EarthLink Pioneers New Muni Wi-Fi Model

Municipal Wi-Fi has proven very popular in cities and towns across this great land. But, until recently, these efforts have focused primarily on delivering best-effort, free or cheap, city-sponsored public access, often with an accompanying private network for city department and public safety use. In many cases, that model has involved a local ISP running the outfit. But all that changed when EarthLink Inc. stepped into the market and clarified a big service provider opportunity.

EarthLink this summer launched its first municipal Wi-Fi broadband network in Anaheim, Calif., kicking off a strategy to create a nationwide Wi-Fi footprint to go after the home broadband user and businesses. This marks a radical shift in thinking within the municipal space, and one that incumbent broadband operators should take note of.

Ironically, incumbent telcos like BellSouth Corp. and Verizon Communications Inc. have fought muni wireless from the beginning, in the courts of law and of public opinion, and clearly were concerned by what they viewed as a DSL competitor that has an unfair advantage thanks to governmental involvement. The reality, however, is that most existing municipal wireless is for the outdoor, casual user, not to power the home network or provide business services. “People aren’t going to get rid of their DSL lines or their high-speed cable just because there’s muni Wi-Fi in the downtown corridor,” says Frank Hanzlik, managing director for the Wi-Fi Alliance. “Other technologies will still be a part of people’s lives for the foreseeable future.”

But with the new model EarthLink brings to the municipal space, RBOCs who believed muni Wi-Fi was a threat before now really have something to worry about. That’s largely because EarthLink plans to aggregate its municipal markets under one service, while creating a wholesale program for major brands. The ISP already has two national wholesale partners: PeoplePC Inc. and DIRECTV. EarthLink also has reached a nonbinding agreement with AOL LLC and is discussing ways to offer AOL.com content and Web assets on the municipal footprint, and plans to partner with local ISPs that want to provide Wi-Fi service in their respective markets. “We’re also talking to major national non-facilities-based players,” says Cole Reinwand, vice president of product strategy and marketing at EarthLink.

EarthLink aims to change the process by which municipal Wi-Fi networks are established. “We are trying to build a national footprint as quickly as possible,” says Reinwand. “The concept of cities doing RFPs will become less common. It introduces such a long process of evaluation and negotiation. But in our model, the cities aren’t actually buying anything. They simply have assets they want to lease.”

The company’s vision is to spend $20 million to build a standardized platform that can be replicated in any EarthLink city, with shared resources for back-office needs operating in the background. “This will be trusted and reliable, with fixed costs spread across the footprint,” says Reinwand. “Eventually, the industry will consolidate on our standards. Meanwhile, partners simply integrate with us once to gain access to the entire footprint.” To bolster the idea, the ISP has launched the Network Alliance, which offers the platform specifications and the EarthLink brand name and equipment discounts to other ISPs that want to build out municipal networks. Once a network is completed, EarthLink will buy access back from the ISP at a fixed rate that guarantees ROI and take over the consumer business to keep that revenue for itself. The ISP that originally built the network will retain the business-oriented fixed-line accounts.

This strategy is intended to enable EarthLink to roll out great swaths of Wi-Fi, cooperating with other operators for out-of-footprint coverage in various cities and hotspots, and making available a channel for big players like DIRECTV to jump into the triple-play game. That may spur the incumbents to action.

In fact, it already is, to some extent. AT&T Inc. is testing the muni Wi-Fi waters with a series of small bids, the most high-profile of which was AT&T’s enterprise services division partnership with MetroFi Inc. on a proposal to build and operate a network for Riverside, Calif. If this duo wins the bid, MetroFi will build and operate a Wi-Fi network covering the city’s 65 square miles, and offer an ad-supported, free tier of service on that network. AT&T plans to offer a paid 1mbps service for around $19.95 per month over the same network.

Meanwhile, EarthLink’s rollout is under way. Anaheim’s 49-square-foot buildout is partially live and is expected to be complete by the fourth quarter, while New Orleans was expected to be turned up on Sept. 1. Philadelphia is next on the agenda, followed by Milipitas, Calif. EarthLink also has pilots in Minneapolis and Honolulu, and a mobility trial on the Stockton, Calif.-to-San Jose commuter rail. As for EarthLink’s high-profile bid win in San Francisco with Google Inc., that’s in the business modeling and negotiation stages.

For a detailed look at municipal Wi-Fi activities to date, see "A Look at Municipal Wi-Fi Activities to Date" in the Added Insight section of xchange.

