Business

Despite high hopes for economic development, U.S. cities struggle with wireless Internet

  • Tuesday, May 22, 2007
  • By Associated Press

NEW YORK (AP) -- Across the United States, many cities are finding their Wi-Fi projects costing more and drawing less interest than expected, leading to worries that a number will fail, resulting in millions of dollars in wasted tax dollars or grants when there had been roads to build and crime to fight.

More than $230 million (euro171 million) was spent in the United States last year, and the industry Web site MuniWireless projects $460 million (euro342 million) will be spent in 2007.

Without revenues they had counted on to offset that spending, elected officials might have to break promises or find money in already-tight budgets to subsidize the systems for the low-income families and city workers who depend on the access. Cities might end up running the systems if companies abandon networks they had built.

The worries come as big cities like Philadelphia and Portland, Oregon, complete pilots and expand their much-hyped networks.

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''They are the monorails of this decade: the wrong technology, totally overpromised and completely undelivered,'' said Anthony Townsend, research director at the Institute for the Future, a think tank.

Municipal Wi-Fi projects use the same technology behind wireless access in coffee shops, airports and home networks. Hundreds or thousands of antennas are installed atop street lamps and other fixtures. Laptops and other devices have Wi-Fi cards that relay data to the Internet through those antennas, using open, unregulated broadcast frequencies. In theory, one could check e-mail and surf the Web from anywhere.

About 175 U.S. cities or regions have citywide or partial systems, and a similar number plan them, according to Esme Vos, founder of MuniWireless.

Rhode Island has proposed a statewide network, while one in California would span dozens of Silicon Valley municipalities. San Francisco, Los Angeles, Chicago and Atlanta also want one.

Because systems are just coming online, it's premature to say how many or which ones will fail under current operating plans, but the early signs are troubling.

''I will be surprised if the majority of these are successful and they do not prove to be drains on taxpayers' money,'' said Michael Balhoff, former telecom equity analyst with Legg Mason Inc. ''The government is getting into hotly contested services.''

Most communities paid for their projects. Elsewhere, private companies agreed to absorb costs for the chance to sell services or ads.

The vendors remain confident despite technical and other problems. Chuck Haas, MetroFi Inc.'s chief executive, said Wi-Fi networks are far cheaper to build than cable and DSL, which is broadband over phone lines.

Demand could grow once more cell phones can make Wi-Fi calls and as city workers improve productivity by reading electric meters remotely, for instance.

Balhoff, however, believes the successful projects are most likely to be in remote places that traditional service providers skip -- and fewer and fewer of those areas exist. Cities, he said, should focus on incentives to draw providers.

Just a few years ago, these municipal wireless projects seemed foolproof.

Politicians got to tout Internet access for city workers and poorer households -- many programs include giveaways for lower-income families. Some cities bear no upfront costs when a company pays for construction in exchange for rights to use fixtures like lamp poles.

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demarco

3 Comments

  • 1704 Days Ago
  • 06/17/2007

Advices

I carefully read this article, because some month ago I decided to start a company which will use mesh networking for building a metro-scale wireless Internet Provider.
I found some estimate of the budget per km^2 on some vendors web sites. They estimate $60,000/km^2.
I think this estimate is quite fair, because the main problem with the Wi-Fi access from residential houses is the wall penetration. If in LOS conditions  the Wi-Fi range is about 250m, in real situations (foliage, walls, doors, streets) I think it will drop heavily. Some vendors (Motorola) offers very expensive software to predict the coverage of the mesh network.
I would know if somebody is aware of other real case studies on mesh networks for residential access.
Giuseppe

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