The end of municipal WIFI projects
The municipal WIFI projects (basically, blanket a city with free hot spots so everyone can be online for free all the time) have been a topic of discussion since a year ago at work. Obviously, when you make money providing Internet connectivity to consumers, the idea of the city using taxpayers money to provide the same service for free is pretty challenging for your business model. I also defended that those projects were not going to be successful due to the difficulty and cost of covering well enough the city for the service to be useful. At least, not with WIFI technology, WIMAX is a different story but then WIMAX runs in licensed spectrum while WIFI in unlicensed so we are talking about different things here. The last couple of weeks there has been a string of news announcing projects being killed or postpone (Chicago, San Francisco) and more importantly, EarthLink (the main company behind this projects) has announced that it will lay off 900 workers, including the head of the municipal WIFI division. The main reason is that they do not see how to make money with a “free” service (there is no free lunch, remember?). Actually, those projects were never completely free to start with (obviously, being a company involved that is suppose to be there to make money). The idea was that the city puts some money to subsidize part of the cost and then the “free” version was either ad supported or low speed with a higher speed version available for free. Two things have happened, the number of pay subscribers has been generally very low and then to get a decent coverage, they have had to install lots more WIFI receivers than expected. Not surprising, I cannot even get WIFI all over my apartment with just one receiver so I always wonder how they were planning to get coverage throughout a whole city full of buildings like Chicago. Now it seems that they want the city to pay in advance the cost for everything so even if the number of subscribers do not go up to cover costs, the company deploying the service will not lose money. The moment this becomes very expensive for a city, all these projects will end. I think that solutions like the one in NY were you get free WIFI in most of the major city parks are good, they do provide some sort of free connectivity for the citizens but are not too costly for the city.
