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Municipal Wi-Fi networks are moving forward. But not without a few bumps along the way.
By Shawn Young
The Wall Street Journal
Monday, October 23, 2006


The effort to blanket cities and towns across the U.S. with wireless Internet access is starting to move from the drawing board to real life. But not without plenty of kinks along the way.

"It's a little bit learn-as-you-go," says Jerry Sullivan, president and chief operating officer of MobilePro Corp., a Bethesda, Md., company that is building systems in several Arizona communities and in parts of Ohio, Texas, Colorado and Massachusetts.

The challenges for municipal Wi-Fi, which is short for wireless fidelity, range from technical issues, like getting signals in and out of buildings, to grappling with the intricacies of local politics. There are debates going on around the country about whether networks should be publicly owned and largely free, or privately owned and operated for profit by companies like EarthLink Inc. and AT&T Inc. For now, most municipalities are splitting the difference -- having private companies build and operate networks that provide a mix of free and paid service.

Most municipal networks are still taking baby steps, serving limited batches of test customers in a few neighborhoods. But a few communities, including Tempe, Ariz., which is near Phoenix, and St. Cloud, Fla., a suburb of Orlando, have systems up and running that are proving such projects can work. Within six months of the launch of a free high-speed network this spring in St. Cloud, 77% of the city's residents had opened accounts, says Jonathan Baltuch, president of Marketing Resources Inc., a marketing and consulting firm that advised the city on its system. About 38% of those who signed up had been offline or using slow dial-up connections before the new system became widely available, Mr. Baltuch says. The city views the free system as a vital economic-development feature, he adds.

More than 300 communities, including Philadelphia, San Francisco and Portland, Ore., have or are planning wireless Internet projects, according to MuniWireless.com, a Web site devoted to such projects. About 100 cities and towns have projects that are advanced enough to provide at least some service to consumers, according to the site.

"There's not going to be any stopping this momentum over the next few years," says Greg Richardson, a managing partner at Civitium LLC, an Alpharetta, Ga., consulting firm that works with local governments and has advised Philadelphia and San Francisco on their projects. As more ventures come to fruition, "2007 is the year when you're finally going to be able to look at measurable results."

But first, there are hurdles to clear.

Getting Started

Just negotiating the contract typically takes six to eight months, says Mr. Richardson. This is where local politics imposes itself, by shaping the terms of the agreement.

Often, the biggest stumbling block in negotiations is the question of pricing. Local government officials generally want people to have as much free access to high-speed wireless services as possible. Instead of charging people to use the Wi-Fi system, they argue, companies can make money by selling advertising that will appear on users' computer screens. But companies generally prefer the more-predictable revenue stream that user fees provide.

This debate is being resolved in a number of ways. In some communities, companies building networks are offering a free service, funded by advertising, that operates at a relatively slow speed that is adequate for basic Web surfing and emailing. Anyone who wants faster service -- better suited for gaming, video downloads and business use -- has to pay for it. Typical fees range from about $5 for a couple of hours of access to about $30 a month for unlimited access. Some projects, like the one in Philadelphia, offer discounted access to faster service for low-income residents. Some companies also offer free access in certain public areas, like parks, and many include free access for local government agencies.

Sometimes companies and local governments find it impossible to come to terms. Negotiations between MobilePro and Sacramento, Calif., broke down over the summer after city officials pushed for more free service, to be supported by advertising that might appear on a corner of the user's screen. "We just do not feel that an advertising-based revenue model is sustainable" unless it is accompanied by some levels of paid service, MobilePro's Mr. Sullivan says. The city is now looking for another company to work with.

Even when things go more smoothly, there are hundreds of technical and financial points that need to be ironed out. For example, cities and companies must work out agreements about access for disadvantaged communities, the extent to which the city is entitled to regulate prices, and what data the providers will gather about users.

Technical Trouble

Once a contract is in place, setting up the network brings its own challenges. Local Wi-Fi systems typically rely on hundreds of small radio transmitters -- attached to streetlights, buildings and other structures -- that beam Internet connections out to users' computers and receive their return signals. EarthLink spent three months in a six-square-mile section of Anaheim, Calif., perfecting the radio grid and otherwise polishing its system there before expanding it. "The design takes a lot of front-end work," says Donald Berryman, president of municipal networks at EarthLink, which also is building Philadelphia's system.

MobilePro built the system in Tempe, which has been operating since March and now covers 20 square miles. "We gave them six months to build it," says David Heck, the city's chief technical officer. "We should have given them 12. That way, they could have perfected it."

The kinks have largely been worked out, but the system faced problems that experts say are typical in the early stages of these projects. The project required more radios than expected, there were some dead spots, and there were engineering problems to be solved in gathering data from the various radios and routing it back onto the Internet, says Mr. Heck.

