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Home My WebLink About2007 05 29 Handout Given by Commissioner Krebs Date: May 29, 2007 The attached was referenced by Commissioner Joanne M. Krebs during Reports at the May 29, 2007 City Commission Special Meeting. Many Cities Face Wi - Fi Woes Associated Press Across the U.S., many cities are finding their Wi-Fi projects costing more and drawing less interest than expected, leading to worries that a number of them will fail, resulting in mil- lions of dollars in wasted tax dol- lars or grants. More than $230 million was spent in the U.S. last year, and in- . dustry Web site MuniWireless projects $460 million will be spent in 2007. Without revenues they had counted on to offset that spend- ing, 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 for whom access to the services was intended. Cities might end up running the sys- tems if companies abandon net- works they had built. The worries come as big cit- ies such as Philadelphia and Portland, Ore., complete pilots and expand their much-hyped networks. "They are the monorails of this decade: the wrong technol- ogy, totally overpromised and completely undelivered," said Anthony Town~end, research di- rector at the Ins.titute for the Fu- ture, 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 anten- nas are installed atop street lamps and other fixtures. Lap- tops and other devices have Wi-Fi cards that. relay data to the Internet through those an- tennas, using open, unregulated broadcast frequencies. In the- ory, one could check email and surf the Web from anywhere served by a municipal network. About 175 U.S. cities or re- gions have citywide or partial systems, and a similar number plan them, according to Esme Vos, founder of MuniWireless. . Rhode Island has proposed a statewidenetwork, while one in California would span dozens of Silicon Valley municipalities. San Fraricisco, Los Angeles, Chi- : cago and Atlanta also wantone. THE wAIl STREET JOURNAL. Because systems are just coming online, it's premature to say how many or which ones will fail under current operat- ing plans, but the early signs are troubling. "I will be surprised if the ma- jority 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 g9vern- ment is getting into hotly con- tested services." Most communities paid for their projects. Elsewhere, pri- vate companies agreed to ab- sorb costs for the chance to sell services or ads. The vendors remain confi- dent 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 read- ing electric meters remotely, for instance. Mr. Balhoff, however, be- lieves the successful projects are most likely to be in remote places that traditional service providers skip-and fewer and fewer of those areas exist. Cit- ies, he said, should focus on in- centives to draw providers. Just a few years ago, these municipal wireless projects seemed foolproof. Politicians got to tout Inter- net access for city workers and poorer households-many pro- grams include giveaways for lower-income families. Some cities bear no upfront costs when a company pays for con- struction in exchange for rights to use fixtures like lamp poles. Vendors such as EarthLink Inc. saw a chance to offset de- clines in dial-up subscriptions. MetroFi, offering free service, got to join the burgeoning mar, ket for online advertising. Goo- gle Inc. also is jumping in for the ads, partnering with Earth- Link 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 un- derestimated the number of wireless antennas needed. Mo- bilePro Corpo'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 pa- per doesn't work that same way once you get into the real world," said Jerry Sullivan, Kite's chief executiv:e. Networks like St. Cloud, Fla., and Portland, meanwhile, shared 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 r~ns a computer-repair shop in Lompoc, a central Cali- fornia town of 42,000. One recent sunny afternoon in Portland, few could be found surfing the Internet from the city's downtown parks. Vendors insist they have been upfront with customers about limitations. But MetroFi said managing expectations can be challenging. EarthLink said it has 2,000 customers in four markets- New Qrleans; Milpitas and Ana- heim, Calif.; and Philadelphia- paying $22 or less a month. MetroFi said it had 8,000 free users in Portland in April, aver- aging 10 hours online; the city says about 1,000 use the net- work on any given day. Although both companies say their numbers are good given that their networks aren't fully built yet, they also are re- aligning expectations. MetroFi will insist that fu- ture contracts commit cities to spend a specific amount for pub- lic safety and other municipal applications. EarthLink, which recently suspended new bids while it focuses on existing projects, said it would likely seek minimums, too. i I WednJsP,aYJ May 23, 2007 BSB , I