TOP SERVICE PROVIDER OPPORTUNITIES

As the municipal Wi-Fi market begins to scale, service providers have many chances to take advantage of the business opportunities it presents. A few options:

• Develop wholesale models and enable multiple other service providers to provide retail services over the wholesaled wireless mesh network.
• Offload cellular traffic, reduce infrastructure costs and increase voice service revenue with VoWi-Fi. From there, mobility/fastroaming enables a provider like a cableco to establish a broad mobile footprint.
• Create a full suite of service offerings including voice, data, video, voice roaming, data roaming and mobile roaming.
• Gain footprint out-of-region.
• Enable competitive displacement or partnerships with smaller service providers. For example, a larger carrier can cannibalize a smaller carrier’s footprint, or vice versa. This also stimulates partnerships to gain footprint.
• Offer applications that are immediately applicable to service providers. New applications require an architecture that provides sustained high performance and QoS to support multiple applications simultaneously, such as video surveillance and VoWi-Fi while fast-roaming on speeding trains.

Source: Strix Systems Inc.

Boom or Bust?
Making Muni Work
By Tara Seals

Amid the hundreds of RFPs and incessant buzz around municipal Wi-Fi lurks a big pitfall: Poor planning. While the mesh equipment used to build out muni Wi-Fi is capable of supporting voice and multimedia, and of maintaining high reliability, many industry watchers caution players to plan carefully for such needs before rushing into the muni breach. As the market matures, so will the applications, user expectation levels and the competitive landscape.

“My biggest concern is that these networks are not being designed to operate at a high level of continuous service, and that there is an assumption that customers will put up with the service not always being available to them,” writes analyst Andrew Seybold in his Outlook 4Mobility column. “Perhaps because it is free or inexpensive they will simply accept the fact that there will be times when it won’t work for them. I wonder how long people will tolerate this level of service as more interference is encountered, and as connections are lost more often.”

Most vendors will tell you that mesh networking is quite capable of avoiding such problems, with proper planning. When it comes to reliability, Kirby Russell, director of product marketing at Wi-Fi equipment vendor Strix Systems Inc., says opex is key. “Building wireless mesh infrastructure with multiple radios is the only way to support the end-user requirements without dramatically increasing opex. That’s what will happen with many of these one-radio deployments. Additional backhaul will be required to attempt to support the user and node-to-node network traffic.”

Mike Downes, vice president of marketing communications at mesh vendor Firetide Inc., notes that as the popularity of Wi-Fi increases, so will the amount of interference, as many devices in the area will compete for the same spectrum. “Service providers need to install networks that can operate under these conditions without adding to the interference problem,” he says. “Another hurdle is providing an infrastructure that can support all of the services customers will expect in the future, such as voice over Wi-Fi, video surveillance and network mobility for public safety vehicles as well as public trains and buses.”

Meanwhile, there are the economic concerns. While the business models still are evolving, the most common options are providing free access with advertising, paid access through subscriptions, or a combination of both. When modeling a market, a rule of thumb for any service provider is to expect three-to-five-year total cost of ownership, looking at the capex as well as opex for backhaul and maintenance, Russell says.

Adding to the hurdles, some municipalities expect to be able to use part of the wireless infrastructure for government or public safety applications, adding to costs without contributing to revenue, says Downes. “Service providers and vendors will need a relatively high volume of users to ensure enough subscription or advertising revenue to cover costs and make a profit,” he says.

Another thing to consider is upgrade costs. “A Wi-Fi hotspot covers just the size of a football field, without interference from buildings and hills,” says Frank Hanzlik, managing director for the Wi-Fi Alliance. “As such, the investment by cities to guarantee seamless coverage metro-wide is considerable. What’s more, are municipalities prepared for costly upgrades a year from now to ensure systems can carry voice when the standard is ready?”

Existing networks are nowhere near where they need to be, either. “We’ll all be smarter in a few months when we can look at the San Francisco, Chicago, Philadelphia and Portland rollouts,” says Hanzlik. “It’s still early days, and right now in the smaller, limited deployments, it doesn’t work everywhere. We’re overcoming dead pockets and other, strategic issues.”

He adds that those involved in muni Wi-Fi builds and operations need to manage expectations, keeping in mind that Wi-Fi today is designed for Internet surfing and e-mail, and over time there will be voice and multimedia, but that will require greater investments than what we’re seeing now.