In addition, the local police department had to update some of its software so that its laptops could connect to the network. The police department now loves the system, which also has become a surprise hit with the town's traffic engineers, says Mr. Heck. They delight in adjusting the timing of traffic lights right from a congested intersection, he says.

Getting signals in and out of buildings also is tricky. Most systems that rely on radios planted on street fixtures like light poles have trouble reaching above the third floor, say people involved in such projects. "The equipment providers are doing some interesting things with directional antennae," says Mr. Richardson, but the problem is far from solved. It helps to get equipment onto rooftops and other tall structures. But "that means a lot of work running around with the landlord," says EarthLink's Mr. Berryman. Support from government officials often helps when dealing with building owners. "They listen to the mayor a lot more than they listen to us," he says.

Even on lower floors, buildings can pose problems. Often, the trouble isn't the network, it's the computer. The signal from the network may reach the computer easily enough, but most computers have puny transmitters that may not be strong enough to push a signal back out. The solution is an amplifier, usually called a bridge, that is about the size of a wallet. In St. Cloud, the city sells them and about one-third of the system's users have gotten one, says Mr. Baltuch. He says the city prefers to err on the side of telling people they'll probably need one, rather than have them frustrated by technical trouble.

Facing the Divide

In Philadelphia, Mr. Berryman says, EarthLink is grappling with the complexities of fulfilling the project's ambition to reduce the digital divide -- the gulf between low-income people and those with higher incomes in terms of access to all the benefits of the Internet. The system the company is building there includes access for $9.95 a month for low-income users.

"It's turning out to be a lot more work than we thought setting up the digital-divide programs," Mr. Berryman says. "We originally thought that if we just charged $9.95 for access, the problem would take care of itself." What the company found was that it needed to work intensively with local charities and businesses that could help low-income families get computers, and that it needed to help train local groups that teach people how to use computers.

At the other end of the digital divide, EarthLink was surprised when it turned on part of a system near Temple University that it wasn't planning to promote yet, and over a weekend 74 people signed up after their computers automatically detected the signal.

Networks built by start-ups like MobilePro and Internet powerhouses like EarthLink and Google Inc., which are working together in San Francisco, are the latest in a long series of challenges to the traditional phone companies' dominance of communications.

AT&T and Verizon Communications Inc. both lobbied heavily against early municipal projects, viewing them as unfair, tax-subsidized competition. But AT&T recently has begun bidding for municipal work, and two months ago it announced its first municipal customer, the city of Springfield, Ill. The company signed an agreement last week with the city of Riverside, Calif., to build a citywide Wi-Fi network, scheduled to be available early next year.

AT&T says its change of heart happened in part because cities have become less adversarial and more receptive to public-private partnerships. Getting on the Wi-Fi bandwagon also has strategic value for a phone company or Internet-service provider because it makes a portable connection a service the company can use to attract and retain customers.

"It's all about the extension of the broadband access for our customers," says Eric Shepcaro, vice president for business development at AT&T. "It's also about leveraging assets that we already have in place."

AT&T thinks large companies like itself that have long histories of providing large-scale public networks are best equipped to create municipal Wi-Fi systems. "We believe cities don't realize the complexities" involved in building, running, marketing, maintaining and expanding networks over time, Mr. Shepcaro says.

Many Wi-Fi advocates passionately disagree. In Sandoval County, N.M., a municipal project that combines off-the-shelf radios, free open-source software and local technicians has customized radios to send signals that will travel 60 miles -- instead of just a few hundred feet like most Wi-Fi transmitters -- says Dewayne Hendricks, chief executive of Dandin Group Ltd., a consulting firm that is involved with the project. "You can do a lot more with Wi-Fi than people realize," he says.

Role Reversal

The ambitious goal is to bring a connection fast enough to support remote education and medical care both to the county's fast-growing southern portion and to its rural north, which is home to several Native American communities.

The county-owned project doesn't provide service directly to consumers. Its goal is to bring a high-speed network to each community's doorstep, a function that normally is fulfilled by local and long-distance phone-company networks. Qwest Communications International Inc., the regional phone provider, had long neglected the area in building its high-speed network, says Mr. Hendricks.

In a reversal of the usual roles, county officials met with Qwest representatives about six months ago and offered to sell Qwest access to the county's network. "They were dumbfounded," says Mr. Hendricks, who is also an adviser to the Federal Communications Commission and an editor at MuniWireless.com. They said they would schedule additional meetings, but they never did, says Mr. Hendricks.

Qwest spokesman Jon Lentz declines to comment about the specifics of the meeting with Sandoval County officials, but says the company has made progress extending high-speed Internet connections using its existing, wired DSL technology. Qwest remains focused on using DSL to provide high-speed service, he says.

--Ms. Young is a former reporter in The Wall Street Journal's New York bureau.

Write to Shawn Young at shawn.young@wsj.com

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