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Has the Death Knell Sounded for Municipal Broadband Wireless?
EarthLink gives two of its municipal wireless networks back and plans to sell or give the rest away too.
Yahoo
reported this past week that two cities EarthLink had built Muni Wi-Fi
networks for had agreed to take them back---for free. The two
cities were Milpitas, CA and Corpus Christi, TX. The Corpus Christi
network was actually built by the city and then sold to EarthLink for
$5.3 million (with $1.59 million still owed and which the city will
forfeit) whereas EarthLink won a bid to construct the Milpitas network.
As mentioned both cities will receive the networks for free and in no
later than 45 days. EarthLink has a plan to transition subscribers.
EarthLink had previously announced plans to sell or to gift all five of
its networks to somebody, most likely the cities involved, as soon as
possible. EarthLink arguably touched off the municipal wireless
movement with its very high profile agreement with the city of
Philadelphia. And it appears that its recent moves may sound the death
knell for the industry as well. Of course this is just my opinion based
upon the paucity of solid business plans fielded by service providers.
To be fair, EarthLink's model of using advertising and subscription
services to build a service that cities did not pay for sounded great
to many, especially the cities.
The problem is, as many independent wireless ISPs could probably tell
you is that building a network node without anchor tenants or at least
some solid idea of where the revenue would come from to pay for the
costs is risky business at best and a fatal mistake at worst. One axiom
I learned the hard way back during my days of operating a wireless ISP
(I started in 1999) was that no relay site went up unless I had enough
anchor business pre-subscribed to pay for that node's recurring costs
at minimum.
Now that may seem simple, but muni wireless networks whether built with
mesh technology or other methods is probably the maximum most expensive
deployment cost factor for this type of network since the goal is to
gain ubiquitous coverage. And this model is also probably the toughest
to find sufficient anchor tenants (usually business customers) for each
node or series of nodes to break even on recurring expense. It is shaky
if costs rise (which they did for EarthLink) due to gear not performing
as well as hoped and if subscribers don't flock to the service.
Tim Sanders
The Final Mile
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