Muni Wi-Fi Fails in Sacramento

Published November 1, 2008

Sacramento, California has joined the growing list of municipalities that have failed at attempts to provide free wireless Internet service across a city.

The Sacramento City Council voted to cancel its contract with Sacramento Metro Connect (SMC), a consortium of technology firms including IBM, Cisco Systems, Azulstar, Intel, and SeaKay. The deal, approved in June 2007, ran into delays from the start, missing the “Phase One” deadline in October 2007 and a rollout of at least partial service in May 2008, according to a city staff report.

The report suggested the council pull the plug because “SMC has not provided the city with any level of assurance to date that it has the financial capital to perform its obligations,” especially after IBM, Intel, and SeaKay pulled out of the consortium.

Repeated Failures

This is the second time the Sacramento City Council has tried to establish free municipal wi-fi. A 2005 deal with MobilePro Corp., a Bethesda, Maryland-based Internet provider, fell apart in 2006 when the city wouldn’t let the company charge customers for higher broadband speeds. The failed deal with SMC would have allowed the consortium to charge for higher speeds.

“Muni wi-fi fails time and time again because the private sector does it better,” said Steven Titch, a telecom policy analyst at the Reason Foundation. “Wi-fi is a superb technology, but it is most economically and efficiently deployed in public areas conducive to allowing groups of people to congregate and use laptops or PDAs productively for a reasonable length of time.”

Sacramento’s staff report confirmed Titch’s point, noting while most muni wi-fi schemes have failed, the private sector has found success in providing wi-fi in public places.

“The marketplace, including Sacramento, has seen the explosion of wireless network hotspots deployed in cafés, hotels, restaurants, office buildings, airports, libraries, and other public meeting places,” the report said.

Private Success

Titch said he is not surprised by the failures, observing government is ill-equipped to compete with a more nimble private sector.

“The free market has been overwhelmingly successful at creating these hotspots, to the point where municipalities can only provide a second, often inferior, alternative or place hotspots in places where they will get little use,” Titch said. “Meanwhile, users are adopting cable modem or DSL service at home. It’s no wonder we see a pullback in interest in funding muni wi-fi. There’s no reason for it.”

City officials said they would continue to research the idea of muni wi-fi in Sacramento for another year and get back to the council, despite the August vote to end the program.

But the city’s staff report also noted its research to date has found “many of the large and small cities that entered into agreements with various wi-fi providers have ceased their deployment of public wireless networks.”

The report specifically noted Earthlink backed out of agreements to provide muni wi-fi for Philadelphia, Pennsylvania, Corpus Christi, Texas, and Pasadena and Anaheim, California. After Earthlink’s deals with Corpus Christi and Philadelphia failed, the cities were obligated to buy back wireless equipment and maintain the partially built networks.

San Jose, California-based MetroFi, once a leading player in the muni wi-fi field, announced in May it was closing down operations in nine cities: Concord, Cupertino, Foster City, Milpitas, Santa Clara, and Sunnyvale in California; Aurora and Naperville in Illinois; and— the company’s biggest client—Portland, Oregon.

MetroFi’s Web site is now a dead link, and no one answered the company’s phones at press time.

Unanticipated Problems

The Sacramento plan would have let SMC build the network, providing free public access to slower broadband speeds with faster speeds available for a surcharge paid to SMC. The city—which invested no money but spent many hours of staff time on the project—was to enjoy the faster speeds for all official business.

The staff report outlined some unforeseen problems. Among them: Many street lights in what would have been ideal retail locations, on which wireless equipment would have been mounted, were “ornamental” and too short to send out a suitable wi-fi signal, and “gang-switched” street lights in most residential areas had no power running through them during the day to keep the wi-fi service connected.

Councilman Kevin McCarty said the city is still interested in bridging the “digital divide” and bringing “the Internet to underserved areas of the city.”

Councilman Rob Fong, who publicly stated in January “we’ve stuck to it” even after Sacramento’s first try at municipal wi-fi failed, admitted failures in other cities indicate “the market changed.”

James G. Lakely ([email protected]) is managing editor of InfoTech & Telecom News.