June 24, 2008

Wi-Fi is a No-Go for Now; Without Cash Infusion, Milwaukee’s Pilot Project is Unlikely to Be Expanded


Plans for wireless Internet access blanketing Milwaukee have stalled and won't be completed unless major financial sponsors step forward -- something that doesn't seem likely, city officials say, as similar systems are failing.

For all practical purposes, the plans have "stopped dead in the water," Ald. Robert Bauman said, adding that city government has no intention of sinking millions of dollars into a Wi-Fi wireless system.

"It seems like the whole Wi-Fi model nationwide has collapsed," Bauman said.

Launched in 2006, the ambitious plan would have made Milwaukee one of the nation's first large cities with wall-to-wall Wi-Fi service. It would give the city a tech-savvy image and also could provide free or low-cost Internet access to neighborhoods that need it the most.

But Milwaukee's vision of being one giant Wi-Fi hot spot now seems more like a dream than something that's right around the technological corner.

A wireless demonstration area on the city's near west side hasn't been expanded since its inception two years ago, even though technical problems have been addressed and the service is working well, according to the provider, Midwest Fiber Networks.

"The demonstration area was meant to prove the technology. We have done that," said Cheri Grainger, a vice president with the locally owned firm.

Midwest Fiber has already spent $700,000 on its demonstration area, which is roughly bounded by I-43, Highway 41, Canal St. and W. Vliet St.

In that area, computer users can connect to the Internet for free, via wireless signals carried by roughly 100 radio antennas.

But it will cost $20 million to take the wireless network citywide, and Midwest Fiber says it won't spend the money unless the city or other organizations agree to become "anchor tenants" on the system and help make it profitable.

"We can only expand into areas where there would be anchor tenants to support the cost," Grainger said. "We continue to have conversations with City Hall, but at this point there isn't a definitive game plan as to what we are going to do and how we are going to do it."

Where's the money?

Increasingly, major Internet companies are pulling the plug on municipal Wi-Fi services unless governments or other users step forward with millions of dollars in assistance or user fees.

Last week, Wi-Fi was dropped in Portland, Ore., after no one emerged to bail out what had been a successful system.

Thirty percent of Portland, which has about 569,000 residents, was covered by free Wi-Fi. The coverage extended into neighborhoods where residents couldn't afford $40 a month for wired Internet service, and more than 15,000 users a day logged onto the system.

"At one point, we had the most successful Wi-Fi deployment of any major U.S. city," said Brendan Finn, a Portland city staffer who works for the City Council.

Portland spent more than $250,000 planning for the Wi-Fi system and overseeing its launch. But the provider, MetroFi Inc., struggled to get advertisers necessary to keep the system financially viable.

Also last week, a group of investors in Philadelphia said they bought that city's wireless Internet network after EarthLink Inc. gave up because it couldn't make a profit.

EarthLink has pulled out of other wireless markets, too, including New Orleans and San Francisco, because they didn't attract enough customers or financial backers.

Philadelphia's new wireless plan calls for maintaining the network that EarthLink built, costing about $17 million, and for providing free Wi-Fi to consumers. The investors hope to make money by offering both wired and wireless Internet access to businesses and institutions, possibly bundling the services together.

Making it work

Wi-Fi has to make sense financially, and selling the service in combination with something else is one way to do it, said Craig Settles, an independent wireless consultant and author of the book "Fighting the Good Fight for Municipal Wireless."

"Unfortunately, people got wrapped up in this business model that said the service would be free, and that a vendor would come in and build a network for free. It was pretty much a fatally flawed plan," Settles said.

Some municipal governments have agreed to become Wi-Fi anchor tenants for their own purposes -- such as giving building inspectors, police and firefighters Internet access in the field.

Wi-Fi was useful last summer during the Interstate 35W bridge collapse in Minneapolis when cell phones and other communication lines were overwhelmed with traffic.

Wireless access near the bridge was essential to rescue workers' ability to respond to the accident, city officials said. Without the service, workers likely would have had to print out maps, plans and blueprints, or burn them to discs distributed by couriers.

"Municipal wireless has given people some things to be critical about. But the role it played in Minneapolis proved the technology's potential to save lives," Settles said.

Minneapolis is a Wi-Fi anchor tenant, costing the city more than $1 million a year. In addition, the service is supported by roughly 10,000 subscribers who pay about $20 a month for wireless access that covers much but not all of the city.

The network is on its way to becoming financially sustainable, according to the company that built it, U.S. Internet Corp., based in Minnetonka, Minn.

"Minneapolis is about the only big city where Wi-Fi is apparently working," said Glenn Fleishman, editor of Wi-Fi Networking News.

Technical hurdles

Midwest Fiber doesn't intend to drop the Wi-Fi demonstration area in Milwaukee because it's being used by several hundred people a day, according to the company.

But the area won't be expanded until it's financially viable.

Technology problems also have contributed to the demise of wireless networks in some cities, because setting up the service citywide is far more difficult than providing it over a couple of square miles or in a controlled environment, such as a coffee shop.

In Minneapolis, wireless signals have been deflected by tree leaves. In Lompoc, Calif., construction of a wireless network was delayed when the city learned that its stucco homes contained a wire mesh that blocks signals, making Internet service poor or unavailable without additional equipment.

Wireless signals aren't designed to penetrate deeply into buildings, which limits some applications. The next generation of wireless technology might be worth waiting for, rather than spending millions of dollars on a system that frustrates users.

"The worst thing you can do is push a service and then find out it doesn't work. Then it gets a bad name, and nobody wants the service," said Scott Mittelsteadt, village president of Jackson, about 15 miles north of Milwaukee, which has Wi-Fi service.

Midwest Fiber's primary business is fiber-optic cable and wireless networks. It hasn't dismissed the Milwaukee Wi-Fi experiment yet and says city government and the area's colleges could be anchor tenants.

"There's still a strong case for a network," Grainger said. Marquette University's wireless network could be merged with a Milwaukee system, for example, and wireless services could be offered to the University of Wisconsin-Milwaukee -- generating thousands of users.

Milwaukee officials say city government isn't going to be an anchor tenant on the system, however, partly because of the failures in other large cities.

"Philadelphia put millions of dollars into its Wi-Fi network, and it hasn't turned out the way they expected," said Ald. Michael Murphy.

Ultimately, the marketplace should determine whether the Midwest Fiber Wi-Fi project succeeds, according to Murphy.

"But I don't think they are going to find a major anchor tenant wanting to invest several million dollars in this," he said.

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