<nettime> Tim Wu: Why municipal wireless networks have been such a flop (in the USA)

["Patrice Riemens" <patrice@xs4all.nl>]

bwo/thanks to Mike Weissman

Orig to Slate Magazine
Article URL: http://www.slate.com/id/2174858/

Where's My Free Wi-Fi?
Why municipal wireless networks have been such a flop.
By Tim Wu
Posted Thursday, Sept. 27, 2007, at 12:53 PM ET

It's hard to dislike the idea of free municipal wireless Internet
access. Imagine your town as an oversized Internet cafe, with
invisible packets floating everywhere as free as the air we breathe.
That fanciful vision inspired many cities to announce the creation of
free wireless networks in recent years. This summer, reality hit?one
city after another has either canceled deployments or offered a
product that's hardly up to the hype. In Houston, Chicago, St. Louis,
and even San Francisco, once-promising projects are in trouble. What
happened?was the idea all wrong?

Not quite. The basic idea of offering Internet access as a public
service is sound. The problem is that cities haven't thought of the
Internet as a form of public infrastructure that?like subway lines,
sewers, or roads?must be paid for. Instead, cities have labored under
the illusion that, somehow, everything could be built easily and
for free by private parties. That illusion has run straight into
the ancient economics of infrastructure and natural monopoly. The
bottom line: City dwellers won't be able to get high-quality wireless
Internet access for free. If they want it, collectively, they'll have
to pay for it.

For the last 20 years or so, the thorniest economic issue in the
telecommunications world has been the "last mile." Physically, the
last mile consists of the wires that run from your home or business to
the local phone or cable company. It's pricey and uses old technology,
but almost everything depends on it and a few giant companies?like
AT&T and Comcast?control it. The last mile is a bottleneck: The price
and speed of the whole Internet depends on it. When people talk about
the United States lagging behind the world in broadband speed and
access, they're talking about the last-mile problem.

In the late 1990s and early 2000s, dozens of companies were launched
that had new ideas for busting through the last mile and getting the
Internet into homes. I remember going to industry trade shows where
grown men demonstrated robots designed to crawl through city sewers
and deliver a fiber-optic cable to your toilet. (That firm, CityNet,
received $375 million in funding and actually wired the sewers of
Albuquerque, N.M.) Others proposed to fire laser beams at homes to
bring Internet access through the proverbial bathroom window. And in
2004, the New York Times wrote that "Internet service over power lines
is probably a year or more away from becoming widely available." Oh,
really? While both the FCC and paid industry analysts have continually
predicted an "explosion" in broadband over power lines, its current
market share is approximately 0.008 percent.

Each of these ventures proved a dismal failure?with the exception
of satellite service in rural areas, no competitor to DSL and cable
has gotten far in the United States. The startups have run into
the oldest problem in the regulated industries book: the barriers
to entry created by sunk costs. The phone and cable companies have
already recovered the initial billions they've spent over decades,
making it possible to set prices at levels that cannot be matched.
The competitors brought weak products that were not substantially
different. Against that kind of competition, the newcomers never stood
a chance.

So much for the market solution?how about government? The failures of
other ventures made municipal Wi-Fi seem an ideal alternative. After
all, cities provide their citizens with water and garbage pickup?why
not the Internet, too? A few important points seemed to distinguish
muni Wi-Fi from the toilet robots. First, wireless skipped the whole
issue of feeding wires into people's homes, the stumbling block for
so many ventures. And Wi-Fi routers, if not perfect, are a proven and
cheap technology. They work great on college campuses. Even my mother
has a Wi-Fi router.

In 2004, when Philadelphia announced it was considering deploying the
first major citywide Wi-Fi system, many assumed it would be free, or
near-free, just like when you get Internet access from a generous
neighbor. But that kind of system, of course, would cost real public
money. The city would have to pay for the deployment with no hope of
return.

By 2005, it became clear that major cities didn't really want to
build out Wi-Fi networks as public works projects. Instead, places
like Philadelphia and San Francisco announced "private/public"
partnerships. That meant giving a private company the right to build a
wireless network and try to make money off of it. Often, this simply
meant giving a company like Earthlink the rights to install Wi-Fi
devices on street lamps and charge citizens for access. The cities
then washed their hands of the issue of success or failure.

The result, as this summer has made clear, has been telecom's Bay
of Pigs?a project the government wanted to happen but left to
underqualified private parties to deliver. Firms like Earthlink
promised too much, and the cities have stood by and watched as the
firms trying to build Wi-Fi systems have twisted and died on the
beachhead. This summer, Earthlink fired half of its staff, including
the head of the municipal Wi-Fi division. Major projects in Chicago
and San Francisco have been stopped cold, and Houston has fined
Earthlink for falling behind deadlines.

Some observers blame these failures on Wi-Fi's technical limits. Wi-Fi
does have serious limitations, but wireless Internet technology has
worked well even on large college campuses. The deeper problem is
economics. When municipal Wi-Fi became a private service, it fell
into the same economic trap as the toilet robots. Private municipal
wireless networks have to compete against competitors with better
infrastructure who paid off their capital investments years ago.

Setting up a large wireless network isn't as expensive as installing
wires into people's homes, but it still costs a lot of money. Not
billions, but still millions. To recover costs, the private "partner"
has to charge for service. But if the customer already has a cable or
telephone connection to his home, why switch to wireless unless it is
dramatically cheaper or better? In typical configurations, municipal
wireless connections are slower, not dramatically cheaper, and by
their nature less reliable than existing Internet services. Those
facts have put muni Wi-Fi in the same deathtrap that drowned every
other company that peddled a new Net access scheme.

Today, the limited success stories come from towns that have actually
treated Wi-Fi as a public calling. St. Cloud, Fla., a town of 28,000,
has an entirely free wireless network. The network has its problems,
such as dead spots, but also claims a 77 percent use rate among its
citizens. Cities like St. Cloud understand the concept of a public
service: something that's free, or near-free, like the local swimming
pool. Most cities have been too busy dreaming of free pipes to notice
that their approach is hopelessly flawed.

The lesson here is an old one about the function of government. When
it comes to communications, the United States relies on a privateer
system: We depend on private companies to perform public callings.
That works up to a point, but private industry will build only so
much. Real public infrastructure costs real public money. We already
know that, in the real world, if you're not willing to invest in
infrastructure, you get what we have: crumbling airports, collapsing
bridges, and broken levees. Why did we think that the wireless
Internet would be any different?


Tim Wu is a professor at Columbia Law School and co-author of Who
Controls the Internet?











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