At the W2i Broadband-Wireless Local Stakeholders Briefing Session in Detroit, Michigan, on Monday, October 16, 2006, W2i Executive Director Daniel Aghion interviewed IBM's Michael Dillon -- Director, Industry Solutions, Safety, Security & Community Broadband and a major contributor to Metro Connect's bid -- about the the network (which will serve the 2.4 million residents of Silicon Valley), working at the county level, and the challenges facing the municipal broadband-wireless industry right now.
Daniel Aghion: The Silicon Valley network groups together 42 local-government entities, and at the same time the business model is a wholesale model. How will it engage local constituents?
Mike Dillon: As many different networks as possible will be set up across the wireless infrastructure. For example, anyone who wants to be a WISP can put out a service, which will broaden the spectrum of the players to small businesses to cost-justify the network. Different players will have the opportunity to come and buy access to the network, and when they do they can brand it for themselves. A real-estate developer, for instance, would acquire this and provide services along with any of the people who are competing with him. What it requires is a back-office capability.
DA: How many competitors do you envision will be in that space? Are they competing head to head or for different classes of services?
MD: I don't expect there to be tons of them because there is a network owner who has an advantage. Normal tiered services will be offered on the network as well.
DA: You could have the open network, free, tiered, or with certain QoS, and you could have virtual private networks.
MD: Sure, affinity groups.
DA: They could be all different retailers, still addressing different communities, but buying wholesale at equivalent conditions.
MD: Then there's the network itself and the subscribership, which is largely fueled by free use -- about twice as many as subscribers -- and that population will drive the take rates.
DA: The wholesaler can retail as well?
MD: They'll have an advantage no matter who they are. But let's see what the local people choose to do.
DA: In some cases, trying to do things at a county level can appear to add an exponential level of complexity. Are you encountering that in Silicon Valley?
MD: Two counties are involved, so if that were that true, it would be an order of magnitude greater. But at the end of the day, it depends on whether there's been a focus among the constituents, no matter how many communities are involved, on whether they can get the project off the ground.
DA: Do you see synergies within the county?
MD: They are a natural union of all the communities within. They enact ordinances, there are mutual aid pacts -- a variety of different things within the county. So the county has its arms around the communities within, and there's a natural order that can be leveraged. That's not to say there aren't politics, but if they can utilize the mechanisms in place, there are probably some benefits there.
DA: When you actually choose to go after this or that county, is there a single most important criterion that leads you not to pursue?
MD: The lack of a recognizable business model on the part of the customer -- namely, the community -- if I can't understand their business model, or see how they would expect it would work.
DA: In Silicon Valley, there is no anchor tenant, but there appears to be a commitment to reach out to local authorities to bring them into the fold along with the mobile workers who are already in existence.
MD: Yes, IBM will provide network design and integration services, as well as innovative technology applications for public agencies and local utilities including intelligent traffic solutions to regulate traffic and reduce congestion and automated wireless utility and traffic metering. We would imagine that each community would enter into its own contract for those types of services. If it's meter reading, then we would go engage them to do that.
DA: So you may end up with X anchor tenants?
MD: Not necessarily. When I hear the term anchor tenant, then any given community will declare they're going to do this. When we know there's interest, we say here's a menu of things you might do, and then let's see which communities will deploy those types of opportunities. You might have two or three cities saying we want to do digital video surveillance over the network. It may be just an intention, perhaps to save money.
DA: You actually have a modeling tool.
MD: We have developed a tool for ROI. We like to use it in concert with a workshop to work with communities to help them figure out where their low-hanging fruit is. At the same time, these can be fairly complex. Many people haven't thought about every aspect.
DA: What do you perceive as the biggest challenge right now in municipal wireless? Now that IBM and a few other organizations have won sizeable deals, what are the next big challenges?
MD: It's going to be for the community to adopt the same attitude toward wireless as they do to lights and sewer. They offer up these assets -- they maintain them, keep them up and running -- but for this initiative, they still haven't stepped up to the plate to say we're going to acknowledge this like we do these other utilities and infrastructure.
There's funding and financing available, but the industry has been pushing in the direction of doing these creative and speculative deals. It's odd when there are funds available to go in and monetize these networks in ways that would not have them be at risk. The speculative side is interesting, but at the same time, it would be like going off and tin-cupping your way around the community and seeing if you could buy a car. These are infrastructure investments.
DA: There are no major obstacles to funding?
MD: Not if communities avail themselves of the funding that is available. It requires a commitment, but the paradox is, "I'm going to bridge the digital divide, but I don't want to have any responsibility for it, and I don't care how it gets funded, and I want hands off and let other people figure it out."
DA: You mention a key contribution from local communities is their vertical assets. Have you seen any local communities put up other assets, such as spectrum?
MD: We do see communities leveraging spectrum that they have access to. We see them leveraging their holdings in fiber. We see them smartly leveraging their investment in applications. And we see other communities in the "capture portal" -- the thing that's going to grab the user.
DA: Any final reflections on the industry?
MD: This industry has begun to follow a trend. I guess it's like a lot of people walking upstairs when there's an escalator around the corner. They're taking a long and arduous path, but it does require them to step up and commit the city in a serious and meaningful way -- not just by name but in pocketbook. If they do that, the best circumstance is to offer to be the guarantor of their networks such that they would be successful based on a business plan to monetize the network for the general fund. It's about what makes sense to monetize the network, no matter who put it up.
Daniel Aghion is executive director of the Wireless Internet Institute (W2i), an independent forum that brings together stakeholders around the world to accelerate the adoption of wireless Internet in support of universal connectivity and economic and social development. For more information on the Institute, visit the W2i website at www.w2i.org .
