Wireless city development hinges on the business case

Wireless City initiatives are not a new concept, but providers must re-assess how to deliver on the promise as new technologies bring greater speeds at lower costs, and new services provide a means to underpin the business case. George Malim reports

Wireless city development hinges on the business case

The wireless city idea is simple. Deploy cheap Wi-Fi technology to create a bubble of connectivity around an entire city, central business district or metropolitan area. By doing so, the theory goes, each city will make itself appear forward-looking and attract companies and people to live in it. In addition, local authorities will be able to use the network for their own purposes, such as closed circuit television (CCTV) and inter-departmental communications, as well as engage in social inclusion projects to bring the internet to the aged and unconnected and provide social services such as ehealth.

However, as more authorities deploy wireless cities, using the concept as a means of differentiation from other towns has become less effective, and simply offering Wi-Fi connectivity is failing to generate the revenue needed to fund wireless city projects.

Early on, headline initiatives in the US, such as the San Francisco and Philadelphia wireless cities, failed. Their business case was predicated
on generating advertising revenues from homepage advertising that
Wi-Fi users would be exposed to every time they joined the service. The issue was, users didn’t come in volumes.

Similar experiences have been seen in the UK, suggesting that with Wi-Fi widely available in cafés and other mobile broadband technologies available from cellular providers, there simply isn’t the demand to justify such services.

Generating revenue
John Earley, head of strategic development at Metronet UK, which runs networks in Manchester, Dublin and other cities in the north of England using its own network, hasn’t seen Wi-Fi as a means to generate revenue and is not convinced that significant demand exists. ‘Providing Wi-Fi connectivity obviously has value to iPhone users but the difficulty is how to generate revenue,’ Earley says. ‘Out of academic interest, we put an open hotspot up in a street in Manchester a few years ago and found that in one month it got three users, one of which was a guy who lived in the street and clocked on to having free internet access.’

Metronet, however, is different from most wireless city initiatives. For a start, it is privately owned and its initial Manchester network was acquired in 2002 from failed Atlantic Telecom for less than the cost of its construction. Metronet has focused intently on serving the business market and generates significant revenues from supporting CCTV.

Nevertheless, Earley doesn’t think the company’s background sets it apart from other wireless city initiatives. ‘Whether it’s a government initiative or a private one doesn’t make much difference because everything has got to be commercial,’ he says. ‘I don’t think local government is best positioned to make wireless cities work and I don’t think there’s scope for success for not-for-profit initiatives.’

Social enterprise
A diametrically different initiative is Cybermoor, a wireless city serving the remote, rural communities around Alston in Cumbria. Set up as a social enterprise to bring connectivity to users where there was simply no other option, Cybermoor charges subscriptions – ranging from £8 to £20 per user per month, and generates income through consulting to local authorities on wireless cities. ‘We established Cybermoor as a way to get broadband to a remote rural community at a time when BT wasn’t interested,’ says Daniel Heery, project manager, Cybermoor. ‘We’ve now upgraded to a mix of fiber and WiMAX – fiber’s great when we can afford it but the cost is difficult to manage, so wireless is the way to address the demand for bandwidth that exists here.’

As an early pioneer, Heery also feels that the wireless cities concept has lost some of its momentum. He explains: ‘There was a lot of excitement four or five years ago, but then interest slowed down as BT got into it. Also, if everyone’s doing it then you stop standing out.’

Heery also thinks that as WiMAX came in to replace Wi-Fi, issues around licensing of spectrum have presented a barrier to projects. ‘That has created a bit of a brake,’ he adds. ‘Wi-Fi was an upward curve but this has stopped because of the way Ofcom has limited uptake due to operators not offering spectrum.’

Smartphone users
However, that inertia may be coming to an end as users of iPhones and other smartphones seek out Wi-Fi connectivity to unleash the power of their devices. BT is also keen to fight its corner as an enabler of the concept. Ian Robinson, general manager for wireless products, BT Retail, explains: ‘BT works in partnership with local authorities to ensure that the wireless broadband network supports local authority applications and services.’

He adds: ‘BT has also invested in the network itself and, in addition to local authority use, in some cities the majority of usage is for public Wi-Fi with an explosion of usage in mobile devices, particularly iPhones.’

More standard projects, such as that recently announced in Swindon, are led by local councils pursuing a social inclusion agenda to provide connectivity for all, with the costs underpinned by additional services that are paid for either by businesses or by consumers. The Swindon project provides connectivity not only across the city centre but also extending to outlying areas. The project is a partnership involving Swindon Borough Council, a consultancy and a Wi-Fi provider.

Dave Rimmer, director of Intamac Systems – which provides home monitoring and controls and plans to sell its services to householders over the Swindon wireless city network –explains the rationale. ‘Obviously there needs to be a business case behind providing such connectivity,’ he says. ‘Rather than saying it is free, Swindon is providing 20MB Wi-Fi limited to 1.5 hours per day to “free subscribers”. That’s enough for social inclusion and, if a user wants more access, they can select an upgrade model either to pay as you go or by entering a contract.’

Swindon has chosen to set up a series of categories of additional services that users can access. Intamac’s proposition will form part of the home services category and it is hoped, will generate revenue to support the service. In other cities, applications such as the council’s CCTV are being run using the capacity of a wireless city network and, although not sufficient to totally underpin the cost of the network, such usage goes some way to justifying wireless city costs.

Written by Wireless magazine
Wireless magazine

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