U.S. cities, towns and counties will spend nearly $700 million over the next three years to build municipal-owned wireless broadband networks, according to a statistical analysis of the municipal wireless market conducted by Muniwireless.com.

According to the inaugural report, "2005 Municipal Wireless State of the Market Report," the U.S. market will grow 134 percent between 2004 and 2007 and will exceed $400 million by 2007 as more municipalities, including larger cities like San Francisco and Portland, embark on wireless initiatives.

Esme Vos, founder of Muniwireless.com, and a leading voice on how municipalities are evaluating and deploying wireless networks, detailed the report's findings at MuniWireless 2005 San Francisco, the first conference to be produced by MuniWireless.com. The event, held at the Westin San Francsico Airport, which concludes today was expected to draw more than 225 public officials, government IT leaders, systems integrators, consulting firms, investors, public policy experts and technology .

"This is a market that has quickly gained critical mass, and is destined to grow at rapid rates for the foreseeable future -- even with the obvious questions surrounding the technical and political challenges," said Vos.

The study found that both small and large cities are moving aggressively to deploy wireless networks. Growth will more than double annually for the next three years, both in cities with populations of more than 500,000 people, and those with less than 100,000 residents. More than 60% of total 2005 municipal wireless network spending is being done by large cities, a figure expected to hold fairly constant in the next two years, as more and more large cities issue Requests for Proposals (RFPs) for their wide-area wireless initiatives.

The top application for current municipal wireless networks is public safety (police, fire, emergency services). Just over half of U.S. municipalities that have deployed municipal wireless have done so for public safety.

Many municipalities are starting their "unwiring" efforts in an attempt to reduce skyrocketing telecommunications costs. But small municipalities often are driven to offer inexpensive broadband access to residents and businesses that are typically underserved by the large incumbent communications carriers.

Since the majority of municipal wireless spending will focus on infrastructure build-out for the next several years, product vendors will be well-positioned to capitalize on demand for their products. However, that infrastructure is deployed, applications developers are going to be the most sought-after technology partners, the report found.

Adoption of important industry standards, such as the next generation of Wi-Fi (802.11s) and WiMax, could spur even higher growth rates for the market, should those standards be widely adopted by technology vendors early next year.

The report admitted a lack of clarity about how major technology players such as Microsoft, Cisco, Google and Intel will impact municipalities' adoption of wireless networks. However, recent announcements by cities such as San Francisco and Cleveland, show that the digital communities movement across the U.S. provides some clue as to the impact of major players.

Intel has launched the Digital Communities Initiative of which Cisco is a part, and the initiative has already taken root in 13 cities and started to improve operations in city governments, such as Cincinnati, Ohio. Additionally, although it is not an official Digital Community, San Francisco has launched a comprehensive program called TechConnect aimed at improving the quality of residents' lives through access to technology and instruction in how to use it.

And this trend will likely just continue, as cities such as Sacramento continue to provide free wireless broadband access in select areas downtown. Interestingly, Sacramento already has a Bee Hive, an online resource developed by One Economy that provides information on jobs, education, getting involved in the local community, interacting with local government and other topics of interest to residents of cities across the U.S. A Bee Hive is also available for San Francisco.