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Carrier Services
Market will grow as muni Wi-Fi model changes
ABI Research predicts 64-fold increase over next several years
by Jim Barthold
By changing to a municipal services-centric model, the
flagging municipal Wi-Fi business will explode in the next
several years to cover more than 30,000 square miles,
according to details developed by ABI Research.
The report confirms coverage in the January-February issue of
Telecommunications Magazine
(Munis play it safe with wireless) that municipal Wi-Fi started off on the wrong tack with the wrong business model but that the ship is being righted.
“In the past these service providers have gone with a model
of bandwidth to the public from day one and tried to make
money off of it. That model didn’t work at all,” said Stan
Schatt, vice president and research director at ABI, who
authored the report. “The shifting gears that you’re seeing is
the realization that nothing is free. You can’t promise free Wi-
Fi for everybody. That model doesn’t fly at all.”
That model, in fact, and the flameouts that continue to
accompany it, is why municipal Wi-Fi has been proclaimed a
failure by many industry observers. It’s anything but dead or
failed, Schatt contends.
“If you talk to vendors like Firetide and Tropos and Strix
Systems … there are all kinds of municipal networks going in
that are not showcase ones that people think about. A lot of
them are going in primarily because of public safety,” Schatt
said.
As the magazine feature explained, there’s plenty of money
to be had for public safety, starting with funding from
Homeland Security. Cities are starting to tap those funds and
tie their municipal networks into video surveillance,
emergency response communications and then further down
the list to municipal services like meter reading and tracking
other city worker needs. It’s this type of model that will drive
the business from 520 square networked miles in 2004 to
30,000 square miles in the near future, Schatt said.
“The model that seems to be emerging is these cities
agreeing to be an anchor tenant for a period of years,” he
said. “That guarantees a revenue stream for the service
providers and gives them a chance to develop their products
so they can come up with an audience.”
It’s like the old saying that you can’t get a job unless you
have a job. In this instance, you can’t have a profitable
commercial Wi-Fi offering unless you have paying foundation
on which to build it.
“The ad-generated approach isn’t going to work,” Schatt
said. “The model that will ultimately occur is the anchor. It
should work because they have a clear rationale which is
public safety first. They can subsidize it through government
funds.”
This doesn’t mean that the consumer model is dead. Quite to
the contrary, with the number of Wi-Fi-enabled devices now
available, it would be silly not to tap the public appetite.
That’s certainly what a new breed of players is doing—such as FON, an
international effort to develop a community of people, Foneros, who share Wi-Fi.
“They’re setting up these very cheap hotspots,” said
Schatt. “It’s a cooperative thing. you buy a router from them,
set it up and agree to let other people share the bandwidth
and you get a cutout of every person that comes in to use it.”
That kind of competition is “putting a ceiling” on what
traditional muni service providers can charge, as is the
increasing availability of free or inexpensive Wi-Fi connectivity
at places like Starbucks.
This all makes it more attractive—necessary, in fact—to deal
directly with the municipalities and their specific needs, he
said.
“Public safety is what’s really driving it. There’s a lot of money
available for video surveillance … and a lot of cameras going
in. The private network with the municipality has to come
first,” Schatt said.
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