[1st-mile-nm] Cities Struggle With Wireless Internet

[Richard Lowenberg]

Here's a fairly long article from today's Houston Chronicle and the AP.
It expands on an issue that I briefly mentioned at a small meeting held
today in Santa Fe, to discuss and generate interest in a city fiber net.

The economic model for muni-wireless deployments is increasingly being
questioned, as some early deployments do not fulfill their intentions and
promises.

Locally owned 'open' fiber systems, have greater up-front investment
requirements, but have a longer life and the ability to be income
generators, while providing much greater broadband capacity.   We need to
look at our options and potential solutions more stategically.
Richard

---------- Forwarded message ----------

http://www.chron.com/disp/story.mpl/ap/fn/4822700.html

May 21, 2007, 1:43PM
Cities Struggle With Wireless Internet

By ANICK JESDANUN AP Internet Writer
© 2007 The Associated Press

A $3 million plan to blanket Lompoc, Calif., with a wireless Internet
system promised a quantum leap for economic development: The remote
community hit hard by cutbacks at nearby Vandenberg Air Force Base
would join the 21st century with cheap and plentiful high-speed
access. Instead, nearly a year after its launch, Lompoc Net is
limping along. The central California city of 42,000, surrounded by
rolling hills, wineries and flower fields more than 17 miles from the
nearest major highway, has only a few hundred subscribers.

That's far fewer than the 4,000 needed to start repaying loans from
the city's utility coffers, potentially leaving smaller reserves to
guard against electric rate increases.

And Lompoc isn't alone. Across the United States, many cities are
finding their Wi-Fi projects costing more and drawing less interest
than expected, leading to worries that a number will fail, resulting
in millions of dollars in wasted tax dollars or grants when there had
been roads to build and crime to fight.

More than $230 million was spent in the United States last year, and
the industry Web site MuniWireless projects $460 million will be
spent in 2007.

Without revenues they had counted on to offset that spending, elected
officials might have to break promises or find money in already-tight
budgets to subsidize the systems for the low-income families and city
workers who depend on the access. Cities might end up running the
systems if companies abandon networks they had built.

The worries come as big cities like Philadelphia and Portland, Ore.,
complete pilots and expand their much-hyped networks.

"They are the monorails of this decade: the wrong technology, totally
overpromised and completely undelivered," said Anthony Townsend,
research director at the Institute for the Future, a think tank.

Municipal Wi-Fi projects use the same technology behind wireless
access in coffee shops, airports and home networks. Hundreds or
thousands of antennas are installed atop street lamps and other
fixtures. Laptops and other devices have Wi-Fi cards that relay data
to the Internet through those antennas, using open, unregulated
broadcast frequencies. In theory, one could check e-mail and surf the
Web from anywhere.

About 175 U.S. cities or regions have citywide or partial systems,
and a similar number plan them, according to Esme Vos, founder of
MuniWireless.

Rhode Island has proposed a statewide network, while one in
California would span dozens of Silicon Valley municipalities. San
Francisco, Los Angeles, Chicago and Atlanta also want one.

Because systems are just coming online, it's premature to say how
many or which ones will fail under current operating plans, but the
early signs are troubling.

"I will be surprised if the majority of these are successful and they
do not prove to be drains on taxpayers' money," said Michael Balhoff,
former telecom equity analyst with Legg Mason Inc. "The government is
getting into hotly contested services."

Most communities, including Lompoc, paid for their projects.
Elsewhere, private companies agreed to absorb costs for the chance to
sell services or ads.

The vendors remain confident despite technical and other problems.
Chuck Haas, MetroFi Inc.'s chief executive, said Wi-Fi networks are
far cheaper to build than cable and DSL, which is broadband over
phone lines.

Demand could grow once more cell phones can make Wi-Fi calls and as
city workers improve productivity by reading electric meters
remotely, for instance.

Balhoff, however, believes the successful projects are most likely to
be in remote places that traditional service providers skip _ and
fewer and fewer of those areas exist. Cities, he said, should focus
on incentives to draw providers.

In Lompoc's case, officials say construction was delayed about a year
once they realized wireless antennas had to be packed more closely
together. Then the city learned that its stucco homes have a wire
mesh that blocks signals, making Internet service poor or nonexistent
indoors without extra equipment.

