Revisiting the Tangible Drivers of Sustainable Broadband-Wireless Models

Tell a Friend

A look at today’s headlines finds several major U.S. cities reconsidering and even shelving their plans for single-use public-access broadband-wireless networks. Meanwhile, the industry has been reassessing the drivers behind citywide broadband-wireless implementation. W2i is currently observing a reemphasis on public safety, emergency response, video surveillance, machine-to-machine applications (i.e., utility meter reading, parking meters), and intelligent transportation as drivers (among others) over public access, digital inclusion and economic development.

At this time, it is helpful to look back at the commentaries and case studies of several thought leaders and field practitioners committed to models intended to deliver measurable return on investment for local government and the community from day one. These models, often deployed on the basis of a local-government mobile-workforce productivity improvement or a technology upgrade, tend to include low-cost residential access as a secondary outcome and digital inclusion as a windfall benefit of deployment, typically overseen by a Internet service provider operating in a competitive environment. The intent from inception is to proceed in a sustainable fashion — a multiphased rollout serving multiple user groups — that is cost justified on the front end.

These implementations stand in contrast to ambitious service-provider models deployed primarily for public access and that, in retrospect, may have been overconfident about capital expenditure requirements, deployment timelines, subscriber uptake and advertising revenues.

In the Beginning There Were Apps and Upgrades

Discussion about the broadband-wireless opportunity for local government was already well under way by the time W2i hosted the first Wireless Internet and Municipal Government Summit in Atlanta in November 2003. Atlanta Mayor Shirley Franklin, in her keynote address, observed that improving government operations was wireless’s primary benefit to her city:

How technology can be used to build a more efficient and better city is an issue that my administration is particularly interested in…. The wireless Internet, the focus of this summit, has much to offer in terms of worker mobility, network connectivity and getting more information into the hands of our managers and employees faster and with more accuracy.

At the Wireless Internet and Municipal Public Safety conference in San Mateo, California, in June 2004, in a reporting session to the broader audience, Glenn Booth, a co-moderator of the “Building a Business Case Workshop,” pointed squarely to the need for cost justification before deployment:

Unfortunately the days of huge budgets are over — if you build it, they will come. You really must have a driving need, one or two killer applications that are really driving the project, and a few others that are neat but that won’t hold up in a budget request. All these are important as you’re building your case and return on investment.

Top applications included record-management systems, computer-aided dispatch, DMV image databases, and GIS and building and floor plans. In the proceedings from that conference, W2i outlined several stages as the basis for a viable implementation:

Planning and deploying a broadband-wireless network for your police department, municipal agency, and/or the wider community will rest on the ability of project drivers to undertake a thorough needs analysis, bring believers and vendors on board, pitch to skeptics, and locate appropriate funding sources.

From 2003 to 2005, discussions about the business model for broadband wireless seldom strayed from identifying: (a) applications that provide measurable value to government or (b) cost savings through an upgrade to legacy infrastructure. In an Intel-sponsored white paper Digital Community Best Practices (2005), W2i laid out a rationale for a multiphased implementation:

A successful multipurpose broadband-wireless network typically begins with a first-stage infrastructure deployment to meet a single application or mobile-communication need. This can include the delivery of a cost-saving municipal application to increase government efficiency and productivity; as well as the replacement or enhancement of legacy communications infrastructure because of bandwidth under-capacity, expensive recurring costs, and insufficient upgrades. This primary driver is used to secure key political buy-in and justify an initial technology investment in the hundreds of thousands to millions of dollars.

Today, several U.S. communities that are building and expanding networks based on municipal needs are well known among the broadband-wireless stakeholder community but have received less visibility in the media. While intentions to bridge the digital divide with broadband wireless may vary greatly from one community to the next, in each case the onus is on network sustainability.

Proceed with Caution: The Carrier Business Model

By 2005, public-private partnerships between local government and emerging and incumbent wireless Internet service providers began to receive intense interest because of the potential to use private capital to drive implementations forward. Communities would contribute their vertical assets and rights-of-way, and service providers would provide equipment, funding, and know-how. The private sector seemed ready to meet a growing call from big-city mayors around the country to bridge the digital divide with wireless. The fall of 2005 was a highwater mark, as the City of Philadelphia chose EarthLink as its service-provider partner and San Francisco gathered two dozens bids in response to its request for proposals.

