Muni-Wi-Fi crashes and burns (and old-ad 'shopping)

Fast and furious, it's Friday's IT Blogwatch: in which municipal Wi-Fi plans fall apart in SF, Chicago, St. Louis, and Springfield. Not to mention a "Vintage ads for new stuff" Photoshopping contest...

Stephen Lawson reports from fog city:

EarthLink Inc.'s current contract to build a municipal Wi-Fi network in San Francisco appears to be dead following a restructuring of the struggling Internet service provider. The deal, hammered out in months of negotiations last year and completed in January, calls for EarthLink to build a citywide network at no cost to the city and sell high-speed service to residents while Google Inc. provides a free, slower service over the same network. But after announcing layoffs of nearly half its workforce and a gloomier financial forecast, EarthLink said Wednesday it won't invest any more money in that business model ... That includes currently planned networks where the company hasn't yet made capital investments.

...

EarthLink's municipal Wi-Fi woes come as the ... overall climate for municipal Wi-Fi changes. The promise of free networks supported by advertising or residential subscriptions has faded, and EarthLink and other network providers are looking to local government as "anchor tenants" that support the projects by buying services. Chicago ... dropped the plan this week, citing high cost and low subscriber interest.

The company forecast municipal Wi-Fi capital investments of US$30 million to $35 million in 2007 as it completes projects already begun in Philadelphia, Corpus Christi, Texas, and Anaheim, California, but is not forecasting any capital spending on municipal networks in 2008. [more]

Eric Bangeman is in the windy city:

Yesterday morning, I opened up my hometown broadsheet to discover that the Windy City was blowing off its broadband plans. The change in heart comes after the city found itself unable to reach an agreement with either EarthLink or AT&T, the two companies that had submitted proposals. One of the sticking points was apparently Chicago's unwillingness to commit to becoming an anchor tenant for the network. Both of the vendors wanted Chicago to pay to use the WiFi network for internal services, a model which has worked well in other cities like Philadelphia.

...

The bidders ... have seen deployment costs soar in other cities. At first, EarthLink anticipated being able to blanket Philadelphia with between 20 to 25 nodes per square mile. Even after the baseline was raised to 30 nodes per square mile, coverage was still inadequate. EarthLink has had to install as many as 47 nodes per square mile in some areas ... More nodes equals more money, and that means less room for a WiFi provider to make a buck. [more]

Let's Meet David Strom in St. Louis:

AT&T has a contract to supply muni WiFi across the city. So now we hear that things aren’t going to plan ... Apparently, no one bothered to check how the hotspots were going to be electrically powered. Usually for these sorts of projects, the access points are placed atop the street light poles. However, here the lights are powered on in groups, so any muni WiFi network would only be operating between dusk and dawn. You can’t make this stuff up. [more]
And Mark Sullivan has bad news for North Tacoma: [D'oh! You're fired -Ed.]

AT&T announced it had dropped plans to build a muni Wi-Fi network in Springfield, Illinois.

...

As it turns out, selling Wi-Fi service to consumers just isn't a very profitable business. Analysts are saying today that EarthLink and some of its city partners grossly underestimated the cost of building and maintaining Wi-Fi networks, and grossly overestimated the number of consumers who would use the service.

...

Some of us had hoped that EarthLink would eventually offer a "third pipe," an alternative to the (slow and expensive) broadband service we buy from the cable-and-telephone company duopoly here in the US. That kind of competition would be good for consumers. It would push connection speeds up and force prices down. As it stands now, broadband connectivity in the US costs more per Kbps of connectivity than in any other developed country.

Is faster, cheaper and more ubiquitous broandband really important? You bet it is ... better broadband leads to more productivity, more innovation and more jobs. [more]

And Om Malik ponders the competition:

Are ... the incumbents ... going to offer WiFi services as tack-on options to their broadband offerings instead? Don’t count on it. With the biggest commercial competitive threat out of the equation, there is very little incentive for incumbents — already in a bitter price war of their own — to offer services that involve capital expenditure commitments.

...

That third broadband pipe dream… time to wake up! [more]

Cynthia Brumfield calls it, "Inevitable":

San Francisco has to come up with a new game plan. [The Mayor, Gavin] Newsom thinks he could have forced EarthLink to honor whatever contract it signed, despitet the company’s woes. (Oh brother, just what any local government needs — an unhappy and financially ailing contractor forced to do work through threat of litigation.)

...

Over the past few years, I’ve read with mounting disbelief optimistic muni-Wi-Fi projections developed by naive analysts and paid-for municipal consultants. Most of the overheated expectations stemmed not from real-world, cold-eyed analysis but from idealistic hope that this extremely limited technology could bust up the cable-telco duopoly.

But hope doesn’t pay the bills and Wi-Fi is just too expensive ... And that’s just the construction costs. The operating expenses and headaches are endless burdens not justified by the so-far anemic take-rates of muni-Wi-Fi services ... Even AT&T can’t figure out how to power the transmitters in St. Louis, and is stalling on the construction of a Wi-Fi network there. [more]

And this Anonymous Coward seems to agree:

I've see Communism first hand. Being told "sorry, you don't have water on Tuesdays and Thursdays" is unpleasant. Yes, I understand there is a failure in the infrastructure but it isn't corrected without incentive. People, sadly, acclimate to piss-poor surroundings. One or two generations of that and getting out is difficult.

...

I thought about designing my own 'free' wireless network. The manpower and cost to keep it up and running is obscene. Even with free hardware and ISP service, the cost of making sure it's running 100% is a full time job, if not two. Without a financial incentive, there is little to be gained. [more]

Google to the rescue? Maybe, says John Gartner:

Municipal WiFi needs the backing of major brands that can pay the hefty sponsorship fees needed to generate sufficient revenue to offset the cost.

Google can not generate enough money alone through search, so it's time to bring in targeted ads from companies such as Coca Cola, Wal-Mart and Dell. The folks that would use free Wi-Fi tend to be middle to lower income, and these companies certainly know how to make a buck from a diverse audience. Google should work with these advertisers on tracking behaviors to develop targeted ads that are more effective for advertisers and consumers.

The other limiting factor is the "digital divide" that eliminates a portion of the audience from going online. Developing a free PC service based on advertising would take some creative marketing schemes. [more]

Buffer overflow:

Around the Net Around Computerworld Previously in IT Blogwatch

And finally... Vintage ads for new stuff [some may be slightly offensive; hat tip: Boing Boing]

Richi Jennings is an independent analyst/adviser/consultant, specializing in blogging, email, and spam. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You too can pretend to be Richi's friend on Facebook, or just use boring old email: blogwatch@richi.co.uk.
Shop Tech Products at Amazon