The Wi-Fi That Wasn't

Citywide wireless networks aren't dead. It's just that the terms of the deals are changing--radically.
by | October 2007

A few months ago, St. Petersburg, Florida, was on its way to becoming the latest Wi-Fi town. The city was set on rolling out wireless Internet access for residents and businesses over all 60 of its square miles. Even better, it had found an experienced vendor who was willing to build out this network, estimated to cost $7 million, at no charge to taxpayers.

Now that deal is dead. Earthlink, the vendor with whom St. Petersburg had been negotiating, is gutting its municipal Wi-Fi division. St. Pete isn't the only city affected. Earthlink has also backed out of negotiations with San Francisco. Chicago has scrapped Wi-Fi talks with Earthlink and AT&T. And Houston, which had signed a Wi-Fi contract with Earthlink, extracted a $5 million penalty for missed deadlines.

When all this news hit in late August, the media was quick to start writing obits for the whole idea of municipal Wi-Fi. But citywide wireless isn't dying. What is on life support is free build-outs. Local governments are having to let go of the dream that they could reap the benefits of vast wireless networks and not pay for them.

They got that idea from vendors. Earthlink, for instance, thought it could finance large Wi-Fi networks by charging customers $20 a month to use them. But it turns out there aren't enough paying customers to make that business model work. Lately, Earthlink--like most of its muni Wi-Fi competitors--has been looking for localities to share the costs and the risks of building out these networks. Specifically, they've been asking governments to serve as "anchor tenants" by agreeing to purchase hundreds, and sometimes thousands, of Wi-Fi subscriptions for their mobile workers.

Some cities see that as a worthwhile bargain. St. Louis, for example, plans to buy more than 800 accounts for police officers and other mobile workers. AT&T has agreed to build out Wi-Fi across all 62 square miles of the city.

The end of the "free" era of Wi-Fi may be a good thing for cities. Having skin in the game forces them to make a business case for wireless based on increasing workforce productivity and reaping actual returns on investment.

But anchor tenancy doesn't work for all cities. Chicago backed away from it because all it really wanted was another way for citizens and businesses to get online.

St. Petersburg isn't interested in anchor tenancy, either. The city's largest group of mobile workers by far is its police and fire fighters. And they're already using a wireless data service from Verizon that isn't perfect but has a big advantage over Wi-Fi: It doesn't stop at the city's borders. "When our police are chasing bad guys," says Muslim Gadiwalla, St. Petersburg's chief information officer, "they don't know jurisdictional boundaries."

The same is true when they go to a county courthouse that's outside of St. Pete. Whether police officers are over in Tampa or down in Sarasota, their connections work. "It would be a huge step backwards," Gadiwalla says, "if we limited them to access within the city of St. Petersburg, and everywhere else you're out of luck."


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