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Municipal WiFi Costs Outweigh Benefits
TheSync writes "JupiterResearch claims that muni WiFi costs outweigh benefits. It can cost up to $150,000 per square mile over five years, which may not even provide each user a benefit of $25 a month. They suggest that such projects only be taken on as public-private partnerships."
First, the article says the average cost is $150,000, not up to $150k.
Second, it says an assumed $25/month benefit, not that it's not even $25/month. Also, Internet access costs me $40/month, so...
Third, it says the first five years, which includes all manner of infrastructure creation. Even a major network upgrade would likely cost less later on, because you don't have to find locations, put up towers, etc. I'd like to see the per year estimates, but I'm not subscribed to Jupiter's service.
If your town/city is going through the work and effort to build this manner of network, hopefully someone is going to notify your citizens and try to get them onboard. By Jupiter's reckoning, it takes an average 100 users per square mile to cover the costs. Now, if your city/town put any real effort into this project, you'd probably let people know that free Internet access is a $40 network card away. Get local computer stores to stock up on the cards and ask them to chip in on an ad campaign. They can offer a flat-rate installation service (with caveats for running into problems, etc)
That what was all this school was for... to teach us how to solve our own problems. -- janeowit
I don't suppose JupiterResearch just happen to have a Public Private Partnership group for providing Municipal WiFi by any chance?
Until you get a fabric network that covers multiple square miles per basestation (a la WiMAX) You'll not see a municipal implementation over a metro area.
Sure there are exceptions (where town.size approaches zero) or (starbuck.count approaches infinity) but this is just the economics catching up with the technology.
If you've got a connection at home, and you've got a connection on the Bus, and you've got a connection via your cellphone, and yuo've got a connection via your coffee shop, why does a city have to be 100% covered by 802.11a/b/g? GPRS/EDGE/3g/future can (and initially will) pick up the slack.
"Draco dormiens nunquam titillandus."
Hear me before it is too late! SHUN the evil of the Three P's, Public Private Partnership! Turn ye either to the left, to publically funded projects, or to the right, to the blessed land of private enterprise -- but walk not the middle path, the path of the Three P's!
Once, this land of England was fair and pleasant, with mighty Industry and caring Government working hand in hand! Then came the Three P's! They promised us cost savings and social responsibility, but they delivered nothing -- nothing save gigantic invoices and permanent damage to the environmental and social fabric of the nation!
Turn aside, oh turn, I beg you, America, from this path of wickedness! For the evil of Bloated Government Inefficiency is in them, and the sin of Greedy Private Contractors they likewise have! And the private half shall spend, yea spend and spend, and the public half will know not nor care where the money has gone!
Repent therefore, repent before they do unto you as they have unto Europe!
My words have the semblance of jest, but the danger is deadly serious.
Whence? Hence. Whither? Thither.
Let's also assume a statistical overrepresentation of "connected" workers in the areas so equipped. Let's further assume than most of the systems work acceptably well. Let's even still further more (and yet) assume that those workers are made more efficient through access to their data, their schedules, the people making their schedules, and the ability to review documentation from *wherever* they are. SO there goes Jupiter's $25/month metric.
Muni wi-fi is not intended to simply replace household ISPs. $25/month is a meaningless measure of effectiveness. For one, think of the traffic and fuel costs potentially avoided by allowing wired workers improved access. This is a direct benefit to the city. You know; as long as we're making assumptions.
Don't trust anyone under thirty.
I don't know about anyone else but I'm getting skeptical about anything I read from Jupiter, Gartner or any of the big research firms. It's usually being paid for by someone with an agenda and, no surprise, the research tends to support the conclusions the customer wants. After a while you just stop paying attention to them. They've sold their credibility.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
This study needs to be looked at very skeptically, because there is a lot of money right now trying to discourage municipal wifi systems. Why? Because any new legislation being pushed by the telcom companies to ban municipal wifi as unfair competition would have to grandfather in any existing municipal wifi systems and allow them to continue to operate and even expand.
Many of the Wifi activists (Boston Area Wireles for example) are trying to convince local governments to at least establish a single note public Wifi system just so that they can continue to operate if the telecom industry manages to outlaw public networks.
It's pretty obvious which side of this battle has the money and motive to pay for "independent" research.
-braddock
Given that I could only read a short summary instead of the whole report, I could be way off on this. Nonetheless, if it costs $25/month to break even then I say go for it! Why? Because the benefits per month to an individual is EASILY $25/Month. Then let's add in the benefit to your local business. Let's not forget Metcalfe[sp?]'s law. The value of a network goes up as more people participate. Becaues municipal WIFI is free, there will be a ton of people joining and using it, especially the lower income people. This opens up that many more people as potential customers for local businesses and services. Then let's add in the value of convience. To be able to rely on a constant network connection anywhere in town is invaluable. Do they realize how much people are willing to pay just for that? I know businesses would love to send their people around town and be able to communicate with them reliably anywhere in town for free.
