Phoenix MetroNets, Rising from the Ashes

To understand where we are, I think it's important and helpful first to understand where we've been. So, with apologies to all the pioneers who have so much more detail and first-hand experience than I do, and to those of you who want more accuracy in media (I'm spit-balling it here), here's my assessment of where we've come from and where we're going.

But before we get started, here's a snapshot of where existing municipal wireless networks are today, from Broadband Exchange.

This will be fun.

Municipal Wireless 1.0 - the Pioneer Stage

In the beginning ...Intel's promotion of the Wi Fi standard and the sales efforts of early Wi Fi Mesh equipment makers and WISPs combined with inquisitive, motivated city officials to produce some very early stage projects in 2004 and 2005. Collectively, they had in common that they were making things up as they went. The gear they had was not as developed and was more expensive than it is now. Their experience with deploying and network design was next to nil. And not surprisingly, they made a lot of mistakes along the way. But that's how it is when you're learning to do something you've never done before.

Cities tended to do it themselves in these early stages, as you can see below.

In April 2004, Cerritos, CA and WISP aiirmesh launched one of the first city networks, covering 8 sq miles of this Los Angeles suburb.

In June 2004, MIlpitas, CA launched a 5 sq mile network for public safety. It has since been reworked by EarthLink and relaunched at the end of 2006.

Starting in 2002, the City of Corpus Christi began a long journey to a wireless future. They recognized a need for a gas and water meter reading solution and realized they had fiber to their traffic lights. They worked closely with whomever they could find to bring a pioneer Wi Fi Mesh solution together - at one point or another, the team included Tropos (equipment manufacturer), Public Technologies Institute - PTI (government consultant), Intel (chipmaker), Northrop Grumman (system integrator), Hexagram (Automatic Meter Infrastructure company). After the network's official launch in December 2006, the City determined to bring in a private partner, which they did in Spring 2007 - ultimately, EarthLink, ended up owning and operating the network.

Other pioneer city networks of that era, not by any means an exhaustive list, included Oklahoma City, OK (public safety); Chaska, MN and St. Cloud, FL (city-owned public access).

Municipal Wireless 2.0 - the Trial Stage

I think when the history of the expansion of broadband across the United States is written, chroniclers will look more kindly on these efforts over the past few years than we have recently. Despite long odds and vocal opposition from entrenched interests, city leaders and industry pioneers forged ahead, with EarthLink in the lead. But that leadership came with a cost attached. Here's how this next stage of industry development unfolded, in Philadelphia.

Fall 2004: In the fall of 2004, Philadelphia gained notoriety as the first very large city to make a very public push for a citywide Municipal Wireless Network, using Wi Fi Mesh technology. They realized that they had a huge Digital Divide problem.

December 2004: The project got more air play than it probably would have when the incumbent telecom company, Verizon, aggressively pushed through legislation at the Pennsylvania statehouse to ban municipally owned wireless networks, ultimately exempting Philadelphia's network at the last minute.This kicked off a round of state legislative battles in the Spring and Summer of 2005. But all eyes were on Philadelphia for many months.

October 2005: EarthLink's unique proposal was selected by the City of Philadelphia - they offered to build, own and operate the network for a non-profit corporation, and the "EarthLink" model was off and running - cities did not have to pay to have a network built! Free Wi Fi would flow in the streets like water.

Soon, a long list of large cities formed, with exploratory efforts to emulate this "Free Wi Fi" model. It seemed that in every major city, there was a public official who began contemplating what it would sound like in a Press Release to say "___________, Nation's First and/or Largest Municipal Wireless Network!"

Again, this is no exhaustive list, but it's a start.

Anaheim
Chicago
Houston
San Francisco

Also noteworthy during this second stage were these non-EarthLink deals:

Milwaukee
Minneapolis
Portland
Tempe

As long as EarthLink and a few other large city vendors (MetroFi, Mobile Pro / Kite) were grabbing all the headlines with these major announcements in NFL cities, other industry activity was somewhat in the shadow and smaller, different, innovative deals didn't get as much attention.

