The Big Apple’s 32 parks will soon offer free wi-fi—but it will be free only for three 10-minute increments per month. After the initial 30 minutes, Internet users will have to pay $0.99 a day.
New York City’s plan occurs as municipal wi-fi faces increasing challenges from corporate-sponsored sites such as McDonald’s and Starbucks, which feature higher speeds and are relatively easy to find. Additionally, many municipal wi-fi projects, such as one recently implemented in Milpitas, California, have proven financially unsustainable.
In 2009 the city of Chicago announced it was scrapping its plans for citywide wi-fi. The major obstacle, according to published reports, was the city’s refusal to become an “anchor tenant,” to provide only a portion of the initial and ongoing funding for the venture, which EarthLink and AT&T were expected to bid on.
Broadband Prices Falling
Municipal wi-fi efforts in U.S. cities have been troubled from the start. In late 2007 EarthLink announced it would no longer make significant further investments in its wi-fi division, laid off 900 employees, and sought to sell the operation.
In another failed venture, EarthLink sold the network it developed in Corpus Christi, Texas, back to the municipality, which is using it for meter reading and other city services. Corpus Christi has no public wi-fi access, according to Esme Vos, founder of Muniwireless.com, an Amsterdam-based portal for news and information about citywide wi-fi around the world.
A recent Pew Internet & American Life Project study found DSL prices have dropped by 15 percent in the last two years. In a little less than a decade the nation has gone from dominance by dial-up to deep market penetration by cable and DSL carriers, with wireless, cellular, satellite, and even broadband over power lines joining the mix.
“When municipalities seek to offer free wi-fi, incumbents take serious pricing actions to maintain their markets,” said Shriaant Latkar, assistant vice president of product and solutions marketing for Aricent, a Palo Alto, California technology and services company. That and the presence of popular public venues such as Starbuck’s, increased broadband speed over satellite, and 3G and 4G availability on cell phones further weaken the case for municipal, Latkar said.
“The problem with municipal wi-fi may be the same problem [that affects] municipal terrestrial Internet access service in urban/metro markets already served by other carriers,” said David Howard, a social media marketing consultant. “Here in Alameda, California, where I live, the utility sold off the failing cable/TV telecom division of Alameda Power & Telecom—now Alameda Municipal Power—for a substantial loss. Investors who bought bonds issued to pay for the infrastructure are suing over their now-worthless notes.
“In Alameda, the take rate and build-out costs were over-optimistic,” Howard added. “One was lower than forecast, and the other higher. Originally, Alameda residents wanted a cable alternative to Comcast, but we have Comcast for TV and Internet access,
AT&T for DSL Internet access, and satellite TV, and Internet options as well. Just before the sale to Comcast, the utility tried to make a case for going into voice services, to compete with both Comcast and AT&T there, too. Fortunately, we killed that idea.
He concludes, “Municipal wi-fi will have many of the same infrastructure costs. They’ll have to backhaul bandwidth from wireless access points somehow, and if they do it by fiber, it will have much in common with hybrid fiber-coaxial and fiber-to-the-node/neighborhood DSL deployments, save for the home run to the subscriber’s house.”
Phil Britt ([email protected]) writes from South Holland, Illinois.