Killing the Goose that Laid the Golden Egg

We must ask "are we being creative enough in how we define a win?" While city officials in Sacramento defined winning as getting "deal points comparable to those offered in other cities," wouldn't it have been more appropriate for them to define winning as "determining a positive ROI business case in Sacramento by cutting costs and increasing service levels"? One hopes they will get to the point where their needs will be met with their future RFP. What was the cost of delay that resulted from their increasing the ante and causing their partner to bolt? Time will tell.

This process starts to look lke the no-win world of tax abatements, which have evolved to the point where cities compete with each other to get employers to move to their town, often losing sight of long-term negative impacts to their own tax base. It appears that municipal wireless has come to the point where cities are trying to outdo each other by offering to their public constituents an ever better deal through their hard-ball negotiating with vendors. To repeat an oft-heard phrase, "there is no such thing as a free lunch." Free services are not free, so much as they are subsidized in one manner or another by a party that sees a win from their own perspective.

In my own city, the determination by our city management to accept donated wireless gear following the WCIT last month, coupled with a press release offering "free" services downtown had a chilling effect on private companies I was engaged with discussing a for-profit business model for Austin. They wondered if this was a signal that there would be no profits to come by working in Austin. While I assured them that was not the case, there were delays with real costs invovled. There needs to be some gold at the end of this rainbow, or these private sector pioneers will steer their wagons away from this frontier towards greener pastures.

See yesterday's posting on Wi Fi Net News, From Municipal Paid to Gratis: What Cities Want, where Glenn Fleishman comments on an excellent article in the Wall Street Journal yesterday, opining on the migration of the municpal wireless business model, from "cities are taking unacceptable risk in owning networks" to "we will work together" to "gimme, gimme, gimme."

Or see also Intel's Paul Butcher's guest editorial in the June 2006 Digital Communities newsletter by Government Technology: Municipal Wireless Sustainability and Promise, where Paul talks sense about municipal wireless, digital cities, and digital access.

In Wi Fi, we have a technology that offers low barriers to entry, so out on the fringes, we see a plethora of small WISPs who have taken advantage of the confluence of low cost and business need to provide services and make a business. But in the largest of cities, there's a different attitude inherent in evolving RFPs that ask for more and more from the private sector bidder. Now, its not enough to share risk with the private sector partner - they must take all the risk and give away their services to boot!

I think that we will all benefit the more these network proliferate. Isn't that what Metcalfe's Law shows us? And I think that paying for a service makes one value it more than getting it for free. We tend to discount things that are offered for free. The cost of my "free" Wi Fi in any one of the Hot Spots in Austin is generally that I buy something from my host. On the rare occasion when I've dropped in and because of a long line, skipped that important step of making a purchase - well, I've felt like I took something from the provider, because I know there is a cost involved.

I hope we begin to hear more about minimal service fees in lieu of "free" and that we see more RFPs that probe the full extent of the value that these networks can offer, in a joint search for a sustainable "for-profit" public private partnership model.

Otherwise, we may see these smaller pioneer companies withdraw from the market, leaving us with the monopolies and duopolies we've had in the past, and that would be a shame. Please show your support for innovative wireless access alternatives by buying that cup of coffee or by supporting private sector pioneers with innovative and creative business models . And put your "Free Wi Fi" signs back in the closet. We should be feeding these pioneers with partnerships, not starving them with demands for more and more.

It would be a shame if these new-age wireless pioneers were to steer their wagons away from our towns and move on to greener pastures elsewhere, because we asked for too much. It's time for all of us to focus again on the meaning of a partnership and risk-sharing, and the costs involved in getting something for "free."