At the same time, discussion around cost justification of deployment through applications for government as well as the monetization of networks grew more sophisticated — and necessary as ever for those smaller cities and rural communities without private-sector suitors. IBM developed an ROI tool to be used in a workshop with communities to identify “low-hanging” fruit for further cost justification. Michael Dillon, at the time was IBM’s Director of Industry Solutions, Safety, Security & Community Broadband, delivered keynote addresses at the W2i Digital Cities Convention on “rationalizing public-access models through government applications.” In October 2006, when asked about the key challenges facing municipal wireless, he responded:

Communities need to adopt the same attitude toward wireless as they do to lights and sewer. They offer up these assets — they maintain them, keep them up and running — but for this initiative, they still haven’t stepped up to the plate to say we’re going to acknowledge this like we do these other utilities and infrastructure. It’s odd when there are funds available to go in and monetize these networks in ways that would not have them be at risk. The speculative side is interesting, but at the same time, it would be like tin-cupping your way around the community and seeing if you could buy a car. These are infrastructure investments.

While some of the most high-profile public-private agreements were forged in cities like Houston and Portland—often with generous offerings of equipment and deals on service for government employees—some city officials had begun to look beyond service-provider promises at the roots of real sustainability.

The Anchor-Tenancy Imperative

Late in the summer of 2006, in a long-awaited decision, the City of Minneapolis chose local broadband service provider US Internet (now USI Wireless) over EarthLink Municipal Networks to deploy its citywide Wi-Fi infrastructure, and to do so primarily in support of a major telecommunications upgrade for public safety. Bill Beck, former deputy CIO, explained at the time:

We were experiencing tremendous growth in our mobile workforce, on the cellular technologies. The bandwidth on the cellular technologies wasn’t sufficient to support the growing needs, and the cost was very significant in terms of providing those services to all our mobile workforce (police, fire, emergency services) as well as our other organizational requirements (public works, regulatory services for inspectors) and so on.

At the same time, several community members had lobbied the city council to buy and deploy its own network to ensure universal broadband access for all residents. But the city, explains Beck, could not do this on its own:

When we consider the cost of managing an emerging technology, it isn’t just a $25 million investment up front. In four years, we would have had to invest another $10–15 million and, even beyond that, another $10-15 million in another three to four years. The city wasn’t even capable of taking on that kind of a burden.

Instead, Minneapolis’s Business Information Services Department began to think about how to build a sustainable partnership with a service provider that could then support digital inclusion down the road. The city examined some 200 workflows to determine the operational efficiency improvement the network would provide and then assigned a value to those gains. Minneapolis would bring to the agreement a $1.2-million annual anchor-tenancy commitment—increasing to $2.5 million over time—partly in the form of system integration services from USI Wireless. To address low-cost residential access to citizens, the city would iron out a special community benefits package with the provider. Says Joe Caldwell, Co-Founder and CEO of USI Wireless:

We’d never been in a structure like what’s presented with Minneapolis, where a percentage of our net profit actually goes to a digital-inclusion fund…. What I learned from this whole thing, in dealing with the city, is what they really need is to put teachers into these communities so that they could bridge the digital divide….We’re excited about going down that way with the city.

Corpus Christi, Texas, is noteworthy in how it is arriving at viability. Using its own resources, the city began deploying a broadband-wireless network to improve government-operations efficiency and cut costs, primarily to enable automated meter reading and for a public-safety network upgrade. It has worked with EarthLink to enable commercial service, in March of 2007 it sold its network to EarthLink and entered into an anchor-tenancy agreement.

The Recipe for Success

As the broadband-wireless market reassesses the tangible drivers for sustainable implementation, W2i, after four years of field observation, believes the successful approach includes a multipurpose network driven by business-process reengineering or cost-saving technology infrastructure upgrade; a public-private partnership with anchor-tenancy commitments; and digital inclusion as a windfall benefit of deployment.

James Farstad, president of rClient and lead consultant on Wireless Minneapolis project, says: “The municipal broadband initiatives that will succeed, whether they utilize Wi-Fi, WiMAX, FTTH or a combination of appropriate technologies, are those initiatives that are developed to meet a set of realistic, prioritized business requirements and reflect an equitable balance of investment dollars, asset contributions, service-level expectations and business commitments. Those that don't, won't.”

“For municipal broadband networks to be sustainable over a long period of time, governments need to be anchor tenants to these networks,” says Rizwan Khaliq, Global Business Unit Executive, Digital Communities, IBM Global Government. “The business case for governments to be anchor tenants is to focus on efficiency gains and improved citizen services, which can be realized through mobility applications allowing for return on investment, as well as to leverage the networks for public-safety applications such as video surveillance and emerging areas such as Intelligent Transportation Systems.”