Could Muni Fiber KO Muni Wi-Fi?

— August 09, 2006

Berkeley city council in California has become the latest city to examine municipal ownership of "the last mile", a move which could deal the latest blow to the stalling Municipal Wi-Fi movement. Palo Alto in the heart of Silicon Valley voted to investigate a fiber to the home (FTTH) scheme a few days earlier.

Berkeley had looked set to rubber stamp the Wi-Fi option, but voted 5:1 instead for a feasibility plan which would see the city partner with a private contractor for fiber.

"A successful economic model for running municipal Wi-Fi networks has yet to emerge," notes from the city's director of IT, Chris Mead, acknowledge.

The city also noted that while subscription models for Wi-Fi have been a flop, advertising-based revenue "cannot be taken for granted", either.

"It may be that municipal Wi-Fi is a passing fad that will be left behind by economic reality and new technology," advised Mead.

Some FTTH plans are well advanced. Seattle, Wash. voted to explore ownership of the last mile two years ago - issuing a RFI (Request for Interest) in May. But the poster child is undoubtedly Utah's appropriately named UTOPIA MetroNet project. A bond issue raised $85m two years ago, and now 14 areas will receive FTTH at speeds of up to 100mbit/s.

Laying fiber to the home is a much more expensive proposition than the cheap and cheerful option of attaching 802.11 transceivers to street posts. But it offers many advantages, the most significant of which is that residents would have a genuine alternative to the local Bell monopoly and the local cable provider.

Fiber would also offer the municipality a much greater opportunity to monetize the investment. Fiber links can be opened up to content providers to offer entertainment services such as IPTV, in addition to broadband and telephony.

And there are basic technical advantages. Wi-Fi doesn't handle mobile operations well, standards haven't settled, and coverage is patchy and flaky.

Typical city Wi-Fi contracts only stipulate that the contractor provide reception to street-facing rooms or the front rooms of apartments - and it's too bad if your apartment doesn't face the street. However, fiber promises far greater bandwidth at speeds 80x faster than the 256kbp/s basic tier that forms San Francisco's contract. The signal is naturally less vulnerable to weather conditions, challenging topology, or leaves on trees.

The disadvantages are obvious: it's more expensive, harder to sell, and still faces regulatory challenges and hard lobbying from incumbents.

Verizon lobbied hard against Muni Wi-Fi, to protect its high speed mobile 3G investments. But Verizon has already burned through $2bn laying its FiOS fiber network. So how much would it cost the city, really?

According to advocate Bill St Arnaud, quoted by Bob Frankston, who in turn was cited in a recent Robert X Cringely column that helped swing the Berkeley vote, the price per home is $1000 to $1500. Amortized over ten years that comes to $12.50 a month.

Palo Alto, one of the most socially divided cities in the US, estimated the cost of a FTTH network at $40m.

That's a lot of social services. And, of course, householders who already have cable or DSL may see this as unnecessary burden.

St Arnaud admits that there is "no obvious consumer demand for 'third' network", and that "North America is well served with a duopoly, with [the] 'promised' potential of WiMaX, BPL [broadband over powerline] and other technologies" just around the corner.

There's also a problem he could have mentioned, but didn't. If councils adopt "net neutrality" legislation, or if such legislation is forced upon the municipalities by Congress, there will be little interest from the content providers, who then find themselves doomed to compete with BitTorrent downloaders. The content providers are essential if the service is to pay for itself - and such content companies themselves are keen to find a competitor to King Cable.

We'll see. ®

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