$25/month per person is NOTHING! Infrastructures to enable people to work together are usually good investments for the government. Let's just ask S. Korea what they think about widespread access...
EvilCON - Made Famous by
This "research" is almost certainly bought and paid for by the telcos.
Common sense will tell you that muni wifi is a good thing for you and me and a bad thing for the telcos. If the costs of muni wifi outweigh the benefits, then why are the telcos spending so much money buying all this legislation to outlaw muni wifi?
Also, there are cities that have already implemented muni wifi, therefore why not go loko at their implementation, and SEE what the costs and benefits are? Why bother with this fake research? And did the telcos pay Slashdot to run this article?
eat shiat and bark at the moon
There are a HUGE number of things that municpalities do that can be considered money losers. I get the feeling that JupiterResearch probably has some sort of vested interest in wi-fi networks.
As for "public/private" goes. Endeavors like that are always funded with tax money, but any income goes into private pockets. Which means that it STILL will be a money loser for municipalities.
Steve's Computer Service, Hobbs, NM
They say that costs outway the benefits. If that is true, then no sane private entity should invest in it.
The only way you would get the service then is if it became a public work. It is the same with any service that cost too much like rural electric. So they should be in favor of municipal WiFi if any. This is not a very credible report.
If the municipal service is being done in place of upgrading all of the radios in town trucks (garbage, parks, school-grounds, etc.) and emergency services vehicles, and incidentally giving them all access to email and other communications, the benefit to everyone else is just gravy. The goal with any such service is to make it cheap enough that it's not worth metering, and ubiquitous enough that it can be relied on. This is in direct contrast to the goal of any private company, which is to make the highest profit possible. The people who make hardware know that once the hardware is in place it runs for pennies worth of electricity with minimal attention, so they're concentrating on getting buy-in and build-out; it's the people who hope to make money renting out a service who are trying to block things.
I love this reasoning. "It's too expensive to be worthwhile, so please pay a private firm to do it."
Mind the Gap
Right, a muni wifi network that is low cost or free to the user could save America (yes, pseudoLibertarians, I realize it would have to be paid for by taxes, hence the phrase "to the user").
I say this because right now the mass media is responsible for the transmission of the vast majority of political/social ideas. Outside of internet forums and colleges, very little transmission of political ideas is going on from person to person. All ideas come from the mass media.
However, the mass media is owned and operated by the elite, the upper crust, the high earners, the rich, the powerful. These people have political ideas that are different from most working class Americans. In particular, the elite have ideas that favor the elite, not surprisingly. What sorts of ideas favor the elite? Well, the idea of a flat tax favors the elite because the elite get to keep more of their wealth. And it hurts us. THe elite like regressive taxation. That hurts us and helps them.
THe elite like globalization. But it hurts us.
The elite like lots of immigration. But that hurts us working American citizens.
The elite like war. It opens up new markets for the corporations. But we die in these wars.
So, these elite-friendly ideas are favored by the elite. And the mass media is controlled by the elite.
100 years ago, most idea transmission was person to person. And not surprisingly that was when the working people fought and died for a decent workplace, for labor laws, for the right to vote.
We no longer fight for our rights. And so we are losing them. Look at Europe. They work less and get more. We work more and get less. That is because our culture has been taken over by elite thinking via the mass media.
If we want to change our culture back to a workerist-friendly one, and not an elite-friendly one, we need to have a society where ideas are transmitted from working person to working person, not from a few elite persons to muliple working persons. Muni wifi could be the way to do that. Once you get free or very cheap broadband via muni wifi, and you put that together with p2p networks to pass video from person to person, that opens up the way for video entertainment made on the cheap.
This is how the early American theater was, about 100 years ago. The first movies were not shown in opulent theaters like they are now. Instead most were shown in the corners of little urban bodegas, and most movies were made on the cheap by semi-amateur filmmakers. Many of the early movies were strongly pro-worker and anti-elite. These early movies helped start the labor movement that gave us our labor laws (see the book Working Class Hollywood for more info).
Then the big money moved in and bought some politicians and outlawed the small movies via safety regulations and political censorship.
Muni wifi + p2p could be the new movie industry. And it could revitalize America.
eat shiat and bark at the moon
I got the jist that it was along the lines of: "No, no, no, don't do WiFi yourself, it just costs too much. We'll do it for you have save you $$$$ millions!"
Believe it or not, there are tons of companies right now working to setup such private/public partnerships with a lot of cities either considering doing it themselves or still on the fence about it. This article reaks of being a marketing piece for those companies.
My blog
The report talks about costs per square mile. But those costs rely on the population density.