In a sense, we were more or less limited to the Free Wi Fi model as we watched these city projects unfold, at least in the eyes of the mainstream media, waiting to see how they turned out. For most of us in the industry, it was increasingly difficult to get public sector leaders' attention with a model that didn't at least envision a possibility of getting a free ride from a motivated private sector partner, which became harder and harder to find in 2007.

But I've already spoken my piece on all that - see the MetroNetIQ August 2007 Archives, where I wrote a half dozen or more articles on the unraveling of that particular business model.

The bottom line from this industry stage is that these networks counted on a new private sector industry developing and taking on the risks of these projects. Big city leaders were willing to launch initiatives as long as they bore little of the risk. When that "scenario" finally began to unravel, with the withdrawal of free deals by MetroFi and EarthLink, and the sputtering of Kite, the air went out of the balloon that was Municipal Wireless, or so it seemed. The announcement of the Death of Municipal Wireless was premature, however.

Municipal Wireless 3.0 - the Emergent Customization Stage

I think we're emerging into a new stage of this industry, where we'll see the adoption of a variety of new business models, call it "MuniWireless 3.0," which I've labeled the Emergent Customization Stage. Imagine a shotgun blast, where pellets emerge from the gun barrel and explode into a broader, widening pattern. That's where we are with business models - we've matured to the point that interested parties have a menu of options to consider, and they can browse (pardon the pun!) to get the right option for their particular needs - a Custom business model, if you will. As cities learn more, they are able to take a more autonomous role, and we will see several different paths emerge, because cities are widely divergent in their local situations and preferences. Long Live Freedom of Choice!

First, we'll see current projects that were launched in the Pioneer or Trial stages adjusting to lessons learned. On the one hand, there's Privatization, where we see EarthLink taking over in Milpitas, and we see the City of Corpus Christi, TX, selling its network in March 2007 to EarthLink and cashing out.

On the other hand, we see Municipalization when the City of Granbury, TX, buys it's network back from the private operator, to ensure that their municipal application needs are met.

As you can see by these three examples, we're in a highly dynamic mode of adjusting to Lessons Learned from the Trial Stage.

And that's not all. See also this recent analysis of the Portland , OR, network being deployed by MetroFi. It's a highly fluid situation, a good news/bad news type of deal. The Good News: the ad supported network is getting great traffic, where the network is already deployed. The Bad News: there's still no anchor tenant money flowing from the city to the operator, which challenges the pace or ultimate deployment of other areas of the city.

And then there's Charleston, South Carolina, which is struggling to find a new path for its downtown network, temporarily turning off the free version, but not giving up altogether, by any means.

And here's a recent article that's indicative of what we'll be seeing as we watch Community Networks take hold. Watch the wings of this particular Phoenix unfold from the ashes out in the Bay Area - Sharing could use community to provide free Wi-Fi. We see an organic, emergent form of municipal network that would have access points springing up from various and sundry alleyways, streets, and byways in the city like so many mushrooms popping up on the forest floor after a good Spring rain.

For more on the FON business model, see here. This company makes money by selling devices and charging a small fee. It's out of Spain, so the users of the networks are called "Foneros." The key to this model is that the city may not have to do anything about it, but stand back and let it happen! Will it work? Who knows, that's half the fun of this new phase! Bravo, Ole!

Finally, British Telecom, aka BT, perhaps the most innovative of large national telecoms globally, recently cut a deal with FON to leverage their emergent business model, creating something called BTFON.

As new deals percolate, it will be interesting to see if private sector providers are able to sell cities on the value proposition of anchor tenancy. I think some will, while other cities will take a new, fresh look at owning their own networks, seeing them as more akin to a Capital Improvement Project for a new road system, or a utility infrastructure upgrade - those are projects they're used to, so putting thee deals in those terms should bear fruit for vendors (Hint, Hint).

I think this will be an area to watch more closely in the coming months, as Stage 3 unfolds.I hope you can see by this analysis that while the EarthLink-inspired events of last month may have closed one door, they absolutely opened some others (and maybe some windows, too!).

That's it for this round of analysis, which will bear further development in later posts.

See my next blog, upcoming, where I'll take a look at what's happening with Rural Broadband Initiatives, another area of considerable activity, creativity, and emerging customization!