Austin Company to Provide Free Wi-Fi After City Failed

Published May 8, 2010

An Austin, Texas, computer store is rolling out a plan to set up 50 free wi-fi hotspots throughout the city, stating it is frustrated with the city’s broken promise to blanket the community with free wi-fi using taxpayer money.

“Three years ago I fully expected Austin to have nearly blanketed free wi-fi service by now,” said Rick Culleton, CEO of Discount Electronics, which is launching the private-sector effort. “As a consumer I am frustrated by the lack of access and the number of locations that charge to use the Internet.

“It’s hard to believe that in the year 2010 the Austin airport still doesn’t have free wireless Internet access. That is embarrassing,” he added. “If the city would let us, we’d put free wi-fi in the airport and pick up the tab in full.”

City’s Effort Failed
In March 2006 the Austin City Council announced it was partnering with Cisco Systems to provide high-speed wireless Internet access downtown and in a few other neighborhoods. The network never provided the promised service.

Taxpayer-supported muni wi-fi projects designed to give residents and visitors free Web access have sputtered in recent years in other Texas cities, including Houston, Corpus Christi, and San Marcos. While the Austin project was sputtering, the Texas legislature passed a bill—which is now law—preventing municipalities from getting into the broadband business.

The Discount Electronics wi-fi effort is not completely philanthropic. The local hotspots will be branded with the banner, and stickers will be placed on the doors of participating coffee shops, restaurants, and bars indicating the wi-fi is courtesy of

‘Tide Is Against Them’

A characteristic of failed public wi-fi projects is a business plan based on ads popping up on computer screens to subsidize the service. David T. Witkowski, president of the Palo Alto, California-based Wireless Communications Alliance, says he hopes this new plan in Austin—which doesn’t depend on such ads—has a better chance to succeed.

“I’m a firm believer that given a free and open market the private sector always provides the best solution,” Witkowski said. “But ad-supported and free ‘muni’ models have been demonstrated to be unprofitable.

“Very few muni wi-fi projects have been successful, because their business plans are based on profit models which the market has proven are flawed,” he added. “If Discount Electronics can buck the trend and operate a profitable ad-supported wi-fi system, that would be great, but the tide of history is against them.”

Muni Recriminations
Richard MacKinnon, president of the Austin Wireless City Project and CEO of Less Networks, insists the city of Austin never promised to deliver “free” wi-fi to residents as a public service.

“In fact, it is legally barred from providing commercial broadband services, wireless or otherwise,” MacKinnon said. “So the taxpayers end up getting what they pay for—nothing.

“Spend no tax money on roads, and you get no roads,” he added. “Spend no tax money on free wi-fi, get no free wi-fi.”

MacKinnon says the offer by Discount Electronics to provide free wi-fi in the Austin-Bergstrom International Airport “and pick up the tab in full” is generous. But he considers it merely bluster.

“Hopefully, Discount Electronics will be able to sell enough discount electronics from wi-fi ads to air travelers to cover the cost of broadband, maintenance, and support,” MacKinnon said.

High Public Expectations
Witkowski said he is encouraged to see the private sector step up in Austin, because consumers have come to expect to access the Internet everywhere they go.

“It’s worth noting that people have come to expect that some form of wi-fi will be available in city centers and business areas,” Witkowski said. “People now expect free wi-fi in hotel lobbies, restaurants, coffee shops, etc.

“And all else being reasonably equal, many consumers will choose to patronize a certain business over another because it has a wi-fi hotspot,” he added. “This is true for mobile professionals who rely on access to the Internet for their livelihood, and also younger people who rely on the Internet as a key enabler for their social networks.

“If wi-fi is not available, or if it’s slow or otherwise of poor quality, the business will ultimately lose customers,” Witkowski said.

SIDEBAR: Marketplace Supplying Public Wi-Fi

While government-run wi-fi programs continue to struggle to provide reliable service, there is plenty of space for the free market to provide wireless broadband, says William Lehr, a research associate in the Communications Futures Program at the Massachusetts Institute of Technology.

“I think the failure of many muni wi-fi plans is neither terribly surprising nor indicative that such plans are a bad idea,” Lehr said. “I remain skeptical of wi-fi, and especially ‘free’ or very low cost service, as provided ‘universally’ by a government entity, especially a big entity like Austin, Texas.

“Even if the [private-sector Discount Electronics project in Austin] proves temporary, these markets continue to evolve,” Lehr said. “And more wi-fi availability is an important dimension of the broadband market.

“A solution that proves temporary today can be revisited in the future,” he added. “In general, I think the private sector should take care of this, and allowing them to get advertising juice out of deploying free wi-fi is a good idea and I think in the taxpayers’ interest.”

Tabassum Rahmani
([email protected]) writes from Dublin, California.