If you look at certain parts of Tokyo and Taiwan, you have some of the most densely populated areas with high rates of broadband usage in the world.
Maybe cities should not be building WiFi networks covering corn fields in Illinois, but they certainly make sense for place like Tokyo , Taipei, New York and Bombay.
-- I doubt, therefore I might be.
let's take the $150,000-over-5-years and $25/month-per-user benefit numbers at face value (ignoring the comments of earlier users in here). somebody check my math:
$25/month = $300/year = $1,500 over 5 years
1500 * 100 = 150000
so they just need to get 100 users per square mile to break even, given these assumptions? am i the only one who finds these numbers to be a tremendous argument for benefits outweighing costs? add to this the fact that most people are paying more than $25/month for internet access, and i think that's exactly what this shows.
i speak for myself and those who like what i say.
150,000 per square mile over 5 years.
so that works out to 150,000/5 years/12 months = 2500 per square mile per month.
Which means that if you have 100 users in a square mile, which is far more than reasonable, you will be getting equivalent costs to benefits.
Let's say I misunderstood it, and it was 150,000 per square mile per year over 5 years. So then it would be 150,000/12 = 12500 ~ 500 users would be needed, again, really small number for a large city.
Finally, let's say I'm completely wrong and that 150,000 is per month. Then it would require 6000 users for there to be benefit. Which in a city like New York or San Francisco, is far more than reasonable.
Unless, of course, Jupiter is stating something way off, their math makes no sense at all. The cost they are giving is way more than reasonable for the benefits to the general population.
~ kjrose
I realize there is an argument that can be made on both sides. But realize that it is a public welfare system.
As opposed to the bagillions of dollars spent on roadways because the existing ones are too crowded for the cars that people want to put on them?
"It is a good divine that follows his own instructions" - Portia, The Merchant of Venice
A well-managed public service will always be more cost-effective than the same service provided by a well-managed private operation, because there's no profits being taken out before the bottom line. That's basic math.
The trick of course is getting the public service to be well-managed, but that's mostly just a matter of political will. The local Chamber of Commerce will of course pooh-pooh the very notion and sometimes even stand in the way of it, because their interest is in creating niches for private businesses to exploit instead. And of course employees (especially if organized) will try to get as much out of it as possible as well. The government just needs to show some backbone and do it right, regardless.
The only reason a private entity truly needs to be involved is if investors are needed for the capital, and the government doesn't have the means to raise it through bonds or taxes. Otherwise, let the public sector hire the same people to do the same job at the same salary/wages the private company would have hired them at. If the argument is ideological (that government shouldn't do this sort of thing) that's another matter, but if it's a question of accounting, the advantage is to the fully-public approach.
http://alternatives.rzero.com/
Why does everyone try to reduce every question to money alone? Oh yeah, they're selling stuff.
Governments should strive to provide services for as little cost as possible, but that doesn't mean that it should fail to provide a service at all if just because somebody declares it to be not cost-effective.
Guess what, public libraries are not cost-effective.
Public parks are not cost-effective.
I'm sure others can add their own examples. Cities provide these service because it benefits the residents and makes the city more attractive to others. E.g., it might encourage a company to locate new offices in this city instead of another to keep the employees happy, and unlike the usual "development incentives" these investments actually benefit the people, not a few executives.
Should cities provide wifi - even free wifi - in downtown and business areas? I think it should - because the public good (e.g., allowing people to check their email from anywhere in the area) outweighs the cost. If the city really, really needs to offset the cost it could impose a nominal head count on the employees in the area, and by "nominal" I mean $2/month/full-time equivalence person. It won't cover the entire cost but it's a symbolic gesture.
For every complex problem there is an answer that is clear, simple, and wrong. -- H L Mencken
It has been concluded that public transportation, municipal water and sewer, emergency services, and telephone networks are not self sustaining in lightly populated areas.
Duh. The Federal/State/Local government(s) do all sorts of things and provide all sorts of services that are for the public good that don't make money. Internet access is the next utility. I've got municipal water, why not municipal internet? Sure, it may not be appropriate for rural or even some suburban areas, but for areas that have moderate or above population density, this is a no-brainer.
Even the telcos don't recoup costs in the first five years!
Personally, I'm not certain that "municipal WiFi" is necessary or useful or an appropriate use of public funds. So I can't give you the argument you want.
I do want to know one thing, however.
Consider that the last bastion of true lassaiz-faire capitalism is organized crime, and the mixed economy has become the norm in the civilised world.
Consider the number of services that are provided through the city or town you live in, either directly or through contracts with utility companies. Do you really think you'd be better off if you had to separately and personally contract with competing providers of power, sewage, and water?
Given that background, can you explain why you think Wireless Internet service is somehow different than any of the other municipal services? Maybe it is, maybe it isn't. Maybe wired internet is, and wireless isn't, or vice versa. Maybe there should be WiFi access to local services, and you could buy general access to the worldwide Internet? Since you're so sure that the free market is the best model, I'm sure you've already thought about this stuff.
