Government Technology

Municipal Wireless Projects Need Viable Business Model


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Still no Free Lunch

January 29, 2008 By

During the past few years, numerous cities and counties clamored for Wi-Fi arrangements in which vendors funded a jurisdiction's entire network - in some cases subsidizing a handful of wireless subscriptions for low-income citizens. Vendors hoped the venture would result in a wireless service subscription bonanza. The gamble didn't pay off.

As vendors deployed municipal Wi-Fi networks, they discovered the networks didn't attract enough citizen subscriptions to make them profitable. Furthermore, many local governments refused to be anchor tenants, which would have committed them to purchasing a specified volume of service. In November, EarthLink, one of the best-known providers using the business model, announced it would hold off on new municipal Wi-Fi build-outs until it finds a viable business model.

Other cities, like San Francisco and Sacramento, Calif., sought ad-supported models in which private providers own and operate the networks, offering free access to citizens in exchange for them enduring a 1-inch band of advertising across the bottom of their screens. That model failed to gain traction as well.

 
Faulty Bridge
Some observers blame cities' desire to "bridge the digital divide" for the ultimate downfall of some municipal Wi-Fi networks. Local governments should have focused instead on improving government processes as the rationale for building a network, said Riz Khaliq, IBM Global Business executive for Government.

Much of the recent municipal wireless activity has been about enabling mayors to announce free Wi-Fi connectivity for citizens, Khaliq said. He said those pronouncements didn't have much political value in the end because business plans didn't deliver profit for vendors.


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