WiFi gold rush

Private sector declares open season on municipal wireless

Riz Khaliq, a municipal WiFi executive at IBM Corp., said the technology could generate "billions and billions of dollars in opportunity worldwide, and definitely billions in the United States in the coming years."

Rick Steele



"You're talking about billions and billions of dollars in opportunity worldwide, and definitely billions in the United States in the coming years," said Riz Khaliq, municipal WiFi executive at IBM Corp.

Wireless networks are not new to state and local government. Public safety departments were among the first to embrace them. But cities increasingly are expanding the capabilities of these networks, implementing applications and creating wireless mesh networks to provide Internet access to residents.

Mesh networks offer the potential to cover a large area through a series of connected "hot spots," each offering wireless access to the Internet. The hot spots are linked to create a mesh, which is tied into a hard-wired network through a series of extraction points.

Many American cities lay claim to offering municipal WiFi, but most are still in the pilot stage or only offer service in limited areas. Tempe, Ariz., is the closest to full coverage, WiFi experts said.

A study by Forrester Research Inc., Cambridge, Mass., commissioned by IBM, predicts that the North American market for wireless broadband services is increasing from just over $1 billion in 2005 to a projected $9 billion in 2010.

The door is wide open for any company that wants in, said Christopher Baum, research vice president with market research firm Gartner Inc. of Stamford, Conn.

"This is an opportunity-rich environment, and that's one of the reasons that the players here are everybody, and I mean that quite literally," he said.

Hot market

Companies that have played a role in developing wireless mesh networks range from the usual IT giants, such as Cisco Systems Inc. and IBM, to hardware makers, such as Motorola Inc. and Tropos Networks Inc. of Sunnyvale, Calif.

The list also includes wireless technology specialists, such as BelAir Networks Inc., MobilePro Corp., SkyPilot Networks Inc. and Strix Systems Inc. Even EarthLink Inc., Google Inc. and oil industry heavyweight Chevron Corp. have work in the municipal WiFi space.

And that's just a small sampling. The volume of opportunities is creating a super-heated market, according to industry officials and analysts. And no single company or block of companies dominates the market, WiFi experts said.

"It's hotter than people are saying," said Bill Tolpegin, vice president of development and planning for EarthLink of Atlanta. "There are a number of other cities that I expect to go to an RFP this year. There's going to be a lot of movement."

Perhaps the most-watched city will be Houston, where a request for proposals is on the street and carries an estimated value of $15 million. Responses are due by May 15, and an award is scheduled for July, according to Federal Sources Inc., McLean, Va.

Seattle is in the early stages of considering a broadband WiFi network capable of bringing voice, video and data into each home by 2015. FSI estimates the contract to be worth about $50 million and anticipates an RFP release in early 2007.

It's too early to know the size of the opportunity in Hartford, Conn., but the city has collected requests for information and is considering a citywide WiFi network for both government and citizen use, according to FSI.

By the close of 2005, 1,500 square miles of municipal WiFi had been deployed around the globe, including 1,300 square miles in the United States, according to market research firm ABI Research, Oyster Bay, N.Y.

By 2010, that number is expected to grow to 53,000 square miles worldwide, with roughly half of the coverage likely to be in the United States, said ABI senior analyst Sam Lucero.

The average cost of deploying a WiFi mesh network ranges between $60,000 and $70,000 per square mile, Lucero said. To lay a linear mile of trenched fiber-optic cable, as the telecom and cable industries have been doing, costs between $100,000 and $150,000, he said. A square mile of WiFi is an order of magnitude cheaper than a square mile of fiber-optic cable, Lucero said.

Trial and error

When tackling a municipal WiFi mesh network, city and county governments must know what it is they want to accomplish, said IBM's Khaliq. No single business model has emerged in this market, but IBM prefers that government play the role of owner, or "anchor tenant," using the network to improve efficiency in a range of services, while also offering Internet access to area residents.

"We view wireless enablement of applications as one of the key pieces to this puzzle," Khaliq said.

Trial and error in designing business models for municipalities is an important part of the process, said EarthLink's Tolpegin.

"Frankly, we don't know what model is going to win in the long term," he said.

EarthLink has been selected as a finalist for mesh WiFi implementations in Anaheim, Calif.; Arlington, Va.; Minneapolis; Pasadena, Calif.; Philadelphia and in a partnership with Google in San Francisco.

EarthLink said two aspects are essential to deployments: that the contractor be allowed to build and own the mesh network, and that there is a pay component. Several early implementations called for free WiFi access to all citizens.

The company sees municipal WiFi networks as a way into the broadband Internet market without having to pay cable and telecom providers, Tolpegin said.

"The genesis for this whole effort was we needed an economic third pipe to the home, and how could we, EarthLink, act as a catalyst to make that third pipe a reality," he said.

The proposed partnership of EarthLink and Google to blanket San Francisco with a WiFi mesh network includes plans for a slower free service that Google will offer, as well as a $20-per-month faster service that EarthLink will offer.

As the municipal WiFi market matures, companies experienced in systems implementation eventually will be the leaders, said analysts and industry officials. Companies that have experience wading through the political waters that come with highly visible systems implementations and have help desk and call center operations to leverage will shoulder aside the smaller and less sophisticated players, said Gartner's Baum.

"The technology is easy ? it's the service aspect of it and the politics aspect of it that's going to be difficult," he said.

Staff Writer Ethan Butterfield can be reached at ebutterfield@postnewsweektech.com.

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