I live in Boston, and without mass transit, we'd all have trouble getting to work- the roads are underequipped to handle the traffic we have, let alone more. But that's close to your point- wifi won't improve the economy, and is very likely to be a drain on it in most neighbourhoods. Even the MBTA is only starting to look at options for solving their budget woes, and they are used constantly by a huge percentage of the working population.
there are other places where the money could be more useful. Say, for example, supporting those libraries, where multiple resources are available for all, for free.
But there is one place i think wireless is really splendid in Boston- the airport. People arrive and leave and can use wireless there. It makes sense to me that places where people wait to do business would have wireless. I think that shopping malls, and economic centres might look into it, and that towns might make incentives for them to do so. Because these are places where people congregate, and it would be worth it to know that there were a few places that you could go and be almost sure to get a signal. If it were run by the town, why not have it in parks and public buildings, where people most often gather?
"I'd say 'Have a good time,' but arson is still illegal.
Right: public streets, sidewalks, and sewer systems haven't killed off private versions of... oh. Hmm.
Here's the thing: some resources really are overwhelmingly more efficient when delivered municipally (e.g. city streets, sewers). And some may be less efficient (e.g. office furniture). And some hit their sweet spot, as you suggest, with a basic municipal service supplemented by a premium private service (e.g. urban transportation systems, and possibly Internet access). New York City has an awesome subway system and pretty good buses; the city would shut down in minutes if those systems failed. But it is nice to be able to hop in a cab when it's late at night and you're close to home but in a spot that would require one or more transfers on some of the less-popular subway lines.
In general, I think americans have an irrational attachment to private, individualized service; we've been brainwashed by the rich to think that privatization serves our interests. I'd be happy to see only delivery vehicles, buses and taxis on Manhattan streets; it would lower costs and travel times for everyone. London seems to be on the right track with this strategy. I hope NYC - and, eventually, the rest of the US - wises up at some point.
The study ignores a basic item: the municipalities that're looking at this are doing so because they can't get broadband service to residents any other way. Whether it'd be more expensive than private service isn't relevant if the private companies won't provide service in those areas. When one of the lobbyists for the cable and telephone companies gets up and blasts the cities for wanting to waste taxpayer's money, I'd love a legislator from the affected area to get up and ask "So then, will your company agree right here and now to provide broadband service at a price no greater than what we're proposing (that you say is too expensive)? What's that, you won't? Then if you won't provide service why are you complaining that it's unfair that we go ahead without you?".
The question is what are their assumptions about "what's a user" and "what's feasible"? I've seen several models for community wireless, and they've got much different definitions
- Free service that makes the community more friendly, so that the citizens are happier and businesses make more money, similar to the ways streetlights and socialized baseball stadiums do. In this model, success means "everybody loves it, tourists find it easier to get around, people drink more coffee, eat more restaurant food, and use the subways and city museums more."
- Quasi-commercial service with subscribers who pay by the month, or occasional users who pay per use/hour/day/etc. The city's basically competing with T-Mobile, Boingo, etc.etc. and Starbucks for roaming, plus competing against the cable modem and DSL companies for residential business. In this model, success is defined as "subscribers/users paid enough money to pay for the costs of the service", and "feasible" means "there's a reasonable chance that the service will succeed, given some pricing model." It's a much different concept.
- Volunteer-hobbyist-run networks like BAWUG that provide free access - the city doesn't do the work of running it, and maybe it's less scalable, but the city provides access to streetlights and well-placed rooftops, and doesn't abuse and extort them the way they would treat a commercial provider.
- "Public-Private Partnership" is usually that the city hires one of the mayor's buddies to implement the quasi-commercial model instead of having city workers do it, and ideally is friendly and cooperative and doesn't abuse and extort them the way they would treat a normal commercial provider.
$150K / 5 years is $30K/year or $2500/month. For the quasi-commercial models, yes, that means they need 100 subscribers/square mile at $25/month or 500 subscribers at $5, which is probably easier to get if the performance is ok, but there are cities where it won't work. For the public service model, $30K/year/square mile isn't a lot of money - it's certainly cheaper than paying police overtime for baseball games, and it's more likely to attract geek tourists and business tourists than a baseball stadium is, so at least in San Francisco, you'd probably justify paying for it from the hotel tax fund or something for downtown, but in residential neighborhoods it's a tossup of whether it's a win or not.Obviously a private company is only going to use the commercial models, not the streetlight model. In a purely commercial model, if the costs look feasible, there will be a bunch of competitors; in a public-private partnership model, the costs are usually cheaper because the city government causes much less trouble to the service provider, but there's less likely to be competition unless they assign different territory to different providers.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks