Monday, May 21, 2007

Is Municipal Wi-Fi Dying??

There's been lots of news articles recently about citywide Muni-WiFi projects....especially after Earthlink decided to pause and reassess the money-making potential of their citywide Wi-Fi projects.

There's also been an increase in gloom and doom reports out of major tech outlets as cities realize Wi-Fi isn't magic pixie dust and comes with inherent coverage issues.

Of course the majority of the nation's largest projects haven't even been completed yet, and while early subscriber numbers aren't stunning .... cities are finding significant benefits on the municipal and emergency services side. Mostly ....everyone in the whole market is in a wait-and-see mode watching whether Muni-WiFi can really be proven.

What many are finding is that there's no free lunch. These systems cost money to build and operate and maintain and upgrade. That money has to come from somewhere. Some comes from ads (but ad revenues depend on users reading them), some from subscribers, and if those 2 can't cover the cost - they must shut down or get money from the taxpayers.

Unfortunately, the option of shutdown or taxpayer subsidy looks like it may become the default position of many of these systems because they can't draw enough users to make ad supported and subscriber supported systems pay for themselves.

The time has now arrived where the builders of these systems have learned that making these systems pay for themselves is a very risky option. They will now only go forward with a taxpayer backed option as part of the package. We will now see how many local politicians will continue to push muni-wifi systems when the voters start learning it is going to result in tax increases.

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