Muni Wi-Fi Projects Struggle with Technology and Economic Challenges

When Philadelphia announced its ambitious "Digital Inclusion" plan for a citywide municipal Wi-Fi program in 2005, cities across the country took notice. Philadelphia was planning to become the first metropolitan city with a citywide Wi-Fi network covering 135 square miles. It claimed the network would benefit citizens, business, schools and community organizations.

In a frenzy comparable to the dot-com bubble, other cities announced similar plans for municipal Wi-Fi projects, partnering with service providers such as EarthLink who promised to pay all upfront installation costs. Politicians, activists and Internet providers touted free citywide Wi-Fi as a means to bridge the digital divide and increase business development in cities.

Yet in the two years since Philadelphia's announcement, municipal Wi-Fi projects have recently hit the stumbling block of economic and technological reality. Last August, EarthLink recanted its promise to pay for all upfront network costs in some of its proposed municipal Wi-Fi programs, claiming the municipal Wi-Fi business model that attracted numerous municipalities wasn't viable. The company requested that cities pay for network construction and announced that it was cutting 900 jobs - or nearly half its work force - in a massive restructuring. Several cities that worked with EarthLink reacted to the announcement by canceling or postponing their projects, including Chicago; San Francisco; Houston; Alexandria and Arlington, Va.; and St. Petersburg, Fla.

Municipalities are also finding citywide Wi-Fi has technological shortcomings. Philadelphia is about half finished with its Wi-Fi project, but already complaints have mounted about spotty reception from areas of the city where Wi-Fi was supposed to reach. As another blow, subscriptions have been lower than expected. Philadelphia also had to become an "anchor tenant" and commit to funding the network for city services for a set number of years.

Other cities are also encountering Wi-Fi problems, such as where to put transmitters, geographical complications, and interference from buildings, leaves and water. Yet a primary obstacle for municipal Wi-Fi programs seeking to blanket cities with Internet access is who pays for it, if not the city.

EarthLink's new President and CEO Rolla Huff announced EarthLink will reduce its investments in municipal Wi-Fi and Helio, a mobile device and service provider, but added the company will not abandon Wi-Fi projects completely. Huff's appointment came soon after EarthLink reported a $30 million first quarter loss.

"After thorough review and analysis of our municipal wireless business, we have decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value," Huff said in a November 16 press release.

"That was never a sustainable business model, but the hype became so great it drove things forward much like the dot-com bubble and illusion," said Craig Settles, a wireless business strategist and consultant.

In the past few years, many municipal CIOs were caught between fulfilling their elected officials' unrealistic demands and deadlines for low-cost, or in other cases no-cost, citywide Wi-Fi, Settles said. Some cities had even copied RFP plans directly from other cities like Philadelphia and San Francisco in the rush to carry out municipal Wi-Fi directives. 

Inadequate Research
San Francisco's high-profile Wi-Fi project was recently put on the back burner, negating three years of planning after EarthLink backed out of its promise to pay an estimated $14 million to $17 million in installation costs for citywide Wi-Fi. San Francisco Mayor Gavin Newsom blamed the San Francisco Board of Supervisors for stalling, yet supervisors claimed the mayor negotiated a contract without their involvement. The result: San Francisco will not have citywide municipal Wi-Fi access for years to come.

"As CIO, the challenge is being a technology leader and ensuring you share your vision and incorporate as much processes with the community as possible so that we are