designed to pay its own way while providing free public access is a very appetizing solution indeed.

Is Municipal WiFi On The Way Out?

If WiFi hotspots are the greatest for users on the go in airports, hotels and restaurants, then municipal WiFi has to be even better for anyone downtown. Well, it seemed that way for awhile. But with the recent announcement that Earthlink is pulling the plug on its Metro WiFi in Philadelphia, one has to wonder if municipal WiFi is heading the same direction as broadband over power line service. How can this be? I thought this was the golden age of broadband.

Broadband Internet service is actually alive and well and growing like crazy. Narrowband connections, such as dial-up, are now down to under 12% of U.S. Internet users. Broadband penetration has increased 200% since 2002 and now approaches 90% of households. So why can't municipal broadband providers make a go of it?

The problem appears to be in the business model. Earthlink only garnered about 6,000 Philly subscribers out of its expected 100,000 at a minimum. They were asking $21.95 a month for service, with a special deal of half-off for low income households. That doesn't sound like too much, or does it?

What got the idea of municipal WiFi networks going was the early exuberance over WiFi hotspots. When they started popping up all over, line-tethered users rejoiced. They gladly shelled out to be able to use their laptop computers with WiFi adaptor cards on the road or in their favorite coffee shop. Frustrated by the seemingly glacial buildout of broadband Internet by the local telephone and Cable companies, city councils jumped at the idea of being able to leapfrog these seemingly old-timey technologies with the latest and hottest wireless service. As a bonus, they could make sure that low income families could also afford to get broadband access before the digital revolution passed them by.

But a funny thing happened on the way to installing wireless access points on every light pole. The market shifted. Hotels found that their customers were balking at WiFi surcharges when other hotels offered free WiFi. Now most hotel rooms come with free broadband access included. WiFi hotspots have multiplied in restaurants. But not for charge. The free WiFi service is a competitive enticement, not a profit center. People still love their WiFi, but they don't want to pay. They expect it to be free or they'll go somewhere else.

So, are these spoiled users really going to want to pay to use the Metro WiFi downtown? Probably not. They might pay to use it as their home broadband service. But WiFi frequencies don't travel too far and don't penetrate buildings well. Where there is solid service, hungry competitors are waiting as well. That includes those plodding telcos and cable MSOs, who have been steadily building out their networks. They've also been steadily increasing speeds and lowering rates. Even more clever, these wireline companies are bundling phone service, broadband Internet and TV services in discounted packages that really make paid WiFi look pricey.

WiFi may have been the newest and greatest thing a few years ago when these municipal WiFi plans were conceived, but technology continues to move on. Verizon is making fiber to the home a reality. WiMAX is beginning its nationwide buildout with more power and better wide area penetration than even a plethora of meshed WiFi hotspots. The Apple iPhone puts standard Web browsing on your cell phone. Mobile broadband is expanding with the GSM and CDMA systems at each other's throats to see who can increase speeds faster. And don't forget all those free WiFi hotspots. It's very hard to compete against free.