Competitive Intelligence

Broadband Muni Wireless Networks: The Next Public Utility?

The past few days has seen the latest attack on metropolitan telecom and cable operators manifest itself in Philadelphia, where authorities from municipalities around the world gathered to discuss and plot the future of broadband wireless networks as a public utility - just like water, sewer and garbage service. The last mile is no longer safe from public sector competition, especially with the likes of Intel pushing WiMax out to market over the next couple of years.

This is no small matter - a lot of comfortable, safe (i.e., free from competition) operators have billions invested in keeping prices high and service levels relatively lethargic. A new era of public sector competition is sure to get them to wake up to a new set of competitive realities. Here's a summary of what's going on:

Philadelphia Mayor John Street and Dianah Neff, the city's chief information officer, will welcome technology professionals from some 33 cities, as well as counties, states and municipal coalitions, to their city next week as representatives from Dallas to Shanghai gather for the Digital Cities Convention there.

Sponsored by the Wireless Internet Institute, the convention promises to provide three days of brainstorming, analysis and consensus-building among representatives of wireless and mesh networking providers and the city, state and international representatives interested in implementing their solutions.

Stephen Rayment, chief technology officer of BelAir Networks, specialist in wireless mesh networks, who is chairing a solutions panel on the technology's impact on city social and economic development, expects the conference's focus to extend well beyond contentious plans to provide free and low-cost Internet access to city residents.

Those plans have prompted heated political debates at the state level, where telecoms have sought legislation that would prohibit cities from offering municipal service.

Rayment will focus on the question: "How do you make the business case make a lot more sense than just giving away free Internet access?"

Rayment said he was encouraged that Philadelphia has expanded its plan beyond simply providing free access and is outsourcing the build-out and maintenance of its network to third parties.

"Initially what they wanted to do was just provide Wi-Fi stuff," said Rayment. "But there are a lot of other applications that can run on public networks." Among them, he cited public safety, surveillance and inter-departmental communications.

"You need to think about multiservices and network architectures that can scale to grow and accommodate that type of thing."

The conference is proving to be a magnet for vendors with metro wireless and mesh networking solutions.

Intel Corp. heads to the convention hot off a demonstration of its WiMax base station platform at the International Basestation Conference in London this week. The company, which began shipping WiMax chips this month, expects the chip to be installed in notebooks and available to the public by 2006.

Intel has already begun developing markets in Europe. This week, Intel officials announced plans to open a technology center in Moscow this summer to promote the company's broadband wireless WiMax technology.

Nomadix Inc., a supplier of public-access network solutions, and its partner Firetide, a wireless mesh networking specialist, will be exhibiting a public access gateway optimized for metro deployments.

The solution, said Scott Zumbahlen, director of marketing at Nomadix, is designed to centralize and resolve security and billing, allowing municipalities to outsource those functions to the Nomadix network.

"If someone has to take a trouble call, there's no cost model [for cities] that justifies that," said Zumbahlen. "We make sure the user gets onto the network quickly, and the operation is designed so that they do not have to call for support."

But what's a cable or telecom monopoly to do now, in this era of competitive dynamics? Naturally, as one might imagine, they're not at all fired up about it!

A number of U.S. cities are becoming giant wireless "hot spots" where Internet users will be able to log on from the beach or a bus stop, a trend that is triggering a fierce backlash from telecom and cable giants.

"We look at this as another utility just like water, sewer, parks and recreation, that our communities should have," said St. Cloud, Florida, Mayor Glen Sangiovanni, who hopes to provide free wireless service to the entire city by the fall.

At a conference this week, officials from dozens of local governments compared notes, listened to pitches from vendors and discussed ways to counter the lobbying of telecommunications giants that have sought to block them at the state level.

Free or discounted wireless service can spur economic development, improve police patrols and other city services and encourage Internet use in poorer neighborhoods, they said.

Slightly more than 100 U.S. cities—as big as Philadelphia and as small as Nantucket, Massachusetts—are setting up wireless networks now. Conference organizer Daniel Aghion said close to 1,000 local governments worldwide have plans in the works.

The trend has prompted an intense backlash from the large telecom and cable providers that sell most broadband access in the United States. At their request, 13 states have passed laws restricting cities setting up their own networks, and several others are considering such bans.

"With so many other issues challenging municipalities today, why on earth should cities waste millions of taxpayer dollars to compete with carriers already offering high speed Internet service?" said Allison Remsen, spokeswoman for the U.S. Telecom Association, which represents incumbents like SBC Communications Inc. and Verizon Communications.

City officials said they don't want to compete head on with commercial providers but aren't going to be held hostage to their profit concerns.

Providers have shown no interest in setting up broadband wireless service or offering free or discounted rates, they said. Sometimes they refuse to provide any broadband service at all.

"We begged them to deliver the service—we didn't want to be in this business," said Scottsburg, Indiana, Mayor Bill Graham, who said local businesses threatened to leave his town before it set up its own wireless network.

The legal battles seem to have only increased interest among city officials, especially after squabbles over a Pennsylvania state law made national headlines last year.

"It helped to bring to light what the telecommunications industry was attempting to do," said Philadelphia technology manager Dianah Neff.

Others said the threat of a ban at the state level has spurred them to action.

"We're acting pretty quickly for a municipality of our size, because we don't like to be pre-empted," said Lindy Fleming McGuire, a Chicago City Council staffer.

Smaller wireless startups are rushing to provide the equipment and expertise needed to run city networks.

"Munis don't want to own this at all, they just want the service," said Robert Ford, chief executive of NextPhase Wireless, a service provider.

Rio Rancho, New Mexico, brought in wireless provider OttawaWireless because incumbents didn't reach many areas, assistant city administrator Peggy McCarthy said. Now that the network is up and running, the incumbents' service has grown more competitive, she said.

"The lethargy and apathy with which we had been given DSL and cable have both changed," she said.

Some cities, including Spokane, Washington, found they could easily set up wireless service when they upgrade their emergency communications networks with a little help from the Homeland Security Department. The federal department awarded $925 million last year for communications upgrades.

So, whether cities should be in this business or not, it's gotten the commercial interests to sharpen up their customer service and marketing skills in recent weeks - and will probably cause them to sharpen their pencil a bit as well. I think we'll look back on this as having been good for everybody involved.

For those of you interested in helping push things along, check out MuniWireless.com and the Wireless Internet Institute.

- Arik