But more importantly, just as Lompoc committed to the network, cable
and telephone companies arrived with better equipment and service,
undercutting the city's offerings.

"It seemed like we announced we were going to do this and that and
the next day we got trucks from the providers doing this and that,
when we've been asking for years and nothing ever happened," Lompoc
Mayor Dick DeWees said.

D.A. Taylor, who runs a software business from her home, said
Lompoc's Wi-Fi service lacks key features she gets through DSL.

"It's a really great idea, but they didn't spend a lot of time
thinking who their target market was," Taylor said.

DeWees acknowledged that Lompoc might have to pull the plug if it
cannot boost subscriptions, but he said the city still has an
aggressive marketing push in store. Lompoc recently slashed prices by
$9, to $16 a month, for the main household plan.

Just a few years ago, these municipal wireless projects seemed
foolproof.

Politicians got to tout Internet access for city workers and poorer
households _ many programs include giveaways for lower-income
families. Some cities bear no upfront costs when a company pays for
construction in exchange for rights to use fixtures like lamp poles.

Vendors like EarthLink Inc. saw a chance to offset declines in dial-
up subscriptions. MetroFi, offering free service, got to join the
burgeoning market for online advertising. Google Inc. also is jumping
in for the ads, partnering with EarthLink in San Francisco, although
the city's Board of Supervisors is resisting their joint proposal.

As projects get deployed, both sides are seeing chinks in their plans.

Many cities and vendors underestimated the number of wireless
antennas needed. MobilePro Corp.'s Kite Networks wound up tripling
the access points in Tempe, Ariz., adding roughly $1 million, or more
than doubling the costs.

"The industry is really in its infancy, and what works on paper
doesn't work that same way once you get into the real world," said
Jerry Sullivan, Kite's chief executive.

Networks like St. Cloud, Fla., and Portland, meanwhile, shared
Lompoc's difficulties penetrating building walls, requiring indoor
users to buy signal boosters for as much as $150. And when it works,
service can be slower than cable and DSL.

"There's an antenna literally at the curb of my house, but when I've
tried to log on, it cuts in and out," said Landon Dirgo, who runs a
computer repair shop in Lompoc.

One recent sunny afternoon in Portland, few could be found surfing
the Internet from the city's downtown parks.

Mari Borden, a student at Portland State, said she couldn't connect
to MetroFi's free network from several locations, even though her
computer could detect a signal (MetroFi officials say users might
need stronger wireless cards to send back a signal).

The vendors insist they have been upfront with customers about
limitations. But MetroFi's Adrian van Haaften said managing
expectations can be challenging.

EarthLink said it has 2,000 customers in four markets _ New Orleans;
Milpitas and Anaheim, Calif.; and Philadelphia _ paying $22 or less a
month. MetroFi said it had 8,000 free users in Portland in April,
averaging 10 hours online; the city says about 1,000 use the network
on any given day.

Although both companies say their numbers are good given that their
networks aren't fully built yet, they also are realigning expectations.

MetroFi will insist that future contracts commit cities to spend a
specific amount for public safety and other municipal applications.
EarthLink, which recently suspended new bids while it focuses on
existing projects, said it would likely seek minimums, too.

Glenn Fleishman, editor of the Wi-Fi Networking News site, said
vendors could no longer afford to treat projects as testbeds and loss
leaders for winning publicity and new business.

Municipalities, meanwhile, are becoming more cautious. Applying
lessons from other municipalities, Boston plans to raise money
upfront from local groups and businesses and avoid tax dollars or a
corporate partner.

Competition and expectations will only increase as DSL and cable
modems get faster.

Users today are struggling with e-mail and the Web over some wireless
systems, yet video and online games will require even more capacity.

"Most people if they are going to do serious work aren't looking to
be sitting in a park," said Eric Rabe, a spokesman for DSL provider
Verizon Communications Inc. "They want to be at a desk where they
have their papers or business records."

Lompoc's backers, though, still claim success, "even if the whole
network were to be written off tomorrow," said Mark McKibben,
Lompoc's former wireless consultant.

"Prices dropped and quality of service went up," he said. "That's the
way a lot of cities look at it. They don't look at business profits
and losses. They see it as a driver for quality of life."

___

AP Business Writer Michael Liedtke in San Francisco and Associated
Press Writer Sarah Skidmore in Portland contributed to this report.