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Is the Glass Half Full or Half Empty? It Depends

Category:  Orientation > Business Models > Public Private Partnerships

50 Percent Success Rate for Current Wireless Network Initiatives is Indicated While most headlines will trumpet a 50% failure rate, as the study by Jupiter Research suggests based on break-even analysis of current municipal network projects, I thought I would tilt the perspective a little with this title and suggest a 50% success rate.

Preliminary discussion on Daily Wireless: Jupiter Research: Half of City Clouds Will Fail and Muniwireless: Jupiter Research report: 50% of muni projects will not break even opine on the prediction that half of current networks will fail and ponder whether that is a valid analysis.

There are many points and perspectives to consider. I would open discussion with the caveat that this is a very early assessment and so has limited value as a prediction (although it will most certainly sell some reports). I would also highlight the conclusion that Public-Private Partnerships are indicated in the face of such risk. That's a conclusion I've drawn elsewhere on this website. Finally, I think that other industries might look favorably on a 50% success rate. And finally (one more time), it may be that some projects that "fail" are actually considered successes if they provide services that would not otherwise be available, even at a loss.

Not having read the report, I would go out on a limb and offer my perspective that these networks are a risk to the degree that the owners and or operators, be they public or private, neglect to nail down anchor tenants that will help them to cover as much costs as they can with long-term contracts. City government, utilities, and state agencies are just a start as anchor tenants. It's not unlike the way that Southwest Airlines creatively fills its planes to capacity, while other airlines fly planes half empty and risk bankruptcy. Success in this market will go to those savvy operators that figure out how to fill up the bandwidth that they make available, at a decent margin. I don't think that good business sense and creativity are located exclusively on either the private or public sector side. Whoever ends up running these networks will need to be sharp to be successful, but the risks of these projects should be kept in perspective: compared to fiber projects, wireless projects are helped along by the relatively low costs.

Posted on July 06, 2005 at 09:31 PM

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Posted by: Evan Read on July 7, 2005 08